RNEW3 Renova Energia

Renova Energia is a Brazilian company dedicated to the generation and commercialization of electric power from renewable sources, with shares traded on B3 under the tickers RNEW3 and RNEW4. The group’s origin dates back to the creation in 2001 of Enerbrás Comercializadora de Energia Ltda., later Enerbrás Centrais Elétricas S.A., which began operating in hydroelectric developments. In 2003, Enerbrás structured a consortium to implement three small hydroelectric plants (PCHs) in the far south of Bahia, which in 2004 was transformed into Energética Serra da Prata S.A. (Espra). Renova Energia S.A. was formally incorporated in December 2006 as part of a corporate restructuring, with its corporate purpose focused on the generation and commercialization of electric power, fuels from renewable sources and related services. In the same year, the company acquired control of Enerbrás, consolidating hydro generation assets in its portfolio.

Throughout the 2000s and 2010s, the company structured its presence in the capital markets and expanded its shareholder base. Registration as a publicly held company was granted by the Brazilian Securities and Exchange Commission (CVM) in August 2008, and in 2010 Renova carried out a primary public offering of units, with its shares being listed on B3’s Level 2 of Corporate Governance. The entry of strategic investors marked its corporate trajectory, notably the capital injection by Light Energia, a subsidiary of Light S.A., in 2011, and by BNDES Participações S.A. (BNDESPAR) in 2012, through capital increases that reinforced its investment capacity in renewable generation projects. The company was also a leading player in asset recycling transactions, such as the agreement signed in 2015 with TerraForm Global and SunEdison, which involved the sale of wind farms and PCHs and the exchange of interests in projects for shares abroad, as well as the sale of the Alto Sertão I Wind Complex, concluded in 2015.

Renova Energia’s business model combines its role as an independent power producer with the commercialization of energy in both the regulated market and the free market. The company develops, implements, operates and commercializes energy from wind and solar sources, having in the past maintained PCHs and biomass plants in its portfolio, hydropower assets that were sold in 2022. The company positions itself as an integrated energy services platform, with the capability to operate from project prospecting and development, inventory and engineering studies, to the implementation, operation and maintenance of plants and the structuring of power purchase agreements. Its corporate purpose also includes activities such as trading carbon credits, consulting on energy solutions, manufacturing and selling equipment for power generation and transmission, and operating in distributed generation through solar systems.

The operating segments reported by Renova Energia reflect the diversification of sources and the separation by activities. In the Wind segment, the company is responsible for the design, development, implementation, operation and commercialization of the energy generated by wind farms, an activity that has historically concentrated a large part of its investments. The main current asset is the Alto Sertão III Wind Complex – Phase A, consisting of 26 wind farms, 155 turbines and 432.6 MW of installed capacity, located in the interior of Bahia. This complex began commercial operations in December 2022 and allocates its energy to both the Regulated Contracting Environment and the Free Contracting Environment, with approximately 53.3% of the energy sold in the free market and 46.7% in the regulated market, including contracts arising from the 5th and 6th Reserve Energy Auctions. In the Solar segment, the main project is the Caetité Solar Complex, in the southwest of Bahia, with around 4.8 MWp of installed distributed generation capacity, consisting of thousands of photovoltaic modules and inverters, aimed at serving local consumers.

The Energy Trading segment represents another relevant front in Renova Energia’s operations and accounted, in 2024, for the largest share of consolidated net revenue. The company sells energy in the regulated market through public auctions, in which it competes with other qualified generators, and in the free market through bilateral contracts with free and special consumers. Throughout its history, it has traded significant energy blocks in reserve energy auctions and new energy auctions organized by the federal government, linked to wind complexes in Bahia, such as Alto Sertão I, II and III and projects in Umburanas. In the free market, it has entered into long-term contracts with counterparties such as Light Energia and Cemig, the latter being among the main clients of the trading segment in 2024. Trading allows the company to optimize the dispatch of energy from its assets and manage its contractual portfolio, including decisions to cancel or adjust projects when necessary to mitigate financial and implementation risks.

From a geographical standpoint, Renova Energia’s operations are concentrated in Brazil, with a focus on the Northeast region, especially in the state of Bahia, where its current wind farms and solar projects are located. The Alto Sertão wind complexes, in different phases, and the Caetité Solar Complex reinforce the company’s vocation to leverage the region’s high wind and solar resource potential, characterized by capacity factors that are high compared to international standards. All net operating revenue reported by the company is attributed to customers in Brazil, with no record of revenue from other countries. The choice of assets in areas with good natural resources, access to transmission lines and sector-specific tax incentives is part of its strategy to ensure the economic feasibility of projects.

Renova Energia’s operations are embedded in a specific regulatory framework for the Brazilian power sector, with strong involvement of the National Electric Energy Agency (ANEEL) and the Ministry of Mines and Energy (MME). Renewable generation projects are structured as independent power producers or self-producers, operating under authorizations granted by the granting authority, typically for 35-year terms, renewable at the agency’s discretion. For wind farms and solar plants, the company must demonstrate land availability, wind or irradiation studies, environmental licensing, connection feasibility via a Transmission System Use Agreement, and other technical requirements in order to obtain registration or authorization. Legislation provides for discounts on transmission and distribution system use tariffs for alternative sources, which influences the competitiveness of the energy generated, in addition to incentive schemes such as REIDI and specific state tax programs. Trading in regulated market auctions is subject to technical qualification rules by the Energy Research Company and to price caps defined by the MME.

In the environmental, social and governance field, Renova Energia has built its trajectory in connection with the expansion of renewable sources and the diversification of the Brazilian power matrix. The wind and solar projects, as well as the PCHs that were part of its portfolio in the past, qualify as lower greenhouse gas emission sources compared to fossil-fuel thermal plants, with potential for generating carbon credits under international incentive mechanisms. The company takes out insurance for its assets and civil liabilities, in line with the capital-intensive nature of generation projects, and structures its operations through special purpose entities for each project. Listing on B3’s Level 2 of Corporate Governance entails additional commitments in terms of transparency, shareholder rights and governance practices that are more rigorous than the traditional listing segment, in an environment characterized by long-term contracts, exposure to regulatory risks and the need for discipline in capital allocation to renewable energy infrastructure.