CPFL RENOVÁVEIS

IN THE MARKET

National leader in energy generation from renewable sources, in CPFL Renováveis we dedicate ourselves to the development, construction and operation of assets of alternative sources of power generation, such as wind complexes, SHPPs, biomass-powered plants and solar plants.

Based on development prospects of Brazil in the medium and long term, our business strategy is based on the growing diversification of the energy matrix in the country

2016 HIGHLIGHTS

In 2016, our main operational and financial indicators followed the growth strategy that has been taking place since the founding of CPFL Renováveis, in 2011. We maintained our leadership in Brazil and delivered projects on time within budget.

Additionally, in 2016:

  • We reached net revenue of R$ 1.6 billion, 9.8% higher that 2015.
  • Our EBITDA was R$ 1.0 billion.
  • We closed the year with 91 assets and 717 generating units in eight Brazilian states.
  • We achieved 2 GW of installed capacity in operation in Brazil, thanks to the delivery of the Mata Velha SHPP, in Minas Gerais, and Campo dos Ventos and São Benedito wind complexes, in Rio Grande do Norte - projects that together amounted to 255.0 MW.
  • In partnership with the National Bank for Economic and Social Development (BNDES), we closed the first financing for renewable resources projects for the free market in Brazil, in the project finance category.

In the social-environmental field, in 2016:

  • The company’s water use dropped 75% compared to 2015.
  • Total Social and Environmental Management expenses amounted R$ 24 million.
  • Greenhouse gas emissions amounted to 13.25 kgCO2/MWh.
  • 76 Environmental Licenses and Permits were obtained.

Our private social investment program, the Raízes Program:

◦ Served 757 people in the year and more than 12 thousand people since its creation in 2013, by means of media programs implemented in the communities surrounding our projects; and

◦ In its second cycle, started in January 2016, our program covered 14 municipalities in Rio Grande do Norte, Ceará, Minas Gerais, Rio Grande do Sul and benefited 3,232 people.

Despite the difficulties experienced by the market in the last year, we have achieved our corporate goals.

REPRESENTATION OF THE OPERATION OF OUR ASSETS

Strategy and Objectives

Based on Brazil’s medium and long-term development prospects, our business strategy is based on the growing diversification of the Brazilian energy matrix with a focus on renewable sources. Currently, renewable sources account for more than 18% of the country’s energy matrix and according to the Ten-Year Energy Expansion Plan (PDE) these sources are expected to reach 27% by 2024. This means a 26.2 GW increase, which can only occur with significant investments, which tend to grow in this increasingly mature sector. We closely monitor this scenario and are prepared to pursue opportunities with solid projects and capital structure.

To that effect, we have a Strategic Planning associated to the guidelines that follow:

  • Greenfield: organic growth through project sales at industry auctions. Today we own approximately 3 GW in projects in our development pipeline.
  • Mergers and Acquisitions: we closely monitor market opportunities in the electric energy sector and today we have more than 4 GW of opportunities for analysis.
  • Optimization of Operation: continuous investment in people and technologies to ensure the optimization of projects in our current portfolio.

Our three growth pillars are supported by a team with great technical and management skills achieved through the day-to-day operation of the business, and also through constant training and updating courses.

For each possibility of new business, a consistent assessment that includes the specific analysis of the potential social and environmental impacts of the projects is made, ensuring that sustainability principles are guaranteed in all phases. That way, the balance between the economic, social and environmental aspects works as an important factor, so that we can ensure the continuity of our activities.