Highlights:

• Net operating revenues reached R$ 3.4 billion in the period up 5.6% (R$ 180 million) from 3Q20 and up 15.1% in the year to date.
• EBITDA was R$ 1.7 billion, up 22.1% (R$ 316 million) year-on-year. The amount in the year to date has been R$ 4.9 billion.
• Net earnings totaled R$ 639 million in the quarter, up 30.4% (R$ 149 million) from 3Q20, and R$ 1.54 billion in the year to date.
• The greater impact of generation companies’ guaranteed energy scaling factor, due to the hydrological crisis, had a negative effect on the quarter’s results, even if mitigated by the Company’s active portfolio management.
• Electric energy generation at the plants that the Company operates was 5,460 MWa in 3Q21, down 1.8% from 3Q20.
• The Company executed the purchase agreement for the Assú Sol Photovoltaic Complex, located in the municipality of Assú, Rio Grande do Norte, with estimated total installed capacity of up to 750 MW. Operation close awaits fulfillment of certain conditions precedent under the agreement.
• On October 18, the Company and FRAM Capital executed a sale agreement for the Company’s entire equity stake in subsidiary Diamante, which holds the assets making up the Jorge Lacerda Thermal Power Complex, for an amount up to R$ 325 million.

ENGIE Brasil Energia (EGIE3) posted R$ 639 million in Net Earnings in the third quarter of 2021, up 30.4% year on year. Accumulated net earnings in the year today have been R$ 1.5 billion. Net operating income was R$ 3.4 billion in 3Q21, up 5.6% from the same period in 2020 and up 15.1% YoY in the first nine months. Consolidated EBITDA was R$ 1.7 billion, up 22.1% from the previous year. The accumulated amount has been R$ 4.9 billion in the year to date.

The period’s positive results are partly due to the 3Q21 recognition of the effects of Law 14.182/21, which enabled the recovery of past energy costs associated with hydrological risk renegotiation of plants where the Company holds a 100% stake, for a total R$ 372 million. “The reversal of these amounts is the fruit of the industry’s joint efforts, providing generation companies with improved regulatory stability,” pointed out Eduardo Sattamini, Chief Executive and Investor Relations Officer of ENGIE Brasil Energia. Amounts will soon be recognized as well for plants holds equity stakes, such as the Itá, Machadinho and Estreito hydroelectric power plants.

ENGIE Brasil Energia also posted a mere 1.8% decrease in electric energy generation compared with 3Q20, despite the most severe hydrological crisis in 91 years. In such a challenging scenario, the production decrease from the Company’s hydro portfolio was 7.5%. On the other hand, dispatching from own thermal power plants was up 11.2%. The Complementary Plants segment posted a 20.1% increase in energy production compared with the same period in 2020, given the full commercial startup of the Campo Largo 2 wind complex.

“Our portfolio diversification strategy and appetite for growth remain the driving forces of our activities, consolidating ENGIE Brasil Energia as a sound and robust investment platform. We are faced with the prospect of even greater market openness, in addition to a challenging hydrology that requires excellent asset management and trading strategy”, noted Chief Executive and Investor Relations Officer Eduardo Sattamini.

The cash position remains comfortable at approximately R$ 4.6 billion, while the Net Debt-to-EBITDA ratio remains close to 2x. The investments forecast for fiscal year 2021 us R$ 3.5 billion, and investments totaled R$ 881 million in 3Q21. With the acquisition of Assú Sol, the expected investment amounts for fiscal years 2022 and 2023 were revised to R$ 1.9 billion and R$ 0.8 billion, respectively.

Energy transmission segment

In the transmission segment, two of the Gralha Azul Transmission Sistem’s lines were energized on August 21, 2021, launching operations for the project, which reached 95% overall completion in 3Q21, thereby enabling collection of 100% of the Annual Allowed Revenue (Receita Anual Permitida – RAP) by the end of the year.

As for the Novo Estado Project, transmission lines implementation reached 89% completion by the end of 3Q21 and although full implementation of the project has been moved up to the end of the first half of 2022, energization of the first systems making up the project remains on schedule for the final quarter of 2021, which will enable collecting approximately 55% pf the project’s Annual Allowed Revenue (Receita Anual Permitida – RAP). 

Evolution on wind power generation

On September 2, the Campo Largo 2 Wind Complex reached 100% commercial operations for its 361.2 MW installed capacity. Implementation of the Santo Agostinho Wind Complex has begun, including access construction, excavations for wind turbine foundations, and establishment of the Medium-Voltage and Collector Substation grids.

Disposal of coal-burning assets and substitution of thermal for renewable capacity

In line with the ENGIE Group’s global portfolio decarbonization strategy meant to target investments at renewable energy and infrastructure projects, ENGIE Brasil Energia gained ground on negotiations for the disposal of its coal burning assets in Brazil. As a subsequent event, it closed on October 18 the sale of the Jorge Lacerda Thermal Power Complex to FRAM Capital. In addition, the Company continues to review proposals for the Pampa Sul Thermal Power Plant.

Looking forward, the Company also executed a purchase agreement in September for the Assú Sol Photovoltaic Complex, which lies in the municipality of Assú (RN), adding 750 MW to the pipeline of projects in advanced development stages, which now totals 2.2 GW and confirms the commitment to act for accelerating the transition of the Brazilian electric energy matrix.