André Pepitone da Nóbrega Director Brazilian Regulatory Framework: Supporting the Growth of Renewable Energy Installed Capacity in a Sustainable Development Model May 26, 2015 Istanbul/Turkey

2 Brasil Summary million km 2 (83% of Europe) Territorial area million km 2 (83% of Europe) 202 million inhabitants (27% of Europe) Total Population – million inhabitants (27% of Europe) /year Population annual growth /year Monthly new residential consumers U$1.715 billion Overall GDP – 2014 U$1.715 billion Installed capacity MW MW (Feb 2014) Peak load MW (Feb 2014) 2.664,15 kWh Electricity Consumption per Capita 2.664,15 kWh Annual Rate 4% Average Energy Consumption Growth Annual Rate 4%

3 National Interconnected System: Installed capacity by generation source More than 75% of the electricity produced comes from renewable Source: ANEEL –31/12/2014 Facilities in Operation TypeQuantity Authorized Power (kW) % CGH – Very small Hydro ,23 EOL - Wind ,65 PCH – Small Hydro ,58 SOL – Solar ,01 UHE – Hydro ,8 UTE – Biomass + Fossil ,25 UTN - Nuclear ,49 Total ,00

4 Transmission System: National Interconnected System Source: ONS / MME Km Mean growth ( ) km/year 2015/2018: 240 Transmission lines contracted km of extension 2015/2018: 240 Transmission lines contracted km of extension

5 Brazilian Transmission Grid plotted on Europe Map

Amazonas River transmission line crossing m  Lote A: LT Tucuruí – Xingu – Jurupari km 9/7/2013  Lote B: LT Oriximiná – Jurupari – Macapá km 30/9/2013  Lote C: LT Oriximiná – Silves- Lechuga km 9/7/2013

7 Amazonas River crossing - Transmission tower height comparison 295 m 70 m 50 m 150 m

Line workers and transmission towers view 8

9 HydroFossilWindTotal Generation 52,1943, ,128 Proportion 92,99%6,83%0,18%100,00% RENEWABLE Generation 94,38% Fonte: CCEE HydroFossilWindTotal Generation 50,2737, ,570 Proportion 85,84%13,50%0,66%100,00% RENEWABLE Generation 87,35% HydroFossilWindTotal Generation 47,60812, ,250 Proportion 79,02%20,18%0,80%100,00% RENEWABLE Generation 81,98% April/ Rainy season Electricity supply: monthly generation during the rainy season (in mean MW ) April/ Rainy season April/ Rainy season

10 Energy sources for electricity supply 10 % World ,305 TWh Fonte: IEA e MME/ BEN TWh (2,6% of the World) Brazil % WORLD (2013) Renewable = 21,2% Fossil fuels = 68,1% Coal Natural Gas Hydro NuclearPetroleum Other Sugar-cane Coal Natural Gas Hydro NuclearPetroleum Other Sugar-cane BRAZIL (2013) Renewable = 78,4% Fossil fuels = 19,2%

11 Geographical distribution of hydraulic energy availability In operation or construction To be explored So far, 1/3 has been used Operation/Construction/ Concession 30 % 38 %32 % Not in use: studied Not in use: estimated

Hydroelectricity expansion with big plants in the North region 12  Madeira River basin (7.310 MW) :  Jirau (3.750 MW) and  Santo Antonio (3.560 MW)  Xingu River basin ( MW) :  Belo Monte ( MW) - supply 2016/2017  Tapajos River basin (~ MW) :  Upper Tapajos : MW total, supply 2016/2018  Teles Pires (5 plants, ~3.600 MW) and  Juruena (13 plants, ~8.600 MW)  Middle Tapajos: 7 plants (Sao Luiz complex), MW total – supply 2017/2020 Up to , there is security for 150,000 MW (due to energetic and environmental sceneries) supply 2014/2015

Hydroelectricity expansion in the North region: land use 13

Solar Generation in Reservoirs: Sobradinho and Balbina Pilot Projects 14

Regulated Auctions 15 Since 2005 the Brazilian Government has been conducting auctions to contract electricity from power plants to be constructed (green field projects) The energy demand allocated to each source is set according to the government long term plan Long-term contracts (15 to 30 years) and Project Finance – Resource Adequacy Problem Lowest possible price of electricity for the DISCO Consumers Avoid collusion and market power abuse

Total Investment in Generation fonts 2005 ~ May/ US$ 89.6 billion 72% renewable

Fonte: EPE Greenhouse Gas (GHG) emissions, MtCO2eq, Sources: AIE, EPE China and USA are responsible for 46,4% of emissions from the electric sector Related to electric energy production, Brazil holds the 41 position among emitting countries Rest of the world MtCO 2 eq World Total MtCO 2 eq Electric energy production and consumption

Greenhouse Gas (GHG) Emissions, Source: AIE, EPE Electric Energy Other Sources Other Emissions In a world basis, the electric sector contributes with 39% of the emissions from the energy sector. In Brazil, that proportion was 9% (12% in 2013)

 Thermic Program (base load operation) Nuclear (public acceptance, wastes, security and other) Natural Gas (other uses, in industry, supply and prices) Mineral Coal (efficient clean burning, greenhouse gases emissions, and carbon capture technology evolution)  Renewable sources complementation Wind Biomass (sugar-cane) Solar Photovoltaic and eventually Solar Thermal Urban garbage  Energy efficiency and technological advances (After an economically and environmental viable use of the hydroelectric potential) Projections for installed capacity expansion between 2025 and

20 * 1 US$ = R$ 2,8649 R&D Programme: Available Resources % NOI Net Operating Income NOI= US$ 58,43b 1% NOI= US$ 584,3Mi Noi(D) = US$ 38,34b => ( 65,6% NOI) EE R&D 1% NOI G 1% NOI T 0,5% NOI D 0,5% NOI D TOTAL R&D US$ 392,5Mi TOTAL EE US$ 191,9Mi 0.20% MME 0.40% FNDCT 0.40% ANEEL US$ 157Mi US$ 78,5Mi ANEEL US$ 191,9Mi

21 Thank You! SGAN – Quadra 603 – Módulos “I” e “J” Zip Code: /Brasília – DF/Brazil Tel. +55 (61)