The Canada Pension Plan Investment Board has entered into a 50-50 joint venture with Votorantim Energia, to invest in Brazilian renewable energy projects. Photo courtesy of ABEEólica.

Investment in Brazilian renewable energy at a time when country is suffering its deepest depression

The Canada Pension Plan Investment Board (CPPIB) has entered into a 50-50 joint venture with one of Brazil’s largest conglomerates to form a major Brazilian renewable energy company.

Votorantim Energia, which is controlled by privately-held Votorantim SA,  along with the CPPIB plan to build their company mostly through acquisitions.

According to Reuters, Votorantim Energia Chief Executive Fabio Zanfelice says the JV is looking at subsidiaries that Brazil’s state-run power company Centrais Elétricas Brasileiras SA is looking to sell.

“We have high ambition, and if you look at the size of the partners, we want to build a company of presence, of relevance in this market,” Zanfelice told Reuters.

Currently, the joint venture manages two large wind parks located in northeastern Brazil.  The wind parks have a generation capacity of 565 megawatts.

According to Reuters, the JV is hoping to buy up local companies that are struggling through Brazil’s deepest depression.

“Both partners have the desire and the capital to grow. We are not setting targets, we are looking for good deals that deliver good returns for shareholders,” said Zanfelice.

Until recently, the Votorantim conglomerate focussed on providing energy to supply its subsidiaries, including Companhia Brasileira de Aluminio, the largest producer of aluminum in Brazil.

Votorantim has about 2.2 gigawatts of installed capacity.

The move into the broader Brazilian energy market, where the company will build larger holdings of power plants and compete for long-term contracts in the regulated market, is new.

Zanfelice told Reuters that the South American country’s political and financial instability was not a deterrent to the CPPIB.  He says the contracts in Brazil’s power sector are solid, with fixed returns.

He adds that both wind parks under the company’s management have 20-year supply contracts.

Reuters reports the JV sees future Brazilian renewable energy to include hybrid parks.  In the same location, there will be wind, solar and, in the near future, storage capacity via batteries.

“Adding solar panels in the wind parks would complement production, and the batteries would stabilize the generation,” said Zanfelice.