Brazil
Q&A

Bright horizons for RZK Energia's renewable portfolio

Bnamericas
Bright horizons for RZK Energia's renewable portfolio

RZK Energia and FIT Energia have entered into a partnership to launch 13 new distributed generation (DG) plants with a total installed capacity of 40MW by 2025. 

The 22-year energy allocation contract between the companies will include PV solar installations in several states, such as São Paulo, Rio de Janeiro, Espírito Santo, Paraná, Ceará, Piauí, Mato Grosso and the federal district of Brasília, in addition to a biogas plant.

RZK Energia, which operates in renewable generation, commercialization and solutions in the energy market, will be responsible for installing and operating the assets, while FIT, Santander bank's retail arm in this segment, will manage the energy.

The companies estimate that the operation will generate more than 800mn reais (US$154mn) by 2045 through shared DG, serving around 20,000 homes or small businesses.

BNamericas speaks to RZK's CEO and managing partner, Luiz Serrano, about the business scenario and the company's plans, which include investments of more than 550mn reais by 2024.  

BNamericas: The new projects planned by the partnership with FIT Energia fall into which of these categories: GD1, GD2 or GD3? Will investment in DG projects remain attractive even with the end of the exemption from fees to use the distribution system?

Serrano: They fall into GD1, and in GD1 the regulatory and legal conditions laid down in law 14,300 are maintained, which guarantee 100% compensation of the TE [energy rate] and TUSD [distribution system use rate] until 2045. Projects in GD2, GD3 and so on have different viability conditions, which depend on sunshine conditions, customers' energy costs, among other factors. 

Editor's note: According to the DG regulatory framework, GD2 and GD3 projects are conditioned to pay for the use of the grid progressively over the years, starting in 2023, with the latter group, which comprises larger plants, being subject to higher charges. 

BNamericas: Are the financing conditions for DG plants improving? What are the prospects for the coming years?

Serrano: Currently there are many more alternatives for financing projects than when the market really began in Brazil. 

With the growth in supply, there’ve been improvements in the conditions for players who had already been participating and raising funds in the market, depending on the credit characteristics, financial capacity, track record of the borrower, etc. 

Costs generally take into account the factors I've already mentioned, but also the appetite and risk-return ratio desired by creditors. 

Not to mention market conditions. For example, although the Selic [Brazil’s basic interest rate] is currently lower than it was last year, interest on financing has only fallen slightly, as real interest rates have remained the same. On the other hand, risk spreads have fallen significantly over the period, driven by factors such as demand pressure. 

BNamericas: What's the current outlook for RZK's project portfolio? What's the total capacity in operation and under development?

Serrano: Our aim for 2024 is to double our installed capacity, adding another 90MWp to our service in the coming months, with 10.7MWp in solar energy to be delivered in the very short term. 

To do this, we’ll continue to act strategically in the capital markets, seeking quality funding in line with our investments. 

We project an investment of more than 550mn reais in 2024, which will be distributed in our expansion of generation, infrastructure and improvement of management and support technologies.

For strategic and contractual reasons, we don't reveal which clients and projects are being completed or are about to start operating. However, we can mention the Enseada I and Enseada II photovoltaic plants in Nova Londrina, Paraná. Located on a 120,000m2 site, this RZK Energia project was inaugurated this year and has 5.5MWp of installed capacity for clean generation, avoiding the equivalent of 6,400t/y of CO2 emissions. 

Taking into account the plants in operation and those under construction, the capacity is 220MW. We currently serve around 15,000 consumer units in DG and 200 in the free power market.

In the last fiscal year alone, RZK Energia added 11 new plants to its portfolio, bringing installed capacity to 125MWp and 24 projects owned and managed based on renewable sources, including photovoltaic (19) and biogas (5) facilities. 

These plants mainly serve large companies in their most diverse operations, such as TIM, Vivo, Claro, Oi, Raia Drogasil, Santander, FIT and Smartfit, among other clients.

In addition, in order to create more opportunities to reduce costs and facilitate energy management in an accessible and transparent way, we've developed and fostered partnerships in technology, which strengthens our operations on other fronts, such as specialized consultancy in energy efficiency, training autonomous agents and providing digital tools for purchasing, monitoring and managing energy consumption for our clients. 

In technology and service-based companies, more than 250,000 invoices are managed every month.

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