2014 ANNUAL SUSTAINABILITY REPORT – RENOVA ENERGIA – 2014
www.renovaenergia.com.br
ANNUAL SUSTAINABILITY REPORT
• man • technology • wind power – clean energy
• natural resource • life • clean energy
The Renova Seal of Sustainability
• man • solar – clean energy
• movement • wind power
• waste • preservation • fauna
• rebirth • flora • preservation
The cover of this report shows the Seal of Sustainability – devised at Renova’s ‘Engagement in Sustainability’ workshop held in 2014 for all its employees
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CONTENTS
08.
Transparency and Open Dialog
18.
Profile of Renova
TRANSPARENCY AND OPEN DIALOG
04.
From the CEO and the Chief Sustainability Officer
44.
2014 – Context and Achievements
52.
Economic Performance
74.
Environmental Performance
110.
Social Performance
138.
Outlook – and Challenges
143.
Appendices
RENOVA 2014
3
FOR RENOVA, A YEAR OF OPERATIONAL EXCELLENCE GRI G4-1; G4-2
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Since its foundation we, Renova, have been a flexible, agile, dynamic and – above all – achieving company. These characteristics have positioned us as leader in Brazil’s market for electricity generation from renewable sources, and made us the player with the most strategic role and position in the sector. I am very proud to have been part of this story, and to have contributed to the history of Renova and also to the history of Brazil’s renewable-sources power sector. For us, 2014 was a year of many challenges – each one becoming an achievement. They include: our participation in auctions, the start of commercial operation of the Alto Sertão I wind farm complex and most of the Alto Sertão II wind farms – and the daily challenges in management and running of a company that has become the benchmark in Brazil’s renewables sector. So: if I had to sum up what the year 2014 was for us, I would say: it was both challenging and – (pardon the pun!) – electrifying! Each auction, each sale in the Free Market, each new transaction completed, was a moment to be celebrated. There was no space for mistakes or indecision. We knew what we were doing. I saw, and I was part of, a team that had that light in its eyes – and a tremendous force and dedication, that never wavered even at the most difficult and tense moments. Looking back now for a moment, I can see what we did: we wrote one more major chapter in this hugely successful history of Renova, with its quality of high determination and enthusiasm, its masterly touch. At all times we followed and obeyed our vision and our values, as we moved forward toward our goal of making Renova the best and most profitable company in Brazil’s renewable-source power sector. With this success, we have now entered a new
phase: operation of wind farms is now part of our daily routine. In this new phase, in which we will take forward an increasing multiplicity of projects, processes become essential, to enable us to execute, with excellence, each one of the objectives that we have agreed with stockholders, employees and the market. We have to meet the expectations and goals of a group of stockholders that believe in and invest in Renova. Among them, I highlight Cemig GT (Cemig Generation and Transmission), of the Cemig Group – one of Brazil’s largest electricity conglomerates. Cemig GT completed its entry into Renova’s controlling stockholder block in 2014, with a contribution of R$1.5 billion to the Company’s capital. This transaction positioned Renova as Cemig’s vehicle for its development of renewable-source electricity. It was also a year that demanded an unprecedented versatility from our team. We had to obtain operational licenses, put machines into operation, monitor their day-to-day operation, and the relationship with local communities, while at the same time looking for new business opportunities, partnerships and connections in the sector. As if that were not enough, we were also planting the flag definitively in the new field of solar energy – and also, no less, expanding our activity to other regions of Brazil, while never ceasing to look for good business opportunities in the international market. We ceased to be a one-project company; and we became a multiple-transaction and multiple-business company. This effort involved the whole of the Renova team, both from the technical point of view, and also in terms of revision of internal structures, with the creation of new Chief Officers’ Departments, at all times focusing on evolution and improvement of our management. Wind power has clearly established its potential as a source of energy supply – and solar power is now showing that it will follow a very similar path. In 2014
MATHIAS BECKER CEO
In 2014 we also completed an extremely important partnership with SunEdison, through a joint venture to develop solar energy in Brazil – in a relationship which, from this first agreement, shows all the signs of rich results for both sides in the near future. We have also begun construction of the first hybrid energy farm – wind and solar – in Bahia. In wind energy, we have continued our strategy of always selling at high levels. We aim not to win only one race, but the championship. This is why we have kept our participation competitive. The results have been impressive: we have placed 308 average MW in Brazil’s Free Market, in a project in partnership with Cemig; and in the regulated market we placed 20.9MW average in the 2014 LER auction, to be generated by three wind farms in Bahia. We have also obtained the Prior License for a new project in Rio Grande do Norte, a region with enormous wind potential in Brazil. In 2014, we have been for the first time a stockholder actively participating in the management of Brasil PCH. We have grown numerically, in sales revenue, and also in the infrastructure of our offices in Salvador and Caetité, in Bahia.
1. Renova owns 50% of the output (53.5MW) related to the joint venture.
We believe we have reached this level of growth because we have grounded our business strategy on sustainability. For me, this is Renova’s differential. In 2015 we go forward with close attention to the opportunities, aware that it will be one more challenging year. Hence it is essential for us to be ever better: carrying more responsibility, fully sustainable, efficient, and – above all – always with that light of excitement, determination and confidence in our eyes!
WE ARE MOVING FORWARD TOWARD OUR GOAL OF MAKING RENOVA THE BEST AND MOST PROFITABLE COMPANY IN BRAZIL’S RENEWABLESOURCE POWER SECTOR
05 RENOVA 2014
Brazil held its first electric power project development auction exclusively for solar generation. It was competitive – with the cost per MWh around R$215.00 – one of the world’s most competitive costs in auctions. It was one of the most highly-disputed auctions in Brazil’s history. While materializing a new avenue of growth for Renova, the auction and the process it brings into existence begin the establishment of a competitive and efficient value chain for this source of power. We sold a total of 106.9 MW1, to be generated in four solar farms in Bahia, where we already operate our wind farms.
HORIZONS OF OPPORTUNITIES
Looking back on 2014 and what it meant for us, we see a year that was intense, challenging and gratifying for everyone in the team. We made great achievements, which gave us pride, but also indicate a great outlook ahead.
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There is no doubt that one of the most significant results in the year was Brazil’s first auction placing contracts for solar-sourced electricity (the 2014 LER auction). This is an important milestone for the sector, and also for us: we sold 106.9 MWp, opening new business possibilities with the use of solar energy in major projects. Another key achievement was our development of Brazil’s first solar-plus-wind power hybrid project. In wind power, we began a new phase of our business with the start of operation of the Alto Sertão I complex – which placed its production in the 2009 Reserve Energy Auction (LER). This complex comprises 14 wind farms, with total installed capacity of 294.4MW. Also in 2014, the first wind farms of Alto Sertão II started commercial operation – part of the total installed capacity of 386.1MW contracted at the 2010 LER auction and the 2011 A–3 New-build (LEN) auction. We also made a start on construction of Phase A of the Alto Sertão III complex, comprising four wind farms (named Mercado Livre II, LER 2013, Light I and LEN 2012 A–5), with total installed capacity of 411.1MW. These are historic achievements for Renova: we are now established as a player able to operate throughout the whole value chain, from prospecting to planning, via development, to operation.
GRI G4-1; G4-2
These advances gain in importance at a moment when supply of electricity is a priority subject in Brazil. They are at the same time examples of our evolution and efficiency in engineering, our continuing reduction of costs, and our practice of social and environmental responsibility – in turn these are the fruit of strategic planning that incorporates the aim of contributing to sustainable territorial development of the regions where we operate. In line with this objective, we work to structure policies and procedures that strengthen our link with our strategic publics, through a participative listening process, which generates proximity, commitment and trust. These policies and procedures include action to mitigate environmental impact, from the phase of conception and licensing, through voluntary social-environmental responsibility projects, to workplace health and safety initiatives, and communication – reinforcing our link to the territories we are part of. One of the pillars of Renova’s contribution in this area is the Catavento* program, a private social investment initiative involving local partners, public authorities, NGOs, associations, companies and other participants from civil society. It was built as a group of social-environmental projects to promote opportunities for development of the communities and municipalities located in the areas affected by Renova’s enterprises. As part of the program, in October 2014 Renova began works on the Bahia Alto Sertão Museum (MASB), scheduled for completion in 2015: a mu-
*Colloquially, Catavento most frequently refers to a child’s hand-held toy windmill that rotates in the breeze – a light reference to a bucolic idea – while also meaning a practical wind direction and speed indicator such as might be atop a house, etc.
NEY MARON Chief Environment and Sustainability Officer
As well as MASB, in 2014 the Catavento program proceeded with projects for strengthening of associations, continuing action on the Anísio Teixeira Music Conservatory, and on implementation of the Countryside Women’s Movement (MMC) Cerrado Fruit Processing Unit. Also a new R$10 million social subcredit from the Brazilian Development Bank (BNDES) was approved for projects to be put into effect in 2015–16. Environmental initiatives include Renova’s Land of Knowledge (Território do Saber) program, which was created to comply with legal rules and regulations, but does not limit itself to them – creating links and new potentials for the community, through environmental, property and cultural education. In line with this premise, Renova launched the book Plantas Medicinais Saberes Tradicionais (Medicinal Plants, Traditional Knowledge) – which presents more than 100 plant species native to Bahia, and aims to bring together, value and preserve costumes and traditions of the people who live in the Alto Sertão region of the state. Throughout all our actions, and the evolution of our structure, we have always kept our focus on people. Subjects such as occupational safety and health are essential throughout the value chain. In 2014 we held our first Internal Work Accidents
Prevention Week (SIPAT), and structured our Quality of Life and Safety Week – both events involve all employees. These initiatives re-emphasize the importance of this subject for Renova – consolidating the culture of safety, based on respect for people and the environment. To deal with expanding challenges and increase our efficiency, we have strengthened the structures of our Chief Officers’ Departments – these are now: Environment and Sustainability; Finance; Business Development; Investor Relations; Engineering and Operations; and Legal, Regulation and Institutional Relations. The year of 2014 shows that we have so far ‘walked the walk’ – following the path of which we are now very proud. Our target is to continue advancing in operational efficiency, management of people, and in the dialog with our strategic publics. We are a company of initiative, an entrepreneurial company and a company with a passion for what we do. Our desire is to maintain a strong presence in the market, with a dynamic, sustainable and effective business model. This is how we intend to continue to offer development in a country that is rich in renewable energy, and has vast horizons of opportunities.
07 RENOVA 2014
seum of territorial scope, in a large historic house in the municipality of Caetité, and a joint project of Renova in partnership with the Municipal Prefecture and the State University of Bahia (UNEB).
WE BELIEVE IN BROAD, MULTIDISCIPLINARY AND CROSSCONNECTING COMMUNICATION WITH ALL OUR STAKEHOLDER PUBLICS
TRANSPARENCY AND OPEN DIALOG
ABOUT THIS REPORT GRI G4-28; G4-29; G4-30; G4-31; G4-32; G4-33
This is the fourth edition of Renova’s annual Sustainability Report, giving figures and reports on economic, social and environmental aspects in the year of 2014. The process of reporting, collection of information, calculation, writing and production is coordinated by Renova’s Sustainability Management Unit, together with the management units for Investor Relations and Communication – with contributions and involvement from all the Company’s other areas. The material is produced in annual cycles – the first cycle reported on 2011 – and involves all the company’s units – in São Paulo, Salvador and Caetité.
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This is Renova’s second annual report with external verification. Although there is no legal obligation, the Executive Board decided to submit the data to independent verification by Bureau Veritas Brasil (BVQi) – as a means of transparent proof to the market, and also to improve its own process of performance disclosure. Also, the process of analyzing and reporting data annually gives the opportunity to improve management and strengthen the principle of reliability of the Report. Through this material, Renova also formalizes processes and guidelines, evaluates methodologies and results, and involves people in discussing, analyzing and reviewing subjects that are important for its strategy. In a process of ever more closely engaging stakeholders, this year (as for the first time last year) Renova publishes, together with the Sustainability Report, three summary versions for different stakeholder publics: employees, communities and investors.
The report obeys criteria for verification in accordance with standards issued by international bodies – including: the ISAE3000 (International Standard on Assurance Engagements); the G4 Sustainability Reporting Guidelines of the GRI (Global Reporting Initiative) – adopting the ‘core’ reporting option; and the AA1000 Assurance Standard. ISAE3000 and AA1000 AS are rules that are widely used for verification of non-financial information, and the GRI is a very widely used standard to help companies prepare their sustainability report. The GRI sets ten principles to guide preparation of reports, which are then the bases of the Assurance – covering content and quality of the Report – which follows the SRA (Sustainability Report Assurance) Protocol of BVQi.
We welcome any questions or requests for more information about this Report, by email at renova@renovaenergia. com.br. Renova has two other channels of communication: Fale Conosco (‘Talk to Us’), on the website (www. renovaenergia.com.br); and the company’s Facebook page (www. facebook.com/RenovaEnergiaOficial). On Facebook visitors can leave messages, and depending on their need for reply the question or comment is sent to the relevant area of the company.
Increasingly, companies need to deal with a complex diversity of publics with whom they have relationships. Whether because of their diversity, or because of the type of demand or requirement, these publics can directly or indirectly affect the company’s strategic and operational interests. For Renova, it is fundamental as part of management to perceive and engage with this diversity of views, and also to help identify risks and opportunities involved in developing the business from the point of view of sustainability guidelines. Having this objective in mind, the Company seeks to operate with a wide, multi-disciplinary and transversal vision. With its internal public, it creates an environment that encourages individual development, and teamwork. In the communities around its operations, it holds a dialog, in a process of participative listening. For stockholders, it offers profitability in projects and business, while at the same time remaining attentive to, and in compliance with, all the changes in legislation and procedures that involve the rules for its operation in Brazil. Being certain that its success is directly related to effective participation of its interested publics in its day-to-day activity, Renova maintains a proactive stance in the conduct of its relationships and engagement. An example is the updating of its Mapping of Stakeholders of the Alto Sertão region, carried out in 2014, which involved a new identification and analysis of all the interested publics that are involved with, relate to or take part in the activities of the Alto Sertão III project, and then decision on the relationship strategies to be adopted. This process includes not only the present interest-publics, but also analysis of the local stakeholders that might operate as influencing factors in the future.
Further to this, Renova maintains its actions of private social investment, through the Catavento program, and its Sponsorship and Donations Policy (PPD). The Catavento program continues to be our benchmark in the process of engagement with local stakeholders, involving the communities around our projects, organized civil society, and local municipal authorities in execution of partnerships related to development of the territory. Acting with transparency in information, and aiming always for continuous dialog with its interest publics, in 2014 Renova continued to engage with civil society organizations, NGOs, public authorities, environmental bodies, shareholders, investors, financiers, suppliers, communities around our projects, site lessors, employees, and sector specialists.
RENOVA’S SUCCESS IS DIRECTLY RELATED TO THE PARTICIPATION OF ITS STAKEHOLDER PUBLICS IN THE COMPANY’S DAY-TODAY ACTIVITY
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GRI G4-18; G4-19; G4-20; G4-21; G4-24; G4-25; G4-26; G4-27
TRANSPARENCY AND OPEN DIALOG
STAKEHOLDER ENGAGEMENT; CONTINUOUS MATERIALITY DETERMINATION
We can set out a description of Renova’s principal stakeholders as follows:
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EMPLOYEES
SECTOR SPECIALISTS
The ‘internal public’ is of course strategic for Renova, since the people who work for the Company are those who make its entire mechanism function. Taking this further, Renova considers all its employees to be public representatives, multiplying the Company’s image, all over the country. Renova attaches significant value to each person who is a part of the team, seeking to offer a working environment that promotes cordiality and teamwork, as well as a fair salary policy, and individual development.
Renova interacts with entities representing the Brazilian power industry, to contribute to debate on important subjects, such as regulatory and environmental questions. Through meetings, workgroups, technical industry chambers and assemblies, Renova has participated in associations including the following: the Electricity Sector Environment Forum (Fórum de Meio Ambiente do Setor Elétrico – FMASE); the Brazilian Wind Energy Association (Associação Brasileira de Energia Eólica – Abeeólica); the Brazilian Clean Energy Generation Association (Associação Brasileira de Geração de Energia Limpa – Abragel); the Brazilian Association of Independent Power Producers (Associação Brasileira dos Produtores Independentes de Energia Elétrica – Apine); the Brazilian Association of Electricity Traders (Associação Brasileira dos Comercializadores de Energia – Abraceel); and the Industry Power Co-generation Association (Associação da Indústria de Cogeração de Energia – Cogen). In all these contacts, Renova seeks consensus with its peers in the debate on subjects that are of general interest to the industry.
In line with this concept, since 2013 we have promoted a quarterly event called Energizar – a conversation between representatives of the CEO’s office and employees that aims to publicize, internally, any changes in the Company’s targets and objectives, and identify opportunities in each area. It is organized by Strategic Planning Communication, and the CEO’s office. It is now an important tool for the development of policies, strategies, communication and the Company’s relationships, based on the contributions collected from the participating internal public. Further to this, Renova invests in continuous improvement of its tools for communication with its ‘internal public’ – which include the Intranet, the corporate TV channel, the monthly journal Renova+News, and continuing integration events.
In 2014 Renova became a member of the Brazilian Photovoltaic Solar Energy Association (Associação Brasileira de Energia Solar Fotovoltaica – AbSolar), which centers on the promotion and evolution of this energy market in Brazil.
INVESTORS AND STOCKHOLDERS Being a listed company, Renova has an Investor Relations team, which operates intensively aiming for continuous participatory interaction with its public of investors. It issues quarterly Media Releases presenting results, updates on the Company’s operations and strategies, and Material Announcements and Market Notices as necessary. It is always receptive to contact from stockholders via email or phone.
One of the subjects most frequently raised by investors in 2014 was Renova’s growth plans – on a range of subjects including financing, implementation of new products, and the change in the Company’s controlling stockholder block with the entry of Cemig GT.
PUBLIC AUTHORITIES AND ENVIRONMENTAL AGENCIES Renova’s relationship with public institutions is part of the process of implementation and operation of its projects – from the processes of licensing through to continuous monitoring and compliance in relation to the regulatory environment. The federal agencies are important because they request us and the industry for technical input to help in preparation of rules, through their committee-structured governing bodies; and also because of their responsibility for regulation of the market and setting of public policies. Renova is in continuous contact with: the Brazilian electricity regulator, Aneel (National Electricity Agency – Agência Nacional de Energia Elétrica); the Mining and Energy Ministry (Ministério de Minas e Energia); the national Energy Research Company, EPE (Empresa de Pesquisa Energética); the National Electricity System Operator (ONS), the Wholesale Electricity Trading Chamber (CCEE); the Regional Aerospace Command (Comar), and the National Environmental Council (Conama).
TRANSPARENCY AND OPEN DIALOG
ONE OF THE SUBJECTS MOST RAISED BY INVESTORS IN 2014 WAS RENOVA’S GROWTH
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IN 2014 RENOVA BECAME A MEMBER OF THE BRAZILIAN PHOTOVOLTAIC ENERGY ASSOCIATION (ABSOLAR)
THE ‘INTERNAL PUBLIC’ IS STRATEGIC FOR RENOVA, SINCE THE PEOPLE WHO WORK IN THE COMPANY ARE THOSE WHO MAKE ITS WHOLE MECHANISM WORK
RENOVA 2014
Contact with investors includes a range of relationship events aiming to maintain a channel of dialog with this public – including participation in conferences and events, and organization of non-deal roadshows in Brazil and the rest of the world. With banks, Renova is always in contact with analysts covering the company through meetings, conference calls and emails. Finally, in its relationship with the regulatory bodies, RI is in continuous communication with the two bodies regulating listed companies and the capital market: the Brazilian Securities Commission (Comissão de Valores Mobiliários – CVM) and the São Paulo Stock Exchange (Bolsa de Valores de São Paulo – BM&FBOVESPA).
At state level, Renova maintains communication with the licensing bodies of individual States in which it operates, for example requesting technical explanations in relation to procedures for licensing and other environmental authorizations. These principally involve interaction with: in the State of Bahia, the Environment and Water Resources Institute (Inema) and the State Environment Council; in the State of Rio Grande do Norte, the Sustainable Development and Environmental Institute (Idema); and in the State of Paraíba, the Environment Administration Authority (Sudema). For its Small Hydro Plants (SHPs), Renova is an elected member of the Committee for the Peruípe, Itanhém e Jucuruçu River Basins (CBH PIJ), in the Extreme South of the State of Bahia, representing the segment ‘users of water resources’.
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The prefectures and legislative assemblies of the cities where Renova’s enterprises are located are important institutions with which it maintains an active relationship. Aspects such as execution of environmental and social programs, and compliance with the specific legislation of municipalities, are priority questions in the dialog which we maintain with all local public bodies. One of the landmarks of the year was publication of Conama Resolution 462, of July 24, 2014, which set out the procedures for environmental licensing of onshore wind power generation facilities. Renova participated in the development of this legislation. A landmark at the federal level was the partnership with the Oswaldo Cruz Foundation (Fiocruz), a body linked to the Brazilian Health Ministry. With the start of commercial operation of the wind farms contracted under the 2009 and 2010 ‘Reserve Energy’ (LER) auctions, Renova established a closer relationship with the ONS (National System Operator) and the CCEE (Wholesale Electricity Market) – and also developed closer relationships with the Mining and Energy Ministry due to discussions on the
IN 2014: (1) RENOVA IMPROVED ITS RELATIONSHIPS WITH SUPPLIERS –
– (2) AND STRUCTURED A STANDARD POLICY FOR RELATIONSHIP WITH COMMUNITIES
regulatory question of review of the Physical Offtake Guarantees for wind farms.
CIVIL SOCIETY ORGANIZATIONS These are organizations representing all the citizens who may come to be final consumers of the services offered by Renova or its stakeholders – companies, industries and NGOs. They participate in hearings and public consultations to which the Company’s projects are presented, or in the national or state-level environmental bodies – and also in the process of collective construction of environmental rules and laws. At the federal level, Renova has a dialog with representatives of industry – often with similar interests to those of the electricity sector, contributing to the construction of rules that are of interest to the sector. These include the Brazilian Industries Federation (Confederação Nacional das Indústrias, CNI); the Bahia State Industries Federation (Federação das Indústrias do Estado da Bahia, FIEB); and the Brazilian Entrepreneurs’ Council for Sustainable Development (Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável, CEBDS).
TRANSPARENCY AND OPEN DIALOG
COMMUNITIES Renova has specific strategies for its interaction with its local communities. As well as the Catavento program, which seeks to develop each local region and maintains relationships with various local stakeholders, the Company also has its own social-investment institution, TPT, which receives requests for donations and sponsorship from various organizations and individuals of the region. Renova holds periodic meetings with representatives of the community, to provide updates on its activity in the region, and the phases of construction of projects in progress. Each project has its Enterprise Accompaniment Committee (Comissão de Acompanhamento do Empreendimento, or CAE) which holds these meetings, backed by one group for implementation, and two for operation. The CAE for the construction phase of the Alto Sertão II wind complex held four meetings in 2014; and the CAE for the operation phase held four meetings and one visit to the wind farm complexes, in the year, to present the Operation and Maintenance (O&M) team and the technical features of the wind farm facil-
ities. Community meetings are also held with groups of land site owners, to keep them informed on the enterprises and the phases of implementation. In 2014 Renova distributed its quarterly journal Circulador, providing the community with updated information about projects and execution of environmental programs. Another important movement in 2014 was the preparation of the Company’s Corporate Communities Relationship Policy (PCRC), which provides a structure and standardization for the relationship with communities that are local to Renova projects – and also sets up some principles and guidelines for management of demands, community-related events, and the means for establishing an ever-closer relationship that is the most supportive possible.
SUPPLIERS In 2014 Renova dedicated efforts to continuing improvement of its relationship with suppliers, creating the closest channels of communication possible, and seeking means to strengthen its production chain in the regions where it operates.
RENOVA 2014
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CONTINUOUS MATERIALITY In an area of work that involves all of its interest publics, in 2014 Renova began a practice of continuous consultation about the material issues and questions that permeate the business. Based on the results of the process of assessment of broad materiality made for the 2013 Sustainability Report, consultations were made through questionnaires to be answered by the following strategic groups of stakeholders: communities, suppliers, investors and stockholders, and employees. The consultation aimed to update perception of the priority of the material subjects, and to identify new questions considered to be important for the interest publics. The material subjects covered in this consultation were:
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1. Biodiversity 2. Economic performance 3. Market presence 4. Water 5. Suppliers 6. Communities 7. Climate change 8. Innovation and diversification
9. Atmospheric emissions, effluents and wastes 10. Health and safety 11. Employees and employment 12. Electricity from renewable sources 13. Compliance issues 14. Human rights 15. Supply of water
The material issues were identified by the four groups of stakeholders consulted, based on the following criteria for allocating priority: probability of impact for Renova; seriousness of impact in the event of occurrence; growth opportunity for the Company; present or future financial and non-financial implications/consequences; effects on Renova’s strategies, relationships and commitments; effect on competitive advantage and excellence in management.
tation of 2014, excluding “Supply of electricity,” and “Electricity from renewable sources.”
At the beginning of 2015, based on the aim of maintaining a process of continuous accompaniment of materiality, ensuring transparency of information, and maintaining a continuous alignment with the expectations of its interest publics, Renova prepared a new methodology for assessing materiality, and carried out a new process of consultation on the material issues based on it, according to the following criteria: Adoption of differentiated weightings for each group of stockholders, as follows: Weighting 3 – Strategic stakeholders for the business in the long term Weighting 2 – Strategic stakeholders for the business in the short and medium term Weighting 1 – The general public Choice of order of priority for the 13 Material Questions on which stakeholders are to be consulted: senior management was once again consulted on this order of priorities, and re-validated the subjects covered in the Materiality Consul-
Preparation of a new questionnaire for a survey with five questions, each assessing the significance of the subject for Renova’s activity (high, average or low). As a pilot project for this new methodology of consultation on materiality, Renova decided to hold the survey with the following three groups: communities, public authorities, and employees. Through interactions and these interviews, priorities were defined for the subject areas and the most important individual subjects for the business. The results of the two processes of consultation of stakeholders held in 2014 and 2015 indicated that there was no alteration in the subjects that were considered to be material for the Company, as presented in the materiality matrix. Based on the various consultations held with internal and external stakeholders at the prioritization stage, and after the validation of the results by Renova senior management, it was decided that the material subjects considered important for the stakeholders and the business were as follows: biodiversity; economic performance; market presence; water; suppliers; communities; climate change; innovation and diversification; atmospheric emissions, effluents and waste; health and safety; employees and employment; compliance issues; and human rights.
MATERIALITY MATRIX GRI G4-19
3
1
2
10 13
9
7
5
8
2 3
Employees and employment
4
Market presence
5
Innovation, diversification
6
Health and safety
7
Compliance issues
8 9 10 11 12 Important for the business
Communities
13
Suppliers Climate change Human rights Water Biodiversity
TRANSPARENCY AND OPEN DIALOG
6
4
Economic performance
Atmospheric emissions, effluents and waste
Below are the details of the principal subjects that were commented on during the process of consultation of stakeholders.
Biodiversity
• Assessment and publication of the impacts of works, operations, and outsourced companies. • Recovery, conservation and preservation of flora and fauna. • Maintenance and handling of biodiversity. • Monitoring.
Communities
• Direct impact: disturbance during the works, movement of vehicles, safety, inspection, dust, social initiatives, interference and relocation of people. • Indirect impact: generation of revenue, investment in infrastructure. • Relationship: dialog, trust, partnership, transparency, honesty and engagement.
Economic performance
• Performance of the company in 2014, competitiveness. • The company’s capital costs. • Private social investments. • Governance.
Human rights
• Monitoring of work conditions (including outsourced workers), diversity. • Requirements for contracting and alignment of outsourced staff. • Training, procedures and policy in human rights.
Suppliers
• Relationship with local suppliers, timeliness, negotiation, outlook for direct employment (local labor), development of the local economy, credibility, corruption, monitoring. • Acquisition of skills, acquisition of qualifications, partnerships. • Contractual requirements: environment, health and safety. • Partnership relationship with our large suppliers.
Innovation and diversification
• Opportunities; foster solar power suppliers’ production chains. • Partnerships (joint venture). • Results – solar project.
Market presence
• Electricity generation. • Market leadership (market share). • Contribution to the development of the market. • Portfolio of new projects.
Compliance issues
• Communication in relation to compliance with requirements and action plans. • Inspection and monitoring of outsourced workers. • Anti-corruption law. • Internal audit. • Code of ethics and conduct.
Health and safety
• Health and safety training and procedures. • Monitoring and prevention of accidents. • Demand for safety in the vehicle fleet that serves Renova. • Inspection and monitoring of outsourced contractors. • Impact on the communities.
Water
• Monitoring of springs, control of use and quality of water. • Consumption, reutilization of water. • Inspection and monitoring.
Climate change
• CO2 emissions. • Clean Development Mechanism (CDM) project. • Diversification of the energy supply matrix, contribution of renewable sources.
Employees and employment
• Organizational atmosphere. • Retention, training, career plan, development profile. • Local labor.
Atmospheric emissions, effluents and waste
• Generation and disposal of waste (works, and operation). • Inspection and monitoring of waste effluents. • Greenhouse Gas Emissions inventory. • Mitigation measures.
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Important for stakeholders
1
11
KEY AIM: CONSTANT GROWTH AND PROFITABILITY, ACHIEVED SUSTAINABLY
COMPANY PROFILE
LEADERSHIP IN ELECTRICITY GENERATION FROM RENEWABLE SOURCES GRI G4-3; G4-5; G4-6
Renova Energia S.A. is the leader in contracted installed capacity of electric power generation from renewable sources in Brazil. It is committed to sustainable development for the country, and works with wind power, solar power and small hydroelectric plants (SHPs). It operates vertically integrated through the whole chain of generation: prospecting, project development, contracting and sales, construction and implementation, and O&M. It has operational offices in the municipalities of Salvador and Caetité, both in the State of Bahia, Brazil, and its administrative headquarters is in São Paulo city, São Paulo State.
ANNUAL SUSTAINABILITY REPORT
20
A HISTORY TOLD IN MEGAWATTS Renova’s story begins 14 years ago, thanks to the entrepreneurial vision of Renato Amaral and Ricardo Delneri, who could see the potential for renewal of Brazil’s electricity supply profile. They joined forces to carry out innovative and
pioneering studies of the market and the outlook, and in 2001 founded Enerbras, which was the seed of Renova – now the benchmark in renewable energy in Brazil and Latin America. It was while still working under the name of Enerbras that the company took its first steps in development of renewable energy projects, with small hydro plants (SHPs). Energética Serra da Prata (‘Espra’) started operating in 2008, at three SHPs with aggregate installed capacity of 41.8MW. In 2009 Renova took part in the first ‘Reserve Energy’ (LER-2009) Auction, held by the Brazilian federal government, and won the contract to supply 294.4MW of wind energy installed capacity – the highest volume placed in that auction. After winning that auction, Renova began to concentrate on wind projects, a market which it pioneered, and in which it rapidly became a leader. Renova grew and consolidated its position in the renewable sources market as a result of, first, the increase in the equity interest
INNOVATIVE VISION
In 2014 Renova concluded the investment agreement for entry of Cemig GT into its controlling stockholding block, and acquisition of a 51% interest in Brasil PCH – a company with 13 small hydro plants and 291 MW of installed capacity. This move provided a greater balance between assets still at development stage and assets already in operation. Renova is recognized in the market for its winning strategies at auctions. It once again surprised the sector by selling 106.9 MWp of installed capacity in the first auction held specifically for solar power generation – the 2014 LER auction. With its fine sense of opportunity Renova innovated once more, at the end of 2014, announcing a joint venture with SunEdison of the US for development of 1 GW of solar energy projects in Brazil.
In line with these requirements, Renova keeps a constant eye on the expansion of its portfolio, to create increasingly innovative and profitable projects in renewable energy, with high generation capacity, in structured processes, and an operation aligned with the performance of the best companies in the sector. It also observes the market for opportunities, and identifies those that provide the return demanded by its stockholders. Until 2012 Renova centered its attention on construction and installation of new projects, and placement of its supply, with participation in auctions. In 2013 it restructured this approach after the start of commercial operation of its first series of wind farms (officially, in 2014), and its start of operation of Brasil PCH, with 13 new small hydro plants.
RENOVA IS BRAZIL’S LARGEST COMPANY IN RENEWABLE ENERGY, BY CONTRACTED INSTALLED CAPACITY – A TOTAL OF 2,510.9MW AT THE END OF 2014.
COMPANY PROFILE
2013 was an extremely important year for Renova’s history. It signed an innovative contract with Alstom to supply aerogenerators – which gave it greater competitiveness and guaranteed scale to ensure expansion in its business plan. To add to this innovative step, it had very successful results in the auctions of that year, placing 251.7 average MW (‘average’ = average contracted supply offtake level) in the 2013 LER, and the 2013 A–5 LER Auction (A–5 means: for supply to start five years ahead), as well as placing 32.4MW of installed capacity in Brazil’s free market.
Renova’s business is based on the key requirements of sustainable growth and profitability, supported by entrepreneurship, creativity and social responsibility aiming to generate benefits for all its relationship publics (stakeholders). It thus has a group of aims including: optimum return for stockholders, based on efficacy and its first-class reputation; attribution of value to employees through meritocracy, in a cooperative and friendly environment; and sustainable development of territories in Brazil for the benefit of society.
21 RENOVA 2014
held by the fund InfraBrasil, in 2009; and subsequently entry of the Light Group as a stockholder, in 2011; and investment by BNDESPar (BNDES Participações S.A.), the investment arm of the Brazilian Development Bank (BNDES), in 2012. It was also in 2012 that Renova inaugurated the Alto Sertão I complex of wind farms, in the interior of the State of Bahia, the largest project of its type in Latin America.
RENOVA: GROWTH IN FIGURES, 2013-2014 GRI G4-9
NUMBER OF EMPLOYEES
223 2013
281 2014
26% Change
NET SALES R$’000
302,897 2014
226,011
34% Change
2013
STOCKHOLDERS
369 2013
473 2014
28.2 % Change
TOTAL VALUE OF ASSETS R’000
5,542,242 2014
3,672,179 2013
50.9 % Change
OUR BUSINESSES GRI G4-4; G4-8
THE COMBINATION OF PROJECTS ENSURES A COMPETITIVE PORTFOLIO COMPANY PROFILE
Renova is an integrated business, operating in all the phases of development of projects to devise, contract, build, operate and maintain wind power and solar generation projects and small hydroelectric plants: from identification of areas of potential, feasibility studies, environmental regularization and licensing, planning, placement/contracting, to construction, and operation, in both Brazil’s Free Market and its Regulated Market. In 2014 Renova had a total portfolio of 14,800MW not yet contracted in the Brazilian States of Alagoas, Bahia, Ceará, Minas Gerais, Pernambuco, Paraíba, Piauí and Rio Grande do Norte. Its presence in all these States establishes it as one of the Brazil’s largest developers of renewable energy projects.
Renova currently has 1,609.1 MW of installed generation capacity operating in the regulated market, and 901.8 MW operating in the Free Market. At the end of 2014 its total contracted installed capacity was 2,510.9 MW. This total comprised 2,262.4 MW of wind power, 190.2 MW of electricity generated by small hydro plants (148.4 MW of this being its 51% equity interest in Brasil PCH) and 58.3 MW of solar power. The combination of projects ensures a competitive portfolio which has both profitability and growth potential, while generating value for all the Company’s stockholders.
1,609.1 MW OF CONTRACTED INSTALLED CAPACITY IN BRAZIL’S REGULATED MARKET AND 901.8 MW IN ITS FREE MARKET
RENOVA IS AN INTEGRATED COMPANY: IT OPERATES IN ALL THE PHASES OF DEVELOPMENT OF ITS PROJECTS – WIND AND SOLAR POWER PLANTS, AND SHPs
RENOVA 2014
23
It operates in the free market for electric power through contracts signed directly with electricity-intensive corporations. In the Regulated Market, it takes part in auctions which are held based on guidelines issued by the Mining and Energy Ministry, operated by the Brazilian electricity regulator, Aneel. The auction facilities, contracting and settlement are provided by the wholesale Electricity Trading Chamber – CCEE.
ANNUAL SUSTAINABILITY REPORT
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WIND POWER
SOLAR ENERGY
Renova currently has 29 wind farms built – comprising the Alto Sertão I and II complexes. Alto Sertão I is a group of 14 wind farms, with 184 aerogenerators, and 294.4 MW of installed capacity, contracted in the 2009 LER auction. Alto Sertão II is a complex comprising 15 wind farms, contracted in the 2010 LER auction and in the 2011 A–3 LEN auction (A–3 auction = auction for new-build capacity for supply to start three years ahead). As well as these facilities that are now operational, Renova has the works of the Alto Sertão III complex under construction – 46 wind farms, with installed capacity of 736.8MW, all in the Southwest of the State of Bahia.
Renova has been investing in solar energy since 2012 – the year in which Aneel Resolution 482 provided an initial regulatory framework (allowing installation of solar generation systems in homes and commercial premises, using the net metering system – in which clients pay the local distributor the difference between the electricity generated and the volume consumed from the distribution network). This was an incentive for Renova to intensify its efforts to develop the solar market and maintain its leadership position in renewable sources. Since then it has been working in distributed-generation solar projects in various states of Brazil, with residential, commercial and industrial clients.
In the free market, Renova has placed 308.0 MW (average), corresponding to 676.2 MW of installed capacity, in a project in which Renova owns 50% and Cemig the other 50%, for construction of wind farms in the municipality of Jacobina. In the 2014 A–5 LEN auction (A–5 auction = new-build, for supply starting five years ahead), Renova placed 49.4 average MW, to be generated by five wind farms with 108.0 MW of installed capacity in the region of Umburanas. Also, to be built at Umburanas, in the State of Bahia, Renova placed 178.0 average MW, corresponding to 355.5 MW installed capacity, at the 2013 A–5 LEN auction.
IN 2014, RENOVA WON BRAZIL’S FIRST AUCTION HELD EXCLUSIVELY FOR SOLAR ENERGY (LER 2014) 2. This takes into account the 51% equity interest in Brasil PCH
In 2014, Renova won the first Aneel auction held exclusively for solar energy in Brazil (LER 2014); announced Brazil’s first hybrid wind energy/solar generation project; and entered a joint venture with SunEdison to build solar projects in Brazil of approximately 1 GW. Renova believes that an initiative on that scale will likely help the development of the local production chain (which would comply with the BNDES’s policy on fostering and strengthening local Brazilian suppliers).
SHPs In the market for generation by small hydro plants (SHPs) Renova has been operating three plants under the ownership of its subsidiary Espra, in the south of the State of Bahia, since 2008. The three plants – Colino I, Colino II, and Cachoeira da Lixa – have aggregate generation capacity of 41.8 MW, with assured takeoff level of 18.8MW average. The output of the group of three plants was contracted, for 20 years’ supply, under the Mining and Energy Ministry’s Program to Support Alternative Electricity Sources (Proinfa), in 2004. In 2014 Renova expanded its SHP activity by completing acquisition of 51% of Brasil PCH, a transaction begun in the previous year. With these plants, it added additional contracted installed capacity of 148.4 MW2, with sale of average supply of 95.8 MW, also contracted for 20 years, via Proinfa.
14.8 GW
3
MANAGEMENT MODEL – FROM PLANNING TO COMMERCIAL OPERATION GRI G4-8
As an electricity generation company, Renova is qualified to trade in two official Brazilian markets: the Regulated Market (the Ambiente de Contratação Regulada, or ACR), and the Free Market (Ambiente de Contratação Livre, or ACL). In the regulated market, contracts are made in auctions held by the federal government – through the regulator, Aneel – in the wholesale Electricity Trading Chamber (CCEE). In the free market, the supplier may negotiate directly one-on-one with other generators, traders, or consumers.
ANNUAL SUSTAINABILITY REPORT
26
INNOVATION BY DIVERSIFICATION Renova has stood out for its pioneering work with renewable energy sources. For this it needs to have a structure to enable it to identify opportunities, create and develop projects, and keep them profitable. This is a process that involves its entire team. Renova is constantly investing in the quest for innovative partnerships, partners and operational models, able to diversify its business. Examples are: its agreements for development of solar energy projects – like the recent agreement with SunEdison; the structuring of a hybrid solar/wind generation plant on a single site, in Bahia; and its geographical expansion into new States.
TOTAL SIZE OF THE WIND AND SOLAR POWER GENERATION PORTFOLIO
ENGINEERING AND OPERATIONS MANAGEMENT Renova’s Engineering and Operations management area is responsible for keeping all projects at full levels of operation, and ensuring that generation facilities are delivered with the availability indices that have been contracted. In 2014, with the Alto Sertão I and II wind farms starting commercial operation, construction of Alto Sertão III in progress and new projects in development, Renova made a major change in its engineering management. Renova is now working with a portfolio of wind and solar plants totaling 14.8 GW. This creates a major challenge of coordinating all the phases of work – from prospecting to delivery – to maintain Renova’s profitability, and guarantee delivery of valuable assets independently of the external scenario. To provide the necessary support to the business, Engineering and Operations has adopted the matrix model, which places a greater focus on the teams involved in projects, and provides more speed in the processes.
PIAUÍ 600 MW (4%)
CEARÁ 1,826 MW (12%) RIO GRANDE DO NORTE 4,131 MW (28%)
PERNAMBUCO/ PARAÍBA/ALAGOAS 3,235 MW (22%)
COMPANY PROFILE
BAHIA 4.618 MW (31%)
MINAS GERAIS 400 MW (3%) 3. Locations of Renova’s portfolio of wind and solar projects not yet contracted.
Renova’s new operation and management model has three Divisions – Renewable Projects Development; Construction; and Operation and Management (O&M) – and three support areas – Engineering; Business Performance; and Supplies and Infrastructure. Each project is regarded, and functions, as if it were a business unit, with a project director who coordinates all the stages, under the following overall structure: 1. The Development area is responsible for ensuring viability of a project from four principal aspects: regulation (the appropriate regulatory environment, including auctions and the free market); the type of resource available (wind or solar) and its quality; a transmission network for outflow of the power generated, enabling it to be sold; and, finally, the profitability of the project. If all these factors are in harmony, this means the project is viable and the company can place its production in the market.
2. After placement of the project – sale of the output – the Construction area goes into action, coordinating the process of building the facilities. This is the phase that has the highest load of investment. In 2014 Renova was working strongly on the commercial startup of the works of the Alto Sertão III complex which, grouped with the Alto Sertão I and Alto Sertão II complexes, is considered to be the largest onshore wind power complex in the world.
ALTO SERTÃO I, II AND III –
TOGETHER, THE WORLD’S LARGEST ONSHORE WIND POWER PROJECT
RENOVA 2014
27
3. O&M takes over after construction is completed, and the project is ready to be delivered and start operation. O&M management is responsible for operation and maintenance of Renova’s assets. 4. The Engineering area operates as the link between two phases – Development and Construction. At the start of a project it provides the technical and operational support: decision on the system’s capacity, the type of connection, transport and logistics. At the construction phase it has the responsibility for the basic and final designs for construction, commissioning and monitoring.
28
5. The Supplies and Infrastructure area works in parallel, responsible for contracts and suppliers. The other corporate areas also contribute to the activity of Engineering and Operations in all the phases of development of a project.
RENOVA’S VISION OF THE FUTURE GRI G4-2 Renova’s strategic planning procedures include an annual cycle for review of its long-term (five-year) objectives. This process involves: • Detailed analysis of market scenarios, including principal trends and uncertainties. • Mapping of the market forces (clients, suppliers, substitutes, new entrants and competition). • Discussion with stockholders about their expectations. • Decision on initiatives to leverage the principal forces and develop competencies to achieve the stockholders’ objectives, taking into account the market outlook. After reviewing its strategy, the Company informs its various publics through a presentation of its ‘strategic pyramid’ (shown in the diagram on the next page).
To develop and retain Brazil’s best team working in renewable sources
To ensure competitive funding capacity in the market. able to support the expected growth
To have Brazil’s most competitive wind power Portfolio
To ensure that placement of power output captures and protects the highest possible value for the business
To create an alternative growth platform in solar power
To be a vector of sustainable development in the regions where it works
To establish high performance by the Company’s management
To be recognized as a major business partner by our stakeholders
To educate the capital markets on Renova’s business, so as to minimize any discount, providing maximum transparency to stockholders
At the top of the strategic map is the Company’s long-term objective – the Vision. Each of the ‘pillars’ indicates the individual objectives, aligned to the areas of Renova’s business: prospecting, development of new projects, placement and sales, construction, and operation and maintenance. At the base of the diagram are the directives to make execution of the strategy viable – human resources, financial resources, sustainability and environment, relationship with stakeholders, high performance management, and relationship with investors.
To accompany its performance in relation to the strategic planning, the Company monitors a group of performance indicators, which are reported monthly to senior management and stockholders, and quarterly to the whole Company through the “Energizar é Preciso” event. The meeting (its title remits to a famous phrase by the Portuguese poet Fernando Pessoa) updates all Renova’s employees on the Company’s performance, and the stage of achievement of each objective proposed for the current year. In 2014 the event was held four times.
COMPANY PROFILE
To be in the first quartile for efficiency in O&M
To be a market benchmark for application of technology and efficacy in construction of wind projects
29 RENOVA 2014
VISION
To be, in the next 5 years, Brazil’s best and most profitable company operating in renewable energy, working in an entrepreneurial, creative, efficient and sustainable manner with all the stakeholders
RISK MANAGEMENT
GRI G4-2
Risk management is the responsibility of the Internal Audit area, which operates autonomously. Risks are identified, segmented by process, and classified, creating risk matrices. Construction of these matrices began in 2002, with an initial cycle of interviews and workshops with directors. Based on the classification of the risks of the matrices, the most critical processes to be audited in the year are listed. The aim of the audits is to identify compliance of the areas with their duties and internal and external rules, resulting in continuous improvement of the processes.
As their result, the reports of internal audit present the risks that they detect, and plans for action to mitigate or eliminate those risks. The Internal Audit area then has the responsibility of monitoring those actions, updating the matrices and managing those risks. Internal audit activities are reported periodically to the Internal Audit Committee.
RENOVA’S STRATEGIC RISK MATRIX4
4
HIGH (2)
1 9
HIGH (1) EFFECT
ANNUAL SUSTAINABILITY REPORT
30
The audits were begun in 2013, and are carried out by an outside consultancy office. The second cycle was completed in 2014, with assessment of the processes of Human Resources, Sustainability, Environment, Implementation of Projects, ‘Other Expenses’ Control, the Legal Department, and Treasury. In 2015, the following areas underwent audit: Investor Relations, Management of the Alto Sertão III Project, Logistics, Information Technology; and the processes of Trading, Treasury and Procurement were audited for a second time.
MEDIUM (2)
3
8
2 6
11
MEDIUM (1)
10
5
7
LOW (2) LOW (1) LOW (1)
LOW (2)
MEDIUM (1)
MEDIUM (2)
PROBABILITY
4. T he numbers in the table refer to the various strategic risks found (the identification of which is not public information)..
HIGH (1)
HIGH (2)
MAKING HISTORY
2001
Foundation Enerbras created by Ricardo Delneri and Renato Amaral.
Private Equity
2004
InfraBrasil R$30 MM
2008
ESPRA Commercial operation
2009
COMPANY PROFILE
Private Equity
3 SHPs 41.8 MW
InfraBrasil R$131 MM
2009 LER
2010
auction 294.4 MW
31
IPO
Investment by Light
RENOVA 2014
R$160 MM
2009 LER auction
2011
167.7 MW
Vehicle for renewables Injection of R$360 MM
2011 A-3 auction 218.4 MW
2012
404 MW (Free Market)
BNDESPAR Investment R$261 MM 123 MW (Free market)
Partnership with Alstom
2013
2013 LER and A-5 auctions 514.5 MW
2014
Solar: start of distributedgeneration projects.
Cemig GT enters controlling block Acquisition: 51% of Brasil PCH
32 MW (Free market)
Joint venture with SunEdison
2011 LER: 4 wind farms Test operations
2015
2014 LER auction Wind: 43.5 MW Solar: 106.9 MW
2014 A–5 Auction 108.0 MW
338 MW (Free market)
2009 LER and 2010 LER Commercial operation
MISSION, VISION, VALUES – AND RENOVA’S ‘ESSENTIALS’ GRI G4-56 Renova’s mission, vision and values reflect its commitments; guide all its activity, and are the basis for execution of its strategic planning.
MISSION Continually to seek sustainable profitability based on entrepreneurship, creativity and social responsibility as the pillars for growth. Renewable energy generation projects and operations must provide benefits to all the Company’s stakeholders:
ANNUAL SUSTAINABILITY REPORT
32
• Stockholders: Higher market value, based on high growth executed with efficacy. • Employees: Professional development, through meritocracy, in a friendly and healthy growth environment. • Local communities: A vector for sustainable development of their region.
VISION To be, in the next five years, Brazil’s best and most profitable renewable energy company, working with all the stakeholders with entrepreneurship, creativity, efficiency and sustainability.
VALUES • Passion for results: We spontaneously seek to improve at all times, with urgency for changes, and excellence in execution. • Building together: We act thinking of the collective, seeking to realize a shared dream. • Focus on people: We create an environment that stimulates growth and recognition of people. • Responsibility: We are responsible for our attitudes, we show transparency and ethics in all situations, and with all publics.
THE RENOVA ‘ESSENTIALS’ • The dream: The dream should be so great that it is able to make everyone grow together, in the same direction. • Profit: Constant, and growing, to sustain growth. • Responsibility: Every act and event in the Company has a person responsible for it – the one who will get the bonus, but also bears the burden. Discussions are always welcome, but at the end of the day someone has to take the decision and assume the responsibility for it. • Meritocracy: We adopt an aggressive policy of variable remuneration, aiming to compensate each individual at a rate that is on the level with his/her own effort and talent. • Career: Renova’s principal executives are responsible for the strategy and for people’s mobility, opening the way for the best ones to grow. • Succession: We build our team only with the best. The step up to a higher position can only be taken if you have someone who can replace you at your own level. • Performance: To never be satisfied; urgency for changes, and zero complacency in ensuring they happen. It’s better to hold back someone who is going too fast, than to have to push someone who is at a standstill. • Leading by example: We believe in leadership by example. Both day-today gestures, and heroic attitudes, create natural leaders. • Environment: Joyful, simple, informal, objective and transparent. • Bureaucracy: We do not tolerate excess bureaucracy, unnecessary sophistication. • Work: We work efficiently in search of excellence, without pushing aside joy. Luck is the result of: a lot of work. • Focus: Focus is fundamental, it’s not possible to be good at everything. We must concentrate on what is essential.
ORGANIZATIONAL STRUCTURE
COMPANY PROFILE
Renova’s stockholding base works in favor of its sustainable growth. The entrepreneurial flair of the founding partners Renato Amaral and Ricardo Delneri is present in the controlling stockholding block as RR Participações. Light Energia and Cemig GT are also part of the controlling block, adding all their experience and leadership in the Brazilian energy sector. Also in the stockholding base is BNDESPar, a strategic financial investor which appoints a Board member to contribute to the Company’s business plan. The two equity investment funds FIP InfraBrasil and FIP Caixa Ambiental are also part of the stockholding structure.
33 RENOVA 2014
• Courage: We are not afraid of unpleasant situations. “Better to be challenged now, than left behind for a lifetime.” • Ethics: Zero tolerance for concealed or unethical attitudes – that sort of thing corrupts the Company’s culture. • Discretion: Always. We only present when we have aim and objective defined. • Good sense: More important than great knowledge – perhaps more so. Simple = better than complicated. • Creativity: We must be creative – and not be afraid to copy and perfect good examples, when necessary. • Hierarchy: To be exercised with respect, and only for taking of decisions. There are no differences of level – all are in communication. • Working hours: Presence in the company is essential – but each person has responsibility for their own working hours. Results will judge you better than your punch-card. • Group feeling: Each one makes his own – but without losing the common objective.
THE STOCKHOLDING STRUCTURE OF RENOVA GRI G4-13
Cemig GT completed its entry into Renova’s controlling stockholder block in 2014, with a contribution of R$1.5 billion to the Company’s capital. The participants in the controlling stockholder block are now: RR Participações, Light Energia and Cemig GT, respectively with 15.9%, 15.9% e 27.3% of the Company’s total capital. The remaining 40.9% is the free float, traded on the BM&FBovespa.
RENOVA – STOCKHOLDING COMPOSITION 5 RENOVA ENERGIA Controlling block
ON Shares
PN Shares
Total
188,309,629
79.6%
-
0.0%
188,309,629
59.1%
RR Participações
50,561,797
21.4%
-
0.0%
50,561,797
15.9%
Light Energia
50,561,797
21.4%
-
0.0%
50,561,797
15.9%
Cemig GT
87,186,035
36.8%
-
0.0%
87,186,035
27.3%
48,535,763
20.4%
81,810,030
100.0%
130,345,793
40.9%
8,260,093
3.5%
1,300,000
1.6%
9,560,093
3.0%
9,311,425
3.9%
18,622,850
22.8%
27,934,275
8.8%
InfraBrasil
11,651,467
4.9%
23,302,933
28.5%
34,954,400
11.0%
FIP Caixa Ambiental
5,470,293
2.3%
10,940,586
13.4%
16,410,879
5.1%
13,842,485
5.8%
27,643,661
33.7%
41,486,146
13.0%
236,845,392
100.0%
81,810,030
100.0%
318,655,422
100.0%
OTHER STOCKHOLDERS RR Participações* BNDESPAR
Outros Total 5. Situation on December 31, 2014.
GROUP STRUCTURE DIAGRAM GRI G4-17
OTHERS
INFRABRASIL
5.8% – ON 33.7% – PN
99.99% 99.99%
CE UMBURANAS 1 S.A.
ANNUAL SUSTAINABILITY REPORT
100%
ALTO SERTÃO PARTICIPAÇÕES S.A.
34
99.99%
CE UMBURANAS 2 S.A.
CE UMBURANAS 3 S.A.
99.99%
RENOVAPAR
99.99%
DIAMANTINA EÓLICA PARTICIPAÇÕES S.A.
CE UNHA D’ANTA S.A.
100%
ENERBRÁS
99.99% 99.99%
4.9% – ON 28.5% – PN
ESPRA
100%
BAHIA EÓLICA PARTICIPAÇÕES S.A.
99.99%
CE VAQUETA S.A. 99.99%
99.99% CE UMBURANAS
4 S.A.
99.99% CE UMBURANAS
5 S.A.
99.99% CE UMBURANAS
6 S.A.
99.99% CE UMBURANAS
7 LTDA.
99.99% CE UMBURANAS
8 LTDA.
99.99% CE UMBURANAS
9 LTDA.
99.99% CE UMBURANAS
10 LTDA.
99.99% CE UMBURANAS
11 LTDA.
99.99% CE UMBURANAS
12 LTDA.
99.99% CE UMBURANAS
13 LTDA.
99.99% CE UMBURANAS
14 LTDA.
99.99% CE UMBURANAS
15 LTDA.
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99% CE JABUTICABA
CE BARBATIMÃO 99.99% S.A.
99.99% CE JACARANDÁ
99.99%
99.99% CE TABOQUINHA
99.99%
99.99%
99.99%
99.99%
CE PAU D’ÁGUA S.A.
99.99%
99.99%
CE MANINEIRO S.A.
99.99%
99.99%
CE SÃO SALVADOR S.A.
CE CEDRO S.A.
99.99%
CE VELLOZIA S.A.
CE SABIU S.A.
CE JUAZEIRO S.A.
CE JATAÍ S.A. CE IMBURANA MACHO S.A. CE AMESCLA S.A. CE UMBUZEIRO S.A.
CE FOLHA DA SERRA S.A.
CE ILHEÚS S.A.
DO SERRADO S.A.
S.A.
CE TABUA S.A.
ALTO SERTÃO I
CONTROLLING STOCKHOLDING BLOCK OF RENOVA RENOVA ENERGIA RENOVA COMERCIALIZADORA
ALTO SERTÃO III – PHASE A
2009 LER SPECIAL-PURPOSE COMPANIES 2010 LER SPECIAL-PURPOSE COMPANIES 2011 LEN A–3 SPECIAL-PURPOSE COMPANIES
16 LTDA.
18 LTDA.
99.99%
CE CANDIBA S.A.
S.A.
99.99% CE UMBURANAS
99.99% CE UMBURANAS
CE LICÍNIO DE ALMEIDA S.A.
CE ANGICO S.A. 99.99%
CE FACHEIO S.A.
CE IGAPORÃ S.A.
CE ACÁCIA S.A. 99.99%
CE ANGELIM S.A.
CE PENDAÍ S.A.
CE ABIL S.A.
* SHARES OUTSIDE THE CONTROLLING STOCKHOLDING BLOCK
2012 A–5 SPECIAL-PURPOSE COMPANIES
NOTES: T HE MINORITY STOCKHOLDINGS (1% AND 0.01%)
2013 LER SPECIAL-PURPOSE COMPANIES
IN THE COMPANIES OF THE RENOVA GROUP ARE HELD BY RENOVAPAR S.A. EXCEPT IN UMBURANAS COMPANIES 7 TO 18 (EXCEPT 17), AND THE RENOVA MOINHOS DE VENTO CONSORTIUM AND THE RENOVA MOINHOS DE VENTO 2 CONSORTIUM, IN WHICH THE MINORITY HOLDINGS BELONG TO MOINHOS DE VENTO ENERGIA S.A. C E = CENTRAL EÓLICA = WIND POWER GENERATING STATION
SUB-HOLDINGS OTHER COMPANIES OF THE GROUP SMALL HYDRO PLANTS (SHPS) 2013 A-5 AUCTION RENOVA MOINHOS DE VENTO CONSORTIUM
CIA ENERGÉTICA DE MINAS GERAIS CEMIG
OTHERS 73.94% – ON 100% – PN
26.06% – ON
100% – ON
LIGHT S.A. 100% – ON
FIP CAIXA AMBIENTAL
RENATO AMARAL
RICARDO DELNERI 65% – ON
LIGHT ENERGIA S.A.
RR PARTICIPAÇÕES S.A.
21.35% – ON
CEMIG GERAÇÃO E TRANSMISSÃO S.A.
21.35% – ON 3.5 – ON*
36.8% – ON
2.3% – ON 13.4% – PN
COMPANY PROFILE
3.9% – ON 22.8% – PN
35% – ON
RENOVA ENERGIA
99.99%
100% 99.99%
RENOVA COMERCIALIZADORA DE ENERGIA S.A.
NOVA RENOVA ENERGIA
99.99% 100%
100%
SALVADOR EÓLICA PARTICIPAÇÕES S.A.
RENOVA EÓLICA PARTICIPAÇÕES S.A.
CE ALVORADA S.A.
99.99%
CE PAJEÚ DO VENTO S.A.
99.99%
CE PLANALTINA 99.99% S.A. CE RIO VERDE S.A. CE GUIRAPÁ S.A.
99.99%
99.99%
CE N. SRA. DA 99.99% CONCEIÇÃO S.A. CE GUANAMBI S.A.
99.99%
CE PORTO SEGURO S.A.
99.99%
CE SERRA DO SALTO S.A.
99.99%
ALTO SERTÃO I
CE MORRÃO S.A. CE VENTOS DO NORDESTE S.A. CE SERAIMA S.A.
CE TANQUE S.A.
CE DOS ARAÇÁS S.A.
CE DA PRATA S.A.
CE PELOURINHO S.A.
CE AMETISTA S.A.
CE BORGO S.A. CE SERRA DO ESPINHAÇO S.A. CE CAETITÉ S.A.
CE DOURADOS S.A.
CE ESPIGÃO S.A.
CE PILÕES S.A.
CE MARON S.A.
99.99%
CONSÓRCIO RENOVA MOINHOS DE VENTO
99.99%
CONSÓRCIO RENOVA MOINHOS DE VENTO 2
99%
RENOVA PCH LTDA.
CHIPLEY SP PARTICIPAÇÕES S.A.
51%
BRASIL PCH S.A.
35
99.99%
100% PCH PARTICIPAÇÕES S.A.
CE IPÊ AMARELO S.A.
CE CALIANDRA S.A.
100%
SÃO SIMÃO ENERGIA S.A.
100% 99.99%
CE ITAPARICA S.A.
99.99%
CE ICO S.A.
100%
SÃO JOAQUIM ENERGIA S.A.
100% 99%
CE BOTUQUARA S.A.
99.99%
CE PUTUMUJU S.A.
100%
SÃO PEDRO ENERGIA S.A.
99%
CE ANÍSIO TEIXEIRA S.A.
99.99%
CE MACAMBIRA S.A.
100%
CALHEIROS ENERGIA S.A.
99%
CE CONQUISTA S.A.
99%
CE ITAPUÃ IV LTDA.
100%
FUNIL ENERGIA S.A.
99% CE CANÇANÇÃO
99%
CE ITAPUÃ V LTDA.
100%
CAPARAÓ ENERGIA S.A.
99%
99%
CE ITAPUÃ VII LTDA.
100%
CARANGOLA ENERGIA S.A.
99%
CE ITAPUÃ XV LTDA.
100%
SANTA FÉ ENERGÉTICA S.A.
99%
CE ITAPUÃ XX LTDA.
100% MONTE SERRAT
99.99%
CE BELA VISTA XIV S.A.
100%
BONFANTE ENERGÉTICA S.A.
99.99%
CE BELA VISTA XV LTDA.
100%
JATAÍ ENERGÉTICA S.A.
100%
IRARA ENERGÉTICA S.A.
100%
RETIRO VELHO ENERGÉTICA S.A.
100%
100%
100%
S.A.
100%
100% 99%
CE CABEÇA DE FRADE S.A. CE LENÇOIS S.A.
100% 99% CE COXILHA ALTA
S.A.
100% 99%
CE JEQUITIBÁ S.A.
100% 99% 100% 99%
CE CANJOÃO S.A. CE TINGUI S.A.
ENERGÉTICA S.A.
100% 99%
CE ALCAÇUZ S.A.
100% 99% CE CARRANCUDO
S.A.
100% 99%
CE EMBIRUÇU S.A.
100%
ALTO SERTÃO II
99%
CE TAMBORIL S.A.
99% CE IMBURANA DE
CABÃO S.A.
RENOVA 2014
BNDESPAR
ANNUAL SUSTAINABILITY REPORT
36
CORPORATE GOVERNANCE
THE RENOVA CODE OF ETHICS AND CONDUCT
GRI G4-7; G4-14; G4-34
GRI G4-41; G4-56; G4-57; G4-58; SO5; SO8
Renova’s governance model specifies a group of mechanisms that are designed to produce maximum interaction, clarity and speed of communication between the Board of Directors and the Executive Board. The structure also incorporates sustainability practices in all the stages of the business, and adopts a model based on high standards and best market practices, grounded on principles of equity, transparency and compliance. As a result, Renova was the first Brazilian company in the renewable energy sector to be listed at BM&FBovespa Corporate Governance Level 2.
Renova’s corporate governance is in continuous evolution. It has incorporated rules and procedures into day-to-day operations, with formal structures and mechanisms to accompany best market practices. These rules and information comprise Renova’s Code of Ethics and Conduct, which is applied to all employees, and the publics to which they relate. The aim is to align individual conduct with the organization’s values, in accordance with current rules and law, including regulations of national or international scope, and standards of both ethics and morals, such as prudent diligence, respect and honesty.
By following corporate rules that balance the rights of all the stockholders, independently of whether they are in the position of controlling or minority stockholders, Renova keeps itself on a path of continuous and sustainable evolution in terms of corporate governance. Further, its activities are subject to a group of laws, regulatory decrees and resolutions at all levels of government (federal, state and municipal).
All employees receive the Code of Ethics and Conduct at the moment when they join the company. There is also a process of continuous communication through the managers to disseminate the importance of the Code, and continuous monitoring of actions. There is no tolerance of divergent behavior, which may be subject to appropriate measures, depending on the case.
The decisions on matters to be considered and approved by the system of governance are based on the Company’s bylaws so that the relationship between the stockholders is in line with the objectives of the business and does not give any privileged position to any personal interests of those involved. Renova also adopts corporate rules that provide the balance of rights between controlling and minority stockholders, avoiding conflicts of interest.
See more in: Promotion of diversity – Licensing and regulatory requirements – Legal compliance
In its management, Renova further takes into account the Precautionary Principle, with measures to avoid or mitigate risks identified in the process of prior licensing, construction and operation of its projects.
After the Anti-corruption Law (Law 12846/2013) came into effect on January 29, 2014, Renova decided to reformulate its policies and procedures to be in line with the new Law. In 2014 it revised the Code of Ethics and Conduct, and its draft contracts, including clauses that seek to avoid any divergence or non-compliance. All the Company’s managers receive training in relation to the new Law, and training is planned for all employees of Renova over the course of 2015.
GOVERNANCE STRUCTURE GRI G4-34; G4-37; G4-38; G4-49; G4-51; G4-53
Renova’s corporate governance structure was unchanged in 2014: the General Meeting of Stockholders, the Board of Directors, the Advisory Committees, and the Executive Board, each with clearly defined roles and responsibilities. The General Meeting of Stockholders – which comprises stockholders or their duly appointed representatives – is the highest instance of decision in the Company. It meets annually within four months after the end of the business
THE CODE OF ETHICS APPLIES TO ALL RENOVA’S EMPLOYEES, AND ALSO TO ALL THE PUBLICS WITH WHICH RENOVA INTER-RELATES
There are six consultative advisory committees whose role is to support the Board of Directors. Their subjects are: Management, Finance, Talents and Remuneration, Engineering and Operation, Auditing and Compliance, and New Technologies and Prospecting. They study specific themes and help in the analysis of subjects and activities to optimize conduct of business and the value of the Company. Their basic function is to accompany, evaluate and monitor processes and any inefficiencies they find, seeking constant improvement. RR Participações, Light and Cemig take part in these committees, each appointing two members. Economic and financial performance is monitored monthly and quarterly, and audited results are issued to the market. Renova publishes its consolidated results annually. All employees have access to variable remuneration. This is established using individual targets as a starting point, based on the contribution of each area to achievement of the Company’s results.
COMPANY PROFILE
Renova is not aware of any significant fines or punishments in 2014 arising from any non-compliance with law or regulations.
year, and may hold extraordinary meetings when called, to decide on matters that are significant to the business, and it may send recommendations and orientations to the Board of Directors. Employees may send demands, through their managers and directors, to meetings of the Executive Board. After being assessed, these items may be sent through the whole flow of corporate governance, which begins at the same meeting of the Executive Board, goes through the Advice Committees, and through the Prior Meeting, to the Board of Directors – and finally, as the case may be, to the General Meeting of Stockholders.
37 RENOVA 2014
Renova’s channel of direct communication – the e-mail address etica@ renovaenergia.com. br – has been available throughout 2014 to all the publics with which the Company interacts
Also in 2014, Renova developed its ‘Transparency Channel’ for reporting. Planned to be in place in 2015, it aims to preserve and improve confidentiality and operational efficiency for interactions coming from internal and external stakeholders. One of its functions is to receive questions relating to compliance or non-compliance with current legislation, and any divergences from ethics related to the Company.
BOARD OF DIRECTORS GRI G4-38; G4-40; G4-41; G4-45 The Board of Directors is responsible for the management of the Company, setting the general policies and guidelines of the business, including the long-term strategy. It also takes part in approval of the principal plans and targets, and monitors the performance of Renova and its executive. It also assists in management of risks, impacts and opportunities through the other governance bodies, without direct activity in the process of due diligence. It is informed of the results of the analyses carried out by advisors contracted by the Company, and decides on whether negotiations and projects should be continued.
It currently comprises nine sitting members, and their respective substitutes. Two of the current sitting members qualify as independent members. All are elected by the General Meeting of Stockholders. The choice is based on qualities such as profound knowledge of the business, unblemished reputation, and conduct in line with the objectives of the stockholders. They are elected to a period of office of two years, and may be re-elected. The Board of Directors meets at least once every three months, on an ordinary basis, and at any other time when necessary.
MEMBERS OF THE BOARD OF DIRECTORS6 STOCKHOLDER
ANNUAL SUSTAINABILITY REPORT
38
Sitting member Appointed
Substitute member Appointed
RR Participações S.A.
Ricardo Lopes Delneri
Mar. 20, 2014
Maurício José Palmieri Orlandi
Dec. 22, 2014
RR Participações S.A.
Renato do Amaral Figueiredo
Mar. 20, 2014
Daniel Teruo Famano
Mar. 20, 2014
CEMIG Geração e Transmissão S.A.
Fernando Henrique Schuffner Neto
May 9, 2014
Gilberto José Cardoso
May 9, 2014
CEMIG Geração e Transmissão S.A.
Luiz Fernando Rolla
May 9, 2014
Douglas Braga Ferraz de Oliveira Xavier
May 9, 2014
LIGHT Energia S.A.
Evandro Leite Vasconcelos
Mar. 20, 2014
Tiago de Sousa Guedes
Mar. 20, 2014
LIGHT Energia S.A.
André Rocha Mahmoud
Mar. 20, 2014
Ana Silvia Corso Matte
Mar. 20, 2014
Rodrigo Matos Huet de Barcellar
Mar. 20, 2014
Ana Paula de Sousa Soares
Dec. 22, 2014
Silvio Cláudio Peixoto de Camargo Dec. 22, 2014
Peter Edward Cortes Marsden Wilson
Dec. 22, 2014
Carlos José Teixeira Corrêa
Mar. 20, 2014
BNDES Participações S.A. Independent members Mantiq Investimentos Ltda.
Geoffrey David Cleaver
Mar. 20, 2014
6. On Dec. 31, 2014.
THE EXECUTIVE BOARD The Executive Board is responsible for execution of the business strategy set by the Board of Directors, and for the management of Renova. It can comprise up to five Chief Officers, who may be stockholders, and are resident in Brazil. They are elected by the Board of Directors for a period of office of two years, and have the right to re-election. In 2014 the following were the members of Renova’s Executive Board:
CARLOS MATHIAS ALOYSIUS BECKER NETO Chief Executive Officer
PEDRO VILLAS BOAS PILEGGI Chief Officer for Finance, Business Development and Investor Relations ÁLVARO DE FREITAS GOUVEIA SILVA Chief Engineering and Construction Officer NEY MARON DE FREITAS Chief Environment and Sustainability Officer RICARDO DE LIMA ASSAF Chief Counsel; Chief Officer for Regulation and Institutional Relations
ADVISORY COMMITTEES Audit and Compliance Committee: This committee is responsible for the activities of evaluation and control of both external and internal audits, and also review of Renova’s financial statements.
Renato do Amaral Figueiredo
March 20, 2014 to the 2016 AGM – Period 2 years
Daniel Teruo Famano
March 20, 2014 to the 2016 AGM – Period 2 years
Tiago de Sousa Guedes
March 20, 2014 to the 2016 AGM – Period 2 years
André Rocha Mahmoud
March 20, 2014 to the 2016 AGM – Period 2 years
Douglas Braga Ferraz de Oliveira
March 20, 2014 to the 2016 AGM – Period 2 years
Gilberto José Cardoso
March 20, 2014 to the 2016 AGM – Period 2 years
Engineering and Operations Committee: This is responsible for assessing the planning for implementation of electricity generation projects; choice and contracting of suppliers; and monitoring of construction, timetables and budgets.
COMPANY PROFILE
AUDIT AND COMPLIANCE COMMITTEE
ENGINEERING AND OPERATIONS COMMITTEE March 20, 2014 to the 2016 AGM – Period 2 years
Daniel Teruo Famano
March 20, 2014 to the 2016 AGM – Period 2 years
Tiago de Sousa Guedes
March 20, 2014 to the 2016 AGM – Period 2 years
Evandro Leite Vasconcelos
March 20, 2014 to the 2016 AGM – Period 2 years
Douglas Braga Ferraz de Oliveira
March 20, 2014 to the 2016 AGM – Period 2 years
Gilberto José Cardoso
March 20, 2014 to the 2016 AGM – Period 2 years
Financial Committee: This committee monitors and evaluates investments and disinvestments in businesses that are within the Company’s objects as stated in the by-laws; and identifies opportunities and challenges, proposing mechanisms and solutions.
FINANCIAL COMMITTEE Ricardo Lopes Delneri
March 20, 2014 to the 2016 AGM – Period 2 years
Daniel Teruo Famano
March 20, 2014 to the 2016 AGM – Period 2 years
Tiago de Sousa Guedes
March 20, 2014 to the 2016 AGM – Period 2 years
André Rocha Mahmoud
March 20, 2014 to the 2016 AGM – Period 2 years
Douglas Braga Ferraz de Oliveira
March 20, 2014 to the 2016 AGM – Period 2 years
Gilberto José Cardoso
March 20, 2014 to the 2016 AGM – Period 2 years
39 RENOVA 2014
Renato do Amaral Figueiredo
Management Committee: This is responsible for advising the Board of Directors in formulation of strategies for the Company’s activity; in decision on the business plan and budget, targets and indicators; and in monitoring of Renova’s operational performance.
MANAGEMENT COMMITTEE Ricardo Lopes Delneri
March 20, 2014 to the 2016 AGM – Period 2 years
Daniel Teruo Famano
March 20, 2014 to the 2016 AGM – Period 2 years
Tiago de Sousa Guedes
March 20, 2014 to the 2016 AGM – Period 2 years
Evandro Leite Vasconcelos
March 20, 2014 to the 2016 AGM – Period 2 years
Douglas Braga Ferraz de Oliveira
March 20, 2014 to the 2016 AGM – Period 2 years
Gilberto José Cardoso
March 20, 2014 to the 2016 AGM – Period 2 years
New Technologies and Prospecting Committee: This proposes and monitors development and study of new technologies and new business models, and the pipeline of projects that are in development.
NEW TECHNOLOGIES AND PROSPECTING COMMITTEE
ANNUAL SUSTAINABILITY REPORT
40
Renato do Amaral Figueiredo
March 20, 2014 to the 2016 AGM – Period 2 years
Daniel Teruo Famano
March 20, 2014 to the 2016 AGM – Period 2 years
Tiago de Sousa Guedes
March 20, 2014 to the 2016 AGM – Period 2 years
Evandro Leite Vasconcelos
March 20, 2014 to the 2016 AGM – Period 2 years
Douglas Braga Ferraz de Oliveira
March 20, 2014 to the 2016 AGM – Period 2 years
Gilberto José Cardoso
March 20, 2014 to the 2016 AGM – Period 2 years
Talents and Remuneration Committee: This is responsible for support in selection and hiring of employees (including those exercising statutory posts); remuneration policies; and other activities related to human resources.
TALENTS AND REMUNERATION COMMITTEE Ricardo Lopes Delneri
March 20, 2014 to the 2016 AGM – Period 2 years
Daniel Teruo Famano
March 20, 2014 to the 2016 AGM – Period 2 years
Tiago de Sousa Guedes
March 20, 2014 to the 2016 AGM – Period 2 years
Ana Silvia Corso Matte
March 20, 2014 to the 2016 AGM – Period 2 years
Douglas Braga Ferraz de Oliveira
March 20, 2014 to the 2016 AGM – Period 2 years
Gilberto José Cardoso
March 20, 2014 to the 2016 AGM – Period 2 years
COORDINATION AND ADVOCACY IN THE SECTOR GRI G4-15; G4-16
Associations have strategic importance for Renova’s business, since they make it possible to widen the debate on subjects of importance to the energy sector, and make proposals to the managers of public policies. There are associations representing a range of agents in the sector, and they have a strong representative power in relation to the sector’s institutions. They also operate as political entities that have the ability to defend the interests of the electricity industry. Renova participates through in-person meetings, discussion forums, congresses, workshops, conference calls, e-mails, and any other appropriate means.
COMPANY PROFILE
As a listed company, Renova has an Investor Relations (IR) department, responsible for contact with stockholders, investment banks, regulatory bodies, employees, development banks, the fixed income and equity markets, etc. Through the IR Department, Renova publishes quarterly reports with financial results, and reports and comments dealing with strategy, economics and the market. It maintains a proactive stance in communication with stakeholders, through in-person meetings, conference calls, participations in events, and other activities.
41
IN 2014 RENOVA JOINED ABRAGEL AS A MEMBER OF ITS GOVERNING COUNCIL, AND ABSOLAR – BOTH HELPING TO WIDEN DEBATE ON TOPICS OF IMPORTANCE TO THE SECTOR
RENOVA 2014
INVESTOR RELATIONS (IR)
Renova’s CEO, Mathias Becker, has maintained the Company’s active participation in the Sustainable Leadership Platform (Plataforma Liderança Sustentável) – a group of business leaders that aims to connect, inspire and educate young leaders for the values of sustainability. It has a group of tools – books, a web portal, video, lectures, regional and national educational events, courses and other content supporting education of leaders – to provide support to companies, business associations, business schools and universities in management of knowledge for sustainability.
ANNUAL SUSTAINABILITY REPORT
42
In 2014 Mathias Becker also joined the CEBDS Agenda for a Sustainable Brazil, an initiative of the Brazilian Business Council for Sustainable Development (CEBDS). The Agenda aims to emphasize the role of the public authorities as catalysts for growth of the green economy. Through its CEO, Renova became a signatory of the Open Letter to Candi-
dates, prepared by CEBDS in partnership with associate companies and specialists in various sectors. This document was launched in August 2014, prior to Brazil’s elections, listing 27 proposals based on the pillars of sustainability, to meet society’s demands and transform business to create a country with better conditions of infrastructure, health, water services, and education – among other subjects. On another front, Renova’s Chief Environment and Sustainability Officer, Ney Maron de Freitas, is the Company’s representative on the Bahia State Industries Association (FIEB), in the state’s Industrial Economy and Development Council (Cedin). This group meets monthly to update on strategic subjects for the socio-economic development of Bahia. It feeds the positioning of FIEB on issues affecting development of the state’s industry, suggesting action, and interacting with the councils on other subjects.
COMMITTEES, FORUMS AND AUTHORITIES
Renova also stands out nationally for its activity with Conama, especially in debate on disciplining the process of environmental licensing of renewable energy enterprises. The Company’s representation vis-à-vis Conama and the Bahia State Environment Council (Cepram) takes place in coordination with the associations in which it participates, in particular Abeeólica and AbSolar. Renova’s representations through Abeeólica were important in that association’s discussion of the wind power sector’s needs with the National Historic and Archeological Heritage Institute (Iphan) – during the debates prior to issuance of Iphan Normative Instruction 01/2015, specifying the administrative procedures to guide Iphan in the processes of environmental licensing.
Renova is a member of the following associations: •B razilian Electricity Producers’ Association (Associação Brasileira dos Produtores de Energia Elétrica – Apine) • Brazilian Wind Power Association (Associação Brasileira de Energia Eólica – Abeeólica) •B razilian Power Traders’ Association (Associação Brasileira dos Comercializadores de Energia – Abraceel) •B razilian Clean Energy Generation Association (Associação Brasileira de Geração de Energia Limpa – Abragel) – as member of the Council • I ndustry Power Co-generation Association (Associação da Indústria de Cogeração de Energia – Cogen) •B razilian Photovoltaic Solar Energy Association (Associação Brasileira de Energia Solar Fotovoltaica – AbSolar) •B razilian Business Council for Sustainable Development (Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável – CEBDS) • Comunitas • Sustainable Leadership Platform •E conomics and Industry Development Council (Conselho de Economia e Desenvolvimento Industrial) of the Bahia State Industries’ Federation (FIEB)
COMPANY PROFILE
In other Council bodies, Renova participates as an elected member of the Committee for the Peruípe, Itanhém and Jucuruçu River Basins (‘CBH PIJ’), in the extreme south of the state of Bahia, representing the market segment ‘users of water resources’ in the terms established by the Water Resources Policies of both the Nation and Bahia State. At national level, Renova participates in work groups, technical groups and plenary sessions through the National Industry Federation (CNI), which is responsible for issuing national
rules, in the environmental area, especially in relation to the complementary regulations relating to environmental licensing.
43 RENOVA 2014
Renova also participates in FMASE – the Electricity Sector Environment Forum – promoting debate in the market on proposals which are then submitted to the public authorities based on sustainable development. This activity is strategic, in that it enables member companies to have a direct say in the process of building and issuing legal rules, mainly using the participative mechanisms provided by the National Environment System (Sisnama).
ANNUAL SUSTAINABILITY REPORT
SINCE RENOVA WAS FOUNDED IT HAS CONCENTRATED ITS BUSINESS PLAN ON POWER GENERATION FROM RENEWABLE SOURCES
CONTEXT AND ACHIEVEMENTS
EXPANSION IN RENEWABLE ENERGY SOURCES Generation from renewable sources in Brazil has grown strongly as a percentage of total power generation in Brazil in recent years. In 2014 wind and solar power as energy sources became a highlight in the country due to the instability of the rest of the sector caused by climate and operational difficulties in supplying the country’s needs, calling for significant new proactive efforts by the federal government. In the last five years renewable sources have diversified Brazil’s sources of energy, and wind power has become a strategic element since it delivers electricity efficiently at increasingly competitive cost.
ANNUAL SUSTAINABILITY REPORT
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The figures for the period reflect the strong expansion of this source. Total installed capacity of wind farms in Brazil increased by 126.7% in 2014, from 2,181 MW to 4,945 MW, according to a bulletin of the CCEE – reflecting the start of commercial operation of the plants whose supply was contracted at the power auctions of the last three years. According to a report by the Mining and Energy Ministry, in December of 2014 wind power was 3.1% of total Brazilian power generation. The Global Wind Energy Council (GWEC) places Brazil as the country with the fourth largest new installed capacity coming into operation in 2014 – after China, Germany and the USA. In Latin America and the Caribbean Brazil is the country with the best results in terms of total wind generation capacity installed.
INSTALLED CAPACITY: TOTAL UP TO END OF 2014 5,939
836
Brazil
Chile
464
271
198
186
Uruguay
Argentina
Costa Rica
Nicaragua
Source: GWEC – 2014 Global Wind Report
ENTREPRENEURIAL VISION Since its foundation, Renova has concentrated its business plan on generation of power from renewable sources, with a bias to sustainability, in projects that seek profitability while developing a more diversified and secure range of energy sources for Brazil. In 2014 Renova strengthened its market position with consistent achievements, closing the year with ten wind project clusters totaling more than 14,000 MW. If on the one hand the numbers are impressive, on the other hand they bring with them the major challenge of management of the whole production chain, in such a way as to create value in each project, in a process of continual improvement. In response to this, Renova carried out a profound restructuring, in 2014, in its Engineering and Operations Department, setting up a completely new model of management, with an organizational structure for each project, to act synergistically in all the project’s stages. This model uses a macro vision of the process, no longer segmented by areas of operation, in which each stage and each area – prospecting, sales and placement, construction, and licensing, for example – is part of a single large mechanism functioning in an integrated environment.
As soon as the connection was ready, Renova’s whole team was mobilized. Under the coordination of Engineering and Operations, it put the Alto Sertão I complex into operation in record time: 184 aerogenerators were connected in only three days – a result which indeed surprised both partners and suppliers. This was followed by another record: 100 machines in three hours, connecting part of the Alto Sertão II complex.
SUCCESS IN AUCTIONS As is now widely recognized, Renova was very successful in the regulated market auctions, both for wind power and in Brazil’s first auction exclusively for solar power. In the year, it contracted 1,609.1 MW of installed capacity in wind and solar projects. At the same time it contracted important projects in the Free Market, placing 901.8 MW, and entered into significant partnerships with a major world player – SunEdison – for development of solar projects in Brazil.
SUSTAINABILITY: THE BASIS OF OUR GROWTH One could say that the practice of allocating high value to life, and maintaining a focus on people, is ‘in Renova’s DNA’. In 2014 we separated the Environmental Department and the Occupational
The new Occupational Health and Safety structure aims to strengthen the culture of safety. In a young company that is continuously evolving, all the aspects related to safety are vital for ensuring excellence in the operation. As part of the area’s activities, the first Internal Work Accident Prevention Week (Sipat – Semana Interna de Prevenção de Acidentes do Trabalho) was held, involving employees, suppliers, and partners that operate directly in the Caetité unit. Another new development was the strengthening of coordination of the Communities’ Relationship management unit, which is part of the Sustainability Management unit, through structuring of the Corporate Communities Relationship Policy (PCRC). Further important initiatives were the mapping of stakeholders, actions for social dialog, and the start of implementation of a system for management of demands. The initiative strengthens the Company’s links with the local communities of its projects, based on the concept of continuous dialog with the population that participates in Renova’s day-to-day activities, in all the regions where it operates. In the area of Environment, Renova held the first Seminar on social-environmental Management of the Alto Sertão complex, which resulted in publication of the book Traditional Knowledge and Medicinal Plants of the Alto Sertão (Saberes Tradicionais de Plantas Medicinais do Alto Sertão). This book is available on Renova’s website and also in municipal libraries and schools of the semi-arid region of Bahia.
CONTEXT AND ACHIEVEMENTS
This new vision has already brought the Company important results in performance. In 2014, Renova overcame the challenge of the delay in delivery of the transmission line for the Alto Sertão I complex, creating a plan of action to begin its commercial operation.
Health and Safety Department – previously a single management, and now each managed by a separate manager. Both still report to the Chief Environment and Sustainability Officer. The reorganization also included creation of an Environment General Management unit, under which the Environment Management unit (GMA) and the Environmental Feasibility Unit (GVA) are two separate, subordinate management units.
47 RENOVA 2014
SETTING OPERATIONAL RECORDS GRI G4-13
Within the area of social responsibility, Renova made a significant advance with its main private social investment initiative – the Catavento program, launched in 2012. In 2014 the program received a new social sub-credit, of R$10 million, from the Brazilian Development Bank (BNDES), to be invested in the Southeast of the State of Bahia. The focus of the Catavento program is to promote sustainable development in its territory, through projects aligned with local demands, such as fostering development of local production chains, technical advice for family agriculture, development of social technologies for storage of water resources, and several other initiatives.
THE CHICO MENDES AWARD
ANNUAL SUSTAINABILITY REPORT
48
More information in the Social Performance section
The Catavento program won the Green Seal (Selo Verde) certificate – and the Chico Mendes Social-environmental Award for 2014 – as outstanding in the category “Responsible Socio-environmental Action”.
RENOVA COMPLETED OPERATIONAL STARTUP OF THE ENTIRE ALTO SERTÃO I WIND FARM COMPLEX IN RECORD TIME: 184 AEROGENERATORS IN ONLY THREE DAYS
THE BENCHMARKING BRASIL 2014 PROGRAM In 2014, in the 12th annual edition of this event, Renova was placed in the ranking of companies with the best sustainability practices in Brazil, for its production of the book Traditional Knowledge of the Alto Sertão (see more information about the book in the Environmental Performance Section). Benchmarking Brasil is a program of sustainability certification for companies that set an example in social-environmental action. This is an independent initiative, with voluntary participation by companies, which submit their management model for assessment by an international multidisciplinary technical committee.
CORPORATE STRUCTURE: IN CONTINUOUS EVOLUTION One of Renova’s distinguishing features is its permanent focus on profitability, high standards of governance, and compliance. It is recognized in the market for its complete beginning-to-end creation of projects: it creates the business plan; makes a complete evaluation of the context (including the macroeconomic outlook, exchange rates, currency and financing lines); and before construction, assesses production risks, the supplies and equipment chain, and the participation of partners in structured transactions. To do this in practice, Renova is continually evolving its management of people, and investing in training and new knowledge for the whole of its ‘internal public’. As an example, in 2014 its Human Resources department underwent significant restructuring, with new internal segmentation. A first cycle of performance was completed at the beginning of the year, and the second put in place, consolidating the model of establishment of targets. Also in 2014, Renova expanded its physical structure in the three cities of: Caetité, Salvador and São Paulo, further facilitating the integration between its areas.
MAJOR HIGHLIGHTS OF 2014
1. According to EPE, this was the Brazilian electricity auction with the highest-ever degree of competition. The average sale price for photovoltaic solar energy at the auction was R$215.12/MWh. 2. Renova sold supply of 106.9 MWp, to be generated in four solar farms, also in Bahia.
4. In 2014 Renova began development of the first hybrid wind/solar generation project in Brazil. This will have installed capacity of 4.8 MWp, corresponding to an offtake level of approximately 1 MW average. It will be built in Bahia, in the same region as Renova’s wind farms. The solar component will have approximately 20,000 photovoltaic units, fixed support structure, and four inverters. Construction begins in 2015. Within the same project, there will be two wind farms with installed capacity of 21.7 MW corresponding to offtake of 11.0 MW average.
ENERGIA EÓLICA:
CONTEXT AND ACHIEVEMENTS
One of Renova’s strongest achievements in 2014 was its participation in the 2014 Reserve Energy (LER) auction, on October 31. The government’s Energy Research Company (EPE) reports that this auction attracted investments of approximately R$7.1 billion – part of which in construction of 31 projects. There was sharp competition for the photovoltaic solar projects, and for the first time in Brazil’s regulated market solar projects were offered in an auction dedicated to them alone. Highlights of that auction:
3. After the auction, Renova and SunEdison announced the creation of a joint venture for development of solar energy projects totaling 1 GW in Brazil. This partnership will enable the two companies to operate and place solar power projects in the Brazilian regulated market.
49 RENOVA 2014
SOLAR POWER: A LATENT MARKET, READY TO GROW
WIND POWER: SUCCESSFUL BY NATURE 2014 was an extremely important year in the development of wind power. According to GWEC, worldwide total capacity grew by 51,477 MW – a year-onyear increase 44% greater than in 2013. Renova’s most significant events as part of this achievement were: 1. Renova started up operation of the 14 wind farms of the 2009 LER auction – the Alto Sertão I complex. This is considered the largest wind power complex in Latin America, with 294.4 MW of installed capacity. Six wind farms contracted at the 2010 LER auction – part of the Alto Sertão II complex – also started commercial operation in 2014, with installed capacity of 167.7 MW.
50
4. In the regulated market, Renova sold 20.9 MW average at the 2014 LER (Reserve Energy) auction, corresponding to 43.5 MW of installed wind power capacity. This will be generated by three wind farms in Bahia, in the same region where Renova currently operates. At the 2014 A–5 LEN auction Renova placed 108 MW, to be generated by five wind farms to be built in the region of Umburanas, also in Bahia State, with offtake guarantee level of 49.4 MW average.
INSTALLED CAPACITY (BY TYPE OF MARKET) IN MW
36%
902 MW FREE MARKET
CONTEXT AND ACHIEVEMENTS
3. In the free market, Renova placed 308.0 average MW in a 50%/50% partnership with Cemig for construction of a wind complex in Jacobina, in Bahia, with 26 wind farms and total installed capacity of 676.2 MW.
At the end of 2014 Renova had 2,510.9MW of installed capacity contracted:
64%
1,609 MW
REGULATED MARKET
51 RENOVA 2014
2. Timetable coordination for connection with the transmission lines the moment they were ready was a major logistical challenge for the whole of Renova’s engineering team. A total of 184 aerogenerators were brought into operation in record time – three days (in Alto Sertão I); and a further 100 aerogenerators were commissioned in only three hours (in the Alto Sertão II complex). The Company prepared carefully for this efficient and structured achievement – sustained by strong risk management, and demonstrating the technical capacity of the whole of Renova’s team.
INSTALLED CAPACITY: BUILT, AND IN DEVELOPMENT (MW)
35%
871 MW BUILT
65%
1,640 MW
IN DEVELOPMENT
OBJECTIVES FOR 2015 For Renova, one constant factor is the quest for opportunities able to generate value and contribute to development of the regions where the company operates. In both the short and medium term, the Company’s daily work involves major efforts in guiding the entrepreneurial vision toward new businesses, supported by efficient strategic planning. Renova currently has three major objectives as its focus for 2015: delivery of the Alto Sertão III complex; maintenance of continued high availability of the operation; and continuing development of a consistent and innovative portfolio of operations. The Company expects to conclude licensing and other procedures for environmental and regulatory feasibility to enable it to go forward with the process of sale and placement for the Facheiro wind farm, in the State of Rio Grande do Norte, in 2015.
See more information in the Outlook
and Challenges section
WE GROW SUSTAINABLY AND WITH CONTINUOUS IMPROVEMENT IN EFFICIENCY, PRODUCTIVITY AND QUALITY IN THE POWER GENERATED
ECONOMIC PERFORMANCE
THE FORCE THAT IMPELS RENOVA FORWARD Renova’s significant results for 2014 indicate its sustainable growth in a continual development of increasing efficiency, productivity and quality in all the phases of production of electric power. Net operational revenue in 2014 was R$302.9 million, or 34.0% more than in 2013.
NET OPERATIONAL REVENUE (R$ mn) 350
302.9
300
226.0
250 200 150
ANNUAL SUSTAINABILITY REPORT
54
115.6
100 50
36.6
0 2011
2012
2013
2014
These positive numbers are the results of technical skill and knowledge, entrepreneurial vision, and efficient sales and contracting, sustained by a structured management able to deliver the operations with a high level of availability – positive for the Company’s revenue.
2014 NET OPERATIONAL REVENUE R$302.9 MILLION
Renova’s successful bidding at auctions in 2014 brought its total of installed capacity contracted to 2,510.9 MW, including the 14 wind farms of the Alto Sertão I complex, placed in the 2009 LER auction, and six wind farms of the Alto Sertão II complex, placed at the 2010 LER auction – all of the latter being in the Southwest of Bahia. Of the total installed capacity, 64.1% is for contracts in the regulated market, and the rest in the free market. At the end of the year Renova had a substantial total of 871 MW completed and operating, or 34.7% of the total contracted – and 1,640 MW in development, representing the remaining 65.3% of the Company’s total contracted capacity. These developments bring Renova to a new phase, in which it can be seen as a company operating throughout the entire production chain: prospecting, development, construction, operation and maintenance. Over the years Renova has grown fast due to the market demand for electricity, and the potential for wind and solar sources. In the new situation Renova re-emphasizes its vision of operating on the basis of generation of value, with profitable projects, always conscious of the challenges of execution and operation, supported by dynamic and efficient internal management. With recent climate variation developments, in which Brazil’s until now essentially hydroelectric and thermal generation capacity faced almost unprecedentedly low water reservoir levels due to lack of rainfall, it becomes increasingly difficult to forecast the total generation by all the companies supplying the National Grid – and thus to plan operation of the Brazilian system. Another factor creating uncertainty in the outlook is the lead time for a generation project from conception through to commercial operation – for the various types of energy source – allied to the instability of the environmental bodies. All these factors make it difficult to set timetables for operation of generators and transmission lines.
See more information in the Profile section
As a result of the restructuring in the Engineering and Operations management division, Renova has strengthened its activity as a generator from renewable sources, with an up-to-date vision of management of its value chain. The new format divides the area into three: Project Development; Construction; and O&M (Operation and Maintenance). The Engineering management unit functions as a block that links these areas, with its focus on accompanying, developing, commissioning and technical support at all phases of the process. In parallel, the Supplies and Infrastructure Area, responsible for management of contracts and suppliers, has also been reorganized.
This change was the starting point for the creation of a management-by-project model – since the Company, currently, has 10 projects in operation and processes of construction taking place simultaneously in a portfolio of 14.8 GW. One of these projects is the largest onshore wind complex in the world – Alto Sertão III, with 736.8 MW of capacity contracted – and there are two more major projects already on the development agenda: one (Jacobina) in partnership with Cemig, with 338.1 MW installed capacity; and the other (Umburanas), with two wind farms planned for total capacity of 463.5 MW.
ECONOMIC PERFORMANCE
INTEGRATED MANAGEMENT OF ENGINEERING: FOCUS ON RESULTS
55
MAIN FIGURES FOR THE YEAR GRI G4-EU1; EU10 POWER SUPPLY PLACED IN 2014 (Regulated market)
Source Location Number of wind farms Installed capacity Contracted supply Price Commercial startup
2014 LER AUCTION
2014 LER AUCTION
2014 A–5 AUCTION
TOTAL
Solar
Wind
Wind
-
Gold mine
Gold mine
Umburanas
-
4
3
5
12
7
43.5 MW
108.0 MW
205.0 MW
10.9 MW average
20.9 MW average
49.4 MW average
81.2 MW average
R$220.30/ MWh
R$138.9/ MWh
R$136.42/ MWh
-
October 2017
October 2017
January 2019
-
53.5 MWp
7. Calculation includes 50% interest in the joint venture with SunEdison.
INSTALLED CAPACITY (MW) IN 2014 (by source, and market) GRI G4-EU1; EU2; EU10
REGULATED MARKET – SOURCE: WIND COMPLEX
Alto Sertão I
AUCTION: TYPE AND YEAR
Alto Sertão II
Alto Sertão III – Phase A
Umburanas
Gold mine
LER 2009
LER 2010
A-3 2011
A-5 2012
LER 2013
A-5 2013
Installed capacity (MW)
294.4
167.7
218.4
18.9
159.0
355.5
108.0
43.5
Power sold (MW average)
127.0
78.0
103.6
10.2
73.7
178.0
49.4
20.9
14
6
9
1
9
17
5
3
Jul. 2012
Oct. 2014
Mar.–Sep. 2015
Jan. 2017
Sep. 2015
May 2018
Jan. 2019
Oct. 2017
Number of wind farms Start of operation
A-5 LER 2014 2014
FREE MARKET – SOURCE: WIND
ANNUAL SUSTAINABILITY REPORT
56
COMPLEX
Alto Alto Alto Alto Sertão III – Sertão III – Sertão III – Sertão III – Phase A Phase B Phase B Phase B
– Phase A
Jacobina
Light I
Light II
Mercado Livre I
Mercado Livre II
Mercado Livre III
Cemig PPA 8
Installed capacity (MW)
200.7
202.8
21.6
101.4
32.4
338.1
Power sold (MW average)
100.2
100.2
11.0
50.0
15.0
147.5
12
12
1
8
1
TBD
Sep. 2015
Sep. 2016
Jan. 2016
Jan. 2017
Sep. 2015
Sep. 2018
PROJECT
Number of wind farms Start of operation 8. Includes 50% equity interest.
REGULATED MARKET – SHPs ESPRA
Brasil PCH9
Installed capacity (MW)
41.8
148.4
Power sold (MW average)
18.8
95.8
3
13
2008
2008/2009
2014 LER 10
Hybrid
Installed capacity (MW)
53.5
4.8
Power sold (MW average)
10.9
1.0
4
1
Oct. 2017
2016
Number of generating units Start of operation 9. Includes 51% equity interest.
REGULATED AND FREE MARKETS – SOLAR
Number of generating units Start of operation 10. Includes 50% equity interest in joint venture.
CONTRACTED INSTALLED CAPACITY GRI G4-EU1; EU2
Installed capacity in commercial operation at the end of 2014 was 652.3 MW, comprising 462.1 MW in wind farms and 190.2 MW in small hydro plants.
CONTRACTED INSTALLED CAPACITY 2,402.9
1,709.3 1,267.6
58.3
190.2 In operation
SHP Wind Solar
1,072.6 190.2 2015
58.3
1,492.0 58.3
652.3
462.1
2,510.9
1,297.0 190.2 2016
1,460.8
190.2 2017
2,154.4
190.2 2018
2,262.4
190.2 2019
ECONOMIC PERFORMANCE
At the end of 2014 Renova had a total of 2,510.9 MW of installed capacity contracted, as follows: • Wind (regulated market) – 1,365.4 MW • Hydroelectric (regulated market) – 190.2 MW • Wind (free market) – 897.0 MW • Solar (regulated market) – 53.5 MW (including 50% of the joint venture with SunEdison) • Solar (free market) – 4.8 MWp (hybrid project)
57
OUTLOOK AND MARKET GRI G4-EU2; EU4
Brazil has been showing its potential for diversification of its energy supply sources. Aneel reports that Brazil currently has 3,637 generation units in operation, with total installed capacity of 135,241,742 kW. Over the coming years, total generating capacity of 36,255,176 kW is planned to be added to this, through 192 enterprises currently under construction, and a further 591 for which works have not started.
According to Abeeólica, Brazil currently has 5.6 GW of wind generation capacity installed, comprising 4% of the country’s total. The association estimates that 15.2 GW will be added to this by the end of 2018 – this includes the volumes of supply contracted at the sixth LER auction, on October 31, 2014. The chart below shows growth in Brazil’s installed capacity, with forecast for growth to 2023, in GW, by source:
BRAZIL: INSTALLED CAPACITY, BY SOURCE – GW (WITH PROJECTIONS TO 2023)
Total capacity: CAGR from 2013 to 2023E: 4.6%
ANNUAL SUSTAINABILITY REPORT
58
11 11
31 10 13
28
26 11 12
22
17 11 11
142
133
125
156
149
11 12
86
89
93
2013
2014
2015
35 12 13
98
102
2016
2017
167
175
168
196
186
179
CAGR 2014-2023
40
42
10.4%
39
47
36
12 15
12 16
12 18
12
0.9%
Other
12 13
20
6.5%
Natural Gas
107
107
109
111
114
117
3.1%
Renewables
Hydroelectric
Source: Brazil 10-year Energy Plan (PDE) for 2014-2023 (Aneel). 2018
2019
2020
2021
2022
2023
START OF COMMERCIAL OPERATION GRI G4-EU4 In all its operations Renova seeks to marry operational efficiency with competence in implementation. In Brazil there are three categories of operational agent: generators, transmission companies and distributors. Generators depend on the transmission infrastructure for the outflow of their product – for the volume they produce to be connected to the national grid. The operational start dates under the electricity supply contracts for the projects placed at the 2010 LER auction and the 2011 A–3 LEN auction were programmed – respectively – for September
2013 and March 2014. However, with the fragility of Brazil’s transmission system, the start of operation of the wind complexes was delayed. In March 2014 Aneel published a dispatch changing the timetable of the wind farms that sold electricity at the 2011 A–3 LEN auction, to bring their operational start dates into line with the operational start date of the transmission line that will serve them. It added a further 30 days’ grace period for start of commercial operation, from the day of start of operation of the transmission line. As a result of this, Renova is not subject to the penalties specified by
The 14 wind farms in the interior of Bahia that sold supply (127.0 average MW) in the 2009 LER auction began commercial operation on July 4, 2014. From that date the output of the wind farms, with installed capacity of 294.4 MW, began to be accounted under the terms of the commercial contract signed between Renova and the CCEE. Up to the start of commercial operation, the wind farms had received the revenue from the electricity sold, as per contract. These windfarms, in the interior of Bahia State, placed supply of 127.0 MW at the auction. Initially, the contract under the 2010 LER auction provided for start of supply in 2013. Because the Igaporã II substation, for which the responsible party is the transmission company, was not ready in time, Renova requested, and was granted, alignment of the supply start date with the start of operation of that substation. Thus it was only in September 2014 that the works necessary for outflow of the power generated by the 2010 LER wind farms was concluded – and start of commercial operation became possible.
The nine wind farms of the 2011 A–3 LEN auction continue to have their supply dates synchronized with the transmission facility, and the contract will start within 30 days after the startup of the transmission line.
WIND POWER: SUSTAINABLE EXPANSION AND EFFICIENT OPERATION Over the course of the year Renova followed its strategy of growth in the wind sector and sold 378.30 MW of installed capacity. Of this total, 308.0 MW was traded in the free market for production by Renova’s 50%/50% joint venture with Cemig. In the Regulated Market, Renova placed 20.9 MW average at the 2014 LER auction, to be provided by three wind farms in the area where Renova currently operates, and 49.4 MW average at the November 2014 A–5 auction, for supply by five wind farms also in Bahia, in a region of new exploration by the Company. A project in partnership with Cemig plans a total of 676.2 MW of installed capacity in and around the towns of Jacobina and Mirangaba, in Bahia.
ECONOMIC PERFORMANCE
In April 2014 Aneel formally made the same concession for the plants contracted in the 2010 LER auction, when the transmission line came into operation. Again Aneel gave a grace period of 30 days for start of generation, from the date of start of operation of the transmission line. As with the 2011 A–3 LEN plants, Renova is not subject to contractual and/ or regulatory penalties for the period when the transmission line was not ready, and the original period of supply under the contract was maintained.
On October 11, 2014, the six wind farms that placed supply contracts in the 2010 LER auction began commercial operation. As from that date, the output of the wind farms with installed capacity of 167.7 MW began to be accounted under the terms of the commercial contract signed between the Company and the CCEE. Their timetable for start of operation was aligned with the start of commercial operation of the transmission line. The total of supply placed was 78.0 MW. The wind farms that placed supply in the 2010 LER auction are also in the interior of Bahia State, in the same region of the interior of Bahia as the 2009 LER auction.
59 RENOVA 2014
the contracts and/or by regulation, during the period in which the transmission line is not ready. The overall period of supply under the contract was kept unchanged.
Brazil’s competition watchdog, Cade, approved acquisition by Cemig of 50% of the capital of a special-purpose company to be created by Renova, to handle and operate the contracts related to the project. After the acquisition, the two companies will share the investment
ANNUAL SUSTAINABILITY REPORT
60
Parallel to this, 20 wind farms contracted at the 2009 and 2010 auctions began commercial operation in 2014: In July, 14 wind farms comprising the Alto Sertão I complex, placed at the 2009 LER auction, with 294.4 MW of installed capacity; and in October, six of the wind farms contracted in the 2010 LER, with installed capacity of 167.7 MW. With a further nine wind farms, placed in the 2011 A–3 LEN auction, the latter group comprises the Alto Sertão II complex, with 386.1 MW of installed capacity. Both complexes are in the Southeast of Bahia. Part of Renova’s contribution to development of the wind power production chain in Brazil is acquisition of equipment produced in the country. Renova was a major player in promoting the project that culminated in creation of TEN – Torres Eólicas do Nordeste (‘Wind Towers of the Northeast’), a plant to be built in Jacobina, as a joint venture between the Brazilian construction company Andrade Gutierrez and the French group Alstom, for manufacture of wind power generation equipment. There will be benefits in terms of logistics, due to the proximity to Renova’s other wind farms, as well as increasing the wind power production capacity of the State of Bahia, and expanding the outlook for development in the region. Some €30 million (approximately R$105 mn) has been invested in TEN, which will generate approximately 250 new jobs directly, and more than 600 indirectly, with its plant built on a site of 140,000 m2, with capacity to produce 200 steel towers for aerogenerators per year.
SOLAR ENERGY: DEVELOPING THE BRAZILIAN MARKET October of 2014 was a winning month for our sales teams. Renova won Brazil’s first electricity supply auction held exclusively for solar energy – the 2014 LER auction – staking a claim to this market that has great potential. It placed solar energy supply of 21.8 average MW (corresponding to 106.9 MWp of installed capacity), to be generated by four generation plants in Bahia in the same region where the Company’s wind farm projects already operate. After the auction, Renova announced creation of a joint venture with SunEdison, to develop a total of 1GW in solar energy projects in Brazil, and stimulate development of the local production chain – in accordance with the local-production strategy of the BNDES. This partnership was conceived as the exclusive vehicle of both companies for operating and selling solar energy projects in the Brazilian regulated market. Renova has an equity interest of 50%, and the other 50% will be held by SunEdison, the world leader in solar energy services, which will supply the equipment for construction of the photovoltaic solar plants whose supply was placed in the 2014 LER auction. Another innovative project, structured and announced in 2014, was creation of Brazil’s first wind-solar hybrid generating plant. It will have 26.4 MW of installed capacity – 21.7 MW wind power and 4.8 MWp from photovoltaic solar energy – providing average generation level of 12 MW (equivalent to the consumption of a town of 130,000 people). This production has been fully placed in the free market. The complex will be built in the region of Caetité, where Renova already has wind generation plants. Works on the wind farms were begun in 2014, for scheduled
In the last four years, the price of solar power, worldwide, has fallen by 54%, especially for solar power from photovoltaic panels. In many countries the cost of solar energy is already more competitive than the other three main sources worldwide – diesel, coal and gas. (Source: Bloomberg, 2014). With evolving technology and increasing scale of supply in the medium term, it is possible to see a trend of reduction in the cost of solar-generated power, opening opportunities, in distributed-generation plants, and expanding the possibilities for financing in Brazil.
61 RENOVA 2014
This project will further establish Renova’s leadership in the market for contracted renewable projects in Brazil. It also underlines Renova’s status as pioneer in investment in development of solar energy in the country. Brazil has excellent potential,
in comparison to countries of Europe, and the United States – and its market share is growing: solar energy is now a significant element in the EPE’s 10-year plan for the country’s electricity supply.
ECONOMIC PERFORMANCE
delivery in 18 months. The solar plant has an estimated construction lead time of 12 months, due to the project’s complementary technical and logistical significance. The funding, of up to R$108 mn, was provided by a credit line from the Innovation Development Agency (Finep) – linked to the Science, Technology and Innovation Ministry (MCTI). The output from the two sources will use the same transmission line, and have separate generation peaks – solar, during the day, and wind power, at night – optimizing distribution logistics, and costs.
INSTALLED CAPACITY, BY COUNTRY (MWp)
36,491 33,084 Emerging Countries
23,751 18,925 17,709
808
509 19
Brazil
35
Russia
México
155
Chile
706
South Africa
Thailand
1,180
Ukraine
1,720 1,929
Korea
2,132
Canada
Greece
2,621
Czech Rep.
3,206
India
4,167
Australia
Spain
France
UK
USA
Italy
Japan
China
Germany
5,342 5,435 4,588
Source: Bloomberg forecasts for 2014.
SMALL HYDROELECTRIC PLANTS (SHPs) Renova has a diversified portfolio of investments providing a balance between management of operating projects, projects under construction and projects in development. Those in operation include the SHPs. Renova’s acquisition of 51% of Brasil PCH, completed in 2014 through its subsidiary Chipley, for R$739.9 mn, was in line with this business model of project balance. It added 13 SHPs to Renova’s then portfolio of three small hydro plants, in operation since 2008 – operated by the subsidiary Espra, in the extreme South of Bahia.
62
This transaction was part of the investment agreement between Renova and Cemig GT, in which Chipley – subsidiary of Renova – acquired 51% of Brasil PCH, and Cemig GT entered the controlling block of Renova, through subscription of new shares. The plants of Brasil PCH have total installed capacity of 148.4MW11 and assured offtake of 95.8 MW average. All have longterm sales contracts (20 years), placed under the government’s Proinfa program to encourage alternative energy sources. The transaction also added robustness to Renova’s cash position, thus extending its horizon for new investments.
11. Based on 51% equity interest.
In September the first issue of non-convertible debentures by Renova Eólica, for a total of R$146.0 mn, was approved. These were issued as Infrastructure Debentures, due to the projects qualifying as priority projects under ministerial orders issued by the Mining and Energy Ministry. The proceeds were allocated to the Alto
AT THE END OF 2014 RENOVA’S TOTAL INSTALLED CAPACITY WAS
2,510.9 MW IN 2014 FITCH MAINTAINED ITS ‘A(BRA)’ RATING FOR RENOVA, WITH LONG-TERM OUTLOOK STABLE
Sertão II complex, as a complement to the financing from the BNDES. The first series, for R$73.0 mn, was disbursed in December 2014, and the second, of the same amount, in January 2015. A further corporate debenture issue of R$500.0 million was placed on December 30, 2014, the proceeds of which were used to pre-pay the previous debenture, of R$370.8 mn, generating an addition to the Company’s cash position of R$129.2 mn. The new debentures have the same remuneration as the prior issue, maturity of 10 years, and grace period of three years for the principal – thus lengthening the Company’s debt profile. The BNDES has qualified the plan for Phase A of Alto Sertão III – comprising the wind farms in the group projects referred to as Mercado Livre III, LER 2013, Light I and 2012 LEN A–5 – for feasibility assessment for financial support by its Qualification, Credit and Capital Markets Committee. These wind farms have aggregate installed capacity of 411.1 MW, for delivery over a period from 2015 to early 2017. The Company is currently awaiting the analysis and approvals of the BNDES, to confirm the amount and approve the financing. In December 2014 the BNDES approved bridge loans of R$700 mn for Phase A of Alto Sertão III. Also in December two tranches of R$215 mn and a further R$85 mn were approved for release by the end of first quarter 2015 – the rest being scheduled for payment in the second half of the year. The bridge loans will be settled on the date of disbursement of the BNDES long-term financing. In May 2014 the BNDES approved the long-term financing of R$1.044 billion for Alto Sertão II, for amortization in 16 years. This was released in three tranches – in June and August 2014 and in the first quarter of 2015.
ECONOMIC PERFORMANCE
Renova made important financial transactions during 2014, both in terms of raising of funds, and also in terms of changes in stockholdings to provide an even stronger stockholding and financial structure, further enhancing the Company’s credibility in the sector for new investments. As a result the Company’s rating by Fitch Ratings, of A(bra), with long-term outlook stable, was maintained. According to Fitch, the rating is based on the strength of Renova’s operational assets and the projects it develops.
63 RENOVA 2014
FINANCIAL TRANSACTIONS
FINANCIAL RESULTS GRI G4-9 CONSOLIDATED PROFIT AND LOSS ACCOUNT (R$’000)
2014
2013
Change
Gross operational revenue
315,534
234,545
34.5%
(-) Taxes - PIS, Cofins and ICMS
(12,667)
(8,534)
48.4%
NET OPERATIONAL REVENUE
302,867
226,011
34.0%
Non-manageable costs
(14,220)
(11,437)
24.3%
Manageable costs
(46,413)
(18,154)
155.7%
(80,380)
(68,449)
17.4%
OPERATIONAL PROFIT
161,854
127,971
26.5%
Administrative expenses
(90,201)
(38,392)
134.9%
(1,808)
(1,077)
67.9%
(60,060)
(72,261)
-16.9%
(1,620)
-
-
(23,222)
-
-
(5,259)
-
-
Income Tax and Social Contribution Tax
(15,407)
(9,970)
54.5%
NET PROFIT
(35,723)
6,271
-669.7%
-11.8%
2.8%
-14.6 p.p.
1,239,783
1,203,010
3.1%
Depreciation
Administrative depreciation Financial revenues (expenses)
ANNUAL SUSTAINABILITY REPORT
64
Equity gain (loss) in subsidiaries Amortization of goodwill Gain (loss) on investments
Net margin Electricity volume sold (MWh)
NET OPERATIONAL REVENUE (R$’000)
2014
2013
Change
Net revenue – SHPs
22,565
40,525
-44.3%
Net revenue – Wind power
263,169
185,349
42.0%
Net revenue – Solar power
101
137
-26.3%
17,032
-
-
302,867
226,011
34.0%
Net revenue – Power trading Net operational revenue
Consolidated costs (the sum of manageable and non-manageable costs) in the year totaled R$60.6 million. This was an increase of 104.9% from 2013, mainly due to operation and maintenance services on rotors, BOP (Balance of Plant Equipment) services for the 2009 LER wind farms, the end of the two-year grace period following delivery of the wind farms, and payments for services of preservation of the 2010 LER and 2011 A–3 plant. There was also pay-
ment for leasing of the sites for Alto Sertão III – these costs did not exist in 2013 – and purchase of electricity for resale. Depreciation in 2014 was R$80.4 million, compared to R$68.5 million in 2013. The increase reflects the start of commercial operation of the 2010 LER wind farms. Total administrative expenses in the year were R$90.2 million, or R$51.8 million more than in 2013. This reflects: the increase in the number of employees (from 223 to 281); higher provision for and payment of bonuses; and higher expenses on outsourced suppliers, rentals, land leasing, travel and discontinuation of projects.
CONSOLIDATED FINANCIAL REVENUE (EXPENSES) (R$’000)
2014
2013
Change
53,082
32,426
63.7%
52,871
32,070
64.9%
211
356
-40.7%
Financial expenses
(113,142)
(104,687)
8.1%
Costs of debt
(103,959)
(98,034)
6.0%
(9,183)
(6,653)
38.0%
(60,060)
(72,261)
-16.9%
Financial revenues Revenue from cash investments Other financial revenues
Other financial expenses Net financial revenues
ECONOMIC PERFORMANCE
RENOVA’S NET OPERATIONAL REVENUE INCREASED 34% FROM 2013 TO 2014
65 RENOVA 2014
Net operational revenue in the year was R$302.9 mn, 34.0% higher than in 2013. The difference mainly reflects revenue from the generation capacity contracted in the 2010 LER Auction, after those plants came into commercial operation, on October 11, 2014. Revenue from wind power was R$263.2 million, or 42% more than in 2013, due to the addition of the 2010 LER production. In contrast to the significant increase in wind power revenue, total net revenue was affected by the lower total revenue posted for the SHPs (it does not include the revenue of Brasil PCH). The net value of the financial adjustment for generation, which was negative for the SHPs and received a positive effect from the wind farms, was nevertheless R$19.8 million negative in the year. Revenue from trading in 2014 was R$17.0 million, and revenue from Solar energy was R$101,000.
For the year of 2014, Renova reported net financial expenses of R$60.1 mn, 16.9% less than its net financial expenses of 2013. This arises from the higher cash balance than in the previous year, partially offset by the higher total of financings, and by the operational startup of the 2010 LER projects, causing financing costs to cease to be capitalized.
EBITDA (R$’000)
2014
2013
Change
Net operational revenue
302,867
226,011
34.0%
NET PROFIT (LOSS)
(35,723)
6,271
-669.7%
15,407
9,970
54.5%
105,410
69,526
51.6%
113,142
104,687
8.1%
(53,082)
(32,426)
63.7%
145,154
158,028
-8.1%
47.9%
69.9%
-22. p.p.
(+) Equity method gains (losses)
1,620
-
-
(+) Gain/loss on investments
5,259
(+) Income tax and Social Contribution tax (+) Depreciation and amortization (+) Financial expenses (–) Financial revenues EBITDA EBITDA margin
ANNUAL SUSTAINABILITY REPORT
66
(+) Financial adjustments – generation
19,848
2,674
642.3%
(+) Provision for 2010 LER wind farms
(4,464)
4,644
-
ADJUSTED EBITDA
167,417
165,347
1.3%
55.3%
73.2%
-17.9 p.p.
Adjusted EBITDA margin
Adjusted Ebitda for the full year of 2014 was R$167.4mn, with margin of 55.3%. The difference from 2013 mainly reflects: higher administrative expenses due to higher expenditure on outsourced services; higher manageable costs on purchase of electricity for resale and expenses on maintenance and operation; negative equity contribution from subsidiaries, due to amortization of goodwill for the acquisition of Brasil PCH; and the financial adjustment in generation.
2014 ADJUSTED EBITDA: R$167.4 MN – WITH EBITDA MARGIN OF 55.3%
EQUITY METHOD GAINS (LOSSES) In the result for the whole of 2014 (February to December – reflecting acquisition in February), Brasil PCH’s net profit was R$4.9 million. Chipley has a 51% interest in the profit of Brasil PCH. The total goodwill premium on the acquisition was R$656.7 million. The Company identified and measured the fair value of the existing assets and liabilities in Brasil PCH based on the best existing estimate, and began to post the amount of the monthly amortization of goodwill in the month of the acquisition. The amortization accounted in Chipley for the year (February through December) was R$32.6 million.
4Q14
Feb.-Dec./14
Net revenue
42,213
202,325
(10,884)
(38,464)
Expenses
(5,084)
(16,089)
Depreciation
(10,703)
(39,525)
Net financial revenues (expenses)
(28,119)
(94,321)
Income tax and Social Contribution tax
(2,576)
(9,041)
(15,153)
4,885
4Q14
Feb.-Dec.
Equity gain (loss)
(7,787)
2,491
Amortization of goodwill
(9,168)
(32,592)
(72)
(72)
211
211
(33)
(33)
(16,849)
(29,996)
Costs
Net profit
The effect of the acquisition on Chipley was as follows:
Operational profit Net financial revenues (expenses) Income tax and Social Contribution tax Net gain (loss)
The effect of the acquisition on Renova is as shown below. Note that until the end of September Renova consolidated 60% of Chipley, and in 4Q14 began to consolidate 100%.
4Q14
Feb.-Dec.
Equity method gains (losses)
(7,787)
(1,620)
Amortization of goodwill
(9,168)
(23,222)
(16,955)
(24,842)
(5,259)
(5,259)
Gain (loss) Gain/loss on investments
67 RENOVA 2014
(R$’000)
ECONOMIC PERFORMANCE
BRASIL PCH (100%)
STATEMENT OF FINANCIAL POSITION (Balance Sheet) – R$’000
CONSOLIDATED ASSETS
DEC. 31, 2014
DEC. 31, 2013
692,655
441,615
CURRENT
86,599
132,598
Loans and financings
509,018
241,449
Debentures
Clients
68,627
20,923
Suppliers
Others
28,411
46,645
Others
4,849,587
3,230,564
160,487
123,981
8,745
1,098
713,312
-
CURRENT Cash Cash investments
NON-CURRENT Deposits, etc. Other Investments
ANNUAL SUSTAINABILITY REPORT
68
CONSOLIDATED LIABILITIES
DEC. 31, 2014
DEC. 31, 2013
517,165
1,380,939
355,442
1,100,134
884
11,239
100,200
242,418
60,639
27,148
2,515,436
1,290,640
1,917,051
953,855
572,315
325,028
26,070
11,757
STOCKHOLDERS’ EQUITY
2,509,641
1,000,600
Share capital
2,526,240
981,585
NON-CURRENT Loans and financings Debentures
Fixed assets in service
2,175,130
1,459,662
Capital reserves
55,176
55,067
Fixed assets in progress
1,791,913
1,645,823
Retained losses
(71,775)
(36,052)
-
-
5,542,242
3,672,179
Funds for future capital increase Total assets
5,542,242
3,672,179
Total liabilities
MAIN VARIATIONS IN ASSETS The largest effect was the net inflow of cash from the capital increase, and inflow of cash from new financings, mainly the BNDES bridge loan for Alto Sertão III. Additional factors included: the corporate debenture issue, with settlement of the first series of debentures of Renova Eólica (Alto Sertão II) – which had already been partially absorbed by conclusion of the works of Alto Sertão II; advances to suppliers for the projects already contracted; and progress on Alto Sertão III.
Fixed assets in service was R$715.5 mn higher than at December 31, 2013, due to the operational startup of the 2010 LER projects. During construction, Fixed assets under construction are accounted in Fixed assets in progress; after a wind farm starts operation it is accounted in Fixed assets in service.
R$302,867,000
34% YEAR-ON-YEAR GROWTH
ECONOMIC PERFORMANCE
NET OPERATIONAL REVENUE
1,239,783 MWH SOLD
RENOVA 2014
69
MAIN VARIATIONS IN LIABILITIES The balance of loans, financings and debentures in current liabilities at the end of 2014 was R$755.1 mn lower than at December 31, 2013, due to settlement of the bridge loans and part of the Notes raised for Alto Sertão II, following the release of the long-term financing from the BNDES. This amount was, thus, removed from current liabilities and added to non-current liabilities.
In non-current liabilities, the Loans, financings and debentures line increased by R$1,210.5 million in the year, reflecting release of the long-term financing for Alto Sertão II, receipt of proceeds of the new corporate debenture and of the first series of the Renova Eólica debenture, and the bridge loans for Alto Sertão III. In Stockholders’ equity, the increase of R$1,508.9 mn in the full year was principally due to the capital increase.
FINANCINGS
ANNUAL SUSTAINABILITY REPORT
70
The total of short and long-term loans, financings and debentures at the end of 2014 was R$2,859.00 mn, comprised as shown in this table, which gives tenors and rates.
CONTRACT
Rate
$’000
BNDES Salvador Eólica
TJLP + 1.92%
583,145
BNDES (social subcredit)
TJLP
BNDES Bahia Eólica
TJLP + 2.18%
BNDES (social subcredit)
TJLP
BNDES Renova Eólica
TJLP + 2.45%
674,010
BNDES Renova Eólica
TJLP + 2.60%
159,071
BNDES (social subcredit)
TJLP
BNDES – Bridge Loan I
TJLP + 3.65%/2.50%
215,094
Itaú (Bridge Notes)
100% CDI + 0.98%
256,598
BNB
9.5% a.a.
*
Debentures – 3 Issue Holding Co.
123.45% CDI
Debenture – 1 series – Renova Eólica
IPCA + 7.60% a.a.
Finep – CEOLI Itaparica
3.5% a.a.
rd
st
Total debt Funding cost Debt net of costs Cash and cash equivalents Net debt**
4,258 285,231 2,699
1,323
96,635 500,269 74,343 6,356 2,859,032 (13,340) 2,845,692 509,018 2,336,674
* The financings have interest rates of 9.5% p.a. (which may be reduced to 8.08% under a 15% non-default bonus). ** Cash equivalents plus cash investments.
MATURITIES TIMETABLE (R$ mn)
2,859,032
336,687
12 months
2016
124,457 2017
196,332 194,133 2018
2019
After 2019
Total
SOCIAL INVESTMENTS GRI EC1 The Catavento program is Renova’s main channel for promoting voluntary social initiatives. In 2014 the company invested R$2.7 million in projects for territorial and cultural development of the communities where it works, through initiatives of the Catavento program, and of the PPD. It was a period of monitoring the projects in the social-economic area that had received investment in infrastructure and training in 2013, such as work on technical assistance, higher farming education, and initiatives to strengthen
INVESTMENT OF R$2.7 MILLION IN PROJECTS FOR TERRITORIAL AND CULTURAL DEVELOPMENT OF THE COMMUNITIES WHERE RENOVA WORKS
Another aspect is what we call Organizational Development of the Institutions in the Territory: In 2014 the initiative to raise funds for this purpose supported preparation of 23 projects for participation in public tenders, in partnership with various community associations, and projects totaling value of R$657,003.00 were approved. The partner organizations include the Anísio Teixeira Foundation, the Municipal Culture Department of Igaporã and the Centro Público de Economia Solidária (Public Economic Solidarity Center). Further important investments under the Catavento program include: • Investment of R$1.176 million in Culture and Heritage – in actions and support for the MASB Museum, the Anísio Teixeira Musical Conservatory, Roda Cultural, FestCasa and Medicinal Plants of the Alto Sertão. • Organizational development of the Country Women’s Movement (Movimento de Mulheres Camponesas – MMC), technical consultancy assistance and farming education: a total of R$140,000 in investments. • Support for the environment: investment of R$209,573 in recovery of riverside forests and in use of organic waste.
71 RENOVA 2014
357,179
production chains. In the latter example, of the 10 groups supported in 2013 through training and improvement of construction and equipment infrastructure, five became part of the formal market in 2014, with revenue of approximately R$241,900.00.
ECONOMIC PERFORMANCE
1,650,244
SPONSORSHIP AND DONATIONS POLICY
THE SPONSORSHIP AND DONATIONS POLICY HAS ESTABLISHED ITSELF AS A SOCIAL PRACTICE IN TERRITORY WHERE RENOVA OPERATES
ANNUAL SUSTAINABILITY REPORT
72
10
R$ million
VALUE OF A NEW BNDES SOCIAL FINANCING FOR THE 2ND PHASE OF THE CATAVENTO PROGRAM
Renova seeks to meet demands that contribute to development of the territories with which it interacts, through action in education, the environment, sport or income generation. One of the means for voluntary financing is the PPD program, which supports initiatives in the territory where Renova operates that strengthen local social networks, are genuinely working for collective or public interest, converge with public policies for the region, support redemption of culture and heritage values, and/or support actions of citizenship, sport, the environment or income generation, helping to improve communities’ quality of life. Access to the PPD has, indeed, established itself as a social practice in territory where Renova operates. Institutions and the public authorities have shown familiarity with its policies, and 125 requests were received in 2014: 64 were approved and 61 refused. The following investments were made under the Sponsorship and Donations Policy:
IN 2014 IMPROVEMENTS WERE MADE TO THE ACCESS ROADS TO THE WIND FARMS
• Under the environment dimension, R$17,500.00 was invested in the Forest Animals Support Center; and R$53,000.00 was invested in Inter-municipal Selective Collection and in the same service in Caetité. • In Culture, R$143,115.00 was invested in various cultural initiatives of the region. • R$73,865.00 was invested in supporting economic initiatives. • R$46,666.00 was invested in education. • And R$120,032 was invested in initiatives related to sport.
DISTRIBUTION OF ADDED VALUE
GRI EC1
DIRECT ECONOMIC VALUE GENERATED (EVG) – 2014 (R$’000) Revenues
264,679
Economic Value Distributed (EVD) Operational costs
213,115
Employee salaries and benefits
42,894
Payments to suppliers of capital Payment to government
40,267
Investments in the community
2,702
Other
2,305
Total (R$ million)
565,081
ECONOMIC PERFORMANCE
1,821
NEW SOCIAL FINANCING FOR THE CATAVENTO PROGRAM In 2014 the BNDES approved a further R$10 million in social financing. This will be used in Cycle II of the Catavento program in 2015-17, for country and urban regions in four municipalities of Bahia: Caetité, Guanambi, Igaporã and Pindaí.
INVESTMENTS IN INFRASTRUCTURE GRI EC7 Renova’s investments in operational infrastructure are also reflected in improvements for the communities. In 2014 improvements were made in the network of road access to the wind farms, with construction of drains and run-offs, and earthmoving of damaged sections, with investment of approximately R$2 million. The works facilitate access for the community, and for the wind farm operation and maintenance teams, help prevent floods and landslides, and facilitate outflow of the region’s farming output. Complementing the investments in the community, the Environment Department supported the following initiatives through environment programs or voluntary actions:
R$47,211 SPENT ON PRODUCING THE RURAL ENVIRONMENTAL REGISTER FOR PROPERTIES WITHIN THE AREA OF ALTO SERTÃO I
R$352,215 SPENT ON TRAINING AND CONTRACTING OF LOCAL LABOR FOR THE ALTO SERTÃO II PROJECT
R$601,614 INVESTED IN THE ENVIRONMENTAL EDUCATION PROGRAMS PUT IN PLACE FOR THE ALTO SERTÃO II AND III PROJECTS
RENOVA 2014
73
SUSTAINABILITY IS IN EVERYTHING WE DO: EVERY INTERNAL DISCUSSION, ALL OUR PLANNING
ENVIRONMENTAL PERFORMANCE
SUSTAINABILITY: OUR DAILY ROTUINE Renova was born into a sustainable sector. As a result the subject of sustainability is part of all internal discussion and planning, from environmental studies and preparation for construction through to operation of the finished projects. The Chief Environment and Sustainability Officer, is one of Renova’s four statutory directors – indicating the strength and value of sustainability in the Company’s day-to-day life.
ANNUAL SUSTAINABILITY REPORT
76
See more information in the section
About this report
In its business strategy, Renova has to include several related aims: compliance with all aspects of all regulation; feasibility for wind- or solar-resourced projects; capacity for connection of the projects (transmission lines and networks); and profitability. Achieving this gives management the task of looking comprehensively at all the aspects of the energy value chain, from prospecting through sale and placement to construction and operation, guided at all times by the rational use of natural resources. The main aim is to maximize the value generated, as well as sharing its benefits with the whole of the Company’s relationship network – in line with Renova’s statement of material aims, which include biodiversity, communities and human rights.
IN 2014 RENOVA CREATED A WORKGROUP TO STIMULATE INTERNAL SUSTAINABILITY PRACTICES
Starting in 2014 Renova began to include the preparation of a Greenhouse Gas Emissions Inventory in its sustainability strategy – coinciding with the start of operations of the Alto Sertão I and II wind complexes. This made possible a more precise monitoring of the impacts and opportunities related to the emissions resulting from Renova’s activities. All these subjects are monitored closely by the office of the Chief Environment and Sustainability Officer, which organizes continuous forums to identify possibilities for broadening Renova’s activity on the social-environmental themes. In accordance with these guidelines, in 2014 Renova created a Sustainability Workgroup, with 16 people from various sectors and levels of the Company. Its aim is to propose, monitor and stimulate internal sustainability practices in all the Company’s offices, contributing to development and implementation of Renova’s Sustainability Culture. Renova also offers open and transparent communication to all the publics involved with its activities. It is aware that it needs to understand the demands and expectations of the agents that participate in the sector as a whole, and at all times to underline and strengthen the relationship with local communities in a sustainable manner.
In its interaction with regulatory agencies, Renova has made significant contribution to the renewable energy sources sector, by fostering and encouraging debate in diversification of Brazil’s energy sources.
Entry of solar energy into the market was, indeed, the result of this activity. And now acknowledgement of its potential is expressed with Brazil’s first auction in the Regulated Market exclusively for this source. We believe that solar power will evolve in the same way as wind power has evolved – through specific targeted regulations, participation in technical forums within the industry’s associations, and debate on the subject in general. Within this context Renova is aware that it has a priority role to play, and takes part actively as a leading company operating in renewable energy sources in Brazil. All these initiatives are supported by Renova’s values, and demonstrate the conscience of a responsible company, that seeks to contribute to the sustainable development of the regions where it works based on the execution of environmental programs associated with the projects that it is building or operating, and also through voluntary initiatives. Renova also seeks to gain a full understanding of the reality of each territory, respecting diversity of culture and knowledge, and holding a dialog with its acquired wisdom, so that a scenario of successful development can be built.
INVESTMENTS IN ENVIRONMENTAL PROTECTION GRI G4-EN31 Renova has invested more than R$13 million in environmental protection initiatives, in all its areas of operation.
TYPE Green purchases Environmental investments (Catavento program and PPD) Environmental management (environmental consultancy) Expenditure on equipment Cost of licensing
Invested in 2014, R$ 32,119.50 280,073.00 5,494,270.04 895,641.72 5,855,577.44
Education and training
257,551.06
Recovery of degraded areas; protection of areas
539,987.33
Preservation of biodiversity
407,467.92
Total
13,763,956.69
77 RENOVA 2014
2014 was a period of major achievements in sustainability; a year of winning of important projects in solar and wind energy; a year of completion of partnerships with significant global players; and the year of start of operation of the wind farms contracted in the 2009 LER auction. All these achievements reiterate Renova’s disposition to contribute to the development of Brazil’s infrastructure, in an environment in which the need for supply of electricity has never been so widely debated, and with the incentive to deliver a large volume of clean and renewable energy effectively. The element of implementation is not limited to construction alone, but also involves a complete engineering structure for start of operation of the wind farms, and for their continued maintenance. All these techniques, now with the addition of solar generation, are in practice stimuli and means for development of the territory where the Company operates.
ENVIRONMENTAL PERFORMANCE
A YEAR OF SUSTAINABLE ADVANCES
PROMOTION OF DIVERSITY – LICENSING AND REGULATORY REQUIREMENTS – LEGAL COMPLIANCE GRI G4-14 Harmonious integration of the business with the environment is part of Renova’s mission. Thus all its projects excel in their degree of responsibility in terms of the environment, and carry a commitment to minimize environmental impact in the areas where the Company operates. Renova goes beyond the formal requirements of the public bodies and the licensing process, making it a priority of the business to include efficiency in environmental studies, so as to cause the minimum possible interference in the local natural environment.
ANNUAL SUSTAINABILITY REPORT
78
Renova carries out in-depth studies on local natural characteristics, enabling it to operate in preservation and mitigate impacts, and also to meet all requirements for licensing of projects. Two factors have significantly reduced the influence caused by Alto Sertão I: (i) improvement of the aerogenerators, and (ii) accumulation of experience on construction and placement of equipment. Together, these two factors have reduced the size of the clearings necessary for tower assembly and access – thus reducing direct interference with the local flora and fauna. Because they are in the same region as its wind projects in the State of Bahia, Renova’s solar power projects in progress can make use of some of the existing auxiliary structures (such as access roads) that are required for construction and operation of plants – thus reducing effects on the environment, and communities.
Legal compliance is one of the most important aspects in conducting Renova’s business in accordance with its values and mission. Efficient management and anticipation of the risks connected with environmental and social issues ensure that the Company has a good reputation with the public bodies concerned, and increase investors’ confidence. The Company has two management units dealing with the processes of environmental licensing and activities related to them. The Environmental Feasibility management unit (Gerência de Viabilidade Ambiental – GVA) has these duties: • Social-environmental analyses of the territory where Renova operates. • Assessment of risks of acquisition of new businesses from the social-environmental point of view. • Support for wind and solar engineering projects through preliminary environmental assessments, and by identifying environmental constraints that make it possible to choose the best location from the social-environmental point of view. • Providing the conditions for environmental regularization of Renova’s various businesses. • Providing the conditions for environmental licenses and/or legal certificates for projects in development. • Arranging and coordinating the specialized technical support for management of environmental aspects inherent in Renova’s businesses. • Supporting continuous improvements and achievement of excellence in environmental standards.
79
This involves the GVA in the following processes:
Renova’s Environment management unit has the following main duties:
1. Due diligence on the social-environmental requirements. 2. Environmental regularization of wind metering towers. 3. Preliminary environmental assessment. 4. Management of Prior Licensing (Licenciamento Prévio – LP). 5. Environmental requirements for auctions. 6. Management of Installation License (Licenciamento de Instalação – LI). 7. Regularization of projects that have been altered at the LP and LI phases. 8. Environmental management of small hydro plants.
• Management of execution of social-environmental plans and programs required as conditions for the Installation License and the Operational Licenses (LO) of all projects. • Management of inspection in relation to social-environmental requirements, including inspection of the companies contracted by Renova to build and operate all projects. • Management of risks and social-environmental impacts of projects under construction and in operation. • Management of proceedings for obtaining Licenses that are complementary to the LIs and obtaining and renewal of the LOs of all projects. • Preparation and implementation of Environmental Procedures and Guidelines.
As well as this structure Renova has a legal requirements system that advises it on the laws applicable to all projects, and monitors compliance with the conditions imposed for environmental licenses, in alignment with the Guidelines provided by Health, Environment and Safety (Saúde, Meio Ambiente e Segurança – SMS). Under current Brazilian legislation these guidelines also have to be followed by suppliers. The system is updated monthly.
ANNUAL SUSTAINABILITY REPORT
80
Based on clear communication, Renova maps penalty payment proceedings and notifications, and has an Environmental Guarantee Technical Committee (Comissão Técnica de Garantia Ambiental – CTGA) which evaluates, monitors and organizes environmental self-regulation of activities in progress that are part of the licensing procedures. In 2014, the CTGA held four meetings with the participation of the Company’s managers. As well as the Rules of its Environmental Risks Prevention Program (PPRA) and its Occupational Health Medical Control Program (PCMSO) for its internal public, Renova specifically supervises outsourced suppliers, checking, training and orienting them with technical support from specialized teams. Using diagnostics based on the legal requirements and the SMS guidelines, action plans are created, with deadlines, with individual executives made responsible for correction of any non-compliances found and creation of reports for any further corrective action. In 2014 Renova’s Environmental Regulations unit carried out three SMS audit cycles in the companies responsible for the construction of the wind farms of Alto Sertão II, and one audit cycle in the company responsible for construction of the wind farms of Alto Sertão III. This is how Renova ensures ef-
ficacy and competence in the licensing procedures, always with an eye on the needs of those involved at all the stages of the lifecycle of the projects. Internally, Renova also makes employees aware of the importance of environmental preservation and sustainability in taking of decisions. Subjects such as biodiversity, generation of waste, use of water, analysis of working risks, and defensive driving are part of the internal training. This initiative extends to outsourced companies, from whom environmental and safety management, and compliance with Renova’s procedures, are demanded. To ensure this compliance, Renova monitors performance of the SMS guidelines, which are established as minimum requirements for provision of services. Based on the Precautionary Principle, Renova believes the absence of absolute scientific certainty should not be a reason for postponing effective and economically viable measures to prevent the threat of serious or irreversible damage to the environment or to human health in the procedures for prior license, installation and operation. In 2014 the Nexos System was contracted to improve integrated management of health, environment and safety. A team was also formed which will develop the Integrated Management System for the whole Company. With Renova’s entry into the solar energy market, a basic environmental project was prepared in 2014, with a view to obtaining the Installation License for the hybrid (solar and wind power) complex, financed by Finep. Preparation of the study is in progress and will be completed after termination of the engineering plan.
THE LICENSING PROCESS ENVIRONMENTAL BODY
1
RENOVA ENERGIA
Decision on the documents, plans and environmental studies necessary to start the licensing process
SIMPLIFIED ENVIRONMENTAL STUDY (‘RAS’) ENVIRONMENTAL CONTROL PLAN AND PROJECT PRELIMINARY ENVIRONMENTAL REPORT ENVIRONMENTAL DIAGNOSIS
ENVIRONMENTAL STUDIES
2
CONTINUING TREATMENT PLAN DEGRADED AREA RECOVERY PLAN PRELIMINARY RISK ANALYSIS ENVIRONMENTAL IMPACT STUDY (‘EIA/RIMA’)
Technical analysis and inspections
3 Requests for further information on the documents
4
ENVIRONMENTAL PERFORMANCE
Application for the license
RENOVA ALWAYS HOLDS
MEETINGS AND/OR PUBLIC HEARINGS
PUBLIC MEETINGS FOR OPTIMUM
5
RENOVA 2014
ITS PROJECTS
Analysis
6 Issuance of conclusive technical opinion, and, where applicable, legal opinion
Requests for further information arising from the meetings and/or public hearings
7 ENVIRONMENTAL LICENSES MAY BE ISSUED IN ISOLATION OR SUCCESSIVELY, DEPENDING ON THE CHARACTERISTICS AND PHASE OF THE PROJECT
Grant or refusal of application for license
8
Environmental license certificate
OR ACTIVITY FOR RENOVA, THEY HAVE BEEN REQUESTED AND GRANTED SEPARATELY
PRIOR LICENSE (LP)
LP
06
MONTHS
12
MONTHS
Average time taken to acquire a prior license when submitting Simplified Environmental Study (‘RAS’)
Average time taken to acquire a prior license in cases of full Environmental Impact Study (‘EIA/RIMA’)
(PRELIMINARY PHASE OF PLANNING) APPROVES LOCATION AND CONCEPT OF THE PROJECT. ESTABLISHES THE ENVIRONMENTAL FEASIBILITY AND BASIC REQUIREMENTS AND CONDITIONS TO BE MET IN THE SUBSEQUENT PHASES OF IMPLANTATION INSTALLATION LICENSE (LI)
LI
AUTHORIZES INSTALLATION OF THE PROJECT IN ACCORDANCE WITH THE SPECIFICATIONS CONTAINED IN THE PLANS, PROGRAMS AND PROJECTS APPROVED. INCLUDES ENVIRONMENTAL CONTROL MEASURES AND OTHER CONDITIONS
EVERY ENVIRONMENTAL LICENSE HAS CONDITIONS TO BE COMPLIED WITH DURING THE WHOLE LIFE OF THE PROJECT
RENOVA BUILDS ENVIRONMENTAL PROGRAMS IN ACCORDANCE WITH THE ENVIRONMENTAL STUDIES AND THEY ARE PART OF THE BASIC ENVIRONMENTAL PLAN (’PBA’) OTHER PROGRAMS MAY BE DEMANDED BY THE ENVIRONMENTAL BODY AFTER THE LO HAS BEEN OBTAINED
OPERATIONAL LICENSE (LO)
LO
81
COMMUNITY AWARENESS OF
AUTHORIZES OPERATION OF THE ACTIVITY OR PROJECT, AFTER CONFIRMATION OF FULL COMPLIANCE WITH CONDITIONS OF THE PREVIOUS LICENSES, THE ENVIRONMENTAL CONTROL MEASURES, AND CONDITIONS SPECIFIED FOR OPERATION
ALL PHASES HAVE PROVISIONS FOR INSPECTIONS BY THE ENVIRONMENTAL BODY TO CHECK ACTUAL COMPLIANCE WITH THE CONDITIONS
Highlights of 2014 GRI EN31; EN13
• In the Small Hydro Plants (SHPs), a total of R$1,113,496.91 was spent on: Environmental consultants executing the fauna monitoring programs (R$407,467.92); recovery of the Permanent Preservation Areas (APP) (R$509,967.33); and environmental education and communication with the public (R$196,061.66).
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• The Integrated Management System (Sistema de Gestão Integrado – SGI) was put in place for the SHPs of Espra. The objective was a complete environmental and occupational evaluation, identifying and evaluating risks, deciding operational controls, with focus on protection of the environment, work safety, occupational health, an emergency plan, use of vehicles and service to communities, among other items. • R$209,573.00 was invested in voluntary action on the projects for Recovery of Riverside Forests, and Sustainable Use of Organic Waste, in the Catavento program. The purpose of this was to increase the quantity and quality of water from the sources of supply used by the Bahia State Water Company (Embasa), by means of planting of riverside vegetation, and environmental education, in Caetité. • Sustainable use of organic wastes, through a process that transforms the waste produced by the Guanambi sewerage treatment station into fertilizer, helped reduce the environmental impact, creating an ecological soil fertilization process. • In the PPD, Renova invested R$50,000.00 for the Intermunicipal Selective Collection project. This support was requested by the Intermunicipal Consortium of the Alto Sertão Region (an initiative involving 12 municipalities): R$17,500.00 was invested in equipment for the Forest Animals Care Center (the only center re-
searching and monitoring forest animals in the southwest of Bahia); and R$3,000 was contributed to the selective waste collection cooperative of Caetité. • The Facheiro wind complex, to generate 486 MW, will be built in the municipalities of Lajes, Caiçara do Rio do Vento and São Tomé, in the State of Rio Grande do Norte. For its licensing procedure the GVA team, with the support of partner consultants, prepared the first Environmental Impact Statement (known in Brazil as an EIA/ RIMA) for one of the Company’s wind projects. As well as becoming a benchmark in terms of licensing practice for Renova, this project was also regarded as a benchmark for quality by Idema, resulting in a record completion time of four months for the environmental body’s procedures – from registry of the EIS. • A total of R$640,276.32 has so far been invested in social dialog action in the State of Rio Grande do Norte for the environmental licensing process of the Facheiro wind complex. The objective was to map all stakeholders in the project’s area of influence, explain the initiative to each one, hear the communities’ concerns and expectations in relation to the project, and mobilize the various segments of the communities to participate in public meetings and a public hearing about the project. The aim is being achieved: transparency of information and public participation in the process of the Environmental Impact Assessment – which is so necessary for the success of construction and operation of a development project – is being achieved. • Renova began the Environmental Licensing Procedure of the Facheiro Project by holding a public hearing in the municipalities of Caiçara do Rio dos Ventos, and Lajes, in December 2014. 500 people from Lajes took part, and 700 from Caiçara do
• Contracts were made with outside companies to prepare the Basic Environmental Plan (PBA), and update the social-economic diagnostic of the municipalities and land owners affected by the plans for Alto Sertão III. Seven companies were contracted to prepare the environmental plans and programs related to various aspects – physical, biosphere, social-economic, archeology, speleology – and the forest inventory. • Seventeen environmental plans and programs were created in the preparation of the PBA of the Alto Sertão III wind complex and to meet the conditions required for its LP, including: the Program for Recovery of Degraded Areas (PRAD), the Program for Monitoring Fauna, and the Program for Environmental Education (PEA). • A separate licensing was carried out for the transmission line of the Alto Sertão III complex – separately from the wind farms themselves. A Simplified Environmental Report (Relatório Ambiental Simplificado – RAS) was prepared, as part of the application for the prior license for 145 kilometers of the transmission line and its associated substations. In 2014 work began on the report on compliance with the conditions of the LP, and the PBA, to obtain the LI for the transmission line.
The habitats researched in 2014 in Espra included stretches of forest close to the reservoirs of three SHPs: Cachoeira da Lixa, Colino I and Colino II. Two species in danger of extinction that were identified in the studies to monitor terrestrial fauna were the Redbrowed amazon (Papagaio-Chauá, or Amazona rhodocorytha), in danger of extinction according to the ICMBio official list, and the IUCN ‘red list’; and the Ariel toucan (Ramphastos ariel), reported as in danger of extinction on the official list of the IUCN. The other species are considered ‘near-threatened’. At the end of 2014, with the updating of the lists of endangered species of Brazilian flora and fauna by publication of two new ministerial orders from the Environment Ministry (Ministerial Orders 443 and 444, of December 17, 2014), Renova carried out a revision of its lists in the territory covered by its projects. The updated version has removed three tree species from the MMA red list – the Aroeira (Myracrodruon urundeuva), the Braúna (Schinopsis brasiliensis) and the Aspicarpa harleyi; and added a further five species identified as endangered: The Bolsinha-de-Pastor (Zeyheria tuberculosa), the Micranthocereus polyanthus cactus, the Spanish Cedar (Cedrela odorata), the Pau D’arco (Handroanthus spongiosus (Rizzini) S.Grose); and the yellow Garapa (Apuleia leiocarpa (Vogel) J.F.Macbr). In fauna, the list had two species in the territory added: the Eyra cat or Jaguarundi (Puma yagouarondi) and the Golden-bellied capuchin or macaco-prego (Sapajus xanthosternos (Wied-Neuwied, 1826).
83 RENOVA 2014
• In 2014 Renova obtained 22 LIs for wind farms comprising the Alto Sertão III complex, and the LP of the Alto Sertão III transmission line.
Renova maintains its policy of care for endangered fauna, and follows the conservation recommendations according to the lists issued by the International Union for Conservation of Nature (IUCN), the Brazilian Environment and Renewable Natural Resources Institute (Ibama) and the Chico Mendes Biodiversity Conservation Institute (ICMBio).
ENVIRONMENTAL PERFORMANCE
ENDANGERED SPECIES GRI G4-EN14 Rio dos Ventos. These meetings also included communities from São Tomé. Representatives of communities from the area of the project, representatives of NGOs, universities, associations, workers’ unions and public authorities, all took part.
The presence of representatives of the Felidae families (leopard, ocelot, and jungle cat or margay), is considered to be an important bio-indicator – signaling quality of the environment – and all are present in the areas of Renova’s operations. In general, they are large and medium-sized species, which require large territories per individual (from 1 to 12 km2), have a slow reproduction rate (one litter, with two or three offspring), and a diet made up of a variety of prey. Other representatives also endangered and present in the area are two bird species: Tyrannulet (Phylloscartes roquettey) and White-browed guan (Penelope jacucaca) – both regarded as bio-indicators of environmental quality.
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On the other hand, there was no increase in habitats of flora or fauna species contained on the IUCN red list, but rather, alterations in the list of endangered species. The information was obtained through studies of characterization of vegetation and counts of fauna, in the execution of the plans for restoration of animals that have fled an environment, recovery of flora, and the fauna monitoring program. The latter has already consumed 9,890 network hours of studies to define the bird population of the Alto Sertão I and Alto Sertão II complexes, 87,360 hours of camera trap used in monitoring non-winged mammals, and 155,275 m2/hour for chiropteras (bat species).
PANORAMA OF ENDANGERED SPECIES – 201412 CATEGORY
SHP
Wind plants
Critically endangered
0
1
Endangered
2
3
Vulnerable
6
6
Near-threatened
4
8
Least concern
0
6
BIRD MONITORING PROGRAM One of the questions raised on wind power plants is the effect they might have on bird migration. Renova has a local Bird Fauna Monitoring Program, characterizing the species by biological aspects (migratory activity, vertical spatial occupation, habitat, use of habitat, sensitivity and feeding habits). In 2014 the program had 2,437 birds in captivity, of 197 species, registered with 46 families, thanks to 28 sampling points installed in the Alto Sertão I and II wind complexes, and 9,890 network-hours of sampling research.
In 2015 the program will evaluate the area where the wind farms of Alto Sertão III will be built, where the bird species monitoring program is also held. Based on continuing studies, it will be possible to obtain more concise and clear results on the migratory activity of the species of birds over the areas of the wind farms, for impacts to be assessed and mitigation solutions to be proposed.
12. These are the totals of species included in the IUCN Red list, and Brazilian conservation lists with habitats in areas affected by Renova’s operations, set out by level of risk of extinction.
GRI G4-EN9
To build the wind farms of the Alto Sertão II complex, Renova acquired permission to create eight subterranean wells with autonomous flow for capture of 406,038.20 m3 of water per year. These capture points are in the municipalities of Pindaí, Caetité, Igaporã and Guanambi, in the region of the basin of the São Francisco River.
In its use of the wells that have been granted – the source of the water consumed in the process of construction of the wind farms – Renova makes pumping tests to analyze the time of recovery of the water table and determine the volume to be granted, ensuring full preservation of the source. Renova obeys the rules for grants of water use rights, in accordance with Decree 14,024 of June 6, 2012, which governs the Bahia State Water Resources Policy and the state’s Water Resources Management System.
85 RENOVA 2014
For the works on Alto Sertão II, Renova used 5.34% of the total flow granted for the year 2014 (21,670 m3), considerably less than in 2013 (153,601 m3), due to the Company’s greater focus on the operation of the wind farms. The wells used by Renova in 2014 were drilled and granted in 2013 for industrial use, that is to say, to provide supply for the building works of
Alto Sertão II. Thus they are not a source of supply used by the community. Renova is also studying the possibility of donating these wells to the local communities at the end of the works in the region, in 2017.
ENVIRONMENTAL PERFORMANCE
PROCEEDINGS FOR GRANT AND USE OF WATER RIGHTS
RENOVA TESTS WATER TABLE REPLENISHMENT TIME, TO ENSURE WATER SOURCES ARE PRESERVED
MONITORING OF NOISE GRI G4-EN30
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For four years Renova has been running its Noise Control and Monitoring Program, to evaluate the sound environment at sensitive points of the Area Directly Affected (ADA) and the Direct Influence Area (DIA) of its projects. The result of this work has been to characterize the noise environment of 128 sampling points established close to sensitive reception points, and these will be monitored during the operation of the Alto Sertão I and II wind complexes.
In the areas of the wind farms, wind itself was the principal factor in the high levels of sound recorded; when there was little wind, noise levels fell significantly.
The result of this work is to record and define the local noise environment before operation of the wind farms. For the areas sampled, a variety of sounds that mostly occur simultaneously have been observed. The noise peaks found during the samplings were local influences, natural or otherwise, such as the very high prevalence of noise-making insects (crickets and cicadas), birds, influence of winds and, principally, human influences, since the focus of monitoring is on sensitive receiving areas (such as homes, schools, churches).
In general, the building phase provides a more noisy environment than the one found in the initial monitoring campaign. However, it can be concluded that the alterations found are environmental variations characteristic of the areas monitored, since variations in wind levels, humidity, temperature, activity of forest animals and human activities, among others, are factors that directly influence the sound environment in a given area.
IN ALL PROJECTS, MANAGEMENT IS DIRECTED TO MINIMIZE THE IMPACTS OF THE CONSTRUCTION PROCESS
In the area of construction of Alto Sertão II, Renova carried out its fifth Neighborhood Noise Monitoring Campaign in April and May 2014. This aimed to monitor and control impact from the noise of operation of machinery and equipment during the construction phase of the project.
PROTECTED AREAS GRI G4-EN11; EN13
The areas of the wind farms and SHPs include several environmentally protected areas. The Alto Sertão I, II and III projects contain a total protected area of 2.63 km2; and the SHPs of Espra have 1.48 km2 of protected areas (APPs) in their three reservoirs. The wind farms of the Alto Sertão I complex comprise an area of 2.34 km2, with 14 wind farms and 184 aerogenerators. Alto Sertão II comprises 15 wind farms, with 230 aerogenerators, occupying an area of 3,451 km2. The figures indicate a high potential for generation, in a small area occupied.
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87
In all Renova’s projects, management receives explicit directions to minimize the negative effects of the process of construction, based on environmental control programs such as: the Fauna Escape and Recovery Plan; the Flora Recovery Plan, the Fauna Monitoring Program (mammal, bird and bat species) and the PRAD (Plan for Recovery of Degraded Areas), among others. These actions were developed and carried out by specialized teams, for which Technical Responsibility Records (ARTs) were kept. They generate reports with extremely important data for taking of decisions on progress of works, with a focus on greater protection of biodiversity and on safety of the workfronts, always
in compliance with the environmental and employment-law rules currently in force. Further, in the construction of Alto Sertão II, educational booklets were produced to disseminate knowledge about the region, enhancing the value given by the public to culture, and for prevention of accidents. In Alto Sertão II, technology and assembly techniques had already advanced significantly. Use of more modern aerogenerators and higher generation capacity resulted in the yield being 5% more than in Alto Sertão I. The complex, with 230 aerogenerators, has generation capacity for 386.1 MW, which is an increase of 18 MW, and represents better use of the wind potential available, with a smaller area occupied by the project.
In the Alto Sertão III complex, on which construction is in progress, there are 265 aerogenerators with installed power capacity of 736.8 MW. The impact of construction on local flora and fauna was further reduced by smaller assembly and access areas, resulting from further development of methods for this project.
The Small Hydro Plants are in areas far from conservation units or their absorption zones. Renova carries out continuous revegetation in the Atlantic Forest, to maintain a good state of conservation.
PROTECTED AREAS IN THE ALTO SERTÃO I, II AND III WIND COMPLEXES KM2
2013
2014
Adjacent protected areas
0.27
0.35
Operational area of the organization
3.45
5.94
1.5
2.63
2013
2014
-
-
Operational area of the organization
3.57
3.57
Protected areas inside the organization’s operational area
1.89
1.89
Protected areas inside the organization’s operational area
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PROTECTED AREAS – SMALL HYDRO PLANTS KM2 Adjacent protected areas
HABITATS PROTECTED AND RECOVERED SHPs KM
Wind farms
2013
2014
2013
2014
Protected areas
-
0.41
0.17
0.18
Restored areas
-
1.48
-
-
2
CLIMATE CHANGE GRI G4-EU5
Recent and increasingly intense global warming has resulted in environmental and biological effects that are being repeatedly reported in scientific studies and indeed in Brazilian and international media. This makes debate on the importance of renewable energy at a moment of climate change a subject that Renova considers to be a priority.
At the same time it needs to be remembered that climate change is a direct consequence of increased greenhouse gas emissions13, which can alter the atmosphere, and affect fauna and flora, wind patterns and the planet’s cycles of water transport, storage, and rainfall. One of the consequences of a change in wind patterns might be reduced generation by wind farms – causing a need to use additional funds to buy power supply from outside parties to honor contracts that the Company has signed. The goal of reducing greenhouse gas emissions into the atmosphere gave rise to the creation of the Kyoto Protocol, an international agreement signed in 1997. It stipulated an average reduction of greenhouse gas emissions of 5.2% between 2008 and 2012, based on the emissions of the year 1990. A new text aims for reductions of at least 25%, and up to 40%, in emissions by 2020 (from 1990 levels), for the developed countries. The aim of the Protocol is to stabilize levels of greenhouse gases in the atmosphere, to reduce or mitigate damage to the climate and to the planet’s sustainability. The developing countries can acquire carbon credits from other countries with projects under the Clean Development Mechanism (CDM), benefiting from the activities of reduction
RENOVA OPERATES TO INCREASE THE PERCENTAGE OF BRAZILIAN ELECTRICITY GENERATED BY RENEWABLE SOURCES 13. ‘Greenhouse gas’ is the name given to any natural or man-made component of the atmosphere that absorbs and issues radiation at certain infrared wavelengths issued by the surface of the earth, the atmosphere or clouds. They include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), the hydrofluorocarbons (HFCs), the perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and nitrogen trifluoride (NF3).
ENVIRONMENTAL PERFORMANCE
RENOVA HAS MADE ITS FIRST INVENTORY OF GREENHOUSE GASES GENERATED BY ITS RENEWABLE PROJECTS OPERATING OR UNDER CONSTRUCTION
89 RENOVA 2014
With a focus on diversification, Renova intends increasingly to be a part of the process of change in the profile of Brazilian electricity production to enable the country to maintain high levels of production without significant environmental impact – contributing to the development of Brazilian power infrastructure.
RENOVA SEES CLIMATE CHANGE AS A PRIORITY SUBJECT
of greenhouse gas emissions, and sale of Reduced Emission Certificates (RECs) – usually referred to as carbon credits. In Brazil, the federal government (by Law 12,187/2009) has instituted a National Climate Change Policy (PNMC) together with the Brazilian targets for the climate, aiming to help reduce or contain global warming. In contrast to the targets established by the developed countries in Kyoto, the voluntary targets announced by the developing countries are based on future values and have economic growth projections. The initiative is a fundamental step in ensuring that environmentally responsible
90
companies have the possibility of trading carbon credits, and thus effectively contributing to the process of reduction of greenhouse gases, in harmony with the PNMC and the decisions of the United Nations. In line with this scenario, Renova is a company that operates in development of CDM projects in the electricity sector, since the wind farms and SHPs are characterized as clean generation, which reduces dependence on consumption of fossil fuels and can generate compensatory systems. The wind farms of the 2009 LER, 2010 LER, and the 2011 A–3 auctions are registered in this mechanism and after the start of gen-
In 2014 Renova generated a quantity of clean energy that represents 400,456 tons of CO2e, in two wind farm complexes – the 2009 LER group (316,410 tons) and the 2010 LER (84,046 tons).
GREENHOUSE GAS (GHG) EMISSIONS GRI G4-EN15; EN16; EN17; EN18
In 2014 Renova made its first inventory of greenhouse gas emissions produced by renewable-source projects in operation and being built during the year. Its remit was to establish the profile of emissions resulting from Renova’s activities, by identifying the sources of greenhouse gas emissions and quantifying their related emissions or removal. The document
follows the directives of the Greenhouse Gas Protocol Initiative (‘the GHG Protocol’)14, a standard recognized worldwide in this area. Preparation of the inventory enabled Renova to publish information about the organization’s climate performance, and also to evaluate risks and opportunities related to emissions of GHGs, identify opportunities for improvement and establish strategies for reduction of emissions – targets now set for 2015.
ENVIRONMENTAL PERFORMANCE
eration by each component, Renova can trade the related carbon credits.
Preparation of Renova’s GHG inventory was structured on the basis of the principles and requirements of Brazilian Standard NBR ISO 14.064:2007 – Part 1, and the Brazilian GHG Protocol Program. The work was divided into seven stages:
RENOVA 2014
91
DECISION ON SCOPE
ALL UNITS WITH OPERATIONAL CONTROL
DECISION ON PERIOD OF REFERENCE
2014
IDENTIFICATION OF SOURCES AND SINKS OF GHG
SET HIERARCHY AND CATEGORIES OF SOURCES AND SINKS OF GHG
VISIT TO CLIENT
DATA COLLECTION TOOL
In visits to Renova’s facilities, the sources of GHGs15 in the organization were identified. All were categorized and placed in a hierarchy through development of a data collection tool. The data was then collected by Renova with the technical support of an external consultancy company. To calculate emissions, data collected from the emitting activities were used, with emission factors16. These calculations were made using a spreadsheet created for this inventory, using factors issued by the Brazil GHG Protocol and the Intergovernmental Panel on Climate Change (IPCC)17 for 2006. The data col-
COLLECTION OF DATA
RENOVA
CALCULATION OF EMISSIONS/ REMOVALS, AND UNCERTAINTIES
TOOLS FOR CALCULATION OF EMISSIONS AND OF UNCERTAINTIES
lected were evaluated in calculating the uncertainties of the inventory, using the tool developed by the GHG Protocol.
14. The GHG Protocol is a tool used to understand, quantify and manage GHG emissions originally developed in the USA, in 1998, by the World Resources Institute (WRI). Today it is the method most used worldwide by companies and governments for making GHG inventories. It is also compatible with ISO 14064 and with the quantification methods of the IPCC – Intergovernmental Panel on Climate Change. 15. A physical unit or process that releases greenhouse gases (GHGs) into the atmosphere. 16. A factor relating data on activities to emissions and absorptions of GHGs. 17. The role of the IPCC is to evaluate scientific, technical and socio-economic information that is material to understanding of the risks of anthropogenic climate change (www.ipcc.ch).
PRESENTATION OF RESULTS
EMISSIONS REPORT
EMISSION SCOPE The GHG Protocol defines three categories of sources of GHGs associated with operations: Scope 1: direct emissions18 of GHGs coming from sources that belong to or are controlled by the organization – in four categories: generation of electricity, heating, refrigeration and steam; physical-chemical processing; transport of materials, products, wastes, employees and passengers; and escaping emissions19. Scope 2: indirect emissions20 of GHGs, arising from acquisition of electricity that is consumed by the organization.
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Scope 3: an optional reporting category taking into account all the other indirect emissions21 that take place as a result of the organization’s activities, but in sources that do not belong to or are not controlled by the organization.
INDICATORS AND RESULTS As the tables below show, Scope 3 is responsible for the largest part of Renova’s greenhouse gas emissions (94%), and the category ‘goods and services purchased’ accounts for 93.5% of the Scope 3 emissions. The figure reflects the activities of building the wind farms, which are intensive in consumption of diesel fuel by the vehicle fleets of the companies subcontracted for construction and logistics. These emissions are occasional within Renova’s activities – they take place only when there is expansion of generation capacity. Internal transport in the wind farms is responsible for 84% of Renova’s Scope 1 emissions, due to the consumption of diesel fuel in its own vehicle fleet for transporting employees, and the fire brigade truck. Renova’s total emissions in 2014 were calculated as 22,135 tCO2e. Further to this, 1,403 tCO2 was issued from renewable-source activities.
Direct emissions of greenhouse gases – Scope 1
EMISSIONS OF GREENHOUSE GASES (SCOPE 1) Mobile sources belonging to or controlled by the organization (tCO2e)
DIRECT GHG EMISSIONS (SCOPE 1) IN METRIC TONS OF CO2 EQUIVALENT, INDEPENDENT OF ANY GHG NEGOTIATIONS, SUCH AS PURCHASE, SALE OR TRANSFERS OF OFFSETTING AMOUNTS OR SUBSIDIES
2014 1,085
2014
Electricity generation; heating, refrigeration and steam (tCO2e)
98
Fugitive emissions (tCO2e)
111
Physical and chemical processing (tCO2e)
0
Total
BIOGENIC EMISSIONS OF CO2 – IN TCO2E, SEPARATELY FROM GROSS DIRECT EMISSIONS (SCOPE 1) OF GREENHOUSE GASES Emissions of biogenic CO2, in metric tons of CO2 equivalent
1,294
2014 65
18. Emissions of GHGs by sources belonging to or controlled by the organization. To establish the organization’s operational frontiers, the concepts of financial and operational control are used in this document. 19. Emissions that are not physically controlled, but which result from intentional or accidental release of GHGs. These usually result from production, processing, transmission, storage or use of combustible fuels and other chemicals, frequently through joints, seals, packing/gaskets, etc. 20. Issuance of GHGs arising from electricity generation, heat or steam, imported into or consumed by the organization. 21. In contrast to the indirect emissions related to consumption of energy, these emissions are a consequence of the organization’s activities, but arise from sources of which other organizations hold ownership or control.
Indirect emissions of GHGs arising from acquisition of power supply (Scope 2)
GHG EMISSIONS (SCOPE 1)
2014
Fugitive emissions
111
Mobile sources belonging to or controlled by the organization Other fixed sources
1,085
Own thermoelectric generation plants
0
Other fixed sources
0
Mobile
0
Fugitive emissions
0
Total
0
Total
1,294
2014
Consumption of electricity (tCO2e)
66
Consumption of electricity (tCO2e/ton of steel produced
0
GHG EMISSIONS (SCOPE 3)
2014
Scope 3 (tCO2e)
20,776
Scope 3 (tCO2e/ton of steel produced)
0
GHG EMISSIONS, SEPARATED BY:
2014
Estimate of delivery of net energy to final clients (Electricity utilities)
0
Net generation from the total of fossil fuel generation (Electricity utilities)
0
Net generation from own total generation capacity (Electricity utilities) (tCO2e/MWh)
24.54
CO2 emissions from renewable sources in each Scope
65
Scope 1
+
tCO2 – renewable sources
0
Scope 2
1,338 = 1,403 + Scope 3 Total
93 RENOVA 2014
GHG EMISSIONS (SCOPE 2)
ENVIRONMENTAL PERFORMANCE
98
Scope 1 GHG emissions, by activity
ACTIVITIES WITH SCOPE 1 EMISSIONS Internal transport in own fleet
GHG emissions (tCO2e) 1,084
Utilities and others
96
Commissioning of substation
48
Commission of aerogenerators
29
Agricultural activities
14
Substation operation and maintenance
8
Operation and maintenance of SHPs
8
Operation and maintenance of aerogenerators
6
Office Total
0.01 1,294
Scope 3 GHG emissions, by category
ANNUAL SUSTAINABILITY REPORT
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CATEGORIES OF SCOPE 3 Goods and services purchased Transport and distribution (upstream22) Waste generated in operations Business travel
22. Indirect emissions of greenhouse gases from goods and services bought or acquired. 23. Indirect emissions of GHGs from goods and services sold. Downstream emissions also include emissions of products that are distributed but not sold (that is to say, without receipt for payment).
Emissões GEE (tCO2e) 19,415 15 43 1,303
Goods leased (where the organization is lessee)
0
Transport and distribution (downstream23)
0
Processing of products sold
0
Use of goods and services sold
0
End-of-life treatment of products sold
0
Goods leased (with the organization as lessor)
0
Franchises
0
Total
RAISING OF UNDERGROUND WATER WAS REDUCED BY 86% FROM 2013 TO 2014
20,776
WATER GRI G4-EN8 The subject of water is currently one of the most challenging in Brazil, for companies and for society in general. We are living through a moment of restrictions on use of water, calling for continuous efforts to reduce levels of consumption. For Renova this is exacerbated by being at a stage of operational growth in a region noted for its drought – the Semi-arid region of Brazil’s Northeast. Renova continuously monitors the quality of water from the springs near its projects, by several methods, to ensure that any effects of its projects are mitigated, and to preserve use of water for the communities. It also monitors the vol-
ume of underground water that it captures, recording the figures monthly, and supervises consumption by its suppliers that work on wind farm construction. Renova itself is the party responsible for the licensings of the wells from which water is raised. In 2014 the total figure for capture of underground water was reduced by 86%, due to de-commissioning of some temporary structures used for the construction of the Alto Sertão III wind complex. This pattern of reduction and increase is a recurring factor, reflecting the progress of works on construction of new projects.
USE OF WATER M3 OF WATER DRAWN Underground water Municipal supply of water, or other sources Total
2013
2014
Change
153,000.6
21,712
-85.8%
6,660
4,498.24
-32.5%
159,660.6
26,210.24
-83.6%
RENOVA 2014
95
WATER CONSUMPTION
ANNUAL SUSTAINABILITY REPORT
96
In Renova’s offices, the efforts of the entire team had significant results: even with the doubling in size of the offices in Caetité, in Bahia, and in the city of São Paulo, total water consumption figures were reduced by 32.45%. In Bahia, the supply comes from the Bahia water utility, Embasa, and in São Paulo from the São Paulo State water utility, Sabesp.
For the start of the activities of Alto Sertão III, only three springs to be monitored were found, in only two wind farms whose construction was beginning. Of these, two are already part of the monitoring program of the Alto Sertão II complex. With this spring incorporated into the program there was an increase of 0.008 km2 in the area protected by the Company.
The estimated consumption of water by activities of the wind farms of the Alto Sertão I and II complexes was reduced by 85.8% in 2014, due to start of commercial operation of the farms. This stage reduces the use of water for functioning of the machines, compared to the need for water during the period of works of construction.
All these actions are taken in partnership with the landowners. Renova provides technical support, and maintains an overall stance of action in favor of conservation and raising of awareness.
PROGRAM OF MONITORING SPRINGS In 2014 Renova continued with its Spring Conservation and Monitoring program, taking specific action at each of 22 springs located around the Alto Sertão complex, in the towns of Igaporã, Caetité, Pindaí and Guanambi. The project, which was begun in 2013, evaluates any impacts of the Company’s activities on the waters of the region. Renova also carried out recovery measures at a further six springs: building of sediment filters; providing protective isolation for springs; manual cleaning; and planting of saplings of native species.
ELECTRICITY CONSUMPTION GRI G4-EN3 Reflecting its growth, Renova made significant investments in expanding its infrastructure in 2014, enlarging all its offices – in São Paulo, Salvador and Caetité. In Caetité the existing office was enlarged; in Salvador, the offices were moved to a larger space in a purpose-designed office building, with more infrastructure, and spaces providing better synergy and communication between the areas of the business. The works on expansion of the offices increased our electricity consumption. We expect the level to stabilize in 2015. All our reported calculations of electricity consumption are based on the figures provided by the local utilities.
ELECTRICITY CONSUMPTION IN 2014 CONSUMPTION
2013
2014
340,391.67
362,465.00
340.3
362.46
Renova – number of employees
223
281
Average consumption per employee (MWh)
1.52
1.28
Total (kWh) Total (MWh)
MATERIALS GRI G4-EN2 The principal materials that Renova uses in its activities are: building and construction materials; mechanical and electrical materials; electricity generation and transmission equipment – especially rotors for hydroelectric or wind generation; and high/medium voltage substations. It also uses civil, mechanical and electrical engineering services for the construction of the infrastructure of generating plants, including foundations for wind farm aerogenerator towers, and dams for SHPs. In solar generation the main inputs are: photovoltaic plates; inverters; metal support structures; and other electrical equipment for protection of the system. Renova consults with the main suppliers worldwide and in Brazil, and selects those that are regulated by the Brazilian certification bodies, such as the National Meteorology, Quality and Technology Institute (Inmetro).
Although Renova does not yet carry out complete tracing of the origin of materials used in its projects, it is known that 30% of the steel used in the hubs of aerogenerators (the central components connecting the blades) is re-used material (carbon steel scrap).
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The use of materials of recycled origin was reduced in 2014 with the termination of construction of the wind farms and start of operations. In 2015, with the construction of the Alto Sertão III wind farms, use of re-used materials is expected to be resumed, at a higher volume.
EFFLUENTS GRI G4-EN22 Renova produced less effluents in 2014 than 2013. The works of construction on the Alto Sertão II wind complex were de-mobilized, while works continue on Alto Sertão III. The figure for 2014 is 16,124.1 m3 of effluent generated, compared to 16,220 m3 in 2013. In construction of the wind farms, treatment of effluents is the responsibility of the part-
ner companies, which send a monthly measurement report to the Renova team responsible for managing these indices. The effluents produced by the Company are calculated using the invoice for water supply from the local utilities. The effluents from the machine rooms and offices of the Small Hydro Plants are sent to sump filters and septic tanks.
EFFLUENTS GENERATED IN 2014 (M3) Total, offices
98
2,525.7
Total, works (wind power)
13,598.4
Overall total
16,124.1
Renova identifies effects caused by transport in construction works as from the feasibility analysis phase of each project – a Traffic Signaling and Control program is produced, and submitted to the responsible environmental body for approval. This document takes into account the characteristics of the region in terms of vehicle flow and infrastructure quality of roads and highways, signaling, and the local population’s level of information about traffic safety. Renova also provides training in defensive driving for its employees, to orient them in terms of traffic on the highways and inside the wind farms. More intense transport during the construction work on wind farms causes an increase in dust on the unpaved access roads. To reduce this effect the Company protects loads and trailers of trucks carrying earth with tarpaulins, and also carries out periodic maintenance of the vehicles, to minimize the amount of sediments they are carrying. Drivers are also trained on generation of dust and the importance of the vehicles not exceeding 40 km/h. Renova monitors the works to detect non-compliances, and puts solutions in place, including installation of speed bumps. In the construction of the Alto Sertão I and II wind farms, Renova found some non-compliances and took action to resolve or mitigate them. In 2014 in the Alto Sertão I complex, there was considerable reduction in traffic of light and heavy vehicles due to the reduction of the team involved in the phase of operation and maintenance. Renova also trains personnel for integration with the service providing companies.
With the start of construction of Alto Sertão III, at the end of 2014, three programs were resumed in the communities: the Traffic Signaling and Control programs, the Particles Emission Control and Monitoring program, and the Environmental Education program. These initiatives result in better traffic flow, and play a fundamental role in preventing accidents and reducing the impact of dust. Renova produced and installed traffic signs of regulation, warning, information and education along the access roads, intersections with the municipal and local roads, and inside the wind farms. The scale and positioning of all our traffic signage, and specifications of its materials, in all the wind farms, obey the rules of the National Traffic Council (Contran) and the Brazilian Driving Code (CBT). For the Particle Emission Control Program, Renova invests in installation of PVC coverings at homes located close to the access roads that are impacted by generation of dust. It also carries out humidification of these roads during earth moving and passage of heavy equipment and vehicles. These mitigation measures also contribute to enhancing the value of those local properties.
ENVIRONMENTAL PERFORMANCE
GRI G4-EN30; LA7; SO1
RENOVA’S ORIENTATION OF ITS EMPLOYEES – FOR TRAFFIC ON HIGHWAYS AND INSIDE WIND FARMS – INCLUDES TRAINING IN DEFENSIVE DRIVING
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TRANSPORT AND INFRASTRUCTURE
WASTES GRI G4-EN23; EN24
Renova’s management of wastes is based on its Solid Waste Management Plan, which establishes practices to meet the legal requirements for reducing or avoiding generation of wastes, and to re-use or recycle whenever possible. The Plan governs identification of the wastes generated in the process of construction and operation of the wind farms, and their classification, manner of collection, transport and appropriate final disposal. Renova carries out continuous control of generation, storage and/or allocation of wastes with outsourced contractors, who must provide an inventory each month to Renova’s Environment Team.
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In 2014 Renova’s various projects, at different phases, resulted in an increase in generation of wastes. Construction of the Alto Sertão II wind farm was at completion stage – five wind farms, a transmission line and substation. At the same time, Alto Sertão I and six wind farms of the Alto Sertão II complex began commercial operation, and works were begun on two wind farms of Alto Sertão III. This resulted in a 32% increase in the generation of class II wastes (non-hazardous – the category includes organic materials from the food industry, iron filings, iron scrap, pressure tools, glass, cutting discs, etc.), due to the dismantling of some temporary structures for the phase of implantation and start of the operation. Also, 60% of these wastes were assigned for recycling; and 21% of the wood waste arising from the works was donated to a ceramics factory, for use to generate power. The output of hazardous wastes in 2014 was 55% less than in 2013.
The increase in assignment of wastes for recycling; re-use of waste for energy; and lower output of class I waste (hazardous items such as paint cans, mineral oil lubricants, items containing thinner, sawdust contaminated with oil, greases, chemical products, air filters, brake pads, cutting waste, oil filters, papers and plastics contaminated with grease/oil, sweepings, etc.), all reflect improved inspection and monitoring on the workfront by Renova. In the year, Renova was also holding its Environmental Education Program for employees and partners, which includes raising of awareness about environmental issues, with a focus on reduction, reuse and recycling of waste. The class I wastes from operation and maintenance of the wind farms of Alto Sertão I and II were duly stored in 2014 for subsequent appropriate disposal. In the SHPs, Renova has a continuing contract with a partner company, which collects and transports class III solid wastes (plastic, glass, cardboard, paper, iron and iron scrap, etc.). There was no collection of hazardous waste – which would be only diesel auto fuel – in 2014, since the quantity was of low significance (less than the 1,000 liters specified by the collecting companies). The material is still stored in bays in packed drums, until collection. Material that is not recycled, arising from organic waste and bathroom paper, goes to a controlled landfill in Teixeira de Freitas, in Bahia State.
QUANTITY OF WASTES BY TYPE AND METHOD OF FINAL DISPOSAL
Composting
Reuse
Recycling
Recovery
Municipal collection
Total
2012
1,525
171,71
7,589
12,16
7,718
200,702
2013
1,435
-
54,055
29,6957
233,4
318,5857
2014
0,13
-
253,29
113,61
53,57
420,61
YEAR
GENERATION OF HAZARDOUS WASTE IN CONSTRUCTION OF ALTO SERTÃO I AND II (tons) YEAR
Reuse
Recycling
Incineration
Class I landfill
Total (B)
2012
10,208
-
18,6583
-
28,8663
2013
-
14,5359
-
19,65849
34,1944
14,70
18,7955
2014
4,09
ENVIRONMENTAL PERFORMANCE
GENERATION OF NON-HAZARDOUS WASTES IN CONSTRUCTION OF ALTO SERTÃO I AND II (tons)
101 RENOVA 2014
In 2014 no significant leaks arising from the Company’s activities were found or recorded.
DIALOG ON THE ENVIRONMENT GRI G4-EN34; SO11 The consolidation of Renova’s image as a good corporate citizen conscious of its role in society is enhanced by its activity in relationship with communities. The PCRC, approved in 2014, is grounded on Renova’s Mission, Vision, Values – and the Renova ‘Essentials’ – aligned with the understanding that all those involved in the business (stockholders, employees, service providers, suppliers and communities) act together in an integrated fashion and have a vital role in optimum progress of the processes. The policy specifies manners of treatment, and maintenance of an accessible and efficient channel of communication, indicating flows and processes that lead to closer bonds of trust and credibility, and ensure the continuous evolution of the relationship of Renova with the communities in the regions where it operates. And this is at all times based on the principles of ethics, trust and credibility. The whole of the process of relationship with the communities of the regions where Renova operates must follow the orienta-
tions of the PCRC, which is guided by the main regulatory rules that harmonize with the theme of sustainability in the corporate world – the International Finance Corporation’s Performance Standards on Environmental and Social Sustainability and AA1000 – especially the latter, which deals with social-environmental accountability. It is Renova’s Sustainability Department that creates and implements the PCRC. It is subject to federal legislation and related state and municipal legislation of the localities in which it is present, and also specific legislation such as (examples) the Brazilian Driving Code, and the Children’s and Adolescents’ Law. Renova approaches its actions for dialog and relationship with communities by carrying out a process of local diagnostics – possibly also with diagnostics by sector or by subject – to get to know the reality in which it is working or will work as deeply as possible: local cultures, territories, identity, organizations, and related ideas.
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Social Communication Plans are structured as from the first stages of environmental licensing – when studies characterize the region where the Company intends to operate. The purpose of these Plans is to share decisions relating to the project that will result in effects at each location. Through these Plans, the Company finds out who its relationship-publics are, and what the most sensitive subjects are, and is able to shape the related actions to keep its stakeholders informed and participating in the stages of licensing, construction and operation of Renova projects. The significant information on all the environmental impacts and their related actions of control and monitoring is structured and consolidated to comprise the network of subjects that are then debated with the interested parties through various in-person initiatives (the Project Accompaniment Committee (CAE), meetings, forums, seminars, etc.), or initiatives through media (bulletins, newspapers, radio, etc.).
FROM THE FIRST STAGES OF ENVIRONMENTAL LICENSING, COMMUNICATION PLANS ARE STRUCTURED TO KEEP COMMUNITIES INFORMED
The strategies that Renova adopts for engagement during the environmental licensing, construction and operation of its projects make a definitive contribution to the construction of relationships of trust and mutual gain. Further, they enable the Company to continually improve its processes and projects, based on the contributions that have emerged from genuine dialog with its publics. All Renova’s social-environmental processes that are carried out in the phases of construction and operation of its projects have the Social Communication Program as their support, for dissemination of the Company’s initiatives, and for promotion of participation and contribution by the various stakeholders in the actions for social-environmental monitoring of its projects. Getting to know its publics in depth, Renova then sets out, in its Social Communication Plan, the level of engagement that is appropriate to each one of them. On this basis the Social Communication Programs of the Alto Sertão I, II and III wind complexes have sought to promote transparency, participation and engagement in relation to Renova’s business at all phases of project. Over the course of 2014 the Social Communication Program fulfilled a multiplicity of functions: • It helped integrate the various environmental programs in relation to demands put forward by stakeholders. • It shared the meaning and significance of the Company’s actions with local residents through campaigns and informative materials. • Through the CAE and the meetings with public authorities, it ensured that it was noted and recorded that there had been adequate response to the demands arising from the impacts caused by the construction and operation of its projects. • It mapped the significant and sensitive subjects for each one of the publics with which it held dialogs. • It promoted debate and participation on these subjects, among others.
In line with the PCRC and other initiatives, in 2013 Renova put in place the Demands Management process, which is divided into Social, Environmental and Legal subjects, and Communication and Safety. In the first year seven environmental complaints were recorded, all resolved in the period. In 2014, the management of demands was improved with the creation and reformulation of the instruments of monitoring and execution, redistribution by macro processes to the team responsible, and remittance of the demands to
the appropriate areas for support (Construction, SMS, O&M, Land Subjects and Communication). A new system – Management of Demands and Recording of Events (SIGED) – was put in place, with procedures and communication flows for internal solutions. And the mapping of stakeholders of the Alto Sertão region was finalized. In the SHPs, Espra receives complaints through the contacts of Renova (telephone, email) or through the companies providing services. In 2014 there were 28 complaints, all resolved.
MANAGEMENT OF COMPLAINTS AND DEMANDS RELATED TO ENVIRONMENTAL IMPACTS IN 201424 Number of complaints
Complaints resolved
% resolved
Sustainability (relationship with communities)25
28
28
100
Environmental feasibility (SHPs)
28
28
100
SUBJECT AREA
24. Complaints or claims related to environmental impacts recorded through formal mechanisms in the period covered by the report. Due to divergences in the calculation of the demands in 2013, Renova opted to work with only the figures for 2014 – for comparison with 2015. 25. The figures are for complaints and claims related to the Alto Sertão I, II and III complexes.
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OUR COMMITMENT – EXAMPLES Renova carries out a series of environmental education initiatives – the subjects include: health; raising of awareness and training of labor; archeological preservation; and information on traditional knowledge.
INVOLVEMENT OF THE COMMUNITY BEARS IMPORTANT FRUITS FOR ENVIRONMENTAL EDUCATION IN THE TOWNS AND VILLAGES AROUND RENOVA WIND FARMS
ENVIRONMENTAL PROGRAM
ANNUAL SUSTAINABILITY REPORT
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Through its Environmental Education Program (PEA), Renova establishes contact with the publics that are directly and indirectly involved in its business. This social-environmental initiative by the Company is of definitive importance for the relationships of trust that need to be established due to Renova’s presence in the territories where it operates. Thus, to ensure the program carries out a role of bringing people together, the Company presents it as an invitation to build, together, knowledge that will transform relationships. Renova believes that knowledge is the means for achieving trust, and thus sees its education program as a strategic part of its activity. The program had two areas of objectives in 2014: ‘Scenario 1’ relates to the regions where Renova already operates – Alto Sertão I and II; and ‘Scenario 2’ covers the regions where Renova is implementing new business – Alto Sertão III. The Company uses different work methodologies for each scenario, since the municipalities that are already familiar with the Company deal with different effects from those publics that are meeting Renova for the first time.
THE BOOK ON TRADITIONAL MEDICINAL PLANTS OF THE ALTO SERTÃO GIVES INFORMATION ON 30 OF THE 109 PLANT SPECIES MAPPED IN THE REGION The program deals with familiar and updated concepts relating to electricity generation both locally and globally; it works on constructing individual and collective meanings for the work of the people involved (external and internal); and builds knowledge and experience on ways of dealing with subjects arising from the daily experience of the construction works. A total of 31 meetings was held in 2014 with 1,041 participants. These were meetings with community groups and local landowners, and Daily-Safety Dialogs (‘DDSs’) with employees working on the construction. The program also held four meetings based on Health Education, with 64 teachers participating in each event, and a further four meetings on Heritage Education, attended by 58 teachers in municipal schools.
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PRESERVING THE TRADITIONAL KNOWLEDGE OF MEDICINAL PLANTS OF THE ALTO SERTÃO Direct involvement of the community is a fundamental item in enhancing the company’s sustainability. It brings important results, such as the fostering of environmental education in the towns and cities surrounding Renova’s wind farms. One positive result, in 2014, was the publication of the book Traditional Knowledge of Medicinal Plants of the Alto Sertão (Saberes Tradicionais de Plantas Medicinais do Alto Sertão) which arose from the Program to Recover Traditional Knowledge of Use of Medicinal Plants. This program resulted from a process of dialog with the communities and technical forums in the municipalities of Igaporã, Caetité and Guanambi, during the environmental studies for the implementation of the Alto Sertão I complex. At the time, Renova noticed the opportunity for a work of conservation of biodiversity, with mapping of the
medicinal plants of these regions. In partnership with specialized consultants, Renova carried out a series of interviews with the people who are referred to as ‘Guardians of the Knowledge’ – local residents who have the knowledge about the use of medicinal plants – and visited the areas where each of them habitually finds the plants that are endangered. The aim of the program was to enhance the perceived value of natural resources and local knowledge, fostering the preservation of these species. The book tells the story of 11 ‘Guardians of the Knowledge’, and gives information on 30 of the 109 species of plants mapped in the region. The botanical material on native species collected was sent to the collections of herbariums of the State of Bahia. The work was launched to the public during the First Social-Environmental Management Seminar of the Alto Sertão Wind Complex, on November 19, 2014, at the Casa de Anísio Foundation.
ARCHEOLOGICAL PRESERVATION PROGRAMS To ensure proper handling of items found during the process of excavation for construction of the wind farms, Renova developed programs of identification, preservation and management of the archeological heritage in the regions of the Alto Sertão I, II and III complexes. Actions were concentrated in the municipalities of Caetité, Guanambi and Igaporã, Licínio de Almeida and Pindaí, in the State of Bahia, and continued over a period of four years (2010 to 2013). These initiatives are legally supported by the Brazilian Constitution (Article 225, Paragraph IV), and Law 3,924 of July 26, 1961, which make provisions governing
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archeological monuments and historic heritage, as well as by resolutions of Conama and Iphan on the subject. This work gave rise to a complete diagnosis of the archeological potential in the areas susceptible to impacts, with mapping, study and preservation of the region’s historic heritage, and comprehension of how human occupation happened in this place over the centuries. The next step envisaged is dissemination of the knowledge through workshops on heritage, education and tourism, focusing on archeology.
Both for new projects and for those already being built or operating, these social dialog actions are support for Renova’s relationship with communities and its Communication Plans. Renova believes that each region has its particular characteristic, but also seeks to emphasize what they have in common, and in the overall context, production of wind energy is a channel for integration – opening doors to constructive and strategic dialogs. These interactions serve as a reference for the plan of engagement proposed by Rule AA1000, and demanded by Renova’s environmental licensing process. In the Facheiro wind complex, at the prior licensing phase, actions of dialog were carried out over five months and showed themselves to be fundamental in introducing the Company and its culture into new territory, and presenting the project and the results of the envi-
• Decision on a key message for alignment of statements on the project between Renova employees and external consultants. • Mapping of stakeholders, with analysis of their positions in relation to the project. • A survey of expectations, and points of attention for mediations, and correct positioning of the company. • People continually available to the public for information and explanations about the EIS. • Prior meetings with various segments of society. • The public hearings that are required by the legislation in the process of environmental licensing. • Decision on a plan of dialog to keep up the flow of information about the project between the stage of sale/placement and the start of works. A proactive stance is important in preparing and executing a strategic plan of dialog in the municipalities, to avoid inertia developing in relationships and/or undesired positions being taken without the opportunity for dialog. The EIS of the Facheiro wind complex was presented to the populations both directly and indirectly affected by the project, enabling local residents to participate in evaluation of the impacts of the project through prior meetings with formal and informal community leaders, and two formal public hearings. Visits were also made to the communities in the area of direct influence, especially in the further country areas. Folders, posters, radio spots and loudspeaker vehicles were also used to support the dissemination of information.
ENVIRONMENTAL PERFORMANCE
Based on the lessons learned in the licensing of the Facheiro wind complex, a series of social dialogs with stakeholders was put in place as a process of the GVA, to enhance and harmonize relationship with the new areas of Renova’s operation, to make a positive contribution in relation to obtaining the environmental licenses (the Prior License – LP and the Construction License – LI) and, principally, to build the ‘social license’ that is the legitimating factor for Renova’s social and environmental actions.
ronmental impact study. These dialogs achieved the following:
107 RENOVA 2014
SPECIAL DIALOG PROGRAM OF THE FACHEIRO PROJECT WITHIN THE PROCESS OF ENVIRONMENTAL LICENSING
Vital face-to-face interaction between the organization and its main interest-publics was a key factor in forging a closer relationship with the community and building relationships based on trust and transparency. Before any of the formal public meetings, the following estimated numbers of people had been involved in the Company’s initiatives for relationship with the population in the project’s area of influence:
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MORE THAN
300
174
900
PEOPLE, CONTACTED FOR PARTICIPATION IN PRIOR MEETINGS
PEOPLE (SIGNING ATTENDANCE) AT NINE PRIOR MEETINGS WITH COMMUNITIES
PEOPLE MOBILIZED FOR PUBLIC MEETINGS
The result was recorded attendance of 500 members of the public at the public hearing in the municipality of Lajes, and 700 at the public meeting in Caiçara do Rio do Vento (which has a population of only 3,200). Of the publics that were mapped prior to the public hearing, all stated they were in favor of the project, and this situation continued after the public hearings. The wide participation of the population in the discussions on the EIS brought the element of trust and safety to the process of licensing, making it possible for the licensing body (Idema) to conclude that the project was socially and environmentally viable. Renova’s strategy sees dialog as an essential way of contributing to the success of the business, at any phase of a project. When considering a new project, in which the Company and its strategic stakeholders do not know each other well, actions for relationship generate credibility and trust in a context in which all the parties have the opportunity to express, and to hear, the various interests, ask for explanations, and negotiate – turning the project into one that is capable of generating benefits for all those involved.
THE LICENSING PROCEDURE OF THE FACHEIRO WIND POWER COMPLEX (RIO GRANDE DO NORTE) The prior environmental licensing of the Facheiro wind complex was an important challenge for the GVA in 2014, for three reasons: first, because it was a project for sale of supply outside the State of Bahia, which would help to establish Renova as one of the largest operators in the Brazilian market – also diversifying its geographical coverage, leading to the possibility of new opportunities and new business; second, because of the process of analysis necessary for preparing Renova’s first EIS; and finally, because of the need to obtain the environmental license in a short period, in time to participate in the 2015 auctions. The project is for a portion of the cluster under development in the wind prospecting area of the State of Rio Grande do Norte, including the municipalities of Lajes, Caiçara do Rio dos Ventos and São Tomé – whose hills have strong and constant winds making wind power generation possible. Licenses were given for 22 wind farms, with 162 generators each with 3 MW nominal capacity, or a total of 486 MW for the whole complex.
The licensing procedure was conducted by Idema, the licensing authority of Rio Grande do Norte. A strategy of transparency and approximation to the technical team of that environmental body resulted in the process being completed in a record period of five months. This period involved technical analysis, inspections, prior meetings and two public hearings. There were no notices for completion of data in relation to the Reference Agenda (Termo de Referência – TR), that is to say the EIS was 100% compliant with the TR – this is evidence of the technical quality of the work involved, and the engagement of the consultancy teams and of Renova’s employees. The success of this execution has made this case a benchmark for Renova – it has been replicated in licensing of other new projects, as a route to developing excellence in management of environmental licensing processes. .
ENVIRONMENTAL PERFORMANCE
control, mitigation measures and compensation compatible with the reality of this new territory of activity by Renova.
109 RENOVA 2014
The environmental team saw the challenge as an excellent opportunity to improve performance in the licensing process. From conception of the project, it sought the best choices of location from the social-environmental point of view, based on technical discussions with the wind engineering and civil engineering areas of the Company. In a completely new development within the Company, members of multiple departments of Renova – Environmental Feasibility, Environment, Sustainability, Prospecting, Communication, Procurement, Logistics, Land Ownership, and Engineering (Wind Power, Civil, Electrical and Electro-Mechanical Engineering) – all contributed in building the characterization of the project, with information supporting a correct analysis of the social-environmental impact in the phases of planning, construction and operation, supported by a detailed social-environmental diagnosis of the project’s areas of influence. A wide and innovative discussion took place in developing the concept of the new project, bringing together the knowledge obtained in the construction of Alto Sertão, and establishing a series of actions for
WE WORK TO ENSURE THE WELLBEING OF ALL OF OUR STAKEHOLDER PUBLICS
SOCIAL PERFORMANCE
DIALOG IS OUR ENERGY A quest for continuous high performance is part of Renova’s daily life – and it ensures that we deliver power with high levels of availability. The basis of this achievement, however, is in our investment in people and in management of internal talents. These are vital foundations that keep Renova fully ready to operate at all the phases of the power generation process, in a business environment that is increasingly complex and competitive.
ANNUAL SUSTAINABILITY REPORT
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While on the one hand, Engineering and Operations are responsible for developing and ensuring the technical quality of Renova’s projects’ technical response to demands, on the other hand Human Resources (HR) is the department that supports the teams that execute the company’s activities at such a high level of performance – in harmonization with the Company’s strategy, in respect for its mission, vision and values and in the sharing of knowledge and value with all stakeholders.
IN 2014 RENOVA RESTRUCTURED ITS HR TO OPERATE ON A ‘BUSINESS PARTNER’ MODEL
Renova’s HR achieved a great deal in 2014. A highlight was the transformation of the entire department, restructured to operate on a ‘Business Partners’ (‘BP’) model with business partners and specialists giving support to the leadership and playing the role of consultants to internal clients. The Company’s first Internal Performance Cycle was completed, and the second one held – a process of evaluation of performance and targets, which led to the payment of bonuses under the Profit Sharing Program (PPR) for the first time in the Company.
THE NEW HR STRUCTURE Accompanying the evolution of Renova itself, the Human Resources area now occupies a strategic role in relation to the other structures of the Company. This was the department’s major change in 2014 – the move to operation under the Business Partnership model. This model (now a leading concept) positions the HR Department as a consultant to the internal client: it evaluates, develops, trains and assists in the search for the best results, supporting Renova’s strategy and helping it achieve its targets. This change began at the end of 2013, and the new structure, completed in 2014, enables employees’ concerns to be met more effectively, and faster, and makes a significant contribution to sustainable growth of the Company based on a model of excellence. The Selection and Recruitment sub-department was created as a support to HR, within the concept of center of excellence.
The business partners are professionals who stay close to the directors’ departments to support leaders in making decisions or in management of teams. With
knowledge of most of the processes of people management, they make a diagnosis of a situation or demand, discuss solutions and contribute to the development of leadership skills. This format has the advantage of providing a much greater synergy between HR and the corporate areas, especially in support to the leaders, to whom it gives a greater repertory for increasing the effective management of teams through a human resources system, policies, tools and communication. As part of a new model, in 2014 the area held a series of meetings called ‘Coffee with HR’ to create a closer day-to-day relationship with HR, and provide a more real perception of the work of the area.
SOCIAL PERFORMANCE
In the new structure, the area operates on two fronts – with the HR specialists, and the Business Partners (BPs). The group of specialists comprises six professionals, with the mission of creating and proposing human resources programs, processes, policies and tools to develop Renova and its employees in line with the Company’s strategy and objectives. It also provides the bridge between the team and other areas: Organizational Development, Remuneration and Benefits, Personnel Management, and Selection and Recruiting.
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INNOVATIVE VISUAL IDENTITY
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To strengthen the effect of the changes in HR, a single visual identity was created for the area – functioning as a ‘seal’ for communications and material that goes out under the HR area signature. The new visual approach is also differentiated by area of specialization – enabling employees to identify rapidly which part of the area is responsible for each activity. A principal logotype represents the area of HR as a whole, and four other ‘brands’ represented the specializations. The choice of a tree as the principal identity is a reference to an organism that is alive and renewable, always connected to its roots – elements that symbolize Renova and its manner of operating.
GOVERNANCE For Renova it is essential to keep employees aligned with the Company’s strategies, operations and governance. It has two bodies that play an important role in this: the Executive Committee (Comex) and the Intermediate Leadership Committee (Coled). The Comex comprises Renova’s senior management – a total of 16 members: nine general managers and seven non-statutory directors. Following a reformulation in 2014, the group increases as new employees are promoted – there is no maximum number of members. It was created to support the CEO’s office and to ensure that the various concepts and visions are fully shared – it is made up of a multi-disciplinary group of professionals with various areas of knowledge. It meets once a month to discuss subjects of importance for the Company. It aims to monitor the level of compliance with the Company’s medium-term strategic planning. It is a consultative body, without power of decision, and only makes recommendations, aiming for the best solutions. The Intermediary Leadership Committee (Coled), created in 2013, also has the role of consultation and proposing solutions, and like the Comex includes people from many areas, at line management level, and functions as an instance of communication between senior management, line management and all the employees. Its focus is on promoting understanding of the Company’s strategy, cohesion in execution of projects, and creation of knowledge through exchanges of experiences, to help in people’s growth and development. The Coled meets every 45 days – its meetings may invite other employees or external professionals, increasing the range of contributions. In 2014, as part of the responses to the Working Atmosphere Survey (which was entitled ‘Speak Up, Renova’ – ‘Fala, Renova’), employees indicated the need for broader dissemination of information on the Company’s leaders, and since last year this is now being done through the internal channels of communication.
PROFILE OF THE TEAM; INVESTMENTS IN THE INTERNAL PUBLIC GRI G4-10; G4-11; LA1; LA12 RENOVA’S EMPLOYEES
MORE THAN
55%
ARE IN THE AGE GROUP 31-50
161
120
SOCIAL PERFORMANCE
In 2014 Renova’s directly hired employees increased by 26% due to the expansion of the Company’s number of projects and demands. There were new hirings in various profit centers and at the end of the year Renova had 281 employees covered by collective negotiation agreements. Of its direct professional employees:
Renova has a team that combines youth, experience, high technical qualification and diversity. It is dynamic and open, employs professionals from various regions and age groups, and has no restrictions on gender, ethnicity or social status. Also, it is based on meritocracy – and does not use mechanisms of recording or monitoring of employees by minority group or gender, within the various levels of schooling and other indicators of diversity. Due to its type of activity, involving projects with fixed deadlines such as construction of wind farms, and for some non-end-use activities, Renova works with
contracting of professionals on demand. In 2014 it had 863 outsourced people in its various operations, the highest concentration being in the Northeast. Renova does not monitor the union membership of these professionals, but adopts the practice of contracting only trustworthy companies that comply with the legislation. Among Renova’s own employees, only the interns are not covered by union agreements. The Company allows freedom of choice for association or negotiation, being always open to the unions and to carrying out negotiations in an environment of total transparency with the employees.
RENOVA 2014
115
TOTAL NUMBER OF EMPLOYEES, BY GENDER
161
120
281
121
102
223
2014
2014
2013
2013
NUMBER OF EMPLOYEES, BY AGE GROUP
ANNUAL SUSTAINABILITY REPORT
116
2013
2013
18 to 25
19
8.52%
26 to 30
71
31.84%
31 to 40
107
47.98%
41 to 50
17
7.62%
51 to 60
7
3.14%
>60
2
0.90%
223
100.00%
Total
2014
2014
40.36%
55.61%
4.04% 100.00%
EMPLOYEES LEAVING THEIR JOB – BY GENDER: AVERAGE NUMBER OF YEARS WITH THE COMPANY
20
7.12%
97
34.52%
133
47.33%
24
8.54%
6
2.14%
1
0.36%
281
100.00%
41.64%
55.87%
2.49% 100.00%
2013
2014
Change
Male
2.28
1.91
-16.23%
Female
1.54
2.61
69.48%
EMPLOYEES LEAVING THEIR JOB – BY AGE GROUP: AVERAGE NUMBER OF YEARS WITH THE COMPANY
2013
2014
Change
1
3.63
263.00%
26 to 30
1.5
2.07
38.00%
31 to 40
2.5
2.01
-19.60%
41 to 50
4
0.92
-77.00%
51 to 60
1
0.75
-25.00%
0.01
4.67
46600.00%
2013
2014
Change
Male
27
21
-22.22%
Female
12
13
8.33%
2013
2014
Change
18 to 25
1
2
100.00%
26 to 30
11
10
-9.09%
31 to 40
24
17
-29.17%
41 to 50
2
2
0.00%
51 to 60
1
1
0.00%
0
2
-
18 to 25
>60
EMPLOYEES WHO LEFT THEIR JOB – BY GENDER
EMPLOYEES WHO LEFT THEIR JOB – BY AGE GROUP
>60
2014
Change
Southeast Region
29
18
-37.93%
Northeast Region
11
16
45.45%
NEW HIRINGS, BY AGE GROUP
2013
2014
Change
18 to 25
6
16
166.67%
26 to 30
29
44
51.72%
31 to 40
42
34
-19.05%
41 to 50
5
6
20.00%
51 to 60
2
1
-50.00%
>60
0
0
-
2013
2014
Change
Southeast Region
36
63
75.00%
Northeast Region
48
38
-20.83%
2013
2014
Change
Male
49
64
30.61%
Female
35
37
5.71%
2013
2014
Change
Southeast Region
43%
62%
44.19%
Northeast Region
58%
38%
-34.48%
2013
2014
Change
Male
58%
63%
8.62%
Female
42%
37%
-11.90%
2013
2014
Change
7%
16%
128.57%
26 to 30
35%
43%
22.86%
31 to 40
50%
34%
-32.00%
41 to 50
6%
6%
0.00%
51 to 60
2%
1%
-50.00%
0
0
-
2013
2014
Change
Southeast Region
6%
27%
350.00%
Northeast Region
32%
21%
-34.38%
NEW HIRINGS BY REGION
NEW HIRINGS BY GENDER
PERCENTAGE OF HIRINGS BY REGION
PERCENTAGE OF HIRINGS BY GENDER
HIRINGS BY AGE GROUP – PERCENTAGES 18 to 25
>60
TURNOVER, BY REGION
SOCIAL PERFORMANCE
2013
117 RENOVA 2014
EMPLOYEES WHO LEFT THEIR JOB – BY REGION
TURNOVER, BY AGE GROUP
2013
2014
Change
18 to 25
26%
45%
73.08%
26 to 30
25%
28%
12.00%
31 to 40
16%
19%
18.75%
41 to 50
17%
17%
0.00%
51 to 60
14%
17%
21.43%
0
0
-
2013
2014
Change
Male
17%
26%
52.94%
Female
23%
21%
-8.70%
>60
TURNOVER, BY GENDER
EMPLOYEES, BY REGION AND GENDER 118 ANNUAL SUSTAINABILITY REPORT
NORTHEAST Caetité and Salvador
TOTAL 131
68 2014
63 2014
55
61
2013
2013
TOTAL 116
SOUTHEAST São Paulo
TOTAL 150
93 2014
57 2014
66
41
2013
2013
TOTAL 107 2013
2014
Men
Women
Total
Men
Women
Total
Total
121
102
223
161
120
281
As %
54.26%
45.74%
100%
57.30%
42.70%
100%
The Variable Remuneration (RV) Program functions as an additional stimulus to comply with the performance and behavior targets, and is calculated under the Profit Sharing Program (PPR). In 2014 Renova adapted its profit sharing payments to the new legislation on the subject (Law 12,832), which created a sliding taxation scale exclusively for income tax on profit shares.
At the same time the new law provides tax incentives to Renova, with exemption from payroll taxes and charges on the amounts of profit shares. To adapt the variable remuneration to the new law, Renova obeyed its various requirements – such as the formation of employees’ committees (in São Paulo and Bahia), and formalization of an agreement signed by the union with which it negotiated the collective agreement. Renova follows a salary policy of paying more than the levels stipulated for each employee type, and above the local minimum wage. The lowest salary paid in São Paulo is R$1,486.08 (while the minimum wage in the State is R$810.00 and the union collective agreement specifies R$880.00). In Salvador, the lowest salary paid is also higher than both the category minimum and the local minimum wage: it is R$1,239.92, compared to the minimum wage of R$880.00 for the employee type in Bahia, and R$724.00 for the state minimum wage. In Caetité, the minimum wage paid by Renova is R$1,087.65, compared to R$880.00 for the union agreement wage, and R$724.00 for the official minimum wage.
CAREER DEVELOPMENT: A TEAM FULLY PREPARED FOR THE CHALLENGES OF TODAY AND TOMORROW GRI G4-LA9; LA11 Career development is one of the pillars of Renova’s people management. The Company believes that a well-qualified team that is ready and prepared for the constant challenges of the market makes all the difference not only in compliance with targets, but also in the very sustainability of the Company itself. In 2014 two development programs were launched: the Leaders’ Academy (Academia de Líderes) and the Cycle of Knowledge (Ciclo do Conhecimento).
NUMBER OF HOURS OF MANAGEMENT TRAINING: BY GENDER
2013
2014
Management posts – female
206
289
Management posts – male
589
387
SOCIAL PERFORMANCE
All the units of Renova follow a unified policy on benefits for the Company’s directly hired employees. They receive: health and dental insurance; assistance for child daycare centers; funeral assistance; insurance coverage for disablement; gym membership support; variable remuneration; maternity and paternity leave; group life insurance; meal vouchers; food vouchers; and transport vouchers. In 2014 Renova invested R$11,948,636.81 in benefits for its employees. This total includes expenditure on benefits, and the payment of variable remuneration, made in 2014 for the full year of 2013.
119 RENOVA 2014
BENEFITS AND REMUNERATION GRI G4-EC5; G4-LA2
TOTAL NUMBER OF HOURS’ TRAINING: BY ROLE AND GENDER
Women
Total
Men
Women
Total
59
2
61
6
2
8
6,310
3,706
10,016
424
347
771
Directors
342
2
344
66
0
66
Management
589
206
795
387
289
676
1,942
129
2,071
1,207
1,122
2,329
9,242
4,045
13,287
2,090
1,760
3,850
Supervision / administrative
Operational Total
ANNUAL SUSTAINABILITY REPORT
2014
Men
Intern / under-age apprentice
120
2013
The Leaders’ Academy was created to improve and strengthen the activity of Renova’s leaders, to align behavior, communication and management competencies with a focus on delivery of results and creation of high-yield teams. The program is divided into two modules: People Management Tools, with the support of consultants Towers Watson; and Business Management, with the support of the Dom Cabral Foundation. In each module, meetings referred to as ‘Practicagens’ are held for exchange of experience between managers and reinforcement of the content learned.
CAREER DEVELOPMENT IS A PILLAR OF RENOVA’S PEOPLE MANAGEMENT
As a dynamic company that is growing fast, Renova constantly needs to redesign its processes and procedures, which it does at all times supported by a team who are able to deliver the transformations that are necessary, according to the scenario. This is the reason for the creation of the Cycle of Knowledge, which helps prepare employees for new challenges based on the supply of tools and content that are appropriate to needs for a moment of transformation. The program is structured in training modules that are replicated in the three units of the Company, in partnership with consultants specialized in each subject. 13 group classes were organized in 2014, with three subjects: Communication and Management of Conflicts; Personal Effectiveness; and Transforming to Renew. They were held in July, October and November 2014, and a total of 159 people took part. The decision on the subjects was made based on the results of the Working Atmosphere Survey, previous assessments, and interviews with managers, who are the parties responsible for indicating which professionals are appropriate to participate in the trainings, based on the results of the Performance and Competency Assessments.
121
EXTRA TRAINING FOR HIGHER QUALIFICATIONS
INTEGRATION OF NEW EMPLOYEES
Renova adopts a policy of development for short and long-duration courses, in which the employees are eligible within pre-established criteria. For short-duration courses, 100% subsidized by the Company, the subject matter must be related to the employee’s function and the needs of his/ her area. For undergraduate and postgraduate courses, and specializations (such as MBAs), of longer duration, the employee is eligible after one year with the Company, provided his/her performance indicators are consistent and he/she is in alignment with his/her activity. HR makes the initial analysis of the need, and the CEO, with the Executive Board, gives the final approval. There is also an offer of a course in English for all employees that have been with the Company at least three months.
In 2014 Renova reformulated its Welcome Program, to give new employees the opportunity to get to know the Company and their work colleagues more deeply, in an environment of interaction and cooperation. The new program has a total duration of eight hours, given on two separate mornings – in two blocks: Institutional, and HR. The institutional component emphasizes subjects such as Renova’s Mission, Vision, Values and ‘Essentials’, and the social responsibility projects, the Renova Business Portfolio (SHPs, and Wind and Solar generation), the business areas, strategic objectives, governance – and the code of ethics and conduct, which each employee signs at the end of the process. The HR component presents the structure of the area, its method of service, benefits, the competencies model, the Working Atmosphere Survey, the process of performance assessment, and calculation of variable remuneration.
PERFORMANCE ASSESSMENT In 2014 Renova completed its first official cycle of performance assessment for the whole organization, with all 281 employees participating. This first cycle was begun in 2013 and completed in the first quarter of 2014. Its objective is that the Company’s results should be made up of the optimum performance of each component – employees, business areas and the Company itself. The final evaluations produced by the 2013 Performance Cycle were the basis for the payment of variable remuneration in 2014.
ANNUAL SUSTAINABILITY REPORT
122
The program involves phases of evaluation by competencies (an assessment form is written by the line manager); a meeting between the employee, the line manager and HR; and feedback meetings between the manager and employee. Specific performance parameters are used for each party, with focus on evaluation of business and evaluation of behavior, setting and checking of targets, and evaluation of competencies. The evaluation process also takes into consideration the alignment of areas, teams and employees with the Company’s strategies and goals, for the purpose of setting out individual development targets.
OPEN COMMUNICATION WITH THE EMPLOYEE Renova takes numerous actions to widen communication with its employees, at all levels and on a two-way basis. The Company believes in transparent and open dialog to ascertain the opinion of employees about the Company and the day-to-day work, with a focus on evaluation of the organizational atmosphere.
One of the tools used is the Working Atmosphere Survey – (called ‘Speak Up, Renova’ – Fala, Renova’), which is held every two years. The results of the survey in 2014 led to a decision to establish five working groups, to meet every two months and make plans of action based on the attention points raised by the survey: Quality of life and well-being, Clarity and direction, Image and values, Performance management, and Remuneration. The members of each group were invited by the HR department, then validated by managers, and there were also employees who wanted to participate voluntarily on their own initiative. In quarterly meetings with the CEO and the Chief Environment and Sustainability Officer, the groups present the progress of discussions and the proposals for initiatives on each one of the subjects. In 2014 Renova also launched its new, more dynamic and interactive Intranet. The Company also has a series of internal communication channels – printed matter, email and network – which provide further dissemination of the subjects of interest to the internal public.
THE NEED TO ENERGIZE’: INFORMATION FOR ALL On another front, Renova held its Energizar event, which aims to inform and align all employees on the Company’s objectives, targets and principal events. This is planned and organized by two areas – Communication and Strategic Planning – and chaired by the CEO, Mathias Becker, with individual participations by areas that have done something outstanding in the quarter. Energizar is held every three months in each unit.
TOTAL FOCUS ON HEALTH AND SAFETY GRI G4-LA5; LA6; LA7; LA8
Major steps forward were taken in this direction in 2014. In the sphere of management, one of the most important was the creation of the Occupational Health and Safety Management Unit, which ceased to be a subgroup of SMS management and took on a larger scale, reporting to the office of the Chief Environment and Sustainability Officer. Another initiative was preparation of SMS directives for the activities of construction, prospecting and operation and maintenance. These comprise one set of rules, 30 procedures and 50 forms. In a joint action with the Environmental Regulations area, these activities also undergo systematic audits for legal compliance. Also, Renova produces a monthly statistical report, enabling levels of safety of the outsourced contractors to be managed. These include: number of hours worked; number of accidents (with and without time off work); days lost; number of non-compliances generated, resolved and pending; and procedures for communication and investigation of accidents.
SOCIAL PERFORMANCE
With the start of commercial operation of the Alto Sertão I and II complexes, Renova invests time, improvements in the organizational structure, and money to disseminate and emphasize the subject of health and safety, and consideration for the individual, at all levels and in all activities. The challenges are greater every day – with the company increasingly working in distant areas to which access is remote, or which call for frequent travel. The Company needs to keep a focus on continuous evolution of the culture of safety, for mitigation and control of risks.
IN 2014 RENOVA MADE GREAT STRIDES IN DISSEMINATION OF ITS CULTURE OF SAFETY
100%
OF THE EMPLOYEES TOOK PART IN RENOVA’S FIRST OFFICIAL PERFORMANCE EVALUATION
EVERY 3 MONTHS RENOVA HOLDS ITS “ENERGIZE” EVENT – WHICH INFORMS EMPLOYEES ABOUT THE COMPANY’S AIMS AND OBJECTIVES
123 RENOVA 2014
As part of Renova’s values, safety and focus on people translates into plans and action that express the importance of this subject for the Company, whether it is in the office, in construction works, or in power plants in operation.
In Espra (the company that manages the SHPs), training schedules are put in place, and procedures and controls developed, for continuous improvement of safety in hydroelectric plants.
ANNUAL SUSTAINABILITY REPORT
124
The first SIPAT (Internal Work Accident Prevention Week) was held, on the worksite at Morrinhos, in the region of Caetité (Bahia), for prevention and for raising of awareness. A total of 474 people including Renova employees and outsourced workers participated. During the week, presentations were given on health in the workplace, sexually transmitted diseases, and subjects related to Renova in particular, such as prevention of forest fires. The event was supported by the SMS (Health, Environment and Safety) Workgroup, created in 2014 and comprising professionals from various areas of the Company. The group held
six meetings in 2014 to contribute to evolution of knowledge and practice on safety, and has already achieved results. These include: preparation of the Vehicle Use Policy; structuring of the flow for reporting accidents; planning of corporate training and procedure for disciplinary measures; and the plan for Safety and Quality of Life Week. SMS Workgroup: Led by the Corporate Coordination of SSO. The first meeting established that the following areas and parties responsible are called to all meetings: Legal, SMS, Acquisitions, Sustainability, Environmental Planning, O&M; Construction, Prospecting, HR, logistics and communication. In accordance with the existing legislation, Renova has a current Internal Accident Prevention Committee (CIPA)
The committee was formed to comply with the legal requirement – obedience to Normative Resolution NR-05. Its membership is as follows:
RENOVA ESTABLISHED NEW SAFETY CONTROLS AND ACHIEVED FATAL ACCIDENT RATE ZERO SOCIAL PERFORMANCE
with four representatives, as well as local safety committees, with 14 people (approximately 6% of Renova’s total of 281 employees at December 2014). The CIPA has the duty of bringing together employees from all areas, presenting proposals for preventive and educative action, to minimize risks in the workplace. The committee may, for example, update content of training.
• Senior counsel of the Caetité unit, appointed by the Company as chair of the CIPA. • Administrative assistant, appointed as second representative of the Company. • Senior environmental analyst, elected as acting representative for the employees. • Construction technician, appointed as second representative of the employees. Renova has not characterized or identified any activities with high incidence or high occupational risk of specific occupational illnesses – as ascertained in the Environmental Risks Prevention Program (PPRA) and in the reports and opinions issued. Employees of Renova act as inspectors of the field activities, in the great majority of the cases. Also, in 2014, the following opinions and programs were prepared: the Technical Opinion on Working Environment Conditions (LTCAT), the PPRA, and the Occupational Health Medical Control Program (PCMSO). Periodic examinations were also made on a large proportion of the employees, enabling the efficacy of the mitigation measures adopted by the Company to be monitored and checked.
RENOVA 2014
125
The concern for employees’ wellbeing is also present in the collective work agreement for Bahia (2014–2015), which includes a specific clause on employees’ health and safety, establishing specific terms on the working of the CIPAs. The agreement also specifies guarantees of conditions that ensure safety in the workplace, with special attention to the services of operation and maintenance of electricity transmission lines and networks, and training on Regulatory Rule (NR) 10 for the employees involved in the activities of maintenance operation, that are subject to risk of contact with facilities of the electricity system, guaranteeing supply of individual and collective protection equipment necessary for the work.
SAFETY OF THE VEHICLE FLEET Since the beginning of 2014, Renova’s Transport Safety Action Plan has covered (among other items): transits between units and airports, period of use, the type of vehicle authorized for rental, preparation of a safety diagnosis, installation of tracking devices for control, and monitoring of the fleet.
The Renova Emergency Brigade has also intensified training of its members in Caetité, because of the period of field burning in the region (in September) where the majority of the Company’s wind farms are in place.
Deaths Number of lost workdays (severity index) Accident rate with injury causing time off work – own employees and fixed outsourced workers Accident rate for own employees and fixed outsourced workers 126
Injury rate
2013
2014
2
0
58.45
69.17
13.36
5.16
29.06
19.10
13.36
5.16
ANNUAL SUSTAINABILITY REPORT
These figures do not include the information for the SHPs of Espra.
SUPPLIERS: STRATEGIC PARTNERS GRI G4-12; G4-13; EC9; LA14; SO10
As part of its transparent and continuous relationship with stakeholders, Renova adopts practices that ensures both transparency of the whole of the process of contracting of suppliers and also formalization of its contracts with these business partners. Renova’s policy is to contract suppliers that are well established and have a good reputation in the market. It seeks out companies with spotless reputation, and encourages contracting of suppliers in Bahia – where the greater part of its projects are located – that show capacity and quality in execution, comply with agreements, and provide the speed necessary for the projects, in a spirit of partnership, through cordial and lasting relationships. Renova made an assessment of the companies that provided services in the year 2014 in the Alto Sertão complexes (I, II and III), involved in activities including civil, electrical and mechanical engineering, assembly, logistics and inspection.
Of the 19 suppliers of the construction activities in 2014, seven were considered to have potential for a negative effect on the community. The possible negative effects, in reality or potential, generated for the community – which were duly mitigated by Renova’s suppliers – were related to dust, vehicle traffic (control of speed) and noise. Of this total, 21% have now adopted the actions agreed with Renova. If the supplier refuses to execute any of these actions, Renova may suspend or even rescind the contract with that company. In the operational partnerships and the SHPs, Renova did not find any potential for impacts. This indicates why, for Renova, it is essential to establish lasting relationships of trust that are beneficial for both parties, ensuring equality of conditions for all supplier companies and greater safety in contracting. This led to the Company putting in place its system for
In 2014 the Environmental Regulation management unit carried out various procedures of SMS audit in the companies that work in partnership with Renova for construction and operation of wind projects.
MAIN OPERATIONAL UNITS: PROPORTION OF COST OF SUPPLIERS SPENT ON LOCAL SUPPLIERS GRI G4-EC9 2013
%
2014
%
3,298,382,808.46
100
2,547,778,494.33
100
-
-
3,402,071.04
0.1
Local (Bahia)
1,446,364,205.18
44
83,291,684.78
3.2
Total (Local)
1,446,364,205.18
44
86,693,755.82
3.3
Whole Company Local (Rio Grande do Norte)
There is a significant difference between the figures for 2013 and 2014. This is the result of a relatively higher weighting of construction of projects in total billing in 2013, which had more activity in works. Also, there were changes in the list of active suppliers. In 2015, with the start of the works of Alto Sertão III, Renova expects once again to have a higher percentage of billing with local companies.
PROCESS OF QUALIFICATION OF SUPPLIERS Renova has a specific policy currently being put in place to give step-by-step guidance in selection of suppliers. The objective is to ensure hiring of suppliers who are recognized as being capable and who agree to the business guidelines of Renova, in processes that ensure equality of conditions for all supply companies. Also in 2014, the procurement area increased the sophistication of the subsidiary process of qualification of suppliers, in partnership with the company Sertras, which is specialized in this service. As well as reducing the periods for
qualification, this expanded the range of criteria of compliance that are checked before qualification in the legal, financial, employment-law and tax spheres, thus minimizing the chances of contracting of non-reliable companies. All suppliers’ contracts have clauses enabling rescission in the event of non-conformity with the criteria ascertained by Sertras. During the year 2015 Renova expects to complete the process of qualification of all its base of active suppliers according to the new policy and the new processes.
SOCIAL PERFORMANCE
Also, Renova’s health, safety and environment (SMS) guidelines are now attached
to all contracts for provision of services. It is company policy to pay special attention to contracting of established suppliers with good reputation in the market.
127 RENOVA 2014
qualification of suppliers, in 2014. With the support of a company specializing in supplier registration risk management when registering suppliers, from that point on, only new contracts that have the related Suppliers’ Certificate have been entered into.
EVER-INCREASING EFFICIENCY IN CONTRACT MANAGEMENT In 2014 Renova signed its first digital contracts, with two suppliers – an environmental consultancy and a communications agency. The use of digital signature, regulated in Brazil in 2001, enables documents to be validated electronically, ensuring authenticity, completeness and legal validity. It also saves costs on printing, delivery and notaries’ offices, and physical filing of documents. Renova includes clauses in its contracts prohibiting illegal conduct (corruption),
ANNUAL SUSTAINABILITY REPORT
128
with punishment according to the Anticorruption Law (Law 12,846 of 2013). Further, since that law came into effect the Company has adopted appropriate adaptation measures: it has updated the Code of Ethics and Conduct; trained all its managers (an eight-hour training module); and adopted clauses in all draft contracts prohibiting acts contrary to the public administration (anti-bribery clauses) – these contracts already have the obligations related to employment-law practices and environmental issues.
HUMAN RIGHTS AND RESPECT FOR THE INDIVIDUAL GRI G4-HR2; HR4; HR7; HR10 Renova is aware of the importance of its social role in an increasingly complex and wide-ranging employment-relations environment, and for this reason has adopted corporate social responsibility management that is in line with the principles of protection of human rights in its activities and operations, and also in the production chain, in all the regions where it is present. This policy of giving value to the individual has been a practice already incorporated in Renova – the Company has never been accused of discrimination. There is an internal mechanism for receiving indications of concern about cases of this nature.
Any employee can contact the Human Resources team, or send an email to
[email protected]
Another facility, currently at structuring phase, is the ‘Transparency Channel’, for identifying demands from the internal or external public relating to any unethical conduct observed in the activities of the Company or its suppliers. This is scheduled to start operating in 2015 with access via internet, intranet and a 0800 channel. As well as dealing with the subject in the Code of Ethics and Conduct – which all employees sign at the moment of hiring – in 2014 Renova took an important step forward on this subject, with approval of a plan for consolidation of human rights guidelines within the culture of the organization. This involves a series of phases, currently in progress, which involved the identification of critical human rights themes, and will serve as input for preparation of the Strategic Plan, and a Human Rights guide. The plan also states specific criteria for suppliers and review of the procurement policy.
In all contracts for works (in all 3 offices) Renova complies with the requirement to give training in policies and procedures relating to aspects of human rights. Contractors are also required to follow the SMS guidelines for training of their subcontractors. All standard Renova draft contracts with service providers, including security-guarding companies, include clauses on the practice of human rights principles.
TRAINING IN APPROACH TO HUMAN RIGHTS26
2013
2014
223
281
Total hours of training (LA10)27
-
7,513.5
Total hours’ training in human rights policies and procedures28
-
43
Percentage of employees in the period trained in human rights policies and procedures (%)
32
31
Number of employees who received formal training in the organization’s policies and procedures in human rights
82
86
Total number of employees (LA1)
26. The content on human rights is presented to employees in the Human Rights training modules, in the Leader’s Academy, in the Cycle of Knowledge, and in the Integration Program. 27. Estimated. 28. Estimated.
ANNUAL SUSTAINABILITY REPORT
130
RELATIONSHIP WITH COMMUNITIES: PARTICIPATIVE LISTENING, AND DIALOG
COMMUNICATION, PREVENTION AND ASSESSMENT OF SOCIAL IMPACTS GRI G4-SO1; SO11
More than the concern to mitigate impacts, Renova’s aim is to maintain a participative listening capacity and an open dialog with communities. This is a process that makes it possible to get to know each territory where the Company is present in depth, identifying the particularities, the cultural and historical characteristics and the social, environmental, political and economic dynamics in their various aspects. These are essential factors for creating an environment of respect, in which Renova positions itself as a socially responsible company that is conscious of the importance of the projects that it carries out.
All the results of evaluations of Renova’s social impacts are published through the Social Communication Program (PCS), which promotes a channel of interaction and exchange of information on the operation and construction of Renova’s wind farms with the stakeholders of their areas of influence, and also publishes matters of environmental control put in place by Renova to monitor and mitigate any impacts of its activities. By getting to know its publics in depth, Renova decides the appropriate level of engagement for each one of them, based on their interests. The PCS of the Alto Sertão I, II and III wind complexes sought to promote transparency, participation and engagement in the area around its business in all phases of the project. These actions have helped to create foundations of a stable environment
for the Company’s presence, minimizing social-environmental risks and costs arising from any fines, non-compliances, stoppages, class actions, etc. In 2014 the program had multiple functions: it helped integrate the various environmental programs in relation to the demands of stakeholders; it shared the meaning and significance of its actions with local residents, through campaigns and informative material; through the CAE and meetings with the public authorities, it guaranteed that demands generated by the impacts of construction and operation of the policies were properly recorded and dealt with; it mapped the important and sensitive subjects for each one of the publics for which it holds a dialog; and it promoted debate and participation around these themes.
To strengthen the participative process in its projects and publication of results, in 2014 Renova launched the Social-Environmental Management Seminar of the Alto Sertão Wind Complex. This event will take place every two years, for representatives of the community, public bodies, technicians and workers involved in the process of construction of the Alto Sertão (I, II and III) wind complexes, and also landowners and families of participating land sites, the population surrounding the works, partnership entities and the local press. The first event was held on November 19, 2014, with 103 people participating. In 2014 meetings were held presenting the Alto Sertão III complex, at the pre-construction phase in the area of influence – covering the municipalities of Caetité, Igaporã, Guanambi, Pindaí, Urandi, Riacho de Santana and Licínio de Almeida – where the wind farms of the complex are located. There were three institutional meetings, with local public bodies and 33 participants, and 22 meetings with communities of directly or indirectly affected areas, with a total of 1,211 people.
SOCIAL PERFORMANCE
WITH COMMUNITIES, RENOVA MAINTAINS A PARTICIPATIVE LISTENING STANCE, AN OPEN DIALOGUE
The web bulletin, available on Renova’s intranet, is distributed to the Company’s external partners on the internet. It is monthly, and reaches a public of 164 people. Nine such bulletins were posted in 2014.
131 RENOVA 2014
RENOVA GETS TO KNOW ITS PUBLICS IN DEPTH, AND SETS THE APPROPRIATE LEVEL OF ENGAGEMENT FOR EACH
The PCS generated an opportunity to produce the various tools of publication of information – such as the journal Circulador, which is designed for the communities, municipal leaders, and all stakeholders around Renova’s projects. The publication reports on events, action and results related to projects, and is published every two months with a print run of three thousand copies.
Among the SHPs, since the Espra complex has been operating for more than five years, the negative impacts took place principally at the construction phase. At the present moment, the impacts are predominantly positive, such as support for cultural and educational projects, and generation of income for the community of cities neighboring the hydroelectric plants. These activities are intensified in the phases of renewal of operational licenses – as was the case in 2014, with the Cachoeira da Lixa SHP. Numbers of complaints related to impacts on the community:
2013
2014
Complaints recorded in the year
142
208
Complaints resolved during the year
126
188
89%
90%
Percentage resolution
HEALTH AND SAFETY IN THE COMMUNITIES GRI G4-SO1; SO2; SO11
ANNUAL SUSTAINABILITY REPORT
132
Renova creates and operates programs to raise the awareness of communities on questions of safety, health and the environment, at all stages of a project. One that is now widely disseminated in the regions where Renova operates is the ‘Territory of Knowledge’ (Território do Saber) program, which includes actions under the Social Communication Program, Environmental Education, Heritage Education, Health Education, and Worker Training and Qualification. Renova’s social-environmental projects, carried out in the construction and operation stages, have the support of the Social Communication Program for publicizing their initiatives and promoting participation by the various stakeholders, and contribution from them, in action to monitor the projects in social-environmental terms.
THE ENVIRONMENTAL HEALTH EDUCATION PROGRAM (PEAS) The PEAS is a group of strategies and actions focused on improving the quality of life of the residents of Caetité, Guanambi, Igaporã and Pindaí, constructed as part of the process of complying with the conditional terms of licenses for installation of the wind farms in the Alto Sertão II wind power complexes, on subjects such as habits of life, conditions of work, housing, environment and access to essential goods and services. The program involves actions of promotion, prevention, study, in-depth diagnosis, raising of awareness and monitoring, serving different publics, such as residents of the ADA and DIA, community health agents, employees of the subcontractors, school coordinators and representatives of the municipal health secretariats.
90% OF COMPLAINTS FROM THE COMMUNITY MADE IN 2014 WERE RESOLVED IN 2014
As part of the program, in 2014 the First Science-On-the-Road Expedition in the Alto Sertão was held in Caetité, Guanambi, Igaporã and Pindaí. This initiative, conceived by Fiocruz 10 years ago, was taken to the Alto Sertão through a partnership with Renova, with a focus on the qualification of school teachers and community agents of the region, through a series of lectures and presentations including specialists. The subjects covered involved prevention of dengue fever, leishmaniosis, schistosomiasis and Chagas disease. As well as the lectures and presentations, the Science on the Road Expedition took a laboratory-bus to the four municipalities participating in the Science Fair, to stimulate the interest of young people in the subject. The event had a structure with a cinema, tests and models built in town squares to interact with the population.
The Heritage Education Program, within Renova’s Territory of Knowledge initiative, takes place in communities neighboring the Alto Sertão II wind complex and aims to enhance appreciation and knowledge of the cultural assets discovered in the archeological recovery work carried out by Renova. A basic contribution comes from the teachers and coordinators of the school network and the residents of communities neighboring the wind farms, who transmit the region’s historical and archeological knowledge. Since 2010, the works carried out in the municipalities of Caetité, Guanambi, Igaporã and Pindaí have made it possible to study 173 archeological sites and 419 historic sites of archeological interest.
SOCIAL PERFORMANCE
• Involvement of 11 community centers in 33 actions to promote health on the subjects of: endemics, prevention of STDs/AIDS, sexual abuse and exploration of children and adolescents, and prevention of use of drugs. • Training of 147 health agents. • Actions in the school network of four of the municipalities involved, with the participation of 54 coordinators, from 43 schools. • Production of seven information bulletins on the related subjects, with support material. • Organization of seven meetings with the health secretaries of Igaporã, Guanambi and Pindaí, for discussion of the program’s theme subjects, analysis of the epidemiological profile of the municipality, and review of the municipal health plans. • Holding of three Daily-Safety Dialogs (DDSs) with the employees of the projects, at the work site, with 712 participants. • Two vaccination campaigns for tetanus, hepatitis B and yellow fever for the employees on the works, with a total of 65 people vaccinated.
HERITAGE EDUCATION PROGRAM
133
Practical action involves: conversation with residents of the municipalities involved, workshops with teachers and school coordinators, technical field visits, and the distribution of kits with support teaching material to the teachers. The book ‘Eyes on the Cultural Heritage’ (Olhares sobre o Patrimônio Cultural), which contains recent information from the researches and from the MASB, is also part of the activities. A chapter for the teaching material of the Environmental Education Program (PEA) on the historic and heritage context of the Alto Sertão was also produced in the year. The idea is for this content to be enabling material for the teacher in the classroom. For 2015, the program plans to create a ‘virtual museum’, based on the process of 3D laser scanning of important archeological pieces. This is in progress, and will be a tool helping to publicize the whole work of research and recovery, disseminating the knowledge obtained in the territory of the Alto Sertão, and enhancing public appreciation of it. The web platform will show original pieces and some printed replicas.
RENOVA 2014
Since its start, in 2013, the PEAS has achieved important results. Examples are:
WORKER QUALIFICATIONS PROGRAM This aims to increase the level of technical skill in communities neighboring Renova’s projects in areas that are important for the activity. The project’s second phase was held in 2014, with 131 people trained in courses of construction, carpentry, and cutting and sewing. The new element in this phase of the program was the inclusion of the carpentry course, held in the community of Tábua dos Alves, in Guanambi. Five locations were chosen as centers for the program: Aguani, Salinas, Quixaba, Brejo dos Padres and Tábua dos Alves.
INDEMNITIES AND RESETTLEMENTS ANNUAL SUSTAINABILITY REPORT
134
GRI G4-EU20; EU22
Renova adopts a wide-ranging model involving a number of requirements for making any relocations with the minimum inconvenience for the communities involved. These are based on Renova’s Indemnity and Resettlement Plan, and on its internal Orientation Rules and Guidelines for this situation. These documents were prepared based on the World Bank’s Operational Directive OD4.30, of June 1, 1990, which describes the policy and procedures adopted by the bank for involuntary resettlement; and by the International Finance Corporation’s Performance Standard 5. To avoid relocations, the Company gives priority to the model of leasing rather than acquisition of land. Its Project Inspection protocol detects any houses and communities affected by projects and access roads. The inspection is carried out by a multidisciplinary team which evaluates the environmental and social-economic impacts and, based on the analysis, proposes opportunities for minimization of the impacts of reloca-
tion of homes, planted areas, and community and/or public equipment. Renova carries out extremely detailed identification and mapping of the population and of the areas that have potential for interference from a project. Based on this in-depth research, the technical team responsible for this process defines 15 types of effect, and the related approaches for dealing with relocations and resettlements, providing the information about the rights and guarantees for each group. All proprietors attended by the Renova technical team take part in the program during the execution of the works at their property, and one year after the project’s start of operation. In the event of relocation, whether temporary or final, the social technical team coordinates with the public health and education services with transparency, respect and appropriate offer of assistance to the families affected, to ensure adaptation and improvement of quality of life in a new living environment. In 2014 Renova disbursed R$1,515,661.86 in indemnities during the construction of the Alto Sertão III complex. There was a total of 282 indemnities, in 470 cases – 249 relating to sewerage collection networks; 204 relating to access; 4 resettlements; and 13 relating to the substation. Some people are indemnified more than once, because they own more than one property or have been reimbursed in more than one category (sewerage networks, accesses, resettlements, substation, new contracts). As well as the above, there were 195 new leasing contracts for future constructions of the complex.
131
135 RENOVA 2014
RENOVA CARRIES OUT EXTREMELY DETAILED IDENTIFICATION AND MAPPING OF THE POPULATION AND OF THE AREAS THAT MIGHT BE AFFECTED BY EACH PROJECT
SOCIAL PERFORMANCE
PEOPLE WERE GIVEN TRAINING IN THE COURSES IN BUILDING CONSTRUCTION, CARPENTRY, SEWING AND CUTTING IN 2014
THE CATAVENTO PROGRAM – RENOVA’S MAIN PRIVATE SOCIAL INVESTMENT INITIATIVE The Catavento program is a group of voluntary social-environmental development projects for the Alto Sertão of Bahia, where Renova’s wind farms are located. The initiative results from the Company’s engagement in causes of public interest in the municipalities of Caetité, Guanambi, Igaporã and Pindaí.
136
The program is supported by a network of employees responsible for creation and progress of the projects, which are carried out using Social Sub-credit funds financed by the BNDES. These funds are invested in integrated or gradual actions, with priority for creation of parks, and can extend to any location perceived as being in the territory. The financings pay special interest rates available for public-interest projects that aim to improve the quality of life of the population of the Sertão of Bahia. The program was inspired by demands observed and received over the process of construction of the Alto Sertão I wind com-
plex, complemented by diagnostic studies. The initiatives were classified according to the impact of their aims, which may be in the social or economic area, or relate to the environment, material or intangible heritage goods, or development or infrastructure, arranged in four classes – Social-economic; Environment; Organizational Development; and Culture and Heritage. Total investment in the first phase of the initiative, in 2012–13, was R$9.4 million. This was allocated in the Social-economic, Cultural, Environment and Organizational Development categories. Renova continued the project in 2014 with renewed financing of R$10 million. So far more than 10,000 people have been benefited by the program. Since the projects aim to boost development of the territory where they are located, the populations of the municipalities of Caetité, Guanambi, Igaporã and Pindaí have been the principal target of the program. Also, the involvement of the municipalities’ prefectures, community organizations (farmers and manufacturing associations), and the State University of Bahia, has been a fundamental component.
CYCLE II OF THE CATAVENTO PROGRAM The social-environmental projects in this second phase include: 1. Continuity of the actions of technical advice and support for organic family agriculture, aiming to strengthen local production chains, and access to public policies. 2. Implementation and supply of lowcost social technologies for capture and storage of water resources. 3. Construction of sustainability strategies for the MASB and the Anísio Teixeira Music Conservatory. 4. Expansion of the project to strengthen rural production chains: This includes the initiatives of Rural Technical Advice and Development (ATER), and cultivation of manioc and beekeeping, maintaining advisory assistance to the 150 families of Cycle I, then inclusion of 150 families in 2014, and a further 50 in 2015, totaling 350 families benefited. The 10 cooperative
AWARDS FOR THE CATAVENTO PROGRAM Renova received recognition in the form of the 2014 Chico Mendes Social and Environmental Award, in the category Action for Social and Environmental Responsibility. The awards are given by the Chico Mendes International Institute for Research and Environmental Responsibility, in recognition of products, services, success stories and systems of organizational management that promote and incentivize sustainability. To receive the certification, the Catavento program proved that it is in compliance with the Program of Commitment to Responsible Socio-environmental Management (Procert), which is a signatory to the United Nations Global Compact, Agenda XXI. Renova’s CEO, Mathias Becker, and the Company’s Chief Environment and Sustainability Officer, Ney Maron, were also awarded the Green Passport, a recognition of outstanding social and environmental action under their management. The Chico Mendes International Institute for Research and Environmental Responsibility is a non-governmental non-profit organization.
SOCIAL PERFORMANCE
The Museum will be headquartered at the Casa da Chácara, in Caetité – and will also have nine other museum centers in the three municipalities – scheduled for opening in 2015. Before the start of the works, in October 2014 the community had the opportunity to visit some of the archeological excavations at the location – some 500 people participated. This project was created by Renova in partnership with the prefecture of Caetité and the State University of Bahia (UNEB). From the start, it will have the vocation of a Museum of the Territory, with the mission of preserving the cultural heritage of the Alto Sertão.
enterprises that were fostered in Cycle I will be further accompanied, and 10 new groups will be stimulated on the basis of ATER. 5. In the Water in the Semi-arid Region project, as part of an effort to increase access to water, some smaller dams and reservoirs have been mapped for processes of recovery. The decision on which of these will be recovered will take into account the number of families benefited and what the water is used for. 6. The Music Conservatory project aims to maintain the Conservatory’s educational activities and provide strategies for its sustainability. 7. MASB: completion of physical construction of the main premises, and the 10 museum centers; and strengthening of the participation of the partner organizations.
137 RENOVA 2014
One highlight of the year has been the start of works on the MASB, the purpose of which is to preserve – and share with the community – the archeological finds made by Renova in the region during the construction of the Alto Sertão (I, II and III) wind complexes.
WE BELIEVE IN EXPANSION OF RENEWABLE POWER SOURCES AS ONE OF THE WAYS OF MAINTAINING BRAZIL’S GROWTH
OUTLOOK AND CHALLENGES
A FUTURE ALMOST LITERALLY REPLETE WITH OPPORTUNITIES In adverse times for the water levels in Brazil’s reservoirs – and with an outlook for change only in the medium term – we expect the interest in the new renewable sources, which means principally solar and wind power, to increase at an expanding rate. In 2014 Brazil was the world’s fourth largest producer of electricity from renewable sources – after China, India, and the United States – and also signed the COP20 Climate Change Protocol of the UN Climate Change Conference, held in Peru, for reduction of emissions of polluting gases.
ANNUAL SUSTAINABILITY REPORT
140
According to the report of the United Nations Environment Program (UNEP), in 2014 investments in clean energy in Brazil were 93% higher than in the previous year, at US$7.6 billion; and of this total, US$6.2 billion (84%) was invested in wind power. This brought Brazil back into the list of the world’s 10 largest investors in renewable-source energy – rated seventh in absolute numbers, after China, the US, Japan, the UK, Germany and Canada. The other three in the list are India, Holland and South Africa. This represents clear opportunities for Renova, which seeks to diversify its mix of businesses, with projects that are increasingly profitable, and able to offer the supply that Brazil needs. The start of 2015 is an important moment for Renova, with the outlook of practically doubling its operational capacity, to 1,100 MW. There are at least two auctions in the Regulated Market in the year: the Alternative Sources Auction of 2015, and the 2015 A 3 auction. Wind power is the highlight of the Alternative Sources auction, with 530 projects registered, of a universe of 570.
There will also be three Reserve Energy auctions in 2015 – two of which are very important for the expansion of Renova’s business plan: one will be solely for photovoltaic solar power sources; and one will place contracts for supply of both solar and wind power. With the growth of renewable sources, we also expect the government to expand its agenda – with some hope for an increase in the ceiling price of electricity due to the appreciation of the dollar, and more expensive credit from the BNDES and the banks, making raising of funds more difficult. We thus see an environment of opportunities and dynamism, but one that will call for caution in decisions. To overcome the difficulties, creatively and profitably, Renova will continue with development of projects that have synergy between wind and solar sources, as one way of optimizing return on investment, and costs. Solar power is now becoming an important alternative, with competitive prices at the auctions and projects under development in the Free Market. Renova believes that holding of auctions is an essential mechanism for increasing the demand for energy generated from solar power. At the same time, this potential comes up against a need for maturation of the market, and also of the regulatory environment itself, and government policies – and we expect this to happen in the coming years. In parallel, Renova will continue to seek new paths of growth. Both for wind power and for distributed-generation solar power, we can see that the market is very open to new sources of energy, new partnerships, and new ways of working.
The operational figures show Renova among the best generators of electricity from renewable sources in the world, with an availability index of 97.5% in its wind farms in operation in the period of nine months. The international benchmark indication is that the first quartile in availability for wind farms with the same type of operation as Renova’s is of the order of 96% (Source: Garrad Hassan). These are figures that show the correctness of Renova’s strategy – guided always by the aim for operational efficiency, dialog, and respect for all stakeholders: environmentally responsible, and with a team qualified to operate in a dynamic market that is in expansion.
OUTLOOK AND CHALLENGES
Renova has a total of more than 14,000 MW under development. It already has 652.3 MW in operation and a further 600 MW scheduled for delivery by the end of 2015. These projects are sustained by an integrated management, that enables it to operate throughout the whole of the production chain, with a high level of services, and low risk for stockholders.
IN 2015: RENOVA READY TO WIDEN ITS MARKET SHARE AND EXPAND ITS GEOGRAPHICAL PRESENCE
141
1,100MW RENOVA’S OUTLOOK FOR OPERATIONAL CAPACITY BY THE END OF 2015
INVESTMENT IN CLEAN ENERGY IN BRAZIL IN 2015 WAS UP BY 93% FROM 2014
RENOVA 2014
In 2015 Renova is ready to increase its market share and expand its presence beyond the state of Bahia, into Rio Grande do Norte, in projects that are at the final phase of structuring. It is a year with important targets, such as the delivery of the Alto Sertão III complex, maintenance of high availability of operation, and continuous evolution of its portfolio of businesses.
GRI G4 CONTENT INDEX Indicators Page
Chapter
Comments
Compliance
External Assurance29 V
Performance Standard (IFC)30
Strategy and Analysis G4-1 G4-2
4; 6
Letter from the CEO; Letter from the Chief Environment and Sustainability Officer
Complete
4; 6; 28; 30
Letter from the CEO; Letter from the Chief Environment and Sustainability Officer; Renova’s vision of the future; Risk management
Partial
Leadership in generation from renewable sources
Complete
Organizational Profile G4-3 G4-4
23
Our businesses
Complete
V
20
Leadership in generation from renewable sources
Complete
V
G4-6
20
Leadership in generation from renewable sources
Complete
V
G4-7
36
Corporate governance
Complete
V
G4-8
23; 26
Our businesses; Management model
Complete
V
22; 64
Innovation by diversification; Financial results
Complete
V
115
Profile of the team; investments in the Internal Public
Complete
V
G4-10
ANNUAL SUSTAINABILITY REPORT
V
G4-5
G4-9
142
20
G4-11
115
Profile of the team; investments in the Internal Public
Partial
V
G4-12
126
Suppliers: strategic partners
Partial
V
G4-13
33; 47; 126
The stockholding structure of Renova; Records in the operation; Suppliers: strategic partners
Complete
V
G4-14
36; 78
Corporate governance; Promotion of diversity; Licensing and regulatory requirements – legal compliance
Partial
V
G4-15
41
Organization and advocacy in the sector
Complete
V
G4-16
41
Organization and advocacy in the sector
Complete
V
Identified Material Aspects and Boundaries G4-17 G4-18 G4-19 G4-20 G4-21
34
Group structure diagram
Complete
V
11
Stakeholder engagement, continuous materiality determination
Complete
V
11; 17
Stakeholder engagement, continuous materiality determination; Materiality matrix
Complete
V
11
Stakeholder engagement, continuous materiality determination
Complete
V
11
Stakeholder engagement, continuous materiality determination
Complete
V
G4-22
142
GRI G4 Content index
No significant changes in scope, limit or measurement methods in comparison with the 2013 publication
G4-23
142
GRI G4 Content index
No significant changes in scope, limit or measurement methods from the 2013 publication
V
V
Stakeholder Engagement 11
Stakeholder engagement; continuous materiality determination
Complete
V
G4-25
11
Stakeholder engagement; continuous materiality determination
Complete
V
G4-26
11
Stakeholder engagement; continuous materiality determination
Complete
V
G4-27
11
Stakeholder engagement; continuous materiality determination
Complete
V
G4-24
Report Profile G4-28
10
About this report
Complete
V
G4-29
10
About this report
Complete
V
G4-30
10
About this report
Complete
V
G4-31
10
About this report
Complete
V
G4-32
10; 142 a 145
GRI G4 Content index;
Complete
V
G4-33
10
About this report
Complete
V
29. T he External Verification Report, containing limited assurances by the independent auditors, is on pages 152–155. 30. The IFC Performance Standards (PS) are directed to the IFC’s clients, offering guidance about the means of identification of risks and possible impacts and are designed to help clients avoid, minimize and manage risks and impacts. The eight Performance Standards are: PS 1 – Assessment and Management of Environmental and Social Risks and Impacts; PS 2 – Labor and Working Conditions; PS 3 – Resource Efficiency and Pollution Abatement; PS 4 – Community Health, Safety and Security; PS 5 – Land Acquisition and Involuntary Resettlement; PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources; PS 7 – Indigenous Peoples; and PS 8 – Cultural Heritage.
Indicators Page
Chapter
Comments
Compliance
External Assurance29
Complete
V
Performance Standard (IFC)30
Governance 36; 37
Corporate governance; Governance structure
G4-37
37
Governance structure
Partial
G4-38
37; 38
Governance structure; Board of directors
Complete
G4-39
142
GRI G4 Content index
The Chairman of the Board of Directors does not hold the position of Chief Executive Officer
G4-40
38
Board of directors
Complete
G4-41
36
Code of Ethics and Conduct
Complete
G4-44
142
GRI G4 Content index
G4-45
38
Board of directors
G4-47
142
GRI G4 Content index
GRI G4 CONTENT INDEX
G4-34
A performance self-assessment process at the highest levels of governance has not been defined. Partial There is no schedule in place for members of the BoD to evaluate impacts, risks and opportunities, but they are reported whenever deemed material and necessary.
G4-49
37
Governance structure
Partial
G4-51
37
Governance structure
Complete
G4-53
37
Governance structure
Partial
PS2
143
PS2
G4-56
32; 36
Mission , Vision, Values and the Renova ‘Essentials’; Code of Ethics and Conduct
Complete
PS2
G4-57
36
Code of Ethics and Conduct
Complete
PS2
G4-58
36
Code of Ethics and Conduct
Complete
PS2
Social investments; the Catavento program
Partial
V
Benefits and remuneration
Complete
V
Investment in infrastructure
Partial
Suppliers: strategic partners
Complete
97
Materials
Complete
96
Energy
Complete
Category: Economic Economic Performance G4-EC1
71; 73
Market Presence G4-EC5
119
PS2
Indirect Economic Impacts G4-EC7
73
Procurement Practices G4-EC9
127
V
Category: Environmental Materials G4-EN2 Energy G4-EN3 Water G4-EN8
95
Water
Complete
G4-EN9
85
Proceedings for grant and use of water rights
Complete
G4-EN10
142
GRI G4 Content index
V
PS3
Since implementation of the Alto Sertão III complex was finalized in 2014, water has not been re-used because the volume needed for the project declined by 86%
Biodiversity G4-EN11
86
Protected areas
Partial
G4-EN13
82; 86
Highlights of 2014; Protected areas
Partial
G4-EN14
83
Endangered species
Complete
V
PS6 PS6
V
PS6
Emissions G4-EN15
91
Greenhouse gas emissions
Complete
V
PS3
G4-EN16
91
Greenhouse gas emissions
Complete
V
PS3
G4-EN17
91
Greenhouse gas emissions
Complete
PS3
G4-EN18
91
Greenhouse gas emissions
Complete
PS3
Effluents and Waste G4-EN22
98
Effluents
Complete
PS3
G4-EN23
100
Waste
Complete
PS3
G4-EN24
100
Waste
Partial
PS3
29. The External Verification Report, containing limited assurances by the independent auditors, is on pages 152–155. 30. The IFC Performance Standards (PS) are directed to the IFC’s clients, offering guidance about the means of identification of risks and possible impacts and are designed to help clients avoid, minimize and manage risks and impacts. The eight Performance Standards are: PS 1 – Assessment and Management of Environmental and Social Risks and Impacts; PS 2 – Labor and Working Conditions; PS 3 – Resource Efficiency and Pollution Abatement; PS 4 – Community Health, Safety and Security; PS 5 – Land Acquisition and Involuntary Resettlement; PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources; PS 7 – Indigenous Peoples; and PS 8 – Cultural Heritage.
RENOVA 2014
Ethics and Integrity
Chapter
Comments
Compliance
External Assurance29
142
Licensing and regulatory requirements; Legal compliance
There were no fines and/or significant sanctions imposed by environmental agencies and/or police in 2014.
Complete
V
86; 99
Monitoring of noise; Transport and infrastructure
Partial
PS6
77; 82
Investments in environmental protection; Highlights of 2014
Complete
PS6
Indicators Page
Performance Standard (IFC)30
Compliance G4-EN29 Transport G4-EN30 Overall G4-EN31
Environmental Grievance Mechanisms G4-EN34
101
Dialog about the environment
Complete
Category: Social Labor Practices and Decent Work Employment G4-LA1
115
Profile of the team; investments in the Internal Public
Complete
G4-LA2
119
Benefits and remuneration
Complete
V V
PS2
Occupational Health and Safety G4-LA5
123
Total focus on health and safety
Complete
G4-LA6
123
Total focus on health and safety
Partial
PS2
G4-LA7
99; 123
Transport and infrastructure; Total focus on health and safety
Complete
PS2
G4-LA8
123
Total focus on health and safety
Complete
PS2
PS2
Training and Education G4-LA9
144
119
Career development
G4-LA10
142
GRI G4 Content index
G4-LA11
119
Career development
Partial Currently, there is no retirement program in place since, due to employee average age, none are currently facing this situation. Complete
ANNUAL SUSTAINABILITY REPORT
Diversity and Equal Opportunity G4-LA12
115
Profile of the Team; investments in the Internal Public
Partial
Supplier Assessment for Labor Practices G4-LA14
126
Suppliers: strategic partners
Partial
Human rights and respect for the individual
Partial
Human Rights Investment G4-HR2
128
Non-discrimination G4-HR3
142
GRI G4 Content index
There were no reports of cases of discrimination in 2014.
V
PS2
Freedom of Association and Collective Bargaining G4-HR4
128
Human rights and respect for the individual
Partial
Child Labor
G4-HR5
142
GRI G4 Content index
Renova maintains a strict monitoring and control system and there were no reports of situations involving child labor in 2014.
PS2
Renova maintains a strict monitoring and control system and there were no reports of situations involving forced or compulsory labor in 2014.
PS2
Forced or Compulsory Labor
G4-HR6
142
GRI G4 Content index
Security Practices G4-HR7
128
Human rights and respect for the individual
Partial
PS4
Assessment G4-HR9
142
GRI G4 Content index
Renova did not undertake any assessments designed to measure the impact of its operations on human rights.
PS4
Supplier Human Rights Assessment G4-HR10
115
Human rights and respect for the individual
Partial
29. The External Verification Report, containing limited assurances by the independent auditors, is on pages 152–155. 30. T he IFC Performance Standards (PS) are directed to the IFC’s clients, offering guidance about the means of identification of risks and possible impacts and are designed to help clients avoid, minimize and manage risks and impacts. The eight Performance Standards are: PS 1 – Assessment and Management of Environmental and Social Risks and Impacts; PS 2 – Labor and Working Conditions; PS 3 – Resource Efficiency and Pollution Abatement; PS 4 – Community Health, Safety and Security; PS 5 – Land Acquisition and Involuntary Resettlement; PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources; PS 7 – Indigenous Peoples; and PS 8 – Cultural Heritage.
Indicators Page
Chapter
Comments
Compliance
External Assurance29
Performance Standard (IFC)30
V
PS8
Human Rights Grievance Mechanisms
G4-HR12
142
GRI G4 Content index
In 2014: (a) we were not aware of any complaints or grievances filed related to human rights violations by the Company and we undertook no assessments of the human rights impact of our operations; (b) we took an important step on the issue, by approving a work plan for 2015 to consolidate and integrate the human rights guidelines within the organization’s culture.
Society Local Communities
G4-SO1
99; 130; 132
Transport and infrastructure; Dialog about the environment; Communication, prevention and assessment of social impacts; Health and safety in the communities
Complete
G4-SO2
132
Health and safety in the communities
Partial
PS4
Anti-corruption 36; 142
Code of Ethics and Conduct; GRI G4 Content index
There were no reports of corruption in the period.
GRI G4 Content index
We recorded no donations to political parties or related institutions in the period.
Code of Ethics and Conduct; GRI G4 Content index
There were no reports of fines or significant sanctions by the appropriate authorities during the period.
Partial
GRI G4 CONTENT INDEX
G4-SO5
Public Policy G4-SO6
142
Compliance G4-SO8
36; 142
Complete
145
Supplier Assessment for Impacts on Society 142
GRI G4 Content index
G4-SO10
126
Suppliers: strategic partners
RENOVA 2014
G4-SO9
We have no controls for the selection of new suppliers based on criteria regarding their impact on society. Complete
Grievance Mechanisms for Impacts on Society G4-SO11
99; 130; 132
Dialog about the environment; Communication, prevention and assessment of social impacts
Complete
PS5
Product Responsibility Compliance G4-PR9
142
GRI G4 Content index
There were no fines or sanctions imposed with regard to products and services during the period.
Sector-specific Content Organizational Profile G4-EU1
55; 56; 57
Main figures for the year; Installed capacity
Complete
56; 57; 58
Main figures for the year; Outlook and market
Complete
G4-EU4
58
Outlook and market; Start of commercial operation
Partial
G4-EU5
89
Climate change
Complete
Main figures for the year
Partial
G4-EU2
Availability and Reliability G4-EU10
55
Local Communities G4-EU20
134
Indemnities and resettlements
Complete
PS5
G4-EU22
134
Indemnities and resettlements
Complete
PS5
29. The External Verification Report, containing limited assurances by the independent auditors, is on pages 152–155. 30. The IFC Performance Standards (PS) are directed to the IFC’s clients, offering guidance about the means of identification of risks and possible impacts and are designed to help clients avoid, minimize and manage risks and impacts. The eight Performance Standards are: PS 1 – Assessment and Management of Environmental and Social Risks and Impacts; PS 2 – Labor and Working Conditions; PS 3 – Resource Efficiency and Pollution Abatement; PS 4 – Community Health, Safety and Security; PS 5 – Land Acquisition and Involuntary Resettlement; PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources; PS 7 – Indigenous Peoples; and PS 8 – Cultural Heritage.
SOCIAL STATEMENT
1 – BASIS OF CALCULATIONS (R$’000)
2014
2013
2012
Net revenue (NR)
302,867
226,011
115,639
Operational profit (OP)
- 20,316
16,241
112
40,776
29,533
12,301
Gross payroll (GP)
2014 2 – INTERNAL SOCIAL INDICATORS Food Mandatory charges/costs on payroll Private pension plan Health Safety and health in the workplace
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Amount (R$’000)
2013
% of GP
2012
Amount Amount % of NR % of GP % of NR (R$’000) (R$’000)
% of GP
% of NR
1,829
4.49%
0.81%
1,356
4.59%
0.60%
769
6.25%
0.67%
11,350
27.84%
5.02%
7,489
25.36%
3.31%
4,206
34.19%
3.64%
N.A.
-
-
N.A.
-
-
N.A.
-
-
3,744
9.18%
1.66%
2,629
8.90%
1.16%
1,164
9.46%
1.01%
-
-
N.A.
-
-
N.A.
-
-
N.A.
25
0.06%
0.01%
31
0.10%
0.01%
31
0.25% 0.03%
Education
257
0.63%
0.11%
107
0.36%
0.05%
36
0.29% 0.03%
Culture
N.A.
-
-
N.A.
-
-
N.A.
991
2.43%
0.44%
224
0.76%
0.10%
107
Transport of employees
Training and professional development Provision of/ assistance for day-care centers Profit sharing Others Internal social indicators – Total
Education Culture Health and Water infrastructure Sport
-
33
0.08%
0.01%
18
0.06%
-
N.A.
-
9,683
23.75%
4.28%
6,643
22.49%
-
N.A.
-
-
905
2.22%
0.40%
778
2.63%
0.34%
337
2.74%
0.29%
28,817
-
-
19,275
-
-
6,650
-
-
% of OP
% of NR
5.36%
0.01%
2014 3 – EXTERNAL SOCIAL INDICATORS
-
0.87% 0.09%
Amount (R$’000)
2013
% of OP
-
2012
Amount Amount % of NR % of OP % of NR (R$’000) (R$’000)
46
-0.23%
0.02%
647
3.98%
0.29%
6
1,320
-6.50%
0.44%
1,123
6.91%
0.50%
28
25.00% 0.02%
53
-0.26%
0.02%
76
0.47%
0.03%
-
-
-
120
-0.59%
0.04%
116
0.71%
0.05%
13
11.61%
0.01%
Anti-hunger action: food security
214
-
-
N.A.
-
-
N.A.
-
-
Other
226
-1.11%
0.07%
1,513
9.32%
0.67%
86
76.79%
0.07%
1,979
133
118.75%
0.12%
11,921 10,643.75%
10.31%
Total contributions to society Taxes (excluding obligatory charges on payroll) Internal social indicators – Total
-9.74%
0.65%
3,475
21.40%
1.54%
37,673 -185.44%
12.44%
19,426
119.61%
8.60%
39,652 244.15%
13.09%
22,901
141.01%
10.13%
12,054 10,762.50% 10.42%
This section of the table shows specifically the dimensions of the Catavento program
2014 4 - ENVIRONMENTAL INDICATORS Investments related to the company’s operations (1) Investments in external programs/projects2 Special programs/external projects Total investment in the environment
2013
2012
Amount (R$’000)
Amount Amount % of NR % of OP % of NR (R$’000) (R$’000)
% of OP
12,080
-59.46%
3.99%
8,052
49.58%
3.56%
19,334
1,403
-6.90%
0.46%
1,219
7.51%
0.54%
329
293.75%
0.28%
N.A.
-
-
N.A.
-
-
N.A.
-
-
13,483 -66.36%
4.45%
9,271
57.08%
4.10%
% of OP
% of NR
17,262.50% 16.72%
19,663 17,556.25% 17.00%
1. Investments, monitoring of the quality of wastes/effluents, de-pollution, expenses on introduction of non-pollutant methods, environmental audits, environmental education programs for employees, and other expenditures in continuous improvement of environmental quality in the company’s operations. 2. De-pollution, conservation of environmental resources, ecological campaigns and social-environmental education for the external community and for society as a whole.
2014
2013
2012
Number of employees at end of period
281
223
178
Number of hirings during period
101
84
78
Number of outsourced employees
23*
21
192*
Number of interns
1
1
4
Number of employees over 45 years old
7
9
12
120
102
79
33
37
13
Number of African-Brazilian employees
ND
15
12
% of supervisory positions held by African-Brazilians
ND
3%
2%
8
0
2
Number of women employed % of supervisory positions held by women
Number of employees with disabilities or special needs
SOCIAL STATEMENT
5 – WORKFORCE INDICATORS
* Outsourced workers of Engineering (Works) are not included
2014
2015 RENOVA 2014
6 – CORPORATE CITIZENSHIP
147
Ratio of highest to lowest compensation: Total number of work accidents: Who selects the company’s social and environmental projects?
( ) senior management ( X ) senior and functional managers ( ) all the employees
( ) senior management (X) senior and functional managers ( ) all the employees
Who decides the company's work environment health and safety standards?
( ) senior management ( ) senior and functional managers ( X ) all the employees plus Accident Prevention Committee
( ) senior management ( ) senior and functional managers (X) all the employees plus Accident Prevention Committee
In relation to labor union freedom, the right to collective bargaining and/or internal employee representation, the company:
( ) doesn’t get involved ( ) follows ILO guidelines ( X ) encourages and follows ILO
( ) doesn’t get involved ( ) follows ILO guidelines (X) encourages and follows ILO
The company pension plan covers:
(N.A.) senior management (N.A.) senior and functional managers (N.A.) all the employees
(N.A.) senior management (N.A.) senior and functional managers (N.A.) all the employees
The profit-sharing program covers:
( ) senior management ( ) senior and functional managers ( X ) all the employees
( ) senior management ( ) senior and functional managers (X) all the employees
In selecting suppliers, the company’s standards of ethics and social and environmental responsibility:
( ) are not considered ( X ) are suggested ( ) are required
( ) are not considered ( ) are suggested (X) are required
As to employees’ participation in voluntary work programs, the company:
( X ) doesn’t get involved ( ) supports ( ) organizes and encourages
( ) doesn’t get involved (X) supports ( ) organizes and encourages
Total number of consumer complaints and criticisms:
in the company - 0; via Procon - 0; in the courts - 0
in the company - 0; via Procon - 0; in the courts - 0
% of complaints and criticisms met or solved:
in the company - 0; via Procon - 0; in the courts - 0
in the company - 0; via Procon - 0; in the courts - 0
Total added value distributable (R$’000)
Distribution of added value (DVA):
2014
2013
R$264,679
R$221,123
Government 18%; employees 14%; stockholders 0%; third parties 81%; retained -13%
Government 11%; employees 18%; stockholders 0%; third parties 68%; retained -3%
GLOSSARY A A-3 and A-5 LEN Auctions ‘New-build’ auctions (Leilão de Energia Nova = ‘New Supply Auctions’), held for the purpose of contracting supply starting respectively 3 and 5 years ahead.
ABEEÓLICA
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Brazilian Wind Power Association (Associação Brasileira de Energia Eólica), a non-profit uniting wind power generation companies throughout Brazil, with the aims of: promoting production of electricity from wind power as a component of Brazil’s electricity supply; and defending the strengthening, establishment and competitiveness of the wind power sector, principally through a governmental program for the long term.
ABRACEEL Brazilian Association of Electricity Traders (Associação Brasileira dos Comercializadores de Energia): defends free market competition as an instrument of promoting efficiency and security in supply of electricity, ethanol and natural gas, and a stimulus to the growth of trading in carbon credits – by interacting with the public, opinion formers, government bodies, and
including the judiciary, and national and international bodies and institutions, defending their rights, interests and aspirations.
ABSOLAR Founded in 2013, the Brazilian Photovoltaic Solar Energy Association (Associação Brasileira de Energia Solar Fotovoltaica) is a non-profit organization which brings together companies of the whole production chain of the photovoltaic sector with operations in Brazil. It coordinates, represents and defends the interests of its members in relation to the development of the sector and of the photovoltaic solar energy market in Brazil.
Aerogenerator A device used to convert the kinetic energy of the wind into electricity. The quantity of electricity generated depends on the speed of the wind, the diameter of the rotor and the yield of the system as a whole.
Alto Sertão I A complex of 14 wind farms owned by Renova in the interior of Bahia State, with installed capacity of 294.4 MW. Their output was contracted in the 2009 Reserve Energy auction (LER).
organizations of the sector.
Alto Sertão II ABRAGEL Brazilian Clean Energy Generation Association (Associação Brasileira de Geração de Energia Limpa): fosters support and mutual interest for small and mediumsized producers of electricity and companies, entities and associations interested in this market. Represents its members in dealing with the public authorities,
A complex of 15 Renova wind farms in the interior of Bahia State, Brazil, with installed capacity of 386.1 MW. Their output was contracted in the Reserve Energy (‘LER’) Auction of 2010 and the New-build (‘LEN’) A–3 Auction of 2011.
Alto Sertão III A complex of 46 Renova wind
farms in the interior of Bahia, with total installed capacity of 736.8 MW. Their output was contracted in the LEN (A–5) Auction of 2012, in the 2013 LER auction, and in the Brazilian Free Market.
Alto Sertão III Phase A 23 Renova wind farms in the interior of Bahia with installed capacity of 411.0 MW, which sold power supply in the 2012 (A–5) LEN auction, the 2013 LER auction, and in the Free Market.
ANEEL The Brazilian electricity sector regulator: Agência Nacional de Energia Elétrica (National Electricity Agency). It is an autonomous authority, connected to the Mining and Energy Ministry, with the duty of regulating and inspecting generation, transmission, distribution and trading of electricity – including: mediating conflicts between agents of the sector, and between them and consumers; granting of concessions, permissions and authorizations for operations of electricity facilities and services; approval of user tariffs; working at all times in favor of quality of service, and investments; stimulating competition between operators; and ensuring universal availability of electricity services. Law 9427 of December 26, 1996. APINE The Brazilian Association of Electricity Producers (Associação Brasileira dos Produtores de Energia Elétrica) has been operating since 1995, promoting sustainable development of the Brazilian electricity sector, mainly in the area
BNDES The Brazilian Development Bank (Banco Nacional de Desenvolvimento Econômico e Social). Founded in 1952. A federal public company that provides long-term financing for investments in all sectors of the economy, under a policy that includes the social, regional and environmental dimensions.
Brazilian National Grid Production and transmission system responsible for supplying electricity to all the regions of Brazil. Aneel Normative Resolution 205 of December 26, 2005.
C CADE Cade, the Administrative Economic Defense Council (Conselho Administrativo de Defesa Econômica), is Brazil’s monopoly watchdog and authority. It is a federal authority, linked to the Ministry of Justice and headquartered in Brasilia, exercising the duties conferred by Law 12,529
CCEE The Wholesale Electricity Market (Câmara de Comercialização de Energia Elétrica – Electricity Trading Chamber) is the mechanism of trading of electricity between companies that operate in the national grid. It is a non-profit organization under private law acting under the authorization of the Concession-granting Power and is regulated and inspected by Aneel. Law 10848 of March 15, 2004, Decree 5177 of August 12, 2004, Aneel Normative Resolution 109 of October 26, 2004.
CEBDS The Brazilian Corporate Sustainable Development Council (Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável) is a non-profit promoting sustainable development in companies operating in Brazil, by interaction with civil society and the various levels of government, and publicizing the most up-to-date concepts and practices related to the subject. It was founded in 1997 by a group of Brazilian entrepreneurs leading largescale businesses, aware of the changes and opportunities that
sustainability brings with it, especially after Rio 92. Today its membership includes more than 70 of Brazil’s largest business groups, with aggregate sales of approximately 40% of Brazilian GDP and responsible for more than 1 million jobs.
COGEN The Brazilian Industry Electricity Cogeneration Association (Associação da Indústria de Cogeração de Energia) is a nonprofit that promotes its members’ joint interests in establishing and strengthening electricity cogeneration in Brazil.
Commercial operation Purchase and sale of products/ services as part of the business of a private company
Comunitas A civil society organization created in 2000 to help optimize corporate social investment – fostering joint action to reduce social inequalities, and stimulating participation in Brazil’s development by the private sector.
Concession holder Holder of a federal concession to provide public electricity distribution, generation or transmission service.
Consumer An individual or legal entity under private or public law that asks a distributor for supply of electricity or use of the electricity system, assuming the obligations arising from this supply to its consumer units, as stated in the applicable law and contracts. Normative Resolution 414, of September 9, 2010.
GLOSSARY
B
of 2011, throughout Brasil. Its mission is to make efforts at all times on behalf of free-market competition. In the sphere of the federal Executive Power, it is responsible for investigating and deciding, as final instance, on matters of competition, and also for fostering and disseminating the culture of free competition. It exercises three functions: preventive, repressive, and educational.
149 RENOVA 2014
of generation. Its members are small, medium-sized and large private generating companies and holders of generation concessions that operate plants in Brazil and worldwide, and other companies in the sector. Its aim is to foster support and mutual interest for companies interested in independent power production, defending their rights and interests in relation to the public authorities and Brazilian and international institutions.
D Demand The average of active or reactive electrical power required from the electricity system by the portion of load that is in operation at a consumer unit during a specified interval of time.
Distribution network Defined as a group of facilities for electricity distribution with voltage lower than 230 kV, or facilities at that voltage or higher when specifically defined by Aneel.
Distributor
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Holder of a concession or permission for distribution of electricity – solely on the regulated basis – to the final consumer or to a Supplied Unit. Aneel Normative Resolution 206, of December 22, 2005.
E Energized area Area with working electricity transmission networks.
Energy source Defined as a natural resource used to run machines to produce energy. Examples are: water, natural gas, coal, oil products, biomass, wind, and solar radiation.
ESPRA Energética Serra da Prata S.A. – the Renova company holding and managing three small hydroelectric plants (SHPs).
F Facheiro Wind Power Complex The Renova wind power complex planned for the center of the State
of Rio Grande do Norte, currently at environmental licensing stage, for construction in the towns of Lajes, Caiçara do Rio do Vento and São Tomé. It will comprise 23 wind farms: 18 in Lajes, with 143 aerogenerators; four in Caiçara do Rio do Vento, with 25 aerogenerators; and one in São Tomé, with 3 aerogenerators.
I IFC
The Bahia State Industries Federation (Federação das Indústrias do Estado da Bahia): Representative body of the business organizations of Bahia – CIEB, Sesi, Senai, and IEL. Provides services in the fields of education, training, qualification, health and leisure, and promotion of IT knowledge.
The International Finance Corporation. A member of the World Bank Group, it is the world’s largest development organization dealing with the private sector in developing countries. Founded in 1956, it is owned by its 184 member countries – which collectively determine its policies. Its work in more than 100 developing countries helps companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities.
Fitch Ratings
Independent producer
FIEB
International credit rating agency. Issues risk ratings on companies worldwide.
Free Market In Brazil, the Free Market is the contracting environment in which prices for electricity supply are negotiated freely between the consumer and the generating agent or trader.
G Generator Holder of a concession, permission or authorization for generation of electricity.
GWEC Global Wind Energy Council: an international organization representing the wind power industry, with the mission of promoting wind power as a source for electricity supply worldwide, with economic and environmental benefits.
Legal entity or consortium of companies holding a concession, permission or authorization to produce electricity wholly or partly for sale, at its own risk. Aneel Normative Resolution 109 of October 26, 2004.
Installed capacity Total generation capacity of all the rotors of a generating plant (usual meaning).
Installed power offtake Sum of the nominal potential power consumption of electric equipment items of the same type installed in a consumer unit and in conditions to start functioning.
J Jacobina Jacobina is a municipality in the State of Bahia, Brazil, 330 km from Salvador. Renova has a wind power project in the region of Jacobina with installed capacity of 338.1 MW, planned to start commercial operation in September 2018. The project is 50%/50% owned with Cemig. Its output has been contracted in the Free Market.
L
O
R
LEN
O&M
Regulated Market
New-build’ auction (Leilão de Energia Nova – ‘New Electricity Auction’): Auction to contract energy supply to be provided by facilities yet to be built
Operation and maintenance.
In Brazil, the Regulated market is the contracting environment in which prices are laid down by the regulator, Aneel.
Light I A complex of 12 Renova wind farms, in Bahia, with installed capacity of 200.7 MW. The output has been sold in the Free Market, and supply is planned to start in September 2015.
Light II A complex of 12 Renova wind farms, in Bahia, with installed capacity of 202.7 MW. The output has been sold in the Free Market, and supply is planned to start in September 2016.
M Mercado Livre I A Renova wind farm with installed capacity of 21.6MW, in the interior of the State of Bahia, which has sold power supply in the Free Market.
Mercado Livre II A group of four Renova wind farms in the interior of Bahia, with installed capacity of 101.4 MW, which have sold power supply in the Free Market.
Mercado Livre III A Renova wind farm with installed capacity of 32.4MW, in the interior of the State of Bahia, which has sold power supply in the Free Market.
Law 9648 of 1998, Law 10848 of 2004, and Aneel Normative Resolution 109 of October 26, 2004.
P P50 An estimate of average electricity output for which the possibility of its being exceeded in the long term is estimated at 50%. Regarded as an average estimate for electricity production.
P90 An estimate of average electricity output for which the possibility of its being exceeded in the long term is estimated at 90%. Regarded as a conservative estimate for electricity production.
PPA Power Purchase Agreement – contract to buy power supply.
Proinfa Program The Program to Encourage Alternative Sources of Electric Power (Programa de Incentivos às Fontes Alternativas de Energia).
S Small hydroelectric plant (SHP) A hydroelectric plant with power output higher than 1,000 kW and not more than 30,000 kW, with total reservoir area of 3.0 km2 or less.
SPC Special-purpose Company: a limited company or corporation set up to carry out a single project or objective. Sustainable Leadership Platform A movement of business leaders to connect, inspire and educate young leaders with the values of sustainability. It has a group of tools – books, an internet portal, lectures and presentations (in video), regional and national educational events, courses and content supporting education of leaders – to support companies, sector associations, business schools and universities in management of knowledge for sustainability. The movement began in 2011, with the publication of the book Conversation with Sustainable Leaders (Conversas com Líderes Sustentáveis), which was the result of a survey by the company Ideia Sustentável, in 2008. The survey indicated leadership as the most important variable for success in inserting the concept of sustainability into the management and culture of businesses.
GLOSSARY
‘Reserve Capacity’ auction (Leilão de Energia de Reserva – ‘Reserve Energy Auction’).
The Brazilian National System Operator (Operador Nacional do Sistema): the agent responsible for coordination and control of the generation and transmission operations of Brazil’s National Grid system.
151 RENOVA 2014
LER
ONS
DECLARATION BY BUREAU VERITAS BUREAU VERITAS CERTIFICATION INTRODUCTION Bureau Veritas Certification Brasil (‘Bureau Veritas’) was contracted by Renova Energia (‘Renova’) to carry out an independent verification of its Sustainability Report (hereinafter ‘Report’), covering evaluation of content, quality and limits of that Report, for the year 2014. The information published in the Report is entirely the responsibility of the management of Renova. Our responsibility is described by the following definition of the scope of the work. SCOPE OF THE WORK Reasonable Assurance of the Report (as per ISAE 30001) in accordance with the GRI (Global Reporting Initiative™) G4 Guidelines and Principles (2013)2, including the Electricity Sector Supplement3. Any evaluation of information related to the following has been excluded from this Assurance: • Activities outside the defined evaluation period.
ANNUAL SUSTAINABILITY REPORT
152
• Statements of position by Renova (expressions of opinion, belief, objectives or future intentions). •E xactitude of the economic and/or financial data contained in this Report, which was extracted from the financial statements audited by external independent auditors. METHODOLOGY The verification comprised the following activities: 1. Interviews with the people responsible for the material subjects and for the content of the Report. 2. Verification of data on performance in relation to the Principles that ensure the quality of the information, in accordance with the GRI G4. 3. A nalysis of Renova’s activities of engagement with stakeholders. 4. V isits to the offices of Renova in Salvador (state of Bahia, Brazil), Caetité (Bahia) and São Paulo state, Brazil, as well as the work site at Morrinhos, in the municipality of Guanambi (Bahia), and the wind farm complexes Alto Sertão I and Alto Sertão II, for verification of the traceability of the data published, aiming to identify the source of that data and the reliability of the management systems involved. 5. Visits to the following private social investment initiatives in the municipality of Caetité: the Anísio Teixeira Music Conservatory, the Casa da Chácara (planned to be the central location of the MASB Museum), the Caetité Women’s Movement Fruit Processing Experimental and Teaching Unit; the Alto Sertão – Costureiras de Morrinhos (seamstresses of Morrinhos) activity; the Beira Rio Dam (irrigation); and the Manioc Processing Unit. 6. Evaluation of the system used to determine the material aspects included in the Report, considering the context of the sustainability and breadth of scope of the information published. 1. ISAE 3000: International Standard on Assurance Engagements. 2. M ateriality, Stakeholder inclusiveness, Sustainability context, Completeness, Balance, Comparability, Exactness, Timeliness, Clarity and Reliability. 3. G RI – G4 Sector Disclosures – Electricity Utilities (2013)
Reasonable-Scope Assurance offers conditions for an appropriate analysis of the company’s internal processes and systems, and also a sampling of sufficiently precise information and data, enabling issuance of an assertive technical opinion. Considering the Context of Sustainability and the statement of data on the company’s performance, our opinion covers subjects related to the management of the company as well as questions related to the Report’s adherence to the GRI-G4 Guidelines. As concerns verification of the Principles of Exactness and Reliability of Data, we note that our scope was limited to the information and data relating to the material aspects presented in the Report. TECHNICAL OPINION • Renova has updated its Materiality Matrix on the basis of consultations with various groups of stakeholders, using a principle of continuous consultations, which requires more frequent surveys of specific publics. We consider the result to be coherent based on the context of sustainability, enabling an objective narrative about the performance of the company. We also see rich detailing of subjects brought up by the interviewees in relation to the material themes.
• The Report clearly presents the material impacts of the operation of the Alto Sertão I wind farm complex, which started operation in 2014. • In relation to the information on the material topic ‘Maintenance and handling of biodiversity’, we report the creation of a work group, which has the objective of achieving more effective management of the impacts on biodiversity. However, we did not find consistent information on the performance of the company in relation to this topic. • The Report made progress in relation to the 2013 report, by presenting a rich body of information about Renova’s business outlook, containing detailed material on objectives and a panorama of the company’s opportunities. • The Report updates the information on the strategy for social investments and conduct of the social projects currently in operation in a consistent manner, based on the program named Catavento, which is structured on the basis of the four dimensions of impact, which guide the activities of the program. • We saw the creation of a corporate policy of relationship with communities, being implemented gradually in the areas in which the company operates. • We witnessed improvements related to the management of human resources (HR) with the use of the ADP RHWEB system. The obtaining and analysis of data on the processes of HR can be considered to be more robust and exact. • Renova has for the first time presented its inventory of Greenhouse Gas Effect Emissions, for Scopes 1, 2 and 3, according to specifications of the GHG Protocol.
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• The positive and negative impacts of the activities of Renova come from the construction of wind farms, and their operation, and the operation of Small Hydroelectric Plants (SHPs) for generation of electricity from alternative sources.
• We found a significant improvement in the collection of data on consumption of water and generation of effluents from the processes of operation and installation of wind farms. • Renova has continued to invest in management of suppliers through intense work based on training and qualification of suppliers, with a focus on technical, employment-law, financial, tax and environmental questions. However, the Report is timid in terms of presentation of indicators relating to management of suppliers. • The inconsistencies found in the Report in relation to one or more of the GRI G4 Principles have been satisfactorily corrected. • We found that Renova had partially addressed the recommendations recorded in our prior Statement. Thus we have maintained some recommendations not previously met, as well as producing new challenges for the company. RECOMMENDATIONS FOR THE NEXT CYCLE
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• There should be deeper coverage of the following topics identified as material in the materiality test: (a) maintenance and handling of biodiversity – wider coverage of the positive and negative impacts, also including internal indicators that would demonstrate the company’s performance in the area of biodiversity; (b) Safety in the communities – enrichment of the reporting on Renova’s actions and development of related indicators (as well as those established by the GRI), that could reflect the material impacts of the activities on the communities in the areas of direct influence of Renova’s projects (recommendation of the previous cycle). • Present richer information on the performance in occupational safety, improving the collection of data of the indicator LA6 (specific data on occupational health and safety). • Increase the presentation of indicators relating to management of suppliers. The GRI G4 gives a series of specific new indicators that provide support for reporting on the management of suppliers. CONCLUSION The Report presents the economic, environmental and social performance of Renova in a balanced manner, based on the material aspects and significant impacts identified, following the GRI G4 methodology. The data and information found were considered to be exact and reliable, in spite of the fact that there is not a system of formal management covering the material aspects of this publication. We have concluded that the Report is compliant with the content and quality Principles of the GRI G4 Guidelines, complying with the criteria of the Core option. STATEMENT OF INDEPENDENCE AND IMPARTIALITY Bureau Veritas Certification is an independent company providing professional services specialized in management of Quality, Health, Safety, Social aspects and the Environment, with more than 180 years’ experience in independent evaluation services.
No member of the evaluation team has any commercial link with Renova. We have conducted this evaluation independently, and believe that there was no conflict of interests. Bureau Veritas has put in place a Code of Ethics throughout its business to maintain high ethical standards among its personnel in the corporate activities. On completion of the verification a detailed report was prepared containing all the subjects verified, the deviations found, corrective actions taken and opportunities for improvement generated. This report ensures traceability of the process, and is maintained as a record in the management system of Bureau Veritas. CONTACT Bureau Veritas Certification is available for any further information on the site www.bureauveritas certification.com.br/faleconosco.asp or by telephone on +55–11–2655–9000.
São Paulo, August 2015.
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Alexander Vervuurt Leading Auditor, Sustainability Reports Assurance (ASR) Bureau Veritas Certification – Brazil
CREDITS PRODUCED BY Renova Environment and Sustainability Management Unit. Renova Finance, Development and Investor Relations Management Unit. COORDINATION Renova Sustainability Management Unit Renova Investor Relations Management Unit Renova Communication Management Unit GRAPHIC DESIGNS TheMediaGroup CONSULTANCY AND TEXT Keyassociados
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PHOTOGRAPHS Salvador and Caetité – Márcio Lima; São Paulo – Régis Filho ENGLISH TRANSLATION P I Brasil
CORPORATE INFORMATION RENOVA – SÃO PAULO OFFICE Av. Roque Petroni Júnior, 999, 4º e 15º andares Vila Gertrudes | São Paulo/SP | Brazil CEP: 04707910 Tel/fax: +55 (11) 3569.6746 RENOVA – SALVADOR OFFICE Av. Tancredo Neves, 450, 23º e 25º andares Caminho das Árvores | Salvador/BA | Brazil CEP: 41820901 Tel/fax: +55 (71) 2886.0840 RENOVA – CAETITÉ OFFICE Rua Barão de Caetité, 393, 1º andar Centro | Caetité/BA | Brazil CEP: 46400000 Tel/fax: +55 (77) 3454.3015 www.renovaenergia.com.br
• man • technology • wind power – clean energy
• natural resource • life • clean energy
The Renova Seal of Sustainability
• man • solar – clean energy
2014 ANNUAL SUSTAINABILITY REPORT – RENOVA ENERGIA – 2014
www.renovaenergia.com.br
ANNUAL SUSTAINABILITY REPORT
