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September 1, 2022

EDP Brazil agrees to sell 198MW hydropower plant in Brazil

The Mascarenhas facility will be sold to London-listed investment company GSEO for $235m.

Brazilian energy company EDP Brazil has agreed to sell its Mascarenhas hydroelectric facility to Victory Hill Global Sustainable Energy Opportunities (GSEO).

The company will sell the 198MW hydropower project for a R$1.22bn ($235m) consideration.

Located in the Brazilian state of Espírito Santo, Mascarenhas is a run-of-river asset that has been operational since 1974.

The hydropower facility has long-term power-purchase agreements (PPAs) in place with local utilities, which generate more than 60% of its revenues.

Its sale is part of a strategy by EDP Brazil’s parent company, EDP – Energias de Portugal, to increase its investments in solar power generation.

London-listed investment firm GSEO expects the Msacarenhas facility to provide ‘strong and sustainable’ cashflow, as its useful life is estimated at 45 years.

Completion of the deal is subject to customary regulatory approvals.

Victory Hill Capital Advisors served as advisor to GSEO for the transaction.

Victory Hill co-chief investment officer Eduardo Monteiro said: “The acquisition of Mascarenhas marks our first investment in hydropower and provides us with a highly reliable source of power generation backed by long-term secure PPAs.

“The preconditions to enabling more penetration of wind and solar power capacity in the Brazilian energy mix are well established and strongly underpinned by government policies and the significant contribution of hydropower.

“Hydropower generation is one of the oldest and most proven power generation sources, complementing more intermittent renewable sources such as wind and solar and ultimately facilitates the presence of such energy sources in the energy mix.”

GSEO said that it will appoint Paraty Energia, an active participant in Brazil’s energy sector, as its local operating partner for Mascarenhas.

Paraty will also acquire a minority equity stake in the hydropower facility and receive performance incentives for its management of the facility.

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