Highlights:

• Net adjusted income was R$ 514 million in 2Q22, 20.4% (R$ 87 million) more than reported in 2Q21.
• The adjusted Ebitda in 2Q22 was R$ 1,897 million, an increase of 23.8% compared with 2Q21.
• The average price of energy sales’ contracts, net of revenue taxes and trading operations was R$ 219.52/MWh, 6.9% higher than recorded in 2Q21.
• Energy sales volume in 2Q22, excluding trading operations, was 9,556 GWh (4,376 average MW), a volume 7.9% higher than sold in 2Q21.
• Concluded the acquisition of the development rights to the Serra do Assuruá Project, with a total authorized capacity of approximately 880 MW and a price ceiling of R$ 265 million. The installation of the asset has an estimated investment of around R$ 6 billion.
• The Company made a successful bid in the Aneel 01/2022 Transmission Auction for Block 7 covering the installation of 1 km of transmission line and a substation, complementary to the Novo Estado project in the state of Pará.
• The Board of Directors approved the distribution of R$ 578 million as intermediate dividends.

In 2Q22, ENGIE Brasil Energia (EGIE3) recorded an adjusted Ebitda of R$ 1.89 billion, 23.8% higher than the same period in 2021 while net adjusted income was R$ 514 million in the quarter, 20.4% up on the preceding year, fruit of the Company’s ongoing growth strategy. In the period, an impairment of R$ 180 million was recognized in the light of progress made in the process for disposing the Pampa Sul TPP.

Results were affected positively by the impact of year-on-year increases of 6.9% in the average price in energy sales agreements of R$ 219.52/MWh, and 7.9% in sales volume of 9.556 GWh (4,376 average MW), excluding trading operations. Also boosting results was the increase in the contribution from the energy transmission segment, an improved result from transactions in the short-term market and the higher remuneration on financial assets of concessions, among other factors.

“The Company continues to reveal its capacity to deliver at a high level of excellence, both in terms of the projects in the process of implementation as well as the management of the operations portfolio. Our performance over the years has shown the importance of executing our growth strategy based on renewables and transmission infrastructure, both of which guarantee portfolio resilience”, comments Eduardo Sattamini, Chief Financial and Investor Relations Officer of ENGIE Brasil Energia. “By acting with a high degree of governance, financial discipline and respect for people and the planet, we are able to ensure the necessary confidence, allowing us to continue growing over the long-term”, he concludes.

Progress with the Transmission Systems

The formal transfer of the Gralha Azul Transmission System to the operational phase was concluded during the last quarter with the energization of the Castro Substation, permitting the system to reach 94% of the RAP (Annual Allowed Revenue). With work now reaching 99.9% completion, all that remains is the connection of the Irati – Ponta Grossa Substation and its related transmission lines – the responsibility of other developers and with conclusion scheduled for March 2023.

Additionally, work on the installation of the Novo Estado Project was ramped up with the end of the rainy period in the states of Pará and Tocantins, this project already with work 93% complete and generating 49% of the total RAP. Again, in respect of the transmission segment, in June, ENGIE Brasil Energia bid successfully for Block 7 of the Aneel Transmission Auction, complementary to the Novo Estado Project, incorporating the installation of a substation and 1 km of transmission line in the state of Pará.

“Given our commitment to a fair and accessible energy transition, we continue to strengthen our presence in the transmission segment. Block 7 brings with it significant synergies with the Novo Estado Project and a potential reduction in the investment as well as anticipation of at least 24 months in the start of commercial operations in relation to the established timeframe”, Sattamini points out.

Growth in wind and solar generation

In the generation segment, the Santo Agostinho Wind Complex in the state of Rio Grande do Norte continues to move ahead. With an installed capacity of 434 MW, work on the project is already 19.5% complete.

The Company continues to strengthen its portfolio of projects at an advanced stage of development, surpassing a potential 3.5 GW of capacity to be installed and encompassing the Santo Agostinho Photovoltaic Complex (509 MW), to be built in the same region as the Santo Agostinho Wind Complex, as well as the conclusion on June 21 of the acquisition of the Serra do Assuruá wind complex (state of Bahia), the installed capacity of which is to be approximately 880 MW.

The Company is forecasting investments for 2022 of R$ 3.9 billion, of which R$ 1.5 billion has already been disbursed in the first half. ENGIE remains in a financially comfortable condition thanks to its cash position of the order of R$ 4.3 billion and a net debt/Ebitda ratio of 2.1x, in line with the financial discipline necessary for planned growth.

Operational Performance

In the second quarter, with the start of the dry season, it was with satisfaction that the Company was able to record the storage of large volumes of water in the reservoirs backing its hydroelectric plants, a factor fundamental for the stability of the National Grid System. At Company-operated plants, the uptime ratio reached 89% with an output of 3,982 average MW from the hydropower plants, while production at the plants fired from complementary power sources was of 736 average MW.

Also worthy of mention in the period was the start of remote operations of the Itá Hydropower Plant on May 30 from the Generation Operations Center (COG) at ENGIE Brasil Energia’s headquarters in Florianópolis (SC). With an installed capacity of 1,450 MW, the project includes a further 59 plants already operated remotely out of the COG.

Dividends

 The Board of Directors approved the distribution of R$ 578 million in the form of intermediary dividends (R$ 0.7082542240/share), equivalent to 55% of the distributable net profit for the first half of 2022. Shares will become ex-dividend as from August 17, 2022 and shall be paid out on a date to be decided in due course by the Executive Board.