2. Agenda
1 Corporate Overview
2 Distribution
3 Generation
4 Competitive Power Supply and Services
5 Consolidated financial figures
2
6 The Electric Sector
3. Agenda
1 Corporate Overview
2 Distribution
3 Generation
4 Competitive Power Supply and Services
5 Consolidated financial figures
3
6 The Electric Sector
4. 4
Corporate overview – Highlights
in the Brazilian electricity sector
• Market cap of , listed
and on
• LTM 2Q14 Adj. EBITDA2 of and Adj. Net
Income2 of
• Differentiated : >50% of net income, semi-annually.
since IPO in 2004
• Presence concentrated in the of Brazil
through 8 subsidiaries
private Generator with an equivalent stake of
, more than
in in Brazil
and a
of
1) On August 15, 2014; 2) Take into account proportionate consolidation of minorities’ stakes at gencos (+) regulatory assets & liabilities (-) non-recurring
items.
5. 55
Corporate structure
Free Float
100%
1
1) Controlling shareholders; 2) Includes the 0.1% stake of Camargo Corrêa S.A.; 3) Includes the 0,2% stake of Petros e Sistel pension funds; 4) 51.54% stake of
the availability of power and energy of Serra da Mesa HPP, regarding the Power Purchase Agreement between CPFL Geração and Furnas.
DISTRIBUTION
100%
100%
100%
100%
100%
100%
100%
100%
65%
25.01%
48.72%
57.13%
51%
GENERATION
100%
99,95%
100%
COMMERCIALIZATION
100%
100%
RENEWABLES
59.93%
5.94% Investco
SERVICES
100%
100%
100%
58.8%
100%
15.1%3 30.5%
100% Nect Serviços
24.4%2 30.0%
Paulista Lajeado
100% CPFL Centrais Geradoras
Serra da Mesa HPP
51.54% 4
6. World-Class Corporate Governance Practices
• Shares listed in differentiated segments:
• BM&FBovespa Novo Mercado
• NYSE (ADR Level III)
• Compliant with the Sarbanes-Oxley Act
• Board of Directors composed by 7 members:
• 1 Independent Member
• Advised by 3 Committees
• Self-Assessment for Board of Directors and Fiscal Council
• Enforcement of policies for disclosure of information and for
prevention of insider trading by employees
• Dividend Policy:
• Minimum of 50% of net income, semi-annually
66
Corporate governance
7. 2015 … 2027 2028 2032 2035 2036
HPP Foz do
Chapecó
HPP Barra
Grande
HPP Castro
Alves
HPP Monte
Claro
HPP 14 de
Julho
HPP
Campos
Novos
HPP Luis
Eduardo
Magalhães
CPFL
Piratininga
HPP
Serra da
Mesa1
CPFL
Paulista
RGE
19 SHPPs
(CPFL
Renováveis)
1 TPP
(Carioba)
CPFL Santa
Cruz
CPFL Jaguari
CPFL Sul
Paulista
CPFL Leste
Paulista
CPFL Mococa
SHPP Rio do
Peixe (I/II)
SHPP Macaco
Branco
CPFL Energia requested
Aneel to renew the expiring
concessions
~3%
CPFL
Energia's
EBITDA
<1%
CPFL
Energia's
installed
capacity
7
CPFL Energia enjoys long term concessions
Distribution
Generation
1) Furnas has the concession for HPP Serra da Mesa. CPFL has the contractual right of 51.54% of the plant’s assured energy, according to the 30-
year leasing contract, maturing in 2028.
8. 50%
22%
8%
20%
3rd Tariff Review Cycle
CPFL Piratininga Oct-122
CPFL Santa Cruz
CPFL Leste Paulista
CPFL Jaguari
CPFL Sul Paulista
CPFL Mococa
CPFL Paulista Apr-13
RGE Jun-13
Feb-132
8
CPFL Energia – LTM 2Q14 Adj. EBITDA Breakdown¹ | R$ million
CPFL Santa Cruz
CPFL Leste
Paulista
CPFL Jaguari
CPFL Sul Paulista
CPFL Mococa
CPFL Energia - Consolidated1 | 3,942
5%
1) Adjusted by regulatory assets & liabilities and non-recurring items; does not consider the holding company; 2) 12 months retroactive effect; 3)
Commercialization in the free market and Services
8
Alternative
Energy
450
Conventional
1,260
CPFL
Paulista
RGE
CPFL
Piratininga
Competitive Supply
and Services3
204
Generation
1,710
Distribution
2,027
74%
26%
51%
43%
Generation Segment
Distribution Segment
CPFL Energia | EBITDA breakdown
9. 9
Leadership among private companies in the electric sector,
with a diversified portfolio in different businesses related to Energy
99
GENERATION
• Operational Excellence,
presenting the highest
margins of the sector
• Expansion of installed
capacity in hydro and thermal
• Leadership in renewable
sources (> 4 GW by 2020)
COMPETITIVE SUPPLY
• Leadership in
commercialization of renewable
energy in the free market
• Maximization of profitability,
considering new market
conditions
DISTRIBUTION
• Market leader, doubling the
market share in Brazil
• Operational excellence
through innovation and new
technologies (smart grid)
SERVICES
• Largest services company in
the power sector
• Strong growth of sales
• Synergies with other
segments in the Group
CPFL Energia’s ambitions
10. Agenda
1 Corporate Overview
2 Distribution
3 Generation
4 Competitive Power Supply and Services
5 Consolidated financial figures
10
6 The Electric Sector
11. 2009 2010 2011 2012 2013 2Q14
Distribution Segment
1º Market share: 13%
• 7.5 million customers
• 569 municipalities
• Footprint: most developed regions
• High potential in per capita
consumption
Industrial
Commercial
Residential
Others
1) Excluding sales 11 at CCEE; 2) Source: EPE.
2009 2010 2011 2012 2013 LTM
2Q13
LTM
2Q14
CAGR 2009-13 Captive TUSD
4.6%
27% 42%
16%
15%
+3.5%
12. Brazilian economy and market performance
Real wage bill1 and CPFL’s residential
consumption | %YoY growth
5.9
5.9
6.1
3.9
7.3
4.5
6.6
2.9
4.5
6.9
6.8
6.0
5.2
4.9
6.9
5.9
2006 2007 2008 2009 2010 2011 2012 2013
Real wage bill Residential consumption
Retail sales2 and CPFL’s commercial
consumption3 | %YoY growth
6.2
9.7
9.1
5.9
10.9
6.7
8.5
5.4
5.5
7.7
5.6
5.2
6.0
6.6
6.8
3.6
2006 2007 2008 2009 2010 2011 2012 2013
Retail sales Commercial consumption
Industrial production2 and CPFL’s
industrial consumption3 | %YoY growth
2.8
6.0
3.1
-7.4
10.5
0.4
-2.7
-3.0
3.3
6.1
2.9
-6.7
9.3
3.9
0.7
2.0
2006 2007 2008 2009 2010 2011 2012 2013
Industrial production Industrial consumption
Other variables influencing energy
consumption
• Population growth
• Migration
• Credit
• Household appliances
• Temperature
• Rainfalls
• Public investments
1) Source: IBGE/LCA. 2) Source: IBGE. 3) Take into account changes in billing calendar for free consumers.
12
13. Footprint in the most developed regions of Brazil
Southeast:
CPFL Paulista, CPFL Piratininga, CPFL Santa Cruz,
CPFL Leste Paulista, CPFL Jaguari, CPFL Sul Paulista,
CPFL Mococa
South: RGE
13
1133
Distribution business
Leadership in the distribution segment
• 8 distribution companies;
• 13% of market share;
• 7.5 million customers;
• 569 municipalities;
• LTM 2Q14 sales of 59,615 GWh | 04-13 CAGR of 5.4%
Discos’ Acquisitions | Key dates
1912 1997-2001
2006 2007
Start Up
1
1
1) Acquired by VBC (one of CPFL Paulista’s controlling shareholder at the time) and PSEG in 1997, during the privatization process, and incorporated by CPFL Energia
in 2001 (67,03%). In 2006, CPFL Energia acquired the additional stake (32.67%).
14. Distribution: best-in-class operational efficiency
Avg. Frequency of Power Outages per Consumer per Year – FEC
2013 (# occurrences)
4.4 4.6 4.7 4.9 5.0 5.1 5.4 5.5 5.8 6.3 6.3 6.7 6.8
8.3 8.3 8.7 8.9 9.0 9.8 10.6 10.9
15.8
14
Avg. Length of Power Outages per Consumer per Year - DEC
2013 (hours)
4.9 5.9 7.0 7.1 7.4 7.6 8.0 8.1 8.5 9.1 9.1 9.7
12.5 13.7 15.5 17.4 18.4 18.9 20.1 22.0 22.5 23.2
15. Zero-Base Budget
Inefficiencies from past
budgets are not carried over
to the next periods
Tauron Program
Introduction of the smart
grid technology in the
distribution network
Corporate Services
Center
Implementation of a back-office
services provider to
increase operating
productivity and efficiency
Corporate Level
Operational Level
Value Initiatives
• Optimization of inspections (loss prevention),
process review, and improvement in
assertiveness: reduction of ≈17%
• Metering and delivery of bills - online billing
(email), changes in layout/type of paper,
alignment of bank fees for all Discos:
reduction of ≈11%
• Reduction of consulting services and “insourcing”
of activities: reduction of ≈47%
• Standardization of outsourced labor: reduction
of ≈52%
• Improved management of travel expenses:
reduction of ≈18%
• Consumption of paper and office supplies:
reduction of ≈66%
15
Cost-cutting Initiatives
Cost-cutting Initiatives Total (2015 x 2011):
Cost-cutting already performed (2013 x 2011)1: ≈R$ 236 million
1) Constant value of Dec/13.
16. • Real-time consumption readings
• Analysis of consumer load curve
• Real-time fraud detection
• Real-time power outage detection
Achievements
Projeto Tauron – smart grid
Optimized logistics for field teams
(georeferenced maps)
• Faster power restoration
• Savings with optimized routes
Tablets for real-time communication
• Dynamic dispatch of teams
• Automated routing of teams
• On-line update of field services’ progress
• Automated dispatch + tablets deployed in ~35% of all teams (RGE and CPFL Piratininga)
• 21,000 smart meters already installed as of August-14 (84%) – (Target: 25,000 large consumers)
• Implementation of RF Mesh Telecom Network already concluded
EBITDA acumulado EBITDA 2013: até setembro: R$ 52.4 million
R$ 24 milhões 16
18. Agenda
1 Corporate Overview
2 Distribution
3 Generation
4 Competitive Power Supply and Services
5 Consolidated financial figures
18
6 The Electric Sector
19. 2º Market share: 2.4%
• Long Term Concessions
• Brazil’s largest Portfolio in Alternative
Energy
• Renewable Sources: 93%
33%
Generation Segment
Installed Capacity1 (MW) | Estimated growth
CAGR 2000-18e = 19% a.a.
Semesa Baesa
Enercan Ceran
Foz Chapecó
Epasa
Baldin
1) Considering 58.8% stake at CPFL Renováveis, since its creation.
Creation of
CPFL Renováveis
19
-
657 657 657 657 660 747 751
931 1,047 1,055 1,055
Privatization assets Brownfield Greenfield
22. CPFL Renováveis | Partnership with Dobrevê Energia
DESA is one of the main independent renewable energy companies in Brazil,
with total contracted capacity of 331 MW
Biomass
22
3
2
5
1
4
R$/MWh
São Domingos (SC)
Jul-07 30.0 MW 70.7% 202
Indiavaí (MT)
Nov-10 19.4 MW 64.9% 201
Campina Grande (PR)
Jun-11 23.0 MW 45.2% 136
João Câmara (RN)
Jul-12 145.2 MW 45.5% 186
João Câmara (RN)
Sep-13 60.0 MW 49.2% 150
João Câmara (RN)
1Q16 29.2 MW 51.8% 124
Unaí (MG)
2Q16 24.0 MW 52.1% 131
SHPP
Wind
Portfolio of Projects in the Partnership (MW) Operation Construction Total
CPFL Renováveis 1,416.8 383.5 1,800.3
DESA 277.6 53.2 330.8
CPFL Renováveis After-Partnership 1,694.4 436.7 2,131.1
1) DESA holds 60% of SHPP Ludesa. 2) The PPAs are based on January 2014 (average values when there is more than one PPA). 3) On December 31, 2013, DESA presented a
consolidated net debt of R$ 656 million (preliminary value, subject to audit and, therefore, eventual changes) to be added after December 31, 2013 in approximately R$ 200 million.
Hydro
Wind
Solar
23. CPFL Renováveis | Corporate structure after the joint venture
Market
(ARROW)
Pre-operation
(2)
58.84% 5.61% 5.49% 7.12% 2.97% 1.93% 1.47% 7.24% 0.00%
9.32%
Market
(ARROW)
6.33% 12.63%(1)
Post-operation
(2)
51.41% 4.90% 4.80% 6.22% 2.59% 1.68% 1.29% 8.14%
1) Shareholders’ stake may suffer adjustments arising from the due diligence. 2) Through CPFL Geração.
23
24. 24
CPFL Renováveis | Installed capacity (MW)
Wind
SHPP – Small Hydro
Biomass
1,495
Operating
(Jun-14)
Under
construction
End of
2018
Under
development
Total
Portfolio
100% with PPA
1,777
5,544
Possible
Probable
Highly Confident
3,767
Small Hydro
• 35 operating: 327MW
• Under construction: -
• Under development: 626MW
Total: 953MW
Biomass
• 8 operating: 370MW
• Under construction: -
• Under development: -
Total: 370MW
Wind
• 26 operating: 797MW
• 11 under construction: 282MW
• Under development: 3,141MW
Total: 4,220MW
Total
• 66 operating: 1,495MW1
• 11 under construction: 282MW
• Under development: 3,767MW
Total: 5,544MW1
1) Including Tanquinho solar power plant – 1MWp of installed capacity
26. CPFL Renováveis | Power plants under construction
Commercial Start-up
2016-2018(e)
282
MW
147
MWaverage
Campo dos Ventos Wind Farms1,4 and São
Benedito Wind Farms2,4 Pedra Cheirosa Wind Farms3
Commercial Start-up 20164 20185
Installed Capacity 231.0 MW 51.3 MW
Assured Energy7 120.9 MWaverage 26.1 MWaverage
PPA Free market 20 years
A-5 Auction
R$ 125.04 MWh6 until 2037
Status
Contract to supply wind turbines signed; executive
projects in progress
Negotiation of wind turbines supply in
progress
1) Campo dos Ventos I, III, V; 2) Ventos de São Benedito, Ventos de Santo Dimas, Santa Mônica, Santa Úrsula São Domingos and Ventos de São Martinho; 3) Pedra Cheirosa I and II; 4)
Gradual commercial start-up from 2Q16; 5) Gradual commercial start-up from 1H18; 6) Constant Currency (Dec-14); 7) Assured Energy calculated in the P90.
26
28. Agenda
1 Corporate Overview
2 Distribution
3 Generation
4 Competitive Power Supply and Services
5 Consolidated financial figures
28
6 The Electric Sector
29. Competitive power supply| Regulated vs. free market
No choice - distribution company Free choice
Distribution company Distribution company
Regulated by ANEEL Free negotiation
Free > 3,000 kW
after July, 1995 any any
before July, 1995
> 69 kV any
< 69 kV incentivized
Special
500-3,000 kW - Group A incentivized
units totaling 500 kW - Group A incentivized
29 1) Source: EPE (full year 2013)
Main differences
Advantages
Who can join
Lower prices
Free choice from energy supplier
Better predictability of energy expenses
Customization according to consumer seasonality
27%
73%
Free Market1
Regulated Market
30. Competitive power supply
• 284 free consumers
• Nationwide outreach
• Value-added product portfolio
• Synergy with CPFL Renováveis
Number of Consumers (#) | CPFL Brasil
3º Market share: 8%
Portfolio (Free Consumers)
179
52
Inside the
concession area
Outside the
concession area
Current: 10.9 GW avg
Potential: +7.9 GW avg
Free Market
in Brazil¹
211
73
30
• CPFL Brasil was the winner of
Exame Magazine’s 2013 Best and
Largest Companies (category
Energy)
• The Company was selected among
gencos, discos, transcos and other
players in the electric sector
throughout Brazil
2010 | 2011 | 2013
80 74
CAGR = 30%
129 141
231
284 284
2008 2009 2010 2011 2012 2013 1Q14
1) Jun-14
2008 2009 2010 2011 2012 2013 2Q14
31. 31
Competitive power supply | Opportunities
Number of free clients in Brazil
# of competitive customers – larger than 3 MW # of special customers – from 0.5 to 3 MW
CAGR=6.9% CAGR=43.6%
441 465 491
558
613 617
Jun/09 Jun/10 Jun/11 Jun/12 Jun/13 Jun/14
Current: 9.1 GWavg
Potential: +1.3 GWavg
221
495
796
1,048 1,164
Current: 1.8 GWavg
Potential: +6.6 GWavg
192
Competitive advantages of CPFL:
market leadership, expertise and synergies with CPFL Renováveis
Source: ANEEL and CCEE
Jun/09 Jun/10 Jun/11 Jun/12 Jun/13 Jun/14
32. Transmission
networks
Self-generation
networks
Distribution
networks
Recovery of
equipment
Services Segment | CPFL Serviços
32
• Foundation: 2006
• Core Business: offers a wide range of value-added services,
ranging from engineering projects to maintenance and recovery
of equipment. These services are designed to help consumers
improve the efficiency, cost and reliability of their electric
equipment
• Type of services: construction of transmission and distribution
networks; maintenance and recovery of equipment; self-generation
networks (cogeneration, energy-efficiency projects
and distributed generation arrays – solar energy)
33. Services Segment | CPFL Total and CPFL Atende
33
• CPFL Total offers collection services with an
established authorized network; capacity to
collect utility bills, such as water, energy,
telephone, and cable TV.
• Capability of cross-sale with other service
providers, enabling the collection via energy
bills.
• Foundation: 2008
• Core Business: provider of contact center and
customer relationship services to other utility
companies
• Services: face-to-face attendance, back-office,
credit recovery, toll-free customer support,
ombudsman, service desk and sales
34. Competitive power supply and Services | Financials1
Net revenues EBITDA Net income
2010 2011 2012 2013 LTM
34 1) Pro forma
2Q14
1,909
1,699
2,031 2,031 2,009
2010 2011 2012 2013 LTM
2Q14
201
164
127
52
136
2010 2011 2012 2013 LTM
2Q14
303
278 287
74
204
35. Agenda
1 Corporate Overview
2 Distribution
3 Generation
4 Competitive Power Supply and Services
5 Consolidated financial figures
35
6 The Electric Sector
36. CPFL Energia | Key financial figures1
2009 2010 2011 2012 2013 LTM
2Q14
10,537
10,921
11,413
13,235
13,671
14,245
3366
Net revenues | R$ million
CAGR 2009-13
6.7%
4.2%
-2.7%
CAGR 2009-13
2009 2010 2011 2012 2013 LTM
2Q14
2,702
3,260
3,649
4,343
3,848
3,743
EBITDA | R$ million
25.6%
29.8%
32.0%
32.8%
28.1%
26.3%
EBITDA
EBITDA Margin
9.2%
Net Income | R$ million
CAGR 2009-13
0.4%
-9.1%
2009 2010 2011 2012 2013 LTM
Net Income
Net Margin
2Q14
1,266
1,526
1,503
1,617
1,284
1,167
12.0%
14.0%
13.2%
12.2%
9.4%
8.2%
1) Take into account proportionate consolidation of minorities’ stakes at gencos (+) regulatory assets & liabilities (-) construction revenues (-) non-recurring
items.
37. 37
CPFL Energia | Key financial figures – Dividends
Dividend Yield 1 (LTM) Declared dividends2 (R$ Mi) CPFL average price (R$/ORD)3
3.7%
140
6.5%
401
9.1% 8.7%
498
612
9.6%
722
10.9%
842
9.7%
719
7.6% 7.3% 7.6% 7.9% 8.6%
602 606 572
655
774
6.9%
486
6.0%
7.1%
748 758
6.1%
640
4.6%
456
3.9%
363
4.8%
568
2S04 1H05 2H05 1H06 2H06 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13
8.29 9.43 11.67
15.02 14.13 15.87 17.99 18.05 16.69 15.77 16.51 18.44 20.18 22.05 21.95
26.30
22.95 21.11 19.80
CPFL has presented payout ration close to 100% since its IPO, reaching the mark
of R$ 11.2 billion distributed. Declaration of dividend for 2H13: R$ 568 million | 0.59/share
1) Considering last two half years’ dividend yield. 2) Refers to declared dividend. Payment in the next half year. 3) Considers share price adjusted
for reversal stock split and simultaneous split of shares on June 29, 2011 (not adjusted per dividends).
38. Total:
R$ 7,739 million1 (IFRS)
R$ 7,213 million2 (Pro-forma)
38
Capex(e) 2014-2018
Generation3:
R$ 1,425 million (IFRS)
R$ 899 million (Pro-forma)
1,553
Commercialization and Services:
R$ 488 million
1,239 1,235
Distribution:
R$ 5,826 million
2,089
136
637
83
129
58 68
28 27
1,316 1,342 1,153 1,140
1,842
1,505
1,230 1,226
1,735 1,622
53 144
837 603
845 875
53 144
513 392
845 875
2013 actual
(cash flow)
136
390
83
80
58 68
19 18
1,316 1,342 1,153 1,140
2014 2015 2016 2017 2018
1) Constant currency Dec/13. Take into account 100% interest on CPFL Renováveis and Ceran (IFRS)
2) Constant currency Dec/13. Considers the proportional stake in the generation projects 3) Conventional + Renewable
Pro-forma IFRS
1,410 1,410
40. Debt amortization schedule1,2 | Jun-14 | R$ million
40
CPFL Energia | Strong and robust liquidity
4,549
Cash coverage:
1.51x short-term
amortization (12M)
3,014
489
1,860
Average tenor: 3.87 years
Short-term (12M): 17.4% of total
2,724
3,325
3,139
2,796
Cash Short-term 2015³ 2016 2017 2018 2019 2020+
1) Considers Debt Principal; 2) Covenants Criteria; 3) Amortization from July/2015.
41. Agenda
1 Corporate Overview
2 Distribution
3 Generation
4 Competitive Power Supply and Services
5 Consolidated financial figures
41
6 The Electric Sector
42. Energy sector in Brazil: business segments
Consumers
76.1 million consumers
Captive Market
76.1 million Consumers
347 TWh of billed energy2
Free Market
1,781 Consumers4
125 TWh of billed energy2
Transmission
• 104 Companies³
• 118,105 km of
transmission lines³
• Eletrobrás: ~55%
of total assets
Distribution
• 63 Companies
• 472 TWh of billed
energy2
• Top 5: ~46% of
the market
Generation
• 130 GW of
installed capacity1
• 79.9% Renewable
energy1
• Eletrobrás: ~31%
of total assets
Competitive Power Supply
1) Source: ANEEL – August 18, 2014; 2) Source: EPE and CCEE; 3) Source: ONS and Ministry of Mines and Energy (MME) – January 31, 2014; 4)
June, 2014
42
43. Brazilian electricity matrix
Brazilian Electricity Matrix
Brazil’s electricity matrix is predominantly renewable, with hydro installed capacity totaling 69% of
the total supply, while biomass, wind and SHPPs account for 14%. In the next years, it is expected
that other sources will grow, mainly wind, reaching 10% of total installed capacity in 2022.
Evolution of Installed Capacity (GW) 2013-20221
2013 2017 2022
129 GW 153 GW 183 GW
1) Source: EPE - National Energy Balance 2013 and 10-year Energy Plan 2013-2022; 2) Others: considers coal, oil, diesel and process gas.
43
44. Gencos
Mechanics of regulated auctions
• “New” Energy: Initial supply 3 years after the auction
• Term of contract: 15-30 years
• Objective: Adjust discos’ contracted energy levels
• Energy contract limit: 2% of the load
2013 2014 2015 2016 2017 2018
Reserve Energy Auction - LER:
Discos are not required to declare contracting needs and generation costs are covered through sector charges
Discos
Discos must purchase electric energy to supply their captive market, five years in advance,
in public auctions (Regulated Market – ACR)
A-5 Auction
A-3 Auction
A-1 Auction
• New Energy: Initial supply 5 years after the auction
• Term of contract: 15-30 years
• Objective: Cover discos market growth and finance new
generation
• Energy contract limit: no limit
• “Old” or Existing Energy: Initial supply in the following year
• Term of contract: 1-15 years
• Objective: Replace old contracts, maintaining the discos’ contracting level
• Energy contract limit: 96% to 100% of the Replacement Amount (MR)
44
45. 45
World’s most attractive alternative energy market
Renewables in Brazil are expected to grow at a CAGR of 8.2%, from 19 GW in 2013 to 38
GW in 2022 and still a highly fragmented market
Unrealized Potential to be Explored in Brazil
Wind
Potential: 143GW
Installed capacity: 2.9GW
Potential Realized
2%
SHPP
Potential: 17.5GW
Installed capacity: 5.0GW
29%
Biomass
Potential: 17.2GW¹
Installed capacity: 9.3GW
54%
Evolution of Brazilian Installed Capacity by
Source | GWh
Highly Fragmented Market | Renewables
Market Share in Brazil based on contracted
energy (26GW)
3.9% p.a.
183
129
Renova
Energimp
QGER
Brookfield
CAGR 3
Cosan
Eletrosul
Gestamp
Elecnor
Other
8.2%
1.3% 6.9%
7.5%
3.6%
2.9%
2.5%
2.4%
2.0%
1,8%
1,6%
67,6%
38
19 12
9
14
83
14
119
Renewables
Other
Natural Gas
Hydro
2013 2022A
8.2%
1.0%
2.5%
3.9%
²
1) 10-year Energy Plan 2013-2022; Installed Capacity : BIG - ANEEL April, 2014 + A-5 Auction; 2) Includes estimates of energy imported from Itaipu
HPP, which is not consumed by Paraguay Electric System ; 3) Considers the export of 2/3 of energy produced by the Company.
46. CPFL Renováveis | High quality and diversified portfolio
Diversified and high quality portfolio, delivering superior performance, mitigating risks,
ensuring reliable load factors and providing capacity to grow with different sources
• Selective high quality project development
• Wind projects certified by industry leaders
• Backed by high quality equipment suppliers
• Long term O&M contracts
• Energy generation monitoring and optimization
CPFL Renováveis benefits from the
complementarity of sources
• Reservoir storage at high levels in the first semester
46
4466
High Quality Development, Construction and
Operation
while wind energy generation is concentrated in the
second semester of the year
Complementarity of Sources Mitigating Risks
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Wind (Generation - MWavg) Reservoir Storage
Wind Portfolio
Attractive location due
to high wind speeds
Biomass Portfolio
Proximity to sugarcane
production centers
SHPP Portfolio
Exposure to
abundant hydro
resources
Installed Capacity1
Biomass Solar
21% 0%
Total: 1,800 MW
Region MW
NE 1,023
CW/SE 506
SO 271
Solar
18%
61%
SHPP
Wind
Operating:
Hydro
Wind
Biomass
Under Construction:
Hydro
Wind SHPP Potential (Southeast and Midwest Regions)
Wind Potential (Northeast and South Regions)
Biomass
Reservoir Storage (%)
Wind Generation MW
1) To be fully operational by 2018
47. 47
CPFL Renováveis | Unparalleled wind conditions
combined with top technology
Europe United States Brazil (NE)
Area
89%
Area
95%
Technology Has Shown Great Improvements in Recent Years | Recently developed technology for
wind power plants allows greater load factors
Frequency
Wind Speed (m/s)
Frequency
Wind Speed (m/s)
Frequency
Wind Speed (m/s)
Ideal Wind Speed Ideal Wind Speed
Area
99%
Ideal Wind Speed
1.500kW
80m
1.800kW
100m
3.000kW
70m
50m
750kW
30m
300kW
17m
75kW
1980 -
1990
1990 -
1995
1995 -
2000
2000 -
2005
2000 -
2005
2010
180
160
140
120
100
80
60
40
20
0
Rotor Diameter (m)
Rating (kW)
Altura (m)
Europe and EUA Brazil
Improved
availability
Greater
efficiency
Reduced
generation
losses
Wind Features in Brazil are the Most Adequate for Power Generation | The average
wind in Brazil (Northeast) has a similar intensity with less variability
48. Stable and solid regulatory framework
Description Sustainability
48
Natural consequence of projects with lower
environmental impact
Environmental
& Streamlined
Implementation
Process
Faster and simpler environmental process
Faster construction cycle
Annual auctions to match growth in energy
consumption
Price of energy at the captive market structurally
higher than at the free market given regulatory
charges
Access to Multiple
Sales Channels
Regulated energy auctions and the free
market
Long term inflation protected/linked PPA
(average 20-30 years)
Special niche in the free market for “special
client” (demand between 0.5-3.0MW)
Current special free market of 2.7% (1.6GW)
to potential of 9.6% (5.8GW)
Not a sector specific benefit
BNDES has been providing support for the sector for
many years
Dedicated
Sovereign
Funding Conditions
BNDES Financing
Low Cost – average interest rate of 7.0%
Long-term funding of 16 years
Attractive capital structure
Policies in place since 1996
Not a direct government expenditure/tax break
Not applicable for regulated auctions
Discounts on
Transmission
Charges
Discount of at least 50% (TUST and TUSD)
Tax regime for small enterprises (annual revenues
below R$78 mm), which is not sector specific
REIDI is applicable for all infrastructure projects
ICMS/IPI1: discussions on expanding tax incentives to
SHPPs
Favorable Tax
Regime and
Fiscal Incentives
“Lucro Presumido” with reduction in the
effective tax rate to 5% - 15% from 34%
REIDI (special program of incentives for
infrastructure development) - exemption of
PIS/COFINS,
Exemption of ICMS (movement tax) and IPI
(production tax)
Source: Company ; 1) Tax on revenues