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2026.09.29 | TB | Energy | Voltalia: Helexia Brazil & Impairments

原标题：Voltalia – Helexia Brazil Plants Commissioning & Impairment Outlook

#energy

Third Bridge · 2026-09-29

Analyst-led • 23 Sep 2026

Companies: VLTSA FR

João Corrêa Guimarães, CFA (JCGC) Portfolio Manager & Head, Infrastructure Liquid Loans at Valora Gestão de Investimentos Ltda (VGI)

Louis Knight (LK) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

LK [00:00:03]: Welcome to Third Bridge's Interview entitled Voltalia – Helexia Brazil Plants Commissioning & Impairment Outlook. My name is Louis Knight. I will be facilitating today's Interview with Mr João Corrêa, former Director of Commercial and Asset Management at Voltalia, focusing on Brazil.

João, thank you for joining, and welcome to today's Interview. Before we begin, please state I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

JCGC [00:00:46]: I agree.

LK [00:00:50]: Thank you, João. Could you please begin with a brief introduction to your relevant experience, your responsibilities at Voltalia and your wider background?

JCGC [00:01:02]: Sure. I'm an economist based in Brazil. I've spent all my career ever since 2008 working in infrastructure finance, first as a consultant, then working in project sponsors. My journey in Voltalia started in 2016 when I started to lead the department called ASIF in Brazil, which is the acronym for asset sales investments and funding. It's basically an investment director. I've worked there from 2016-22 under this role. Then I finally left for a competitor, another renewable company backed by local private equity fund, where I worked for almost three years, working as a Commercial Director and as a new business development director and also Regulatory Director. Then I returned to Voltalia in early 2025 under this new role of Commercial and Asset Management Director. When I finally left in late 2025. Now I'm working with credit asset management and portfolio manager nowadays.

Questions

00:02:44] Voltalia's share price slid roughly 19% as of the H1 2026 earnings report in September 2026, mainly relating to a delay in commissioning the Helexia Brazil plants, so the small commercial solar plants, due to the grid connection delays and grid curtailment on these operating assets. What is happening here? How do you interpret this, and would you add or clarify anything?

JCGC [00:03:13]: I guess, indeed, this was the trigger. We have to understand these two businesses in Brazil. Helexia is one business and curtailment is related to centralised renewable business, which is an entirely different business in Brazil, although, of course, both are injecting megawatts in the grid. The regulation is clear. I mean, centralised business is dispatchable by the national grid operator. The national grid operator controls the flow of your energy. What's happening in the centralised side of the business is that due to its super speedy growth, both on the centralised business, but also mainly on the distributed generation, not only in Helexia and Voltalia, but throughout Brazil, renewables, when you sum up both, they account, I would say, for around 40% or so of the energy matrix nowadays. By renewables, I mean solar and wind because there's a heavy presence of hydro in Brazil as well, which used to be like close to 100% of the matrix in the late 1990s, and now it's roughly 50%. This is the background. Renewables in Brazil grew a lot, and as they grew a lot and they are not controllable. They are intermittent. The grid operator needs to operate cutting some production, both because… There are basically three sources or reasons for curtailment.

(1), there's external unavailability, which means that a transmission line or a substation or whichever structure is down and is not able to dispatch your energy. This is, let's say, the lesser important reason for curtailment. Then there are the two big ones, which are lack of demand. Basically, a solar plant is producing at noon and simply, there's no demand for the entire capacity being produced, so the plants are curtailed. (2), there's what the operator calls reliability. It basically means that there are variations to the frequency of the generation or other technical stuff that is imposing a lot of risks to the grid. Then the operator decides to shut down or to curtail the production of one or more plants. This curtailment is basically directed to centralised renewables, basically, both solar and wind. As distributed generation grew a lot, mainly since 2020-21, these curtailments started happening, first for reliability, then for lack of demand.

Since August 2023, when we had a massive blackout in Brazil, the operator blamed the renewables for the mess and started curtailing a lot, a lot more than it used to previously, basically saying that since renewables were the ones to blame and since they have these structural problems of not having inertia, so not protecting and causing problems to the grid, then he needed to be more risk averse and more cautious operating the grid. Curtailment from this time on, I don't know, it went from 5-6% or so to 20%. It was a massive growth for the centralised side of business. It kept increasing from 2023 to 2024 to 2025 and finally to 2026. This is a structural problem. It's an ongoing problem, which is not going away anytime soon. This is the problem on the centralised side of business.

00:08:55] Could you elaborate on the two businesses that form Voltalia's Brazilian presence? You said that one is renewables.

JCGC [00:09:05]: Distributed generation. It's the niche that Helexia is operating, which means basically… Centralised business, of course, are the big plants, so you have the 500MW or the 300MW, wind, solar and so forth. Distributed generation business, you can drill down in two kind of business. The first one is obviously the rooftops, so it's pretty straightforward. One installs a solar panel on its rooftop and it can…

LK [00:09:48]: The distributed generation is the small PV [photovoltaic] that would be on a farmer's plant and then centralised being utility solar, which is a utility-scale plant that would feed into the grid?

JCGC [00:10:00]: Yes, but there's a caveat on this. As I was explaining, there are two businesses under the distributed generation. The first one is the one that you've mentioned. There are the rooftops, which any homeowner can put on its rooftop and generate its own energy. There's a second business under the distributed generation label, which is something that, I guess, only Brazil allowed. That is the following. An operator can build a small-scale plant, but not that small, up to 5MW, if it connects directly to the grid of an energy distributing company. Once it's connected, it can sell its energy as if it was a rooftop under the same regulatory scheme. What's this regulatory scheme? Basically, both rooftops and this plant, which we'll call remote plants, remote distributed generation, they do not pay for any wheeling fee basically. The consumer who is consuming from these plants just pays the… It should pay the energy, but it's not paying the energy because, of course, it's generating its own energy. It's very beneficial to the consumer because in Brazil, I would say like 35%-or so of the tariff is due to generation and then another 35% and then 30% are due to distribution fees and then transmission fees.

The bulk of the tariff is due to both distribution and transmission. Once you install these rooftops or buy from a remote GD, you are basically foregoing 60-70% of the tariff. Then, of course, you generate your own energy and you simply stop paying your energy or energy. There are high incentives for this. Then this side of the business and this type of plant, both rooftops and also the remote exploded, so they went all the way from zero in 2019, 2018 or so to 50GW nowadays. 50GW is 25% roughly of the Brazilian installed capacity. It's massive. Of course, it's almost entirely solar. There are some very small hydros as well, but very small capacity on that. Of the 50GW, it's roughly, I don't know, 49.7 or 49.8GW of solar. Then this basically is the capacity, which was the cause for most of the curtailment under the centralised side of business because once you are generating 50GW at noon, Brazilian demand, it basically fluctuates between 60 or 70GW average to 100-105. When you are generating 50 from these small-scale units, solar, you are basically taking out the entire centralised business in Brazil, either wind or solar or hydro or thermal.

Basically, the country is being supplied mostly by distributed generation during daytime hours, and the other technologies and the other plants they are mostly generating at night or to fulfil whichever gap there is in the distributed generation plants. This is the conundrum nowadays. That's why I mentioned that both curtailment, it's a structural problem because, let's say, distributed generation is stealing all the generation.

00:15:35] Voltalia booked EUR 8m in impairment charges on Brazilian solar assets due to the grid curtailment. Why do you think it's this amount specifically? Could you describe the unit economics or quantify that?

JCGC [00:15:56]: Let me just get back to the second part of the first question because I didn't mention that. You asked about the grid connections on Helexia. The structural problem that this business has is that the distributing companies were not expecting this kind of flood of new projects on the distributed generation side. They hadn't had, let's say, the teams and the structure to attend all this demand. The basic objective of a distribution company is, of course, serving its clients. Once it has 500-1,000 small-scale projects, that it needs to analyse and to study to check if it's feasible connecting, and it does not have any incentive to do so. Of course, they, let's say, work with very long timeframes and they are simply not incentivised. This is why basically the commissioning of either Helexia or whichever remote distributed generation plant in Brazil is taking a lot of time.

Again, it's a structural problem of the business. Back to your second question, so basically, I don't know where this EUR 8m come from, but I would guess that it comes from one specific vintage of projects, which are projects that were won around 2020, so it's 2019 to 2020 and 2021. How so? Because, of course, we were living in COVID, and if you remember, there was a perfect storm on the H2 of 2020 and early '21 caused first by the disruption of the supply chain globally, which heavily impacted the price of solar panels. Back then, solar panels were costing something around USD 0.17 on the watt, and in like one month, the price soared to more than USD 0.30 on the watt. All of these solar businesses were relying on these panels priced at 17 or so. There was a huge CAPEX boost on these projects and the economics of these projects were simply not there, so…

LK [00:19:19]: Do you think this is more about a charge because of the solar panel price or PV panel increases as opposed to, if we think about the hour curtailment multiplied by the price that you would get for the power, the kilowatt-hour?

JCGC [00:19:40]: Yes. I guess the first problem is this because Voltalia, of course, suffered as all of the players suffered. CAPEX-wise, I mean, you… Solar panels were like, let's say, 25% of the CAPEX or 30% of the CAPEX. Whenever you double that by two, of course, there's a heavy impact on the economics and the recoverability of your investment. This was not the only problem because back then, interest rates soared, currencies got devalued. As Voltalia was developing in a lot of frontier markets, this was a widespread problem everywhere. It was not only a problem on the solar panel costs, but also interest rates and currency rates, and not only on solar panels as well, but the price of the freights got crazy, multiplied by, I don't know, eight or 10. Construction, they got delayed, of course, because of these bottlenecks on the supply chain, so you had all of these problems. Of course, the cherry over the top of the cake in Brazil was curtailment. I guess it's a mix of all of these impacts and this vintage of projects both in Brazil and probably elsewhere, they got hit.

00:21:31] When do you expect Voltalia's assets that are delayed in commissioning to finally be commissioned?

JCGC [00:21:41]: On the remote distributed generation, it's difficult to assess because, again, you are completely relying on the will of the distribution company. There are reports that say that there are some assets in Brazil that took two years or three years to connect. There are assets that took six months. There's a widespread dispersion on these timings. It's very, very difficult to say. I mean what I know is that there's either at Voltalia or everywhere else under the distributed generation companies, this is an area of big effort and all of the companies have a lot of people working on that, trying to speed up these connections. Again…

00:22:43] Do you think the issues around the commissioning of Voltalia will be solved in the next six months, or do you think it could be in the next 18 months?

JCGC [00:22:54]: Yes. We cannot say because… It's not one plant, I don't know how many, but I guess, I don't know, 10-20 or so. You can have one plant connected in two months, you can have one plant connected in two years. It's very difficult to say, well, I mean, 100% of the portfolio will be connected by December. One simply cannot say that because the distribution companies, they have the final say. (1), they don't have the teams, and (2), business-wise, they don't want to do it because they will lose their clients. They simply can create several excuses and several conditions that you have to fulfil, which can be easy or can be difficult. One cannot guess. I mean this is structural…

00:24:05] Do you think the impairment is 100% related to CAPEX on shifts in PV [photovoltaic] panel prices, or is that also including the curtailment charges, whereby you have an outage or a curtailment of X amount of hours or days and you multiply that by the captured power price?

JCGC [00:24:30]: Yes. Again, it's a mixture of both. I mean, of course, solely the company can answer that correctly, but I guess it's a mix.

00:24:46] How long do you expect the grid problems in Brazil to continue, and why? To what extent do you agree that, if this is a structural problem related to the national power matrix and HVDC [high-voltage direct current] transmission on the distribution-system level, it will therefore continue to be a problem for the next 5-10 years?

JCGC [00:25:14]: As I said earlier, so there are two causes of curtailments. One is excess power, the main reason, sorry, there are three, of course. One is excess power and the other is grid reliability. Excess power, of course, you need demand to resolve that. Demand in Brazil grows roughly at 1.5% times the GDP. GDP in Brazil is growing at 1.5-2% or so, so it grows by 3% roughly per year. It also depends whether if the year is super hot or super cold. Once you have hotter years, demand picks up, and once you have cooler years, demand goes down a bit. I mean, at this 3% pace, of course, it's going to take a while. There are some some movements in Brazil to attract the heavy user of energy, which can change up a bit the scenario. Brazil is doing a heavy effort to bring in data centres to the country, the big ones, the hyperscalers for obvious reasons. It has excess renewable energy, and of course, the country is roughly friendly to foreign investment and so forth.

Currently, we have roughly 1GW of data centres in the country. If we are able to, let's say, bring two, three, four, 5GW of data centres to the country, of course, this will help a lot. Again, it's much more binary. You need both the Chinese and the American companies to join. Currently, one big Chinese company joined, which is ByteDance. It's building 200 or 300MW data centre in northeast of Brazil. Of course, it's much desirable that Google, Amazon, Facebook and these kind of companies, they join as well so that this industry can flourish and indeed make a difference on the energy demand. On the reliability, you basically need more transmission lines, and these transmission lines, they get a lot of time to be planned, commissioned and work into operation. It is said that it takes like 6-7 years since planning up until COD for a relevant new transmission line to reach its COD. It takes some time.

Brazil did actually indeed a very big transmission auction, I guess, in '24 or '25, I don't recall exactly, whereby it auctioned a new transmission backbone between the northeast and the southeast, which indeed shall relieve curtailment a lot. This connection line should get into operation 2029 or 2030. Up until 2029, I would be a little bit bearish on curtailment improving, it's actually probably going to stay the same. From 2029, 2030 on, I would say we have a good momentum due to these connection lines getting online and also if demand picks up and the data centres come as well.

00:30:06] The vast majority of solar and wind generation is in Brazil's sunny northeast and southeast regions, and you're saying that you expect the high-voltage transmission lines to begin to connect around 2029. This will connect these large industrial consumption centres in the south so that the system can run at maximum capacity. Therefore, the curtailment on distributed generation that is more relevant to Voltalia will begin to subside, so there will be less curtailment. Is that a fair summary?

JCGC [00:30:41]: Yes…

LK [00:30:42]: Not until 2029. These are the HVDC transmission lines that will alleviate the curtailment and delays in the grid, but only in 2029?

JCGC [00:30:55]: Exactly. I mean it can be 2028 if the sponsor accelerates a bit, but since it's a massive transmission line, I'm not expecting a lot of anticipation. Perhaps we can anticipate a bit like six months or so or three months, something around that, but it's difficult to see this happening in 2027, for instance, I guess.

00:31:28] What are your thoughts on the distribution side? I'm thinking about distributed solar generation, so small arrays of under 5MW – these could be small farms that would be feeding back into the grid and Voltalia would play a part in that. These have recently grown quite rapidly across Brazil. You talked about this causing a surplus of power in the regions, and the local substations and medium-voltage feeder capacity therefore reaching the limit, thus causing curtailment. How quickly is the new distribution voltage network capacity being added as opposed to the transmission lines?

JCGC [00:32:13]: The distribution grid is not that problematic because the bulk of these 50GW industry that I've told you is rooftops. Rooftops, they do not connect on the substation, but they rather connect to the grid itself. It's not that problematic.

LK [00:32:38]: The curtailment that Voltalia has experienced on its portfolio isn't linked to a shortage of capacity for distribution, so distribution lines…

JCGC [00:32:49]: No, it's transmission.

LK [00:32:51]: Only transmission.

JCGC [00:32:52]: Only transmission. Distributed generation nowadays do not suffer curtailment. These Helexia plants, they are not being curtailed at all.

LK [00:33:03]: Does the shortfall in distribution capacity on the voltage and network relate to the commissioning delays, or is that also transmission?

JCGC [00:33:16]: No, this is capacity within the distribution company networks and substations, mostly to the remote distributed generation plants, the ones that Helexia is making. Again, this is a reason for the delays in connection because, for instance, when you go for the first time for the distribution company and say, well, I intend to connect on substation XYZ. They said, "Well, okay, you can connect." Then you build the plant, and then you say, "Well, my plant is ready. I want to connect." Then they say, "Well, I mean, the situation changed, so you need to do A, B and C in order to connect" and so forth. This is why…

00:34:02] Why is there a delay in what you're discussing? If the DSO [distribution system operator] is saying, "We don't have the connection available for you to connect your solar farm", is that because they are struggling with the permits? Are they struggling with the supply chain, the transformers and switchgear or with environmental challenges?

JCGC [00:34:22]: No, because as I've mentioned, they are not incentivised to serve this kind of clients. They simply do not have a department…

LK [00:34:39]: It's the bureaucracy and the administration?

JCGC [00:34:42]: It's the bureaucracy, it's the lack of personnel because, again, the distribution business economics is you serve your low-voltage clients, you pass on the cost of energy and you are responsible for your cost. If you are productive, and if you are a good operator, you simply decrease and decrease and decrease the cost that you can. You're simply not going to have a department to fulfil the distribution generation side of business because you are not being remunerated to do so. You're not being paid to do that. If you have these costs, it's [rubbish] because it's simply more cost and it's on your equity.

00:35:52] Is there a way for Voltalia or Helexia to mitigate the problem we're discussing by paying a fee or covering the CAPEX of the connection, or is there a way to pay for your slot to be moved up the queue for the DSO or regulators?

JCGC [00:36:11]: No, I mean, it's a black box on the distributed generation company. I mean, the distribution generation companies, they are simply doing whatever they can, so either through consultants or through acquaintances on the distribution company. There's no, let's say, easy shortcut. Again, it's a structural problem and one that the entire remote distributed generation companies in Brazil are suffering.

00:36:57] Following the major nationwide power outage in late 2023, Brazil's ONS [Operador Nacional do Sistema Elétrico; National Electric Systems Operator] instituted much stricter operational controls on renewable facilities. Historically, it only curtailed on large utility-scale plants. However, because it began to worsen on grid instability, regulators then approved emergency measures, which let these operators pull back on temporary disconnection for distributed generators – such as Helexia's commercial farms – especially during low-demand periods. Would you agree with that?

JCGC [00:37:36]: Not quite. Actually, I mean, you are correct when you mentioned that the national grid operator approved emergency measures but they are not at all encompassing distributed generation yet. Basically on the centralised big utility scale plants, you have two kind of plants. You have the plants that are connecting to the transmission system directly, which are the bulk of the plants. You also have something called type three power plants, which are the utility-scale, centralised power plants, but they connect to the distribution network also. These are mostly small hydropower plants or biomass power plants. There are some solar, there are some wind plants, and they are basically connected instead of connecting to the 500kV big transmission substations, they are connected to the very small substations of the distribution companies. This is actually of the 200 or so gigawatt that Brazil has of installed capacity. These type three plants, they encompass for roughly, I don't know, 5 or 6GW. It's small. What the national grid operator said is under severe conditions, I can command the distribution companies to shut down these plants.

This is what they have been doing, but again, under extreme circumstances. Basically, on cool winter weekends, mainly holidays or so that the industrial demand goes down to very low. Indeed, it's not enough to simply curtail the entire centralised industry connected to the transmission network. They can go on and disconnect these centralised plants connected to the distribution. Again, the remote distributed generation plants they are not affected yet by this measure. What is being discussed and it has been discussed a lot, so one measure that the centralised side of the business has been doing ever since 2023 is attack, of course, the distributed generation. They want and they desire and they are heavily lobbying for the distributed generation side of business to pay its fair share of curtailment. Of course, I mean, it's back and forth on the regulator, ANEEL, on Congress, there's a heavy lobby of distributed generation as well in Brazil and as in each and every country, not to tax the sun and this kind of popular campaigns.

This is the struggle between both renewable but distinct regulatory schemes. Nowadays, it seems that ANEEL is starting to discuss some ways in which it can indeed curtail distributed generation. They are starting indeed to discuss that, but again, very early on, nothing decided yet.

00:42:15] The distributors may require developers to fund costly grid infrastructure upgrades before granting final grid access. Do you think this could impact Voltalia or Helexia? Do you think that would already be factored into these ROIs?

JCGC [00:42:37]: It always has happened, both in the centralised and also in the distributed generation side of business. The way to mitigate that for Voltalia and for Helexia to do really detailed studies and discuss heavily both with ONS and on Helexia with the distribution companies before making the investment. Voltalia has been hit by some, let's say, unforeseen demands in the past. I mean, it used to be very small amounts compared to total. I mean, it was not that relevant in the past. I don't know in the future, of course. Again, this is a widespread situation within the industry, so not only for Voltalia, but from every player, you are simply hear here and there that some player had to do, let's say, BRL 10m improvement on a substation or some player had to do a revamp on the cables of the transmission company and so forth. It shouldn't be that problematic under the centralised business, of course, because on the centralised, you can actually discuss openly with ONS and with the transmission companies. I guess that on the distributed generation, it is much more difficult because you do not have this full access to the distribution company.

00:44:38] Do you think there could be a step change for Helexia or Voltalia in what we're discussing? If they have all the project economics decided in the model and determined with all the inputs and assumptions, is there a risk that there needs to be more cost or impairments factored into the model as it relates to more funding of grid infrastructure for the distributors? Is there a risk of being told, "We can't manage this, there's so much curtailment in the grid, you can fund it, so therefore, you pay for it"?

JCGC [00:45:11]: Yes. On Helexia, I guess the business model is a little bit different because on the centralised side of business, you have one project, that's your project, and that's it. On Helexia, as the projects are small, like 2GW, 3GW, 5GW, they have, I don't know, 200-300 projects. If there's an early indication that the project… It's very cheap to develop. Basically, you need to find the land, you need to make an agreement with the landowner and then you have a project. It's very easy to simply say, okay, I used to have a project, now I don't anymore because the distribution company is imposing XYZ cost on me. The most difficult part of the distributed remote business is finding a client. Once you have the client, you look for your portfolio and then you say, well, I'm going to build plant A. If early on, on plant A, you discover that you have a problem to connect, then you go to plant B or you go to plant C. It's way easier to change your project than on the centralised side. I would say that the problem for Helexia is if they find out that they have these connection costs, when the plant is ready or whenever they have committed a lot of money in the CAPEX and started construction, then it's a problem.

I would say that rarely you have these situations where there's a very big CAPEX that is indeed going to change the economics and cause impairments. It's usually small amounts. I would say that the most problematic thing is not the CAPEX per se, but it's the time you consume on this back and forth process with the distribution company. Of course, once you have these problems and once you spend like two years to resolve that, it's two years without revenues, with CAPEX deployed, with capital costs going on, so you lose it either way.

00:48:05] What is your outlook for Voltalia and Helexia's Brazilian performance when it comes to the business in development, the operations and the valuations of the underlying assets going forwards?

JCGC [00:48:28]: Let's break down this. First, the industry itself, not only in Voltalia, but for every player is currently in a very bad spot. On the remote side, on Helexia, as we've discussed, there are basically connection problems. Not only this, but once the plants are connected, and again, it's not only on Voltalia, Voltalia is actually, let's say, the good student. Several players, for instance, they've started commissioning their distributed generation plants without customers. The commercial side of business is being very difficult for these players. They simply cannot sell the energ, and they have modelled, I don't know, 10% discount, and they try to give the 10% discount that they are not able to find clients. They start to increase the discounts on the tariffs for 15, 20, 25. Even so, they cannot find the clients. This is what's been most difficult…

LK [00:50:00]: When you say the discount, do you mean from the average PPA [power purchase agreement]?

JCGC [00:50:04]: From the average tariff on the distribution company.

LK [00:50:06]: Spot price.

JCGC [00:50:07]: No, actually, not the spot price, but the regulated price that the DISCO is selling its clients. Basically, the business model for these remote distributed generation players is you build a plant and you offer a tariff that is more competitive than the regulated tariff that the distribution company is selling you. This is the model. The distribution company sells me at 50, so I offer you 45 for…

LK [00:50:47]: How can it now sell for a 20% discount to the…

JCGC [00:50:50]: Yes, that's what is amazing them because they simply thought that because of the discount, the commercial side of business would be very easy, but it's proving very difficult, so you have…

LK [00:51:09]: Why wouldn't it buy for a 20% discount? What is the client saying? Are they saying they can't buy it because they don't know about future curtailment?

JCGC [00:51:15]: Yes, that's what I was explaining. Basically, there's a lot of friction. (1), there's acquisition costs of the clients, which was not on their business model. (2), there's payment friction. The client simply had to pay one invoice. Now it has to pay two, and when you check the balance of each client's consumption, I mean, the client is spending, I don't know, EUR 200, EUR 500. Once you say, well, I mean, here's your 10% discount, they say "EUR 50. It's not that much. I don't want to move. I don't want to pay another invoice." There's a lot of friction on the acquisition of these clients and the maintenance as well. I mean they can retain a client, but they lose the clients. There's churn on this industry. These business models were simply not counting on this churn. This is on commercial. On the operations…

LK [00:52:42]: Does it all come back to the commissioning delays and the curtailment on the assets?

JCGC [00:52:46]: No, not really. It's…

LK [00:52:48]: There's just a surplus of power generation in Brazil compared to how many clients are out there that are willing to purchase power?

JCGC [00:52:58]: Yes, it's not that it's excess because there's never excess. If there's excess of energy, ONS simply curtails the centralised units, so the grid is always balanced. Again, it's friction. Once you are dealing with big industrial clients is one thing on the centralised, but once you are dealing with households or small bakeries and small gyms, one is the entrepreneur is simply not willing to because of EUR 10 or EUR 20 of discount, to have the working hours to study the industry and to get comfortable with the scheme and to pay another bill. You are basically attending retail and retail is difficult. No company was ready for retail. That's the truth. There's a lot of friction on the commercial side. Helexia is a little bit shielded away from this problem because it has sold energy for industrial players. As you know, it has sold energy for Telefónica of Spain, for Telecom Italia, for some other companies. I mean, these companies, they are big companies, they do not have this kind of problem.

I guess it has some assets on the spot market as well, so this can be a little bit problematic. It has sold to some energy commercialisation businesses as well. These commercialisation businesses are having trouble selling to their retailing clients. This can be problematic. The commercialisation companies simply can say, well, I need to renegotiate my PPA because I'm paying too much. I'm not being able to sell and let's discuss. I'm hearing that this is starting to happen, and to be honest, a lot of small commercialisation companies went bankrupt. I mean, each month, there are one or two that are being bankrupt.

00:55:44] What is your outlook for Voltalia and Helexia?

JCGC [00:55:47]: Helexia side, I guess it has sold only to like premier commercialisators. I guess it's a little bit shielded away from this problem. Of course, if there's solely one default on the contract, from Helexia, of course, the commercialisator will try to exploit that and try to bring Helexia on the table to rediscuss because it has default on the contract. Most of these contracts, they have a long stop date to connection. This is a risk. I cannot say to what percentage of plants, this is a risk, but there's an embedded risk there on Helexia.

00:56:47] What do you think impairment charges and future compensation payments for grid curtailments could look like for Voltalia and Helexia?

JCGC [00:57:01]: On Helexia, this is mainly the problem. There's no curtailment yet, as I've explained. Of course, on the distributed generation, there are some other small problems just like underperformance. The plants are not generating a P50. They are generating more P90 or P95. They are not generating as they were expected to. OPEX is a little bit higher. I guess the performance or simply the cash flows expected from Helexia are not going to be that high because of this underperformance, because of the delays in connection, because of perhaps renegotiations of PPAs. We are seeing indeed a lot of players on the distributed generation go bust. For instance, one or two months ago, there was a big company that went into bankruptcy, which was backed by [Firm], had like 800MW or so, huge, exactly due to these problems that I've told you a lot. I mean, there will be cash flow from Helexia, but the return on equity is not going to be that high.

On the centralised side that you just asked, so as we discussed, curtailment is expected to stay up until '28, '29, 2030, and it's going to stay high. It's difficult to assess the percentage. I guess Voltalia was suffering something around 20%-ish of curtailment on its production, and I would expect this number to fluctuate around that average throughout '28, '29, 2030. It can be 18, it can be 23, it can be 22, but it's going to be a decent amount of the energy. It's a risk, and again, it's not a scenario to be very bullish about, so quite the contrary.

00:59:48] Voltalia CEO Robert Klein said he's reviewing all non-core units. If the CEO tried to divest Helexia in Brazil or even other Brazilian assets, do you think he'd get a good price? Could you share your thoughts on the potential valuation in dollars?

JCGC [01:00:05]: Definitely no because nowadays, it's a complete buyer's market. As I said, I mean, probably each and every asset in Brazil or, let's say, 50-70% of the distributed generation capacity is for sale because players have experienced a lot of distress, a lot of problems in connection, a lot of underperformance problems, a lot of commercial problems. There are assets that are being taken by financiers. I mean, there's simply a flood of renewable…

LK [01:00:55]: Do you have any thoughts on the dollar per megawatt on the…

JCGC [01:01:02]: On the dollar per megawatt, no, but what I have is these assets, they were projected to have an IRR, an equity IRR leveraged on the SPV, I don't know, at 15-20% return. What I'm seeing nowadays is that the buyers are demanding a 25% return. You have, let's say, a 500bps widening of the IRR, which, of course, in an asset that has 30-year cash flow horizon is a lot. Indeed, I do not foresee any value production by sale of assets. Quite the contrary, I see value destruction. If they are able to sell, which is the first question, if they decide to do so, will they find a willing buyer? This is the first question. The second question is, if they find this buyer, which is the price. As I'm saying, the price will be negative. It's probably going to produce bad will on Voltalia's balance sheet.

Just to finalise, on the distributed generation side. On the centralised, of course, you have curtailments, which is a completely difficult assumption to assess. You have to remember that interest rates in Brazil are super high nowadays. The prime rate in Brazil is 14% per year. It's the second-highest real interest rates in the world nowadays. Even if the economics of the project is good, there's a hit on capital cost. I mean, it's very difficult. I would say it's probably a no go to sell assets in Brazil nowadays.

LK [01:03:55]: Awesome. We'll conclude the Interview there. Thank you so much for your time. That was really insightful and valuable content. I appreciate it, and have a great rest of the day.

JCGC [01:04:06]: Perfect. Thank you, at your disposal. If you want to continue, let me know. I'm here.

LK [01:04:12]: Appreciate it. All the best. Bye-bye.

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