ENGIE's Strategic Expansion in Brazil's Energy Transmission Infrastructure: A Catalyst for Renewable Integration and Long-Term Growth

Brazil's energy transition is accelerating, driven by ambitious renewable targets and a need to modernize its aging grid. At the forefront of this transformation is ENGIE Brasil Energia, a company strategically positioned to capitalize on the country's demand for robust transmission infrastructure. With the commissioning of the Graúna Transmission System and a pipeline of new projects, ENGIE is not only addressing Brazil's renewable integration challenges but also securing long-term revenue streams that align with global ESG (Environmental, Social, and Governance) trends.

The Graúna Project: A Cornerstone of Grid Modernization

The Graúna Transmission System, awarded in ANEEL's Transmission Auction 02/2024, is a flagship project for ENGIE Brasil Energia. This initiative includes 780 kilometers of new transmission lines across four states and two new substations, with a 30-year concession period and an estimated Annual Permitted Revenue (RAP) of BRL 268.3 million as of June 2025. Notably, a brownfield section—comprising 162 kilometers of existing lines and two substations—has already begun operations, generating BRL 14.0 million in RAP (5% of the project's total revenue). This early cash flow, derived from 100% internal operations, underscores ENGIE's operational efficiency and its ability to leverage existing assets for immediate returns.

The project's primary objective is to reinforce the interconnection between Brazil's Northeast and Southeast regions, a critical step in addressing bottlenecks caused by rapid renewable energy growth. By enabling the secure transmission of energy from wind and solar farms to high-demand areas, Graúna supports the National Interconnected System (SIN) in avoiding overloads and curtailments. For investors, this translates to stable, long-term cash flows and a clear alignment with Brazil's 2030 renewable energy goals, which aim to increase the share of renewables in the energy matrix.

Diversified Transmission Portfolio and Strategic Wins

Beyond Graúna, ENGIE has secured additional transmission projects that solidify its market leadership. The Asa Branca Transmission System, spanning Bahia, Minas Gerais, and Espírito Santo, involves the construction of 1,000 kilometers of lines and the expansion of five substations. The first segment of this project is projected to create 2,000 direct jobs, reflecting ENGIE's commitment to local economic development. These projects, combined with the company's existing 2,710 kilometers of operational lines, position it as a key enabler of Brazil's energy transition, with a diversified portfolio that mitigates project-specific risks.

The company's recent success in Aneel Transmission Auctions—including Lot 1 of Auction 02/2024—demonstrates its competitive edge in securing high-impact infrastructure contracts. These wins are not merely volume plays; they are strategic investments in a sector where Brazil's transmission expansion lags behind renewable generation capacity. As the country grapples with curtailments and grid instability, ENGIE's projects fill a critical gap, offering investors exposure to a regulated, high-margin asset class.

Regulatory Tailwinds and Renewable Synergies

Brazil's regulatory environment is increasingly favorable for transmission developers. ANEEL's upcoming energy storage regulations, expected in late 2025, will likely create new revenue streams for companies like ENGIE, which could integrate storage solutions with transmission networks to enhance grid flexibility. Additionally, the government's BRL 50 billion investment package in 2025 and policies such as RenovaBio and the National Hydrogen Plan are accelerating the shift to renewables, ensuring sustained demand for transmission infrastructure.

ESG Alignment and Long-Term Value Creation

ENGIE Brasil Energia's projects are inherently ESG-aligned. By facilitating the integration of wind, solar, and biomass energy, the company reduces reliance on fossil fuels, directly contributing to Brazil's net-zero targets. The environmental benefits are complemented by social impacts, such as job creation and improved energy access in underserved regions. For investors, this dual alignment with climate goals and stakeholder expectations enhances the company's resilience to regulatory and reputational risks.

Investment Thesis: Stability, Growth, and ESG Resilience

ENGIE Brasil Energia's 30-year concession model, combined with its expanding transmission portfolio, offers a compelling investment case. The Graúna project's early revenue and the Asa Branca project's scalability provide near-term visibility, while the broader regulatory push for grid modernization ensures long-term relevance. With Brazil's renewable share in the energy matrix projected to rise to 55% by 2030, the company's role as a grid enabler will only grow.

For investors seeking stable cash flows and ESG-aligned growth, ENGIE Brasil Energia represents a strategic bet on Brazil's energy future. The company's ability to navigate regulatory complexity, execute large-scale infrastructure projects, and align with global sustainability trends positions it as a key player in the renewable energy era.

In conclusion, the commissioning of the Graúna project and the company's recent transmission wins underscore ENGIE Brasil Energia's pivotal role in Brazil's energy transition. As the country races to meet its climate commitments, the company's infrastructure projects are not just wires and substations—they are the backbone of a sustainable, resilient energy future. For long-term investors, this is a rare opportunity to participate in a sector where regulatory tailwinds, renewable growth, and ESG imperatives converge.