One of the country’s largest electricity distributors is now aiming to be one of its largest generators. A gap in the hydropower market is its window of opportunity

As a country of almost 200 million inhabitants, Brazil already requires an enormous amount of electrical energy, and that need is growing fast as the economy accelerates.

For companies able to power the nation, there is wealth of opportunity here, according to Antonio Martins da Costa, the Chief Executive of Energias do Brasil (EDB), one of Brazil’s main generators and distributors of energy.

“The market is there for investors that would like to see their business grow,” he affirms.

Brazil primarily uses hydroelectric power to meet its energy needs, which have been climbing at a rate of 4.5 percent per year. As only 35 percent of the country’s hydroelectric potential has been utilized, companies like EDB with expertise in the sector are set to capitilize on its opportunities.

For EDB, this means increasing its generation activities. “Our strategy is to grow in generation,” says Martins da Costa. “Our distribution side is already well developed, and distribution is a quite heavily regulated industry so profit margins are lower.”

The company’s portfolio has traditionally been split between 25 percent generation and 75 percent distribution. Looking forward, the company is aiming for a 50-50 split that will see generation representing 50 percent of its revenues.

EDB has already made major inroads towards this, increasing in importance as a major player in the local energy generation market over the last year. It produced 3,929 gigawatts in 2006 and it is currently involved in seven major hydropower plant projects. With the 19 projects for smaller hydroelectric plants that it also has underway, EDB has 1,000 megawatts of capacity in the pipeline.

In addition, the company has been building a solid reputation for its know-how in hydroelectric development. “Building dams is our core business. We are experts in hydro, especially in dam construction operations,” declared Martins.

In areas where hydroelectric projects aren’t possible because of physical or environmental restrictions, EDB invests in thermoelectric power. It is currently spending $1.3 billion to develop a 700 MW thermoelectric plant in Ceara, in the northeast of Brazil.

Martins da Costa, who is also the CEO of Horizon Energy in the U.S., says that alternative energy sources is another area of interest for EDB, specifically wind power. Indeed, environmental preservation and sustainability remain key focuses for the company.

EDB adheres to the Sao Paulo Stock Exchange’s Sustainability Index, and spent some 16 percent of its R$1.6 billion budget last year on protecting flora and fauna near site construction and relocating nearby communities.

Martins da Costa admits that investing in Brazil is a long-term game, but says that it is one worth the time for the huge potential it holds.