Okay. Good morning, everybody. It's a pleasure to be here in Uberlândia. I think it's a landmark for the company, the growth of the plant of Jaguara and Miranda. I'd like to thank for the attendance of everybody, the members of the board. We have over five people here who came to Uberlândia to watch the event. I'd also like to thank the IR team, the people from IB who are here. Of course, we have three directors here: Edson, who's up front from regulatory; Gustavo from new business; and Olavo from operations. Of course, our CEO, Sattamini, who you know very well as well. In this event—let me turn this off. This event is our 12th PDE. I think it's a differential that we have this kind of event. This event aims to keep the communication open with the financial market.
It's important to have this channel with you so that you interact with the people from the company and to keep this fluid communication to keep you up to date with the company's growth and the day-to-day of the company. Our goal here is that you understand very well our business and what our differentials. Today, we have a very complete schedule. We're going to start with Edson in the regulatory part, and then I'm going to bring some competitive differential cases, places where we stand out in the market to create value in a sustainable manner. Then we're going to have our walk the talk. We're going to bring concrete cases where we're going to really show to you how we deliver and execute what we promise. After, Wagner will bring a brief explanation of what is Miranda plant.
After lunch, we're going to have a tour over the plant, over the facilities. We're going to have a break at 10:45 for the break. Before I forget, I'd like to ask you to fill in the forms, two forms that people from IR are handing that they have already. One is related to the satisfaction survey from the IR, and the other is an exercise from International ENGIE. It's called Imagine 2030, in which you're going to be able to contribute with your view, your take on the trends on the world, on the energy market, society trends, which may have some impact in the business in 12 years. That being said, I'll call Sattamini for him to start with his part. Hello. Thanks, Carlos. Good morning, everybody. This is the ENGIE. It's special for me.
It's the 12th event, but it's also been 20 years Gerasul privatization. The ones who are here were able to watch the history of the company and the challenges that the company and the sector faced over the last years. Right? Carlos will talk about our concrete cases, success cases, and show our capability. That's why it's also important that the directors are here because they all have an important role in the success and also in the development, in the market design, in the intense discussion with the regulators and with the grand power. Of course, the financial, the operational, which determines the asset's efficiency, and the financial, which ensures the financial discipline. Everybody has their role in the results. All the parts contribute to this result. That's why it's important that they are here. They are attending here.
They are also available and open to have conversations with you and to explain to you why ENGIE Brasil Energia has a higher performance, above the average performance compared to the market. I have to move on. I am going to start with this slide. Basically, it is the introduction of this meeting. Some of you are already our partners, and you know these numbers very well. There are new faces here, which is good to see. There is a renewal we need, this renewal. We have been in Brazil for a long time, over 20 years since privatization. The group was already here before. We participated in many bids for assets we were offered in the beginning of the privatizations in the second half of the 1990s. As a group, we were the biggest private generator of energy in Brazil, over BRL 7 billion in 2017.
This year, we keep our growth. We acquired more assets, built more capacity. We have over 31 power plants, 9,429 MW operated by the company. We have other assets in which we are partners, majority. We have participation in other assets, 89% in clean and renewable sources, hydroelectrics, wind power, sun power. We are also starting a discard utilization. We're going to talk about this later on. We have installed 1,002 MW and over 1,050 km in transmission lines under construction. We hope this is continuous, this expansion. We're going to see that our financial discipline stops us from accelerating in this moment. We have more than 400 clients with signed pre-market agreements. We noticed that there is a growth in the pre-market because of regulatory discussions that Hobson is going to talk later. The trend is that this growth is exponential.
We need to be prepared for that. We have 1,721 employees, and I believe that our gain in efficiency, our workforce has been increasing at a lower rate than our costs have been increasing at a lower rate than our capacity of generating value and result. We have a component of corporate sustainability index since its inception. We have 13 index, so one more addition than our events. We are part of ENGIE, the largest independent energy group in the world, which also acts in other areas and solutions. This, in a way, gives us capacity to react more quickly. Our movements reflect things that are happening throughout the world. We are among the first companies to start talking about the transformation, the necessity of changing for a market that is closer to the client.
This also gives us a sensibility to what's happening in the world and to anticipate the movements here in Brazil. I'm going to call Watson now. Watson is going to talk about the regulatory environment a little bit and discuss some important aspects of what lies ahead for our market. Thank you. Thank you. Good morning, everybody. It's a pleasure to be here and to share with you a little bit of our experience and our take on the future for the electrical market over the next few years. In a way, it's a continuation of the conversation we were having yesterday at the tables. The topic of my presentation, the main point, is the opening of the market, the separation of capacity and energy, and the challenges for the engine in this new environment.
Opening up of the market and separation of capacity and energy are points of the bill that Congressman Fábio Garcia has been presenting and has presented. As I said, those are main points. That is why they are part of my presentation on the perspective of the repercussion that this will have over the market agents. I noticed that there are many questions among us about whether this bill will move forward, that would there be a regulatory mark. To share a little bit of our view, it is important that we rescue the recent history of the sector, especially 10 years from 10 years ago to now. There are over BRL 35 billion in loans that are nearly finished. A quota of CDE should be financed, supported by the treasurer, but nowadays it is supported by the consumer.
This bill adds up to BRL 18 billion, from which BRL 7 billion refers to grants which are destined to discount for renewable sources. As you know, renewable sources in the free market, they have a discount in the bill for consumed in a way to incentive the sources' development. This grant is over BRL 7 billion and has been growing. Each megawatt new in the free market will impose a higher cost in CDE. Beyond that, we have the crisis of the GSF, which, depending on the simulation, may be BRL 12 billion and BRL 13 billion by the end of the year. It's important not to forget that the physical guarantee of the total amount of electrical power that we have in the country, from this total amount of physical guarantee, 60% is in the quota regimen of Itaipu. It is also a risk, which is on the consumer.
We also have the reserve energy bank. We can bring to the actual model different views, but the fact is that it's not operating. Of course, it's not operating. Changes will happen, perhaps not necessarily the ones that we are proposing here in the bill, but the way is the one which is being designed for this model comes from the Secretary of Energy in a very intelligent manner. There were public consultation, interaction with associations, with the major players in the market as well. It seems that that should be the way, according to the bill. The opening of the market, this reform which is being proposed, it lies on some principles, some guiding principles, as you can see here. I'd like to highlight that first, opening the market aims at reducing the barrier for the participation of new agents.
To understand the risk, it's important to have an economic response as a vector for aligning individual and collective interests. It's important that we can manage this risk properly. Even more important, since it's an important change in our market design, we have to be careful so that the agreements that were held are respected, all the agreements, but at the same time, that the institution's roles are respected. Of course, it's obvious that everybody wants to have the right to choose. This is a common wish in society. Everybody wants to choose. It's obvious that nothing is more fair than that the consumer should choose his or her energy provider. Every time this discussion comes, some people are cautious. If I'm going to open the market, what kind of insurance should I have? How should I go about this?
First, if you are redesigning the market, it's like you are reshuffling the cards of the game. When you do that, the players may change their position. Of course, for the market agents, there is some apprehension because they are facing the new. If you look at the perspective of the government or the Congressmen, they are worried about something else. They are worried about keeping the lights on in fair costs tolerated by society, which are the problems, those are the problems of the current model. The costs are unbearable. A great part of this cost comes from centralism, which is very expressive in the current model. We intend to decentralize it. This is how we start to see some market regulations. Perhaps everybody knows this, but there is a little bit of confusion.
The first market basis, it's security of supply. Imagine the current system. This very system right now, it's been designed a couple of years ago. It was designed a couple of years ago. This system should be able to stand surges in the net, like shortages or short circuits, and maintain its operation. Maintaining right here, right now, it's the security of supply. The second thing, which in Portuguese we translate, it's adequacy, the second aspect. It's a concept in which you are aiming to answer the following question. In the following years, will we have our structure will be able to meet the demand? Of course, there is a risk in that because although I have a structure to meet my actual demand, we may have lack of water or fuel. This is also a risk.
Our talk right now will be on the sense of discussing how can I ensure that I will maintain, that I will ensure that I can meet the actual demand in the future. We have a model in which the feasibility comes from a revenue in the regulated market with long-term agreements together with shorter-term contracts, which are from the free market, go to the free market. When I say I'm going to open the market, what happens is in thesis, in the long term, there won't be regulated market anymore. In that case, how will I be able to finance the construction of the new plants? This is very important. I have to answer this question. How can I do this?
The question that I need to answer is, given that I have costs and investments that were already made, how do I go about this once the free market will grow? Who is going to pay the bill for what was contracted before? We need to be careful with that. The key to answer this is, in a way, somehow ensure that we have receivables to finance this expansion. Just like we have in the current model, I should have receivables in this new model insured because those are intensive investments in capital. This is, of course, necessary. Beyond that, I also have to treat the alleged contracts. I cannot leave for the last contract to pay for the bill of everybody who migrated, which is what is happening today. This is the reality right now.
The way to do this in Brazil, we're calling this separation capacity and energy. This is absolutely necessary. Something else that is as important as and as necessary as is to have credibility of the spot price. This is paramount because in other markets, since in the spot market, energy is worth what it is worth, it's easy to make the math. Here in Brazil, it's the only place where the spot market, if you look at the history since the 2000s till today, I believe we have had more than 12 dozen interventions every year. We have something new coming. This is bad because we don't have credibility. We have to improve that. It's also an important aspect that we do this in a gradative manner. It's a huge change. You need to learn from it.
Throughout the process, you're going to come across situations that we haven't planned or haven't expected, anticipated. We're going to learn from them. A little bit more on capacity and energy. I need to focus because it's central in this discussion. Coming back to the theory, going back to the books. In theory, we have systems, of course, thermoelectric systems from thermoelectric bays. How do I can provide a proper system for this condition? How does it work? I just have to install more potency, more capacity because I consider the fuel source infinite because it's a commodity. If I increase the potency, let's suppose 5% over the charge that I imagine in the future, when I do this, I automatically alterate the potency, I will have energy to meet my demand. This is the classical system of electrical energy.
The other system is the hydroelectric bays. The situation is a little bit different, actually, because the water flow changes. It fluctuates throughout the years and during the years. The planner has to have more machinery above the average capacity of the plant because then they will benefit from the peak moments in which the production is above the average, which is going to compensate for the lower part. The consequence is that the installed capacity comes for free. That is the big difference. Now, more modernly, let's say like that, we're missing, lacking a resource, which is called flexibility. We have a deficit of flexibility. This flexibility is a resource which is more and more scarce because the systems have expanded in a significant manner and based to the wind power base and the sun power base. The scarce resource becomes flexibility.
What do I mean by that? I mean, the system should be able to compensate. If you reduce wind power, you have to be able to compensate this quickly, respond quickly, the frequency control. In real life, I do not have only exclusively thermoelectric or hydroelectric. Actually, I have a mix of all of that. Here in Brazil, I am going to talk about it in a moment. The flexibility has become critical, especially in the Northeast region. What we use here in Brazil currently, as I said, we have an energy market and a capacity market. The energy market is the one that the difference between the consumption and the generation and the agreed are liquidated at the PLD. The market agent will always be exposed when there is this difference. The capacity market already exists, okay?
It's a market where you are certain the rolling average of the physical guarantee of the agents. Every time this rolling average is below what he sold in contracts, the agent is exposed. There's a penalty in the CCR. In the company, we do both the management of energy, but we also do manage the capacity because this is very complex. This is very complex because our assets are not all of them under the same portfolio. We have different companies, and we have to manage the capacity of each of these companies. All of that in the market is done based on agreements. When our commercial area is selling an energy contract, it's actually selling a combo with capacity. What we intend now is to split them. Why?
First, the capacity market, it needs to have centralized contracting in a reasonable time frame. Coming back to the concept, the scarcity of the resource. I want to be able to meet the demand in the future. I want to ensure that I have installations that will enable me to do this. The capacity, it's a public asset. I need to have the capacity for the system to work overall, regardless of the consumer being captive or free. I have to ensure the structure. It's a public asset. I need to be sure that I will have it in the future. I need to hire it in advance so I have that installation. As a public asset, everybody pays for the capacity. Everybody, okay?
That is one important difference from today because today, only the captive consumer is paying for the capacity, which is the biggest financer of the expansion, the captive consumer. The energy market is something different. As long as I have the capacity to meet the charge, the energy market, we can say in the limit that it is the responsibility of each one to decide whether they want to pay for the future price. If I do not want to, I will hire it in advance so I can avoid this risk of the volatility of the price. The energy in this new arrangement, it has become effectively a commodity, and its management will be—the main concern will be the price, the price that will be paid. That is why agreements are important. Of course, there is the short-term market because I will not always be contracting.
I need the free market, and there is a basic foundation here that we will see over the next years that we will have a lot of discussion around this. The main concern is that the expected revenue coming from revenue and capacity has to be equal or higher than the expansion cost. How do you calculate that? What is cost? What is energy? This is not a simple discussion because in spite of being the same market in which the agents will be acting, each source of energy appropriates a different revenue because of different capacities, because of seasonability, because of modulation. The market is the same, but the money is coming from different sources because each of them has different characteristics, except for the thermoelectrics, the dispatchable sources, the hydroelectrics as well, because in thesis, they can dispatch whenever they want.
The others have a revenue that is provided by the nature. It is very important that we start this discussion. Coming back, we have this model today, and we are going to go to a new model in which I will need that a percentage of this revenue is stabilized, paid by the capacity. It is a discussion that we are going to have to discuss. The new is that the energy contracts will be with shorter terms because in thesis, every market will always be free at a moment. In a market, I cannot contract with 15 years for 15 years in the future. It is a shorter term for contracting. I want to highlight that the spot price is believable because it will rule the price of the energy when it is hired. Okay? Very good.
A little bit more on the flexibility because you must have a tenant in different events. Every time we're talking about sources attributes, and it's very important, I particularly see that's a big confusion in this discussion. I'll try to clarify some points for you to make this discussion a little bit more understandable. I've talked about the operational flexibility. You must have seen in the media on Sunday, nine- 29, wind power in Northeast reached 8,100 MW. Very important. The rest amounted to 4,000 MW. Like 40% of the over 100% of the charge was produced by the wind power in Northeast. If you look for international experiences, the other day we were talking about this, right, Sattamini? For example, Australia has a big concern right now because the alternative sources represent 20% of the total. This brings serious problems to the system.
In Portugal, 100% of the charge, it's provided by wind power, but Portugal is supported by the Spanish system, which is not through robust systems, and that's not our case. Markets, especially Northeast, but the country as a whole, it's becoming very dependent on renewable sources. The renewable sources, if you look at the histories of NSE, sometimes they vary from one giga, one giga and a half above and below. If we look at this part, sometimes the generation is zero. It's important that we address this, that the frequency is maintained in 60 Hz in a short time frame. I think yesterday in the table, this conversation came up. What are the consequences of this? What's a new perhaps battery? Perhaps you're going to come up with batteries to pass the situation. The battery experience is very recent.
In California, since 2016, there's a project with For Amiga. We at ENGIE have a project with PLD, and our idea is it's a very interesting project to study the process of charge and discharge of battery, battery charge and discharge, because it's not very known how this works. I don't know if I charge it completely and then discharge it completely. I don't know the impact on the half-life of the battery or if it maintains completely the frequency. We don't have an answer for that. Our project with PLD will also suppose that the regulatory mark changes and the design will be the following. You have wind power, sun power, okay. I need you to give me a flat line of energy. You have to make it. How are you going to do it? One alternative is battery.
Because we don't know exactly the cost of the battery, okay, I'll get there. I'll get there. Okay. It's a flexibility resource. I don't have, I don't know exactly the cost structure. This is just one example of a reasonable solution, but I don't know the cost structure. Just moving on, connecting with what Sattamini said, instead of a battery, why can't I have the hydroelectric plant itself? It's a natural battery. As long as it's in the same market, I can use it to make this accommodation. There may come the time in which it will not be able to do this anymore, which is what's happening in Northeast. Because of the crisis, what's happening is that you can't increase generation in Northeast. Who is compensating? Who's doing the balance? It's the transmission line.
The transmission line is also a way to back up the flexibility system because the operator leaves a space in the line in such a way that if the production increases, it exports. If it decreases, the line provides. Because of that, there are some collateral effects and there are discharges that would be turbine-powered in other plants, residual expansion. You must have heard about it. Hydroelectrics are natural batteries. What kind of batteries could I also have? A plant that is gas-based and dispatch it or make it work to compound a segment of the charge? An advantage of these two sources compared to the battery is that they can do this throughout the year, different from the battery that it even could do throughout the year, but it would not have a high capacity in doing so.
The point that I'm trying to get across is that we need to have these resources, okay? Wind power and sun power are not enough to provide for that because they are regulated by nature, governed by nature. Think like that. I'm designing a market, and I want to have these resources. How do I do this? Because if I do nothing, what's going to happen? What we've seen in the bids, the bid prices for sun power and wind power have been really low. If I have successive auctions, sun power and wind power will also always be the winners. The bid, one of its characteristics is that here in Brazil, they are availability auctions, which means that the generator delivers what it produces. If I produce this curve, I deliver this. If I produce this, I deliver this.
This is the foundation of our auctions. If you get investment costs and operational costs and divide by this production, which is not lapidated, we will have levelized costs of equity, ICB. In Brazil, it's called ICB. This price, it's the price of something that's not proper for consumption. Like when you have the water delayable, it's not proper for consumption. Nobody will buy, not nobody, the consumer will not buy, can't buy. Remember, we're working in the free market. Imagine the wind power comes to me and says, "I deliver like this." If I'm a consumer, it doesn't work for me because I don't consume like that. I consume in a different pattern. I want proper energy for my consumption. We need to separate very well the cost, the price from the auction cost, which is not necessarily the energy price for consumption. This is paramount.
This is so true that the big discussion nowadays is the next wind power auction because EP decided that things will be different from now on. From now on, it's going to be quantity of energy. I will design a product like this, and you deliver it to me. There was a huge reaction because for the investor, they prefer to deliver what they produce without treatment. The consensus, in my view of transition, is that you have a quantity agreement that emulates the quality contract. You do not have to deliver flat or in the consumer profile, but you will deliver very close to what you produce with tolerance bands within a reasonable amount. In this modality, the consumer will be taking the risk.
The same risk that we at ENGIE, when our development staff bring us projects from the free market, delivers to the portfolio for Andrea, that production. What he does is that he adds that production to hydraulic, to electric, and makes it perfect for our clients to consume. Evidently, this has a cost. I am reinforcing, stressing this point because the auction price not necessarily reflects or has not reflected in the current auctions the price of the energy as it is commercialized. I would like to focus a little bit more on this topic because it causes a lot of confusion. How can I make this operational? There is not a defined path. I believe that we will find some paths that will evolve with time. The most obvious is to keep doing what we have been doing.
EP will have sliced auctions, which is basically, at the end of the day, what they already have been doing. Now it's wind power, now it's thermal power, now it's so the planner can say, "I want this matrix for myself." In a way, they will slice the auctions. It's very simple to be done. What is the problem of that? It is that we continue with the old centralized model. A mistake from the planner, which is what happened, there were a lot of thermal that were contracted and that had a bad repercussion in the market. It's a way to do it and decreases competitivity as well. The competition decreases. Another way is that I will have just one auction, one bid for different technologies. In a way, I will equalize competition.
In a way, somehow find a way to perhaps the correct or the precise valuation of the product. Everybody thinks that their product worth more or it's more valuable. This is a challenge. How would I do this in a general way? I may equalize competition through handicaps. If I do nothing, it's just wind power and sun power. What I do is I say sun and wind, you can come to the auction, but you start off paying X reais , paying to the system X reais per megawatt per hour because someone will be controlling your production. This is one way. They have to internalize in their bid this cost.
Another way is to do the opposite. I go to the other sources and I tell them that they will have a discount, a discount if their price is, I don't know, BRL 200 , in the auction, it will be, I don't know, BLR 140, BRL 150. Subtraction, you do something in the opposite direction. This is just for auction purposes. The other question is, who's going to pay the bill? Because when you do this, when you equalize competition, how have you been doing this? All the difference has gone to the consumer so far, but you can also divide this between the providers. The ones who have offer for the ones who don't. It's very important. We have to think. It's not only a matter of saying wind power pays this and the other pays this.
I have to actually give some thought and design a project for this, a structure for this. Another practice which is international is to have technical requirements. For example, I'm going to hold an auction. You have to be able to deliver ramps of X megawatts, increase and decrease per hour or maintain constant generation for X minutes. The guy says, "Oh, but I'm wind power, I'm sun power. How do I do this?" My friend, you buy from another one. This is how you do hybrid projects. That is why I'm saying this is not going to happen happenstance or in Chile, for example, people buy energy blocks, base energy, tip energy, and the entrepreneur finds the better way. In this discussion, another important aspect, and you see that I'm not bringing solutions, I'm just raising challenges that we're going to have to face.
Another challenge is the product uniformization. Each one delivers in a way, but what the consumer wants is what? Is flat, is tip. We need to be careful when we compare things that are from the same nature. To complete this menu of options, we can also create auxiliary service markets. In Brazil, we have problems with that because the hydroelectrics operate over MRE, but in other countries, every time at 11:00 o'clock, beyond you forecasting the price for the next day, you also forecast how much we would like to receive to increase and decrease generation and have a competitive process. Now a little bit more on us. I hope I was clear, made my point with the challenges, what are the challenges that we have to face. We have this picture in which we see that the free market, in fact, is growing.
Now the tendency is that it will grow even more. There is an ongoing process of market opening. This picture is a little bit confusing, but free market, basically free consumer, the eligibles start to grow from 2020, in fact, from next year because those consumers connected to under 69 kV will also be eligible. They grow from here. What happens with this is that the market niche that is supplied by renewable sources, the special consumers in this negotiation that happened because there was a reaction here, of course, from the renewable energy developers because they alleged that they were losing markets. To compensate, a retail consumer was created, which is going to be all the high tension. From 2021 on, Sattamini talked about this. It's a spectacular growth in the market.
The condition is that this retail consumer, for him to exert this option, it will have to be supplied by retail agents. That is the biggest change, gradually, of course. In the future, we expect that the conventional energy will be able to supply also the market of lower tension. In numbers, it is an interesting figure. Internal studies that we have been doing, you can see that there is an increase, a spectacular increase of the market year- by- year. If you add this up in relation to the current free market, if I'm not mistaken, let me do the counts. This represents until 2028, an increase in 40%, oh, I lost my account. 40%, 49%. An increasing significant increase in the basis, in the client basis in terms of energy volume. You can see that, which is obvious as well.
The lower the tension level, the bigger is the number of clients. I have a pulverization in the number of clients, and I have to have a way in my commercial structure has to be able to meet this new profile or this new challenge. In conclusion, what are the challenges that we have as a sector? The first one, I would say, is this transition in which we have a context, the current context, which is highly based on a centralization, and we will have to start acting in a sector in which the market fundamentals prevail. It does not fit our electrical sector as it is because it has always been regulated. There is a different responsibility from the agents. Because today, all problems we have, we know where we go to complain.
When you're market-oriented, each of us will need to have compliance with this new paradigm. We also have hourly price introduction starting in 2020. It should be 2029, but it was impossible the way it was happening. This brings us important challenges on the regulatory perspective because you're going to start dealing with things you weren't used to deal before. The price would be more granulized. How will I go about generation outside of merit, internal restrictions, losses? Anyways, a lot of things that I will have to move forward on. Gradual reduction in grants. What I mean is new alternative sources that come will not have the privilege in which they will be able to sell with discount for the final consumer.
Possibly the end of grants for distribution tariffs because today we have monomial regimen and the trend that it will be binomial. Today, if I have in my house a solar plate, each kilowatt hour that I inject in the network, I have a discount. The trend is that the cost in the structure will be separated. Everyone will have to pay a share. Very important is that the Itaipu contracts will end in 2023. What will we do with this energy? Will we come to Brazil or not? Why is this discussion important? Because if you're discussing market design, the context changes. The decision-making process changes greatly. If you are in a depletion, in a scarcity period or an excess period, and Itaipu have to be careful because of its size. What model will it be?
Will it be a slice for the market agents creating virtual generators? I don't know. It's a discussion for 2023. This year, Gasbol Bolivia contract, three contracts. One is 18 million cu m per day. And this contract will end this year. This year. What are you going to do with the plants that depend on this gas? Distributors have been trying to contract directly from Bolivia, but it's complicated because they're coming close to their depletion because of lack of investment. This is important. Another point, we have the end of contracts with inefficient thermals. It will end in 2023, the big trench. It's generated a little bit of discussion. You must have seen in the media that some agents were defending contracting thermal energy for Northeast, but they noticed it's not possible to contract anymore because these plants are already being replaced.
In the auctions of A minus C's are happening now. Perhaps contract them as energy banks. Depending on the situation, if you're discussing market design, if the system is in crisis, perhaps to resuscitate them. All of this, it's important to keep in mind. Specifically for ENGIE, the main point that Sattamini will also stress in his talk in a moment will have the price will be more granularized. Our risk management will change significantly. Our analyses are being carried out right now, looking at the behavior of sources of generation in different submarkets, what it generates more during the day or at night, different types of consumers, industrial, commercial. You have to be more careful in this management.
Certainly, this new product will come different from the ones we have today because today, basically, we sell energy according to the profile of the consumer. We're going to have a dynamic market which will require the development of new products. The back office structure also needs to be redesigned because we're going to have a lot more clients. Much more information will be going through our pipes. We have to address that. We're addressing that. The main message is that we will have to adequate our commercial strategy to this new context and also increase the product scope. That's the main message I'd like to leave for you here. I'd like to reinforce my trust that the model will change.
I don't know if exactly this year or but with the arrival of the new president, it will change because it's not possible to continue anymore. We often joke that it's not possible to go lower, but it's always possible, of course. CCE liquidations are collapsing. We have people cutting the line to get their options first. This will change. Our role as it has is to participate actively in these discussions and to impose the scope of our company, the power of our company. Of course, the experience we have in other markets and here in Brazil, this is what I had planned. I don't know if we're going to open to questions. That's okay. If I don't know, the president will answer for me. Good morning, Edson. How are you? The first question is about the regulatory risk.
As you said, the GSE hole is intensified not only because of technology, but intermittence in new sources that we have been adding to the matrix and delays in structural projects. My question is, in case we have this change in model, change in model to capacity and energy separated, will this bring some previsibility in terms of capacity? In this scenario, do you believe we're going to have to keep the model as it is? Or do you think that the ideal model is that if we have this capacity, the agents independently should manage their risk, which obviously becomes a risk in prices of commodity and energy? A second question on the side of capacity and energy, I think you brought an interesting solution, which is the handicaps to equalize the prices in each source of energy. Just try to understand a little bit more.
These handicaps will be an adjust in the capacity price. I think precifying these capacities, the biggest issue in a thermal or wind or intermittent source, those sources are, of course, will have different prices. I am just trying to understand how we are going to do it or what you mean by that. How would you go about this? Oh, this is the kind of question I would like to sit at a pub bar and talk for hours about it, but trying to be succinct. The MRE issue is in the discussions we had. We almost were able to implement in the bill the price offer since the beginning. Why? The model that is being designed, it is an advance, conceptually speaking, but this prioritization is key. To have a parameter is key. This depends on a model in which the precification short-term will be attached to MRE model.
The discourse that I had with Bahoso and that he bought is that if you do this offer price, you end with the GSF problem. Because the management will go for each one, what will happen is my decision, not the operator. For the lawmakers, I don't know why they like to bother so much because deep down, they carry this burden with them. MRE, I understand that even with price offer, it needs to continue, but not exactly as it is. It needs to continue, but not as it is. More experienced here will remember that from the beginning in Fernando Ricardo, the beginning of this regulatory mark, the proposal was a different MRE. How? Different how? The agents will make their bids, and each agent will have a currency account. And what is it?
It's a percentage of what is stored in the system as a whole and the energy that is arriving, in fact. I want to precify X percent of my current savings. I want to deplete X percent of my currency account. The Y will be added up. Each one will deplete commercially a volume of their currency account, which will define the price, and deliver to the system operator and says, "Operator, in this submarket, I want you to dispatch X gigawatts in hydraulic, X in thermal." Hydraulic would allocate with optimization because it has to look at the waterfalls. I do not know if I am trying to be very succinct, but it would operate the cascades. The design should be price offers.
In the discussions we've arrived at, I don't remember the final text in the law, but there is a study that will be carried out in 2020. To have price offer starting from 2022 because some agents fear that how could they work on this new model? It's legitimate. This is a point on MRE. The second point, okay, okay. This model in the capacity market started with PGM and basically was thermal. What is the idea here is to have a capacity auction. Of course, there is a curve of demand for each capacity. If the competition is strong, it hires even more capacity than it needs. If the competition is low, it contracts less, contracts capacities. Why am I saying this? When it holds the auction, the price of the capacity is just one. Why is it possible?
How is this possible? Because technology is very similar. At the end of the day, it's possible to have a united price, just one price. In Brazil, it's complicated because the cost of COE is different. What is the trend here? It is that you will have different capacity prices. How do you do this? If you just throw in the auction, the cheaper will win. You have to have a compensation on a capacity price for auction purposes. At the end of the day, this will generate a bill to be paid. As I said, this bill will be paid for consumers as a whole, or it will be shared between the competitors. We could talk about this later on. Hello, Edson. How are you?
Just since there is a lot of uncertainty and we have not closed with a new model, when you said commercial strategy, education, and expansion, what can you actually, in fact, try to do to anticipate what is happening? You are, in fact, changing hiring processes, more flexibility, less flexibility. What do you mean by expansion of product universe? Just for us to understand what has changed, in fact. If I do not know how the system will change, which is the main variable. How are you going about this? Just talk about this a little bit because Sattamini will talk more on this, but things that are already happening to illustrate this expansion. Certain investor in wind power, he has a production curve, and he goes for us and says, "Well, ENGIE, I do not know how to deal with this, to address this. I do not have a structure for this.
I'm a project developer. I know how to build and implant and operate. He asks, "Don't you want to keep my production and you return this energy flat?" Okay? Okay. This is something that happens, and it will continue to happen. When I say adequate strategy, I mean I have to be more aware of these market movements proactively, anticipating this kind of situation in order to be able to face them when they come. Another example, we have wind plants that produce on the shore or countryside of Bahia. These are distant regiments of production. How do I allocate this? More regulated, more free clients? What kind of consumers? This requires a dynamism that our portfolio management area has been reformulated and increasing. Sattamini has been helping this. We're going to need more people to work on this because it's a big challenge.
In this perspective of managing risk. Another issue is how do we go in the commercial approach? As I showed, those are more pulverized clients. The rationale of approach has to be different. It can't be the same belly-to-belly model that we have today. One example that will permeate and illustrate, for example, today I have a consumer profile and production profile, even daily. Eventually, I will prioritize clients with flat profile or out-of-the-peak hour profile because today I already have a big set of clients consuming in the peak client. As I threaded my production and my portfolio, in some situations, I will analyze my portfolio of generation and consumption, stimulating the sales to clients or the purchase from sources that have the complementary profile that will complement my portfolio, equalize my portfolio.
This is one example of how we're going to go about it. Just like Edson said, the regulatory change will also impose us that we'll have to address with an increasing number of clients. How can I deal with clients in a way that I had been going? I can't do this. I can't do the same thing. I had 200 clients. They renew their 20% of my energy every five years. I had 40 clients per year that I negotiated contract on average. I will have hundreds, thousands of clients every year coming in, coming out of my business and renewing. If you have a free market, open market, perhaps a million of clients. You have standardization of contract, digital platform, call center, different kind of sales. It's not the specialized sales only for big clients. Now we are retail of energy.
Perhaps the lowest contract we have of energy today is BRL 1 million . We will have contracts of BRL `100,000 , or if we're working with houses, perhaps BRL 5,000 , BRL 4,000 , BRL 3,000 per year. The cost of transactions is very relevant. I need to use other mechanisms that will make my sales with the human intervention in the sales will be zero. The guy goes for the website, makes the purchase, goes. This is already distributed to the billing. The billing will automatically produce the bill, make the bank reconciliation, make the charges, messages. Just like a telecom, we need to acquire these capacities. Today, we do not have them, and we need to acquire them. I would say, in relation to the distributors, they are ahead of us because they are already dealing with this day- to- day, and we need to create this capacity.
Before moving on, just to complement, the adequation issue and risk management, two important movements that we did recently. We created a specific trading area, specifically to be closer to the markets. The first year we were in operation, we've always wanted this, but the idea was to give more focus to be closer to the market. And portfolio management, we've been trying our best to automatize our process. So we have a team, meteorologists. The dynamic day- to- day is worth mentioning whoever wants to visit us and to see the dynamism that we have in this portfolio management. I will interrupt because of the time. Thank you, Edson. It was very, very interesting. I got curious with what the new model will bring for us in the business opportunities. Not only risk, but also growth. Thank you.
I'd like to bring concrete cases to show how we can bring and produce value in a sustainable manner for our clients. How do we stand out? We know that if we are not able to stand out in the market, we're only able to create value. The generating sector is often seen as a complicated sector. There is risk here and there. How can we differentiate ourselves from our peers and really generate long-term value? It's using our competitive advantages. That is, using our advantages when we're creating new projects, developing new projects. Also in the execution area and the construction area of this when we're executing and developing these projects, which is to deliver what we're promising, all of that with excellence in operational management.
I have two cases to show to you, which leads a portfolio management which is consistent, which is the area that Edson and Andrea lead, which generate a lot of value to the company, which makes us the leader in the market of the niche. We entered this market in 2000, and today we are clearly the biggest player in the free market in Brazil. All of that with the financial discipline and solidity, which is a mark of the company. All of this we do following a logic of sustainability and governance. Those drivers for us are really important. Each decision that we make takes these two aspects into consideration. The first concrete case about new business is the case of Umburanas. Umburanas, as you know, is a project in Bahia, start operating throughout the first semester of new year, 360 MW in the first phase.
A part is hired in ACR, and a part is ACL. And Hanover, which was the owner, had this contract, but he did not have resources to keep the project going. We negotiated, and we bought this project for a reasonable price. What were the challenges in this moment? We had to negotiate with Hanover, which had financial problems in a short period of time. We had to make all the restructuration in how this project will go and fund itself going on, how we would change the process to minimize fees, for example. With a short deadline, this company had already had contracts that would expire soon. We believe that no other player but us could take up this problem and make it a business opportunity. What did we do? We negotiated or renegotiated the contracts with AGE and other suppliers.
The same AGE that provides for Campo Largo provides for Umburana. We could also negotiate with the other debtors, a mix of contracts that will bring a good balance between ACR and ACL. By being there in the hub, in our new hub in Bahia, we were able to bring logistic optimizations that are important. Umburana is next to Campo larga, so they are contiguous. We were able to generate value in a differentiated manner, in a short deadline with a tight program in the fourth trimester of last year. The first machine in the beginning of next year will already be working. With this, we have a new project with high factor of capacity on the order of 50%. It is a project that increases our take in the renewable area, unconventional yet, 700 MW almost that will start operating in Bahia over the next month.
ROI, very good ROI, an excellent one. We do not know yet exactly, but it is a very good one. This project may expand. Umburanas' doors and Campo Largo's doors are coming. Speaking of Campo Largo, Campo Largo is another case that I think it is the execution and the construction of a project. We had, at the time, some challenges, important challenges. That is, in 2014, the ACR environment, a little bit like we see today because this is cyclical. In 2013 and 2014, ACR was very competitive. It got better. Now it is worse. We had a very complex environment to hire all this energy in ACR. We also wanted to increase our sales, our capacity of energy for free clients. We had an important challenge, which was to finance this asset with BNDES because this asset, since it was not 100% ACR, had some short-term contracts.
Something else that's important, we had to meet the local communities, to provide for the local communities. They are very poor. Once the complex is done, there are some important requirements of basic things. What we did, replicating Umburana, it's a mix of free and regulated market. Free and half regulated in Umburanas was 1/4 regulated and 3/4 free market. The current complex in Bahia sells approximately two-thirds for free market, which reinforces our leadership in this market. We also had a solution, a loan solution, that came out very interesting with BNDES. We started discussing two years ago this project. We signed in the beginning of this year. Finally, we withdrew approximately BRL 500 million in investments of short term from BNDES. It's a fund of more than BRL 1 billion coming from BNDES.
It's still in TJ because it was in other conditions, legal conditions. To help these communities, we have 25 social environmental projects around this project, which reinforces our commitment as a responsible company. That is, the benefits of this project, of this execution well done, we anticipate the beginning of operations. There are already machines in commercial operation. We're going to start at the beginning of next year. We're going to start all the parks in Campo Largo. Again, an increase in our take on wind sources, bringing economic development to the area. Also, as I said, with a probability to expansion in the future soon. Now, two cases of excellence in operational management. The first one, which is not very known, it was the modernization of Salto Santiago plant.
It's one of the three hydroelectric plants that were acquired in 1998 in the time of Gerasul, big company, a big plant with 1,400 MW. Over four years, we invested more than BRL 400 million to modernize this plant. What were the challenges? The end of the half-life of these machines. They started operating in 1980. We operated them over more than 30 years, so it was time to do a very important overhaul in this plant, a modernization in this plant. Huge risk for failure. We did not want to have failures in hydroelectric generation. What did we do to bring solutions? Not only did we modernize the units, but we digitalized systems and processes. There were many components that were constructed. Many processes were constructed in another time, so we changed them to have more traceability in their process.
All of this with an increase in the yield in the turbine and the generator. With this, we brought not only more trustability, as I said, but an expansion in the economic life and an increase in the energy that the company is insuring. This was renowned, acknowledged by the regulator. Today, we have more energy insured in the company. The half-life is insured for many more years. We reduced the IOM costs. The next case I'll show, it's our case of remote operation of the plant. Line for example, you have.
Remote operation costs online. We have a central operations, which is very efficient and interesting to see. Maybe in some events, we will see this shortly. We have also done this benchmarking for other modifications, modernizations. We have also assured energy. This is another case then, COG, Generation Operations Center.
In 1998, we had eight plants in Minas Sul, three hydro and five thermoelectrics, three different areas in Bahia. From there on, we have increased, and we have 31 plants now, spread over all of Brazil. This generation in the south, Gerasul, we mentioned before, has become touchable and sending energy to all the country. It is something to be thinking about. The distance between the plants would be one of the challenges. We are in the River Tocantins in the Northeast, Serra, Bahia, with oil, with wind, and with plants all over the country. The physical distance is much greater. We have management. We are not optimization or management teams at the moment. We are spread all over the country. These are challenges. Would it not be better to have a more centralized team with scales and efficiency and greater knowledge shared between the operators?
To do this, we had to risk identification of remote operations. Because if you're operating on site, how can you do it at remote? You have to anticipate potential risks that you may have in these with new systems and new controls which are more robust and with greater reliability on the system of telecom. If you have remote, you have to have real reliability with this communication. What was done then? In Florianópolis, we had this COG. You can see the photographs here, on which today we are setting up all of these plants we have, but the process is there for all of them. More systems for monitoring with greater reliability, reduction of costs, sites of contingency sites. If there's a problem in our COG, there's another which would have contingency plans. If there's a fire in some place, for example, we have to have a backup.
Bringing in telecom resolutions via satellite with triple redundancy for this. Within this, we've had great optimization of resources, human resources, not only for cost, but also of knowledge between the operators. The O&M were reduced in costs. The focus on the plant's operation, the real focus, compatibility between the plants. Same number of operators, KPIs are similar, not mixed, to be able to mix and generate in a better way, manage in a better way. Greater agility for decision-making with the vision of the site and with a high level of normalization in the operation, giving greater reliability to this. Here we have a case then, UTL C, which would be illustrative in our portfolio. We had to anticipate here a great maintenance moment in a thermoelectric Lacerda C, which is the biggest thermoelectric that we have on our portfolio from October to July of last year.
We had to do this without losing generation from the plant because it was at its limit for its life use. We had to force ourselves to do this when we were at the high level. For this, the area of Andrea and Edson had a lot of incisions in the market to be able to avoid this problem. What were our challenges last year? We had a critical situation in our system, as we have this year as well, with important generation. The volume of energy was around 300 AVGs because this was what the plant was able to do in a short period. We had to close off then uncovered positions. This had to be done in a short period. What do we do then?
All the strategy for hedging this new maintenance date, not just for planning this activity, but also to execute it, to go to the market from one and buy in an auction. You had to be more intelligent. We had a commercial management at a short time, a short period management. We were able to do this in coordination and synergy with operations to minimize the time of these machines being idle. We had 18 operations at short time with the swap and purchase and sale to be able to neutralize this exposure, which was temporal that we would have this month of October, for example, or sorry, of July. With this then, we have this position at the end of the year then. We were able to have money at the end of the year. These are some of the examples of what we do in our day-to-day.
Just to give you numbers, but I will say this again. Last year, any day, medium was BRL 320 . GSF medium was 79.6%. This was a scenery which was complicated. In 2016, one was BRL 100 and GSC was 86%. The gap then in GSF was growing from 14%, and the other there was lack from 14% - 20%. It increased 50% to GPF. It was founded then by a PLEJ, which went up BRL 130- BRL 140 . In this market, which is complicated, we were able to get some money. Even removing some offs, Miranda entering in May, month of December last year, we were able to expand our margin. We went from BRL 3 billion to BRL 3.5 billion. Numbers say more than images. We're able to bring this then as a concrete case that the management of the portfolio adds a lot of value to us.
Here we have sometimes no pioneering spirit. We are a reference to the free market with products which are customized. As we said before, 400 clients with contracts signed with the open market to begin in 2020. Before, we had a challenge in 2000 to promote the migration of people from the captive market to the free market. Nobody knew what the free market was. Before in 2000, we had all this work with FPS, associations, etc., from different sectors of the country to see what are the advantages of the free market and to show also what is energy. To get to know the guy going out with his umbrella from Eletropaulo or Celesc, or Light, etc., and do a bilateral contract negotiated with Clayton. You have to show what you are. You have to show credibility of energy.
We were able to attend various times in a differentiated way with credit management. In a very intense manner to minimize and avoid risks of default. We have a differential of ours. We sell energy to people with energy guarantees. We have limits of credit, okay, for clients, but with no default for cash flow, which for the company is all resulted in this. What have we done over these years, in the 18 years? We have products. We represent the client on the CCE. We have innovative agreements. We begin backwards, offering energy at the top, but buying it at the captive market, using the ceiling price, and we have shorter price. We have these customized agreements, and we have a diversified portfolio of guarantees, which risks are reduced. Bringing with this then, bringing pre-visibility to our cash flow and greater execution.
Today, we're not just concentrated on the free market. 150%. We have products which bring value in a more customized manner. Then we have generated value for the company and for the clients. Finally, the last case here. I also think it's important in Miranda here in Minas, our discipline and our financial position. Last year, we won the auction to have the rights for Jaraguá and Miranda with BRL 3.5 billion. The two plants, construction of over 30 years, 832 MW, and no ACL, 70% and 30%. The greatest part in ACL was quotas. How will we finance this situation? We always said we would finance and bring this up in the company. We would redo this in growth. We knew in the back that what we had to pay back was very low. Our liquid was 0.23, almost nothing.
We had this money to pay back of BRL 1 million. We were waiting, trying to search for this needle in the haystack. This is very constructive. Few people could go to the auction in Miranda and put a check on the table and say, "Okay, this is it." We were able to maintain our belabor, he is calling it, to do this. We were able to bring this capital forward and win the auction at the end of September and pay by the end of November. We had two months to raise this money. It was very important, this financial. We were able to have a structure, no course. Always, if you have a new project, do this over, spread over the project. It is important to discuss with FIT. We will show you that us at BDF have many money to pay, debts.
How were we able to do this? How were we able to pay this back? We would have debts over a long period and pay back. What did we do in Miranda? We had a point through a commissary with Miranda for one year of a volume, FTE of a volume, which was BRL 2.1 billion. We had also other bridging loans with three banks, with the EBA, one, three, and five years. We were able to catch more than BRL 3 billion in less than a month. This year, we had two events. One was ABS debts to have the takeout with the commitment and BRL 1.8 billion in Jaraguá and Miranda in a mission of five years was BRL 800 million, was BRL 1 billion, sorry, BRL 1 billion. After nine years, we were incentivized for BRL 800 million .
Now in July, we had another BRL 750 million in the ABA with 7 and 10 years to pay back, 100% incentive. The EBA with today then, we are already refinanced everything that we took as a short-term loan for Miranda and Jaraguá. This shows us the solidity of our financial solidity and the confidence that the market has in the company, both bank and commerce. This was something that was done 100% without acquisition, totally without debt. It's a good active hydro in the southwest, many characteristics, which was financed with capital, which was very cheap, optimizing our balance, which was what the company was saying. The rates were competitive. Our rate today in global scale is 1 point above the rate in Brazil.
Even we having 100% in reais, the BPS Brazilian and the management is done in reais, we have even though a note above this, one note on a global level. It's one of the indicators of credibility. So we're able then to capture the best and to grow in our balance and our credit quality. I'd like to open for questions before a coffee break, which we will have shortly. Any questions? If there's not, we'll go for coffee.
Thank you. Thank you. The question from our end is how you have shown just as a financial health is really important to be prepared for a new asset or another opportunity that comes. On the other, if we look at the contracting level and how we could have greater leverage if you were working. I want to understand the balance and the target and the structure of capital that you have to benefit from our greater leverage or at the same time to be prepared for this kind of opportunity when it comes. The key point here is exactly what you said. It's the trade-off between maximizing short-term, using all the value that you have that would hinder our growth on the medium term.
The relation that we have now is one and a half at the end of June, and it will increase to the end of the year because we have contracts that we're like this on BNDES and Capital Argo, and we will also move with Pampa. Our debt will increase to BRL 1.8 billion, maybe BRL 2 billion. We work our target. Our level of comfort is to work between 2x or 3x our expected value. With 2.5% in normal conditions of pressure and temperature, we would have our cruise level. In practice, we'll be oscillating there between two and three. We may have a peak of BRL 1.9 billion at the end of the year of liquid debt, but Capital Argo is operational, and Pampa will come into in the middle of next year. We are working with the management of long-term within looking at 2.5.
We may go up into possible movement up to 3. That's not what we expect. We want to work on a longer range around 2.5 to have the ability when we see an opportunity to grow instantly, but our comfort level is based on long-term debts. Given the profile of the company, as you mentioned, we have cash flow contracted and we have debts, most of them in long-term. On the first three, we had a peak of BRL 3 billion that were closing in 2018, and we have extended this, and now we are back to the expected level, normal level. The tripod between debt and long-term debts at productive costs and always in reais, whereas it brings the comfort to operate at 2.5. Here from Itaú, I have two questions.
One, Jaguara and Miranda, at the moment in the process in which you took both plants, not only operating, but having more familiarity with the assets, did you have any surprises with the assets having a revamp that was not expected or something that was accounted for? Did you have any surprises on the project that you had to begin with when you had the bidding on the auction? We know that ENGIE and Tractebel were always winners in the market of trading on management of portfolio. I want to understand. I do not know if it is really easy to make this analysis, but how much this success is due to the fact that you have Jorge Lacerda, which plant that nobody else has with the characteristics of Lacerda. It is so much special. What is the comfort that brings to your company on the management?
At the moment that you do not have Jorge Lacerda, will that change the management, whatever you do? Thanks for the question. Let us start with Jaraguá and Miranda. Before we bid on it, we made our homework, went to site, and did the work that had to be done. There were no surprises, and plants were being operated well. We had to do a thing in there, but there were no major events planned. The relevant CapEx that we have now will be within four years, and Miranda after that. No surprises, no significant difference between bidding and today. We always have a small thing to do here and there, but nothing that is really relevant that will change our perception of value with these projects. In relation to charcoal, that is something interesting. Somebody asked me that last night.
We have a portfolio now between hydroelectric, charcoal, or gold. It's a unique portfolio. If you look at today, we sell today, 2018, we will sell 5,000 MW on average of those. 1,300 MW come from third party, 1,300 MW. Buying energy from third parties, it's something on a daily basis. It used to be done very extensively in the past, but from the last two years, it's been increasing. Today, it represents more than 20% of what we sell. This buying energy, it is done, let me get back here, not only to generate products. Today, in practice, we almost have no energy for next year. We are selling a PDA of 19 - 23.
We would go to the market to buy energy for next year from a player for that year to put it together with our average expected production, but also for management, risk management, management of portfolio. That is the trading that Adson's team and I make on the short range, not only short-term. We are anticipating trends. Maybe we have a worse GSF, so we may go and buy at the proper moment, not as desperate, but we have to anticipate it and be in a little long, like what you just said. This management of portfolio, buying energy from third, is part of our equation. In a given moment, if we actually sell Lacerda, we will intensify this movement of outsourcing. We will come back to buying more from third party. In fact, in the short term, what we think now is a buffer and transition system.
As we sell it, we talked about this in the past. When we sell Lacerda, we have a PDA of transition in which the buyer will have an assured sale, and we will maintain our portfolio with that energy. In the medium term, we will exchange energy, buying to a limit until you have other sources for growth. I would complement that. I will ask the microphone here just to complement in our equation for sales and on the wishes of potential buyers of Jorge Lacerda. It is up front. Let me go all the way to the front, so I will be on the image. In our structuring, we expect to have this buffer contracting, which will commit to buy all the energy for some years. Obviously, we will decrease that as our portfolio allows it.
As Carlos mentioned, the way we manage the GSF risk without the thermal of Jorge Lacerda, which is a good hedge, is maintaining the having our own energy and also third-party energy complementing the portfolio. It's what Andrea makes. If he starts to understand that there's a greater risk of GSF in one year or next year or the following year, he will complement removing that energy from the availability for sales, or he will buy energy to complement the portfolio, ensuring that this risk will be contained. We know that the risk on GSF is incredible. When it occurs that the space is really high, it comes to a very expensive cost.
Letting energy not contract and not hire is a good manner to protect from risk, and it will not cause you a big loss because the difference between the spot price that you may have if hydrology allows it and the sales price in the market is much smaller than the sales in the market with the PLD high if you have a problem, hydrological problem. Any other question? Thank you very much. Let's have a break now. We'll be back in 15 minutes at 11:00, 10 past 11:00.
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Is really important for us to finish this up, that we will have lunch only after you fill up the form that you received earlier. Now, let's do it. There is something here that I do not know how good I am going to do it this year. We will talk some now about walk the talk. We talk that we do this well, that well, but what are the evidences? Carlos mentioned some of those study cases, but I want to reinforce and show you why we understand that we have a differential. We always have mentioned that we have a recognized capacity in execution. In fact, if we look at it, what have we added in installed greenfield capacity responsibly? It goes way beyond most of the prices or other stuff that came at the same time as us.
Those who entered hydroelectric components at the end of the 1990s, there is no comparison. We are a major player competing for the space with young developers, new developers equally. We do not go crazy. Some developers will do crazy things, but we are there competing with them in the market. We have added, and we will add until the beginning of our operations from 2019, 2019, 2018, we will add 4,324 MW of installed capacity in greenfield, all that greenfield. We want to expand participation in non-conventional renewables and gas-fired generation as a strategy. We have today 1,000 MW under construction and 2,000 MW in development. We have thermal, 345. Our plan of decarbonization and our own decarbonization, we want to sell just to not anything. We understand that selling an asset with a very much more complex.
As we discuss this, we're creating value until the end of the project and delivering the system operational for the new owner or buyer. We're still on our portfolio. We have 657 wind under construction. On development, we have some capacity on gas, 600 MW, thermal of Garuva that we want to add with a terminal of gas, LNG, which would have participation with that part also. We're closing up, dealing with the terminal at the port, which would insert gas on the gas bow, inverting the flow, and that would change the capacity for delivering gas into the markets of the South and Southeast of Brazil. We also have 1,075 portfolio on oil, wind, and we're discussing other clusters close to the ones that we have.
We believe that we'll believe on the increase of the wind production, and we have to be a player on that. On solar, we have 237 projects in development. We have an efficient commercial strategy. We have looked into research in a short and medium-term protection for them. The level of de-contraction that we have has increased as we started living with the GSF. That's a way to protect from it because it's not 100% contracted. If I have a thermal, a gas, a thermal, which is dispatched when the price increases, we have an additional hedge, but we can also replace that for de-contracting energy. We have leadership in the free market. We have had consistent growth and a long-term presence. If we look in this graph here, you have seen the curve in the markets that Exxon has shown.
We have been following this curve, increasing the number of customers and increasing the number of sailors. This is not sufficient yet. We have to be prepared with different tools to reach a market that's completely different. We will take advantage of the transition that we will have between Salles coming and Gabriel who's arriving. Gabriel has been a commercial manager, and many of you know him. Gabriel is coming now as Commercial Director. Salles , we will support him to the end of the year. He was expecting to retire. The old directors, we had a plan for succession. The first one left Luciano and De Minuzzo, and now it's Zaroni. It's time for Salles to retire. He is supporting Gabriel, and the transformation will be done in a speedy rhythm from now to the end of the year.
We have a new structure in the beginning of next year with an area towards the retail and people with new modes of thinking. Which ahead up to now was wholesale and centralized operations. Now we need to bring—we have been talking maybe bringing someone from telecom for this type of activity. We do not want to grow for the sake of growing. We want to grow generating value. Here we have the identification of risks. Not that fast. We have a return on capital and equity above the average or median. On median, we have this measurement. I would remove electrolytes because it distorted the values extremely. We had a median peer group here, and we have returns that are consistent above the market. One more. They have financial discipline and solidity on the last six years.
We have been coming up positions, climbing them to the ladder on the last six years. We have been keeping the AAA Fitch rating. That was the first induction when you get that. We have climbed four notches. It shows that we are improving not only our financial solidity, but also improving communication and transparency with these rating agencies. When I climbed aboard in 2010, we started a project that was active management of rating. Rating companies had no sufficient knowledge of the electrical sector and did not know how to evaluate that, and they never rated highly those. We explained our work, and periodically we have meetings with them showing our directions, our strategy, which are the impacts of certain actions and actions that we're planning. We've done that in a time when we started talking in 2011.
When we're thinking about buying Jirau, we explained to them how we were going to do, what would be the impacts in the company, and discussed if that would impact or not our ratings. We started having a major concern with this because it's our competitive advantages. If we have a cost of capital that's smaller, we become more competitive. Something else, the suppliers like to sell to us because we have money in the pocket. Because when you don't have money from BNDES, we pay, and nothing stops the constructions, the sites. There's nothing that's left behind. The person selling will not have their materials at the factory. Our cap is smaller. We have other requirements that will increase the CapEx, quality of construction. We have supervision from the operator when we're building it.
We understand that we'll keep that asset for 30 years or so. We need to take it. Cable, our parks are all protected. Why? Because if we have to make anything on a street in the park and the crane cuts one of those transmission lines, I have all this problem of restoring the whole park. We put protection so that will not happen. Sometimes this type of thing from the operator will increase the price, but in general, we can offer better prices for the suppliers than our competition. What else do we have here? Decarbonization, decentralization, and digitalization. We have a project that has started about three years ago. First, we closed Charqueadas, and then we had a decision to close it. Now we are decommissioning the plant at the end of this year.
All the permit solutions over the problems because the water intake would be for the company for supplying water for the region. The question and solution of the places selling all the metals, and we have to work on that time. We selected and named a manager of the project just to decommission this at the end of this year. Alegrete and the other one come to the same way. Alegrete has been decommissioned longer, but because it's an asset which is administered by Eletrobras, we have a question on who's responsible for the cost, who's going to receive that. Finally, after years discussing this, now Eletrobras accepts taking that unit back. We expect at the end of the year, it will rate soil contamination.
We've seen that it's negative, but we have to complete the campaign, two more measurements until the end of the year. So Alegrete will be returned to Eletrobras and to the union until early next year. And we don't know. We have paralyzed the operations last year. We have an agreement with Eletrobras, and you know that well. And we're looking into the possibility of disassembling and selling the equipment or eventually to make a transaction directly with someone who may be willing to try to make it viable. We understand that with our operational characteristics, that asset is not economical. So it becomes a liability. Excuse me. Just a second. I forgot to turn this off. Well. Let me be incredible. This call was from Russia. You'll appreciate that I'm just going out on another trip.
So platform, I was quoting a transfer from hotel to the airport, and the company is Russian. So I make this quotation. So people call from Russia to know if I have chosen them. We're discussing this morning and coffee. So sorry for this interruption. On decentralization, we have worked hard with distributed solar energy. It has increased in our decentralized solar generation. Energy generation contributes to our company, and we know that we'll have profits coming now. We thought that the investment time would be longer because the market was not configured. It grew more than we expected. We're expecting like four years to have a total investment, and that will be results about from the fifth year on. So we have now found that at the end of the third year, we are getting that dropped in, obtaining the levels that we expected of income.
Also, on decentralization, as you have mentioned, we're moving into the retail market and much more direct, closer to the client, to the end customer. So we want effectively to understand the needs of the customers generating product, formulating new offerings, products. And they will open ever more as we have a change in the regulatory market. When I have prices per hour and that I can make an offer of peak energy or to work with energy efficiency of the customer, we have a great amount of offers that will open up through the years. Today, we find options that we do not meet right now. We see the market demands that we could create new products for, and we cannot commercialize those products as consistently as we could. So we're within that changes in the commercial area.
Goals being set for next year, 2019. Five new products, which we have some ideas of that, but we don't want to block the commercial people, so it's new ideas from us. We want these ideas to come from those who are near close to customers, so they will bring things that will effectively create value, and on the digitalization, we have not only the example of the retailer, but we're putting the CSOs, digitalizing all the processes, decreasing the cost and human interaction in the processes of commercialization, including linking with portfolio management that's always more digital. We're digitalizing the process of price formation. We have a robo-making data collection from all the environments in the models, meteorological, bringing that information for our modeling system. We calculate prices when we get there in the morning, the new prices right there.
Andrea is now concerned about what is he going to do. Now he's administering the portfolio. He doesn't have to be there computing prices. We have something doing that for him. So increase efficiency there. And these are our operations center for generation and transmission. It operates our captive lines. They are connected to our assets of generation. A good part of them are operated by us in the centralized management. Some of them will not. Carlos mentioned South Santiago when we made a reformulation there from analog to digital. We had sensors that allowed us and actuators that allowed us to operate that plant remotely. But São Osório , we computed in our financial discipline. If we digitize that and remote operation, the cost for that would be greater than benefits of reducing costs that we would have for the part of the remaining concession there.
So that one is not centralized in 10 more years. So there's no one stimulus that we see in regulation that we have now. There's no stimulus to gain efficacy in operation of the asset because there's no method that would allow you to recover something clear in that methodology to make you recover the investment made during the first period of concession. So we're showing that we're meeting our mission and our strategy. So talking a little more about strategy. One more. I'll put everything together so I'll not get confused. We have growth in renewable sources, and today, the main source that we're investing in is the wind energy. Of course, we're capturing all opportunities like acquiring Miranda, but if you look at the greenfield, the main focus is wind. We understand that we have greater competitiveness there than solar. And we're prepared with expectations for solar generation.
So we have greater nearness or proximity with the customers, clients. That's a fundamental pillar in our strategy. We're creating generation transmission and gas platform in infrastructure. That's the basis for diversification of assets. We serve ourselves as managers of assets as you are managers of financial assets. We are managers of infrastructure assets. At the end of last year, following with the ideas that we had in 2017, we learned there how the auctions worked. So at the end of 2017, we got our transmission lines in Paraná. And we understand that we have the possibility to within the infrastructure sector, the main nearby assets that we have for generation is transmission of energy and gas. So we have value to aggregate into it. So thinking about being managers of infrastructure assets, we're doing this. And finally, the expansion of the production efficiency of a state-of-the-art technology.
So that's one of the pillars that we're feeding on. And we thought that TI was a cost, but now we see that as information technology has to be together within this strategy and regulatory areas. So I think today has the nearness of strategy and TI give us the view to how to walk forward. So in how to do that is part of the strategy of the company. It's not only a support area for operations. It has a vision of greater competitiveness, formation of products, and modernization of management. So I think these are the four main pillars that we have now. Now we're going to questions and answers, and then we'll talk about Jaraguárao and Miranda with Lightner. So we'll have the focus of these two meals that we bid on and one.
Andre from Santander, I want to make sure that could you give us more information on the interest on TAG or if you're still tell me what you can, please. The information that I can tell you are those that are public. We were chosen as preferential bidder for TAG. We started discussing the instruments for the agreement, and we had to stop the conversation due to a judicial decision. We are still interested in that. We're investors in long term. So Virginia scenario has not changed our interest. So we're waiting for decision on the interest of Electrobras so we can carry on. Gustavo is here. He's one of the directors that worked harder on this. So if anyone has a question, could ask him that we'll meet with. But he cannot say much more than what I'm saying here. Would you like to say something? Step forward, please.
Without going too deep in much detail, two actions to employees from Sergipe. Eletrobras received them, then Eletrobras lost on the regional tribunal. On the judge decision, it was clear that we cannot negotiate. The negotiation is suspended with Eletrobras. We have the decision given by the STF by Lewandowski, who paralyzed all the sales of any state plants for energy. In practice, Eletrobras was selling the asset, but it was selling the papers only. It is just understanding there that the decision was won for a specific transaction hit a much larger broader market. That is the reading that we make. We cannot even sit on the table to talk about the values, and it has been stopped by the force of a judicial decision. We have our partners that, and that is not depending on talking with Eletrobras. We cannot refer bid to negotiate. Yeah.
Thanks. A little about our growth strategy. I think Carlos showed our position of a very comfortable balance space there. So we have time to get this net debt. So as a strategy now, what makes more sense for you? It's the infrastructure which we're mentioning now, transmission that you have taken part on the auctions, TAG, CESP in this environment. Does not make much sense due to the focus that you have on this strategy in renewables or activities in infrastructure. Or does it make sense depending on the technological level that we're looking into since you are? It's everything together. Just to make it simple, financial return affects it, but we have the wish to diversify.
If you ask me if today I would make an investment into centralized generation or in transmission, keeping the relation of risk-return, I think the moment now for growth is for distribution because it would test the stability of transmission. It will give a greater stability for our results. It's not that we do not have interest on the other areas, but within the hierarchy of priorities, we are looking into diversification as a positive thing. But there may be a different story if we have a horse that's ready to be ridden, we'll just jump in. I do not care, but I have not blown the candle either. Also about CESP, I doubt to reduce the risk of high exposition to water resource. How is like TAG to have another partner, two more players until diversifying risk would not have to on balance? There's no other way.
There's no other way. I would never get into CESP by ourselves due to other things that are going on. So it would have to be with the association with other players. Are you shy or hungry? Let me see the time. Well, no battery in my watch. Quarter to 12. Any other question? Well, we're closing the first part. Lightner now will present Jaguara and Miranda. Lightner is our director of generation taking care of operation and implementation of projects. So he will present this about the assets that we just acquired and that you visited this afternoon.
Good morning, everybody. We'll talk a little bit then about the history of Jaraguárao and Miranda. I will go from participation of the operation teams in this. I need to use my yeah. I need to put my slides on. That's it, yeah?
So then here we have a timetable up until the auction. Who was leading this was development with participation of many different bodies from the company. But our team and operations were there from the very beginning. We would say them participating in the management, establishing costs, which we would have, establishing how we would do the cover investments that we would have further on, the whole plan of operation itself. So we begin then with the main internal. Sorry, I'll come back again. I don't know how to look at this really. The okay, audiences, public audiences, resignation, visit of the HAPs for internal approval. In August, we would do this visit to the plants, visit the other HPPS. Then we would have a registration online. We would have notice as to investments from the group that we would be part of with the auction.
We go to the board of directors, and on the 27th, we should have the auction. I was part of this auction, SPIC, which SPIC bought San Simon, and now with Alliance also. We've had many success in Miranda. I'm here at this auction. Guilherme is also here. Beside the hammer, Gustavo is trying to hit him on the head. He's halfway on the head there, maybe. It looks like this. Here are some of the newspaper headlines for the day about the repercussion of the disclosure of this auction. The plant Jaguara, which is in Rio Grande, has 424 MW, 241 MW of energy secured. It has a greater relation between secured and capacity installed. It's much over the average, which is about 50% in Brazil. Here it's 75%.
It was built in 71, 1971, and it is the big when Brazil used to be very big, if you drove through it in a car even. The builders of this were SADE and Siemens. It's connected with Jaguara, with CEMIG's transmission. It has a license up until 2023 October. We have the transfer of this license to Para a ENGIE. It has 705 reservoir perimeter area and 33 sq km . And we San Paulo municipalities, we have three municipalities. In Miranda, which we'll be seeing this afternoon on the River Arguari, it's on Indianópolis and Uberlândia. It's about half an hour from the city of Uberlândia by bus or car. The total capacity would be 408 MW, three machines. The basic guarantee is 192, almost at the same size of two. The tier is very great. The window for offers is also very good. IMPSA is the turbine generator.
IMPSA just have mixed with the Argentinians put the women's names on these machines. It seems to be a hobby of theirs. So we hope you'll be able to see some of these on the floor where the generators are, some female names. Elizette, whatever is her name, I don't remember. Elizette. Yeah, one is Elizette, and I don't remember. Oh, it's painted on the wall there, on the floor, sorry. So we have the tradition there. The environmental license from the department for Ministeries. This license was in the process of renovation since 2012. Validity is over in 2012, but the process is still going on because of the rules that are there. We can continue. We are picking up this again to renew this license in our name, talking with them. It's 247 km of perimeter and 52 sq km . And it touches four municipalities.
Here we have some photographs of it from Jaraguárao and Miranda. These two plants call attention is the color of the water. It's very accustomed in here, Uruguay, where you have a type of a clay type of water. This is very nice blue-green water. It's very different. There's no solids really or suspended materials in these waters. So when you're something here is set is beside the machine here. He's talking about a name. So we won the auction. Everybody's working with associates and to create the SPS opening of other companies or when November, 20 days after, will this be done after the opening of the concession agreement. And then from November, this will be ours, we hope, and it will be operated by CEMIG when we will have receipts from the energy. We have adherence to the CEE assigning this operating and contracting concessions.
Some of these contracts are still on the end of preparation, but everything is under control. I think maybe this is the most interesting part. Here, when we begin on the operation side, look at the auction, what are we doing with the investment, etc. The big question is, in a process like this where we're different companies and an asset without anybody, we have the auction and what we're doing on the next day. So we have a plan here. This began on the 10th of November, 2017, assisted operation. We had six months with CEMIG to use this as an operation assisted. While we were having operation assisted, party of the receipts and a very significant part was for CEMIG, stayed with CEMIG. The cost was very much more expensive than what we were planning on. And then we tried to compete then in the auction.
Time was very short, but without doing any mad deeds. So our plan then was to the 1st of January to be able to do this anticipating, but we were able to do it for the 29th of December. On the 10th of November was a Friday, and then on the Monday, we were there with CEMIG to see what was happening. Our strategy on operational was set up a transition team, pick the key persons in the company with great technical capacity and knowledge to come and do a shock here. And then together with them, and as the plants are used and managed, not by the same remote standard of operation, we have a remote at the end of this year in our standards, and we'll bring a company then to do this operation on a local level. They will be outsourced people that we know.
Many of them are retired from different energetic companies. So we'll have these people working with this. This transition team has come as from the 29th of December last year. CEMIG has gone out, and now we have our transition team. We have made this outsourcing team part of us. We have set up this definitive team, and as from June, Julie, this transition team will move out, and I have this team now with me at the plant. Internally, we decided we have a scheme, a regional scheme, which are by basins or for some affinity. We decided to have a regional with these two plants with Ponte de Pedra also and Mato Grosso. And the two plants in PRSA are Rondonópolis and the manager is the manager of this regional. And we have today our local here, our 19 people in our group here in Miranda and 25 in Jaraguá.
This is within what the plan we had at the beginning. So we're following the auction then. We formed a transition team. We've had some maybe September, about a month and a half to do this. We have to arrive there and begin to work with vigilance and different contracts, monitoring, environment, etc. All these different contracts we have to have. So people from contracts negotiating transference of these contracts to us within a short period, maybe six months, maybe three months. So for us to go to the market then and be able to compete in the market and to do this service. So what we have to do is keep those people and don't make us the least amount of noise as possible. Working communication system, we have transmission lines, data links, etc.
These were not available at the beginning, and we were able to get these links from the 29th of December for communication. The also problem, technical information, historical operation, very little material there was left by CEMIG. It wasn't enough documents there that we would have liked for the minimum necessary. So it was and still is a big fight to get this material. Immediately when we had the handover, we began to have a technical diagnosis of the installations, the structures, civil structures, and equipment, making evaluation. What is the state of the turbines, the generators, the lines, the tower distribution lines, etc. control to be able to plan what we had to do with our investment. We had to work also the infrastructure. We had a lot of parts. There were no tools there.
We had to buy in, set up, and we're still having to set up the toolkit for this. We begin to work then at the moment with stakeholders, with town hall, environmental groups. The neighboring plants are helping us. Competition for an auction costs one helping the other in this for to have exit at the end. You have to know the people in the local areas, governments, community, etc. Then working with our standards of health and safety, especially infrastructure for health and safety. Where I was in Miranda yesterday, I provoked somebody there. I said, "This is still not a standard of ENGIE." We have to work really hard to make this come through within six months or a year at the least.
So we need to have it up to standard with engine because of the quality of cleaning, signing, security, safety, etc. Another point then that we're working on very much from the beginning is remote operation. Our idea and plan is to have this by the end of this year. Today, people are commissioning remote operation for Miranda. We would have an operation assisted operation from the headquarters, but through groups from the 8th of September, locally working on this in Miranda. It will be beginning in October. Team will move to Miranda, but by the end of the year, we'll be doing this from the headquarters. We have a plan then for investment. We know that it was in our business plan, but we're beginning now to work on this and study this.
We have a necessity of modernization, regulators of tension, flow, the generator itself, and eventually then very maybe changing or swapping of turbines, other things that need to be swapped or changed. We're working very heavily on this. And another thing we have to do is to form a permanent team. We have a transition team to get time. We did this running as we were. We selected a few people internally who were key to come here, and we set up when this sets up with zero personnel. So it's important for us to bring our culture, our knowledge, and our processes. We had a great desire to make use of people in CEMIG. We know they are qualified. We know they are trained. They have a good capacity. We did a selection process.
We would like to have taken on more, but we're only able to take on three because of people who were two engineers and one supervisor for operations. And then to complete the team, then we had a selection externally where basically we got people from the region to complete the team. As in any plant, we would be going. We try and get local labor to insert within this from the local community. The big message that we'd like to leave with you from operation, we had a plan which was cooperated into the development and considered, and we are fulfilling this plan exactly as it was planned. We have difficulties here and there which were not foreseen, but the great marks are being completed. And we close the year then with remote operation in action by the end of the year.
This is what I had to say for you. Thank you. Any questions?
Good afternoon. One question is when ANEEL says what's Yagi Hagi for the auctions, are these the values when you analyzed? Did you feel that there was a budget side on top of their value for the centralized operation? Basically, what would be the real cost in relation to what was proposed on those quotations? Somebody else is going to answer. We do not have exact value to tell you, but certainly I know there's an operational maintenance cost, a CapEx for maintenance, and our team visited and made the technical estimates and made a curve for maintenance with CapEx for maintenance and the operational cost, which was lower in this example regarding Miranda to what was proposed by ANEEL. It does not mean that at all plants it's going to be like that.
In this case, regarding Miranda, especially Miranda was much below what they expected values there. Yeah, but if you put everything together, you get all the revenue and expenses regardless of which one has been up or down. Any other questions? Well, I have one last question. You end up having economy at the end of the project savings in which will on this team that will carry on the operation. We're making the business plan. We do not know if we're going to get one or two plants. So in our prices, we're considering independent plants. I could have one- one. So for each one of them, I had a plan as if it was suspended by itself. When I get two, I have a synergy both operating here and a remote operation. That's what I wanted to hear.
Five people here from what we had planned, and I put that on 30 years, that's some money. Yesterday, I was at the plant, and the expenses, OpEx, operational costs until June is 91%-92% of what we had planned. We are spending less. We have to tighten it up. Thank you very much. Maybe one thing that is interesting to explain why you are up here is that when you bring into a remote operation how that happens, you start having a team of operations at the plant only in commercial time. You have one team there in the commercial time. I do not know how that makes for vacation. Instead of having five groups taking turns in operation, obviously, part of this need will go to the centralized personnel administration, but it is much smaller than having that on each of plants.
So that means also in the long range, significant savings. If you're looking to 400 mega or 1 mega, usually you need two operators per turn, plus the supervisor, plus people covering vacation. So you have 13 persons. So when I go for centralized and remote operation, I need one operator for every two plants. Instead of 26, I need one per turn. So I have six. I'm exchanging 26 for six, but I still need three persons operation at the plant to release expense because on the remote, I cannot block disjunct or lock. So I need three more. So if I'm making two, it's 26 against six at the operational center, + 6 in the plant. So it's 26 against 12. So I have saved. Well, let's say labor costs, operational costs, and the main driver for results.
We're looking at this efficacy, so we become more competitive and leaving more money in the pocket of the investors. Thank you, Zed. It's less transport and on the turn changes, switches, and all that. Thank you for your presentation. I want to thank all the other directors. Gustavo wants one more word. It's just to point that on your last comment in the case of Jaraguá and Miranda is Jaguara. It was fundamental for the auctions. The 10% was similar to all. 30%, you had the commercialization and market price that was free. So each one had their own premises. So GSF, the value was much lower. So the impact of operation and CapEx maintenance in the business plan as a whole was quite large, especially in this case. And so it was very important. Thank you for complementing the information.
Maybe it's small, but fundamental to give that differential that made us win this. Well, I want to thank again to all of you who came here in person with the full house, new people, old ones, managers, and directors from the company who left their daily activities to be here with us providing new information. So we have great expectations after lunch. Let's visit Miranda. And there, we'll be available to answer questions and interact with you. And now you know who are our directors and what they do. So feel free to approach each one of them and talk to them. Thank you very much. Any other messages? Oh, you have to check out. And where will we convene after lunch? We have lunch after lunch. And at 2:00, we'll be leaving. Thank you very much.