The energy group EDP has reached an agreement with the Australian investment fund Macquarie to manage the electrical distribution businesses of Viesgo, Begasa and E-Redes. Macquarie will retain a 24.9% share of the new company while EDP will own the remaining 75.1%, in addition to controlling the assets and assuming the management. This transaction, valued at 2.7 billion euros, will reinforce its presence in Spain and double EDP's distribution business once it has been approved by the regulatory authorities.
The agreement includes all the assets of the Cantabrian company Viesgo, including the three electricity distributors mentioned previously, with over 695,000 supply points, in addition to 0.5 GW of renewable generation and two thermal power plants. EDP will integrate the renewable assets in its EDPR subsidiary and handle the connection rights after the closing of the thermal power stations.
The transaction is part of the EDP's 2019-2022 strategic plan which was presented in March last year. Its aim is to grow its renewable energies and electricity networks and reduce its exposure to market risk. It also plans to increase the weight of its regulated activities in the long term.
According to Rui Teixeira, CEO of EDP Spain: “This is a strategic transaction. For its size, for the reinforcement of our presence in a core market and because by investing in networks and renewables we can make a substantial contribution to fulfilling our vision of leadership in the energy transition. At EDP we continue creating value through our investments while maintaining our strong commitment to our main customers and the new products and services downstream, which will allow us to fulfill our strategic plan and build a more sustainable future”.
Dismantlement of thermal and coal-fired plants
The two thermal plants that are included in the transaction are currently in the process of being dismantled. Their closure is scheduled for before the start of the coming year and represents almost one gigawatt of potential electricity network access rights.
EDP has also announced that it will bring forward the close of its coal-fired plants in Spain and Portugal as part of its decarbonization strategy. The application for their closure has already been initiated. The first to close in Spain will be the Soto de Ribera 3 plant, which stopped producing power over one year ago. EDP intends to replace the 346 megawatts of generation of Soto 3 with an energy storage project.
For its part, Aboño 1 has already began its transformation to replace coal with steel gas combustion in 2022, maintaining its 342 megawatts of power. Aboño 2 will continue in operation for the time being to support possible supply needs. Both the Soto and Aboño plants will conserve all their jobs.
Although this decision is motivated by the adoption of renewable sources, it is also affected by other factors such as the constant increase in the costs of producing coal-fired energy and the recent competitiveness of natural gas and combined-cycle plants, which have undermined the profitability of coal-fired plants.
According to the CEO of EDP, Miguel Stilwell de Andrade, “EDP maintains a position of leadership in energy transition, with a strategy focused on decarbonization and on sustained growth in renewables. With the acceleration of this process, particularly in the last year, we are seeing an inevitable reduction of the profitability outlook of coal-fired plants and the loss of competitiveness of this market. Faced with this scenario, EDP is seeking reinforcement with high investments in wind power and solar energy as defined in the strategic plan”.
Last updated: 05|10|2020