Portugal’s EDP to invest $27bn to nearly double renewable capacity

Reuters/Youssef Boudlal

Portugal’s largest utility, EDP said it will step up investment and spend €25 billion ($27 billion) over four years to nearly double its renewable energy capacity to 33 gigawatts (GW) by 2026.

In its strategic plan through 2026 EDP said €21 billion would be invested by its wind and solar unit EDP Renovaveis – the world’s fourth-largest renewable energy producer – and €4 billion would be directed towards electricity grids.

This would increase average annual investment to €6.2 billion, 30 percent above what it projected in a previous plan that ran to 2025.

EDP said the “plan represents a clear commitment to the energy transition, through an acceleration of investment and sustainable growth”.

Chief executive Miguel Stilwell de Andrade said: “EDP has to be a resilient company to cope” with market volatility that he expected to continue after the recent surge in inflation and value chain disruptions.

“Our sector is also changing and there is the need to drive energy transition, to have more energy independence in Europe, the United States with affordable energy, and all of that is going to require a massive amount of investment,” he told analysts.

More than 90 percent of the investment would be in onshore wind and solar, with the rest going to offshore wind, batteries and hydrogen. As of December, EDP had installed capacity of 18 GW.

EDP said it would maintain its focus on “core low risk markets” and expected North America to have 7.4 GW in new renewable capacity by 2026, while Europe would have 5.6 GW.

It also plans to install 2.2 GW of new capacity in South America and 1.2 GW in the Asia-Pacific region, through Singapore-based renewables subsidiary EDPR-Sunseap.

EDP expects recurring profit to grow at a compound annual growth rate of 12 percent to 14 percent to reach between €1.4 billion and €1.5 billion by 2026, while seeing its recurring earnings before interest, taxes, depreciation and amortisation (EBITDA) growing at six percent a year to €5.7 billion.

To fund part of the investment EDP expects to cash in €7 billion in so-called asset rotation, where it sells mature renewable energy parks to finance new ones and improve profitability.

Earlier EDP said that EDPR, in which it holds a 75 percent stake, also aimed to raise €1 billion through a share sale, and Lisson Grove Investment, an affiliate of Singapore sovereign wealth fund GIC, had committed to subscribe to the issue at between €19.25 and €20.5 per share.

Reuters reported on Tuesday that EDPR has been sounding out investors, including sovereign wealth funds, to take a stake.

The CEO told a news conference that EDP is committed to keeping more than 70 percent of EDPR.

Stilwell de Andrade said that Oceans Winds – a 50-50 joint venture between EDP and French company Engie to develop offshore wind projects – is not expected to do an initial public offering. “It (Ocean Winds) has two strong shareholders so there is no need,” he said.