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EDP sells thermal power plant and part of its commercial portfolio in Spain to Total

Sunday 17, May 2020

The business is valued at 515 million euros and involves the sale of two groups from the combined cycle plant in Castejón and the B2C commercial business in the Spanish market.

EDP closed an agreement with Total for the sale of two groups of the combined cycle plant in Castejón (in the Navarra region), with 843 MW of power, and the B2C commercial business (residential customers) in Spain, which has 1.2 million customers in the liberalized market. The deal, valued at 515 million euros, also involves the sale of the 50% stake in CHC Energia, a joint venture with CIDE to sell energy in this segment.

The sale of these assets - which should take place in the second half of 2020, after due approvals from regulatory authorities - is part of the EDP Group's Strategic Plan 2019-2022. The plan, presented in March last year, foresees a reduction in thermal generation assets and exposure to price volatility in the wholesale market.

This operation reinforces EDP's low risk profile, helping to reinforce the weight of long-term contracted and regulated activities in EBITDA and accelerating financial leveraging, thus allowing for an improvement in results. Just one year after the presentation of the Strategic Plan, EDP has already fulfilled 65% of the total asset sales and rotation target with a positive impact on the company's net debt.

For EDP's CEO, António Mexia, “this is an excellent operation for EDP which, once again, enhances the quality of our assets, but also our solid execution capacity, as we continue to create significant value with the portfolio optimization strategy defined in our business plan. After this agreement, EDP will maintain more than 95% of EBITDA in Spain, which is one of our strategic markets and where we will continue to invest in the generation, networks and supply of renewables, both in the B2B segment and in the new downstream segment". In addition, he reinforces, "this transaction is fully aligned with our commitment to lead the energy transition, providing EDP with additional flexibility as we build a more sustainable future - a future that will be electric".

Spain will thus continue to be a strategic market for EDP, with an active contribution to the company's goal of leading the energy transition. In this sense, EDP will continue to invest in new renewable energy plants and in the transformation of existing production centers, such as the Aboño Plant (Asturias), where group 1 will be adapted to burn steel gas and become a source of electricity generation.

EDP's bet on the Spanish market also includes improvements in the electric networks and offering a wide range of services to companies, a segment in which it maintains a significant commercial portfolio. In addition, the company maintains a strong commitment to the distributed generation and electric mobility market for all customer segments.

EDP's activity in Spain is a reference in the energy market, both in production (with more than 4,600 MW of installed capacity) and distribution (668.500 supply points), as well as in the sale of electricity, natural gas and services, where maintains a portfolio of 14 TWh (not including B2C). In total, the company will continue to employ more than 1,550 people.