Portugal’s EDP confirms plans to divest generation assets and invest in renewables

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Portugal’s state-owned power company EDP has announced in a filing with the Portuguese Securities Market Commission that its strategic update for 2019-2022 will include more investment in renewables and a plan to dispose of conventional generation assets.

The statement was made by the company after Reuters reported EDP was preparing a sale of generation assets and the ECO website said the utility could invest up to €7 billion in new renewable energy projects.

EDP said more details would be given in a presentation to the market in London today. Reuters reported the plan to divest generation assets in Portugal was down to a campaign by activist investor Elliott Management, which is opposing state-owned Chinese power company the China Three Gorges Corporation’s bid to acquire EDP.

The Iberian power company in May rejected an offer of €3.26 per share which was made by Three Gorges’ European unit and which, according to Reuters, would have valued the deal at $10.8 billion. “The price offered does not adequately reflect the value of EDP and … the implied offer premium is low, considering what is customary for European utilities where the offeror has acquired control,” EDP reportedly said at the time.

The utility’s strategy to expand its renewable energy business – thus far mainly focused on wind – includes investment in storage, solar, off-grid and hybrid wind-solar projects.

EDP’s power generation assets in Portugal meet approximately 90% of the country’s electricity demand. Globally, the utility’s total installed generation capacity stood at around 26.8 GW at the end of 2017.