EDP sells Spanish CCGTs, power and gas clients to Total

Portuguese utility EDP has agreed to sell two Spanish combined-cycle gas turbine (CCGT) plants with a combined 843MW of capacity and a portfolio of residential power and gas customers to Total, in a transaction based on an enterprise value of €515mn ($558mn).

The deal comprises the 425MW Castejon 1 and 418MW Castejon 3 CCGTs in Spain's northern region of Navarra and a business-to-consumer (B2C) portfolio with 2.5mn contracts, of which 1.2mn are in the Spanish power and gas liberalised markets, EDP and Total announced today.

Total will become the fourth-largest supplier of gas and power in the Spanish B2C market, with residential market shares of 12pc and 6pc respectively. Sales totalled 4.2TWh of gas and 2.1TWh of power in 2019, according to EDP.

EDP's 50pc stake in CHC Energia, a joint venture with Spanish firm Cide, is also included in the agreement. Out of the 2.5mn contracts, 0.9mn are in electricity, 0.8mn are in gas and 0.6mn are services contracts, while the remaining 0.2mn are clients from the 50pc participation in CHC Energia.

The transaction is expected to be concluded in the second half of 2020, subject to conditions including regulatory approval. The acquisition of the 50pc stake in CHC Energia is also subject to approval from Cide, Total said.

Apart from stepping into the Spanish gas and power supply business, the deal will enable the French firm to complement its future production of renewable electricity — which is intermittent — with flexible gas-fired generation, the company said.

Total signed agreements early this year to acquire projects totalling 2GW of solar photovoltaic (PV) capacity in Spain, which it plans to have fully operational by 2023. The first plants are expected to come on line by the end of 2020.

For EDP, the divestment means it will have surpassed its €2bn disposals target in Iberia, part of a move to reduce exposure to merchant and thermal power generation in the region and increase renewables capacity worldwide.

The company is also selling 1.69GW of hydropower capacity in Portugal to a consortium of investors formed by French utility Engie, renewable energy infrastructure fund Mirova and Credit Agricole Assurances, in a deal signed in December.

"Spain will continue to be a key market in EDP's portfolio, where the group continues investing in renewables, electricity networks and energy supply and services," the company said. One of its focuses in the region will be on the business-to-business (B2B) segment, in which it has 10 TWh/yr of power and 4 TWh/yr of gas supply.

The Portuguese utility will continue controlling two CCGT units in Spain, 426MW Soto de Ribera 4 and 428MW Soto de Ribera 5, located in the northwestern region of Asturias. It also plans to reconvert its 342MW Abono 1 coal-fired plant into a 181MW gas-fired operation by 2022.

Last year, EDP's CCGT generation in Iberia — including Portugal — reached 10.2TWh, of which 2.1TWh, or 21pc of the total, came from Castejon 1 and 3. Its Iberian CCGT capacity will go down to 2.9GW from 3.7GW once the divestment is completed.

By Juan Weik