EDP Renewables 2013 Annual Report

Selling Price

As a part of maintaining a low risk profile, EDPR’s coverage of installed capacity under regulated or long term remuneration schemes increased to 93%.


The average selling price decreased by 2% to 62.4/MWh (-1.1/MWh YoY), driven mainly by regulatory changes in Spain (-9% YoY) partially offset by a higher production mix towards European output (48% vs. 45%) and a higher average selling price in the US (+3% YoY) and Brazil (+8% YoY).


The 2013 average selling price in Europe decreased 6% YoY to 88.7/MWh (94.2/MWh in 2012) mainly due to lower selling prices throughout the countries, except for France (indexed to inflation) and Belgium (PPA with a fixed price). In Portugal, the lower price was driven by the above average wind resource, ultimately resulting in higher revenues.

In Spain, changes in the remuneration framework, that were previously announced, drove the decline. The new framework, defined in RDL 9/2013, includes the removal of remuneration received for reactive power (up to 3.5/MWh) and sets the profitability of all assets at the Spanish 10-year Bond yield plus 300 basis points. The net result is a steep decline in the remuneration received as the average selling price fell to 80.0/MWh or a 9% year over year decline. As the production of Spain contributes to nearly 30% of EDPR´s generation, the impact is significant.

Although the average selling price in Portugal decreased to 99.3/MWh (-3% YoY), it was more than compensated by the increase in electricity output. All the wind farms that contribute to Portugal´s EBITDA are under the old remuneration scheme. Under this scheme there is a negative correlation between the price and the annual working hours. Whenever, there is a stronger wind resource, the final realized price will tend to be lower as a result of the tariff formula.

In Romania, the average selling price decreased to 110.9/MWh (-19% YoY). A key component of the remuneration scheme is the sale of Green Certificates (GCs). Renewable operators generate GCs based on the electricity output and have the option to sell them during monthly auctions. During the year, Romania approved Emergency Government Ordinance 57/2013, which caused uncertainty in the GC market leading to a decline in prices; however, there was a recovery during the fourth quarter. The new legislation does not change the number of GCs earned but rather delays the ability to sell 1GC for wind and 2GC for solar projects to 2017.

In Poland, the average selling price decreased to 95.6/MWh (-6% YoY). Similar to the remuneration scheme in Romania, renewable projects receive green certificates, which can be sold, and prices based on the spot market.

During the year, several factors resulted in lower energy and green certificate market prices such as a decline in fuel and CO2 prices and decreased electricity demand.

In France, the selling price improved 1% YoY to 90.2/MWh, while in Belgium it remained stable at 112.0/MWh due to the long-term PPA contracts in place.

In Italy, the above average selling price achieved reached 137.6/MWh, benefiting from the favourable remuneration scheme.




In the United States, the electricity generated from EDPR´s projects is primarily sold under long term power purchase agreements with fixed escalators or sold merchant on the spot market with short-term hedges. The average selling price increased 3% YoY to $48.6/MWh, driven mainly by a greater weight of output from projects with PPAs (which usually have annual price escalators) and an improvement of prices in the spot market.

Average selling prices for wind farms under PPA increased 2% YoY to $52.6/MWh, resulting from the contracted price escalators and the contribution of new PPAs. Selling prices for the production exposed to wholesale electricity increased 2% YoY to $31.9/MWh, benefiting from the recovery in wholesale gas prices from an average of $2.8/MMBtu in 2012 to $3.7/MMBtu in 2013.

From the beginning of 2013, EDPR has secured 1,200 MW of new wind energy PPAs. 250 MW for projects that were already in operation and 950MW will be installed over the next 3 years starting in 2014. The MW to be installed are backed by seven PPAs and are spread across the United States in five different states (California, Oklahoma, Kansas, Maine, and Indiana). In addition to the wind energy PPAs, EDPR has also secured two PPAs for 30 MW of solar plants to be installed in California. In line with EDPR´s growth strategy of expanding in to new technologies, the planned solar plant will be the first for EDPR in the North American market, capitalizing on both the attractiveness of the investment and the expertise gained from the installation of solar plants in Romania starting in 2012.

Risk management is critical when the price received from generating electricity is subject to the uncertainty in the wholesale market. In order to improve certainty and decrease exposure to volatile spot prices, EDPR entered into power futures contracts, partially hedging US merchant exposure. This allowed EDPR to secure a fixed price for a stated volume and provide price stability and effectively reduce the monthly cash flow volatility due to the variation in market-driven electricity prices.


In 2013, the average selling price in Brazil increased 8% to R$309.2/MWh, reflecting the updated PPA price in accordance with the adjustment for inflation.