Portugal: Power utility EDP loses €76M in Q1 due to drought, electricity prices

EDP posted losses of €76 million in the first quarter of this year, compared to profits of €180 million in the same period last year, due to the drought and increased cost of electricity, it said in a statement.

In the note released to the Portuguese Securities Market Commission (CMVM), EDP said the extreme drought in Portugal heavily impacted its financial performance “in the first quarter of 2022 in the winter of 2021/2022, the driest in 90 years, which resulted in a record deficit of EDP’s hydro production in the Iberian market in the quarter of 2.6TWh [terawatt hours] compared to the historical average.”

“This hydro deficit resulted in the need for an equivalent volume of electricity purchases in the Iberian wholesale market to meet the consumption of the customer portfolio, in a quarter of record-high prices (average electricity price €229/MWh in Q1 2022, a year-on-year increase of 407%),” it noted.

The group also said that “the strong increase in the cost of electricity sold, not passed on to the customer portfolio” implied a loss of €400 million between January and March, at the “level of EBITDA [earnings before tax, interest, depreciation and amortisation], which justifies the negative net profit of €76 million recorded by EDP in Q1 2022 (a fall of €256 million year-on-year)”.

Therefore, “EDP’s EBITDA fell 18% to €710 million in Q1 2022, with the losses associated with the high hydro deficit in the Iberian Peninsula only partially offset by the positive performance of the remaining business areas”, with “the conditions of low hydro production and high prices in the Iberian electricity market implying a significant increase in the use of thermal generation in the Iberian market, which increased 160% to 2.4TWh, mitigating the losses associated with the hydro deficit”, it said.