EDP announces sale of 80% of Pecém coal-fired power plant in Brazil

EDP - Energias de Portugal will sell 80% of the Pecém coal-fired power plant, located in the Brazilian state of Ceará, with a market value of 1.9 billion reais (around 366 million euros), in what is an "important milestone in achieving the group's strategic goal of being coal free by the end of 2025?.

"EDP - Energias de Portugal, through its wholly owned subsidiary EDP - Energias do Brasil, has entered into a Sale and Purchase Agreement with a group of Brazilian investors coordinated by Mercurio Asset for the sale of an 80% stake in Pecém Geração de Energia and, under certain conditions, an option to sell the remaining 20% by the end of the PPA, reflecting an implied Enterprise Value of BRL 1.9 billion for 100% of the plant," the Portuguese Securities Market Commission (CMVM) announced in a statement issued early Wednesday evening.

The energy company led by Miguel Stilwell d'Andrade points out that it will guarantee 100% of the management of the 1.25 MW renewable hydrogen project that began operations in December last year at the Pecém complex.

"EDP will continue to evaluate the potential for developing larger-scale renewable hydrogen projects in the region," the company adds in the same note.

The Brazilian plant, which has a capacity of 720 MW, "plays an important role in supporting the security of electricity supply to the Northeast region of Brazil, where electricity consumption and renewable energy production capacity have been growing steadily," the same note adds.

"The plant has a regulated capacity PPA that runs until July 2027, with revenues updated for inflation and adjusted to technical availability and dispatch decided by ONS, the Brazilian electricity system operator. After an all-time high in generation recorded in 2021, as a result of the extreme drought in Brazil, the ONS has not issued any dispatches for this plant in the last 16 months, due to the recent high levels of hydroelectric reservoirs in the region. The buyers have started studies for the conversion of the plant to other fuel sources, such as natural gas and mixtures with hydrogen or biomass, through an Energy Transition Plan based on the best international decarbonization practices," reads the CMVM note.

Regarding the goal of "being coal free by the end of 2025?, the company says that, "in relation to the last 3 coal-fired plants still in its portfolio, located in Spain, it continues to actively develop decommissioning plans for the Soto and Los Barrios plants, which require authorizations from the respective electricity system operator, as well as a conversion plan for the Aboño plant from coal to gas".

At the end of August, EDP - Energias de Portugal announced that it had completed the acquisition of the remaining outstanding shares in EDP Brasil, taking over 100% of EDP Brasil's share capital in aggregate.

EDP with 100% of EDP Brasil after potential acquisition