China Three Gorges increases investments in renewable energy in Portugal and Brazil

10 December 2013

Two years after becoming the biggest shareholder of Portuguese power company EDP – Energias de Portugal, China Three Gorges (CTG) has taken an important step in improving the partnership by boosting its investment in renewable energy in Portugal and Brazil.

At the end of last week EDP announced agreements to sell its stakes in two hydroelectric projects to CTG as well as one wind project in Portugal, thus achieving the target for 2013, of investments of 1 billion euros by the Chinese company in EDP.

The EDP chief executive, António Mexia told Reuters that the transaction with CTG “is the complete fulfilment” by the Chinese company “of what was agreed when it took a stake in EDP,” and that “therefore half of the amount stipulated until the beginning of 2016 has been invested.”

CTG agreed to invest an additional 1 billion euros in EDP and, according to Mexia, “the first obvious market” to invest in is Brazil.

EDP Brasil announced it had signed a memorandum of understanding with the CWE Investment Corporation (CWEI), a 100 percent-owned subsidiary of CTG, that sets out the main guidelines for the partnership for suture co-investments by the companies and which establishes the rules for participation of the parties involved in projects in Brazil.

In the context of this partnership, CWEI is to acquire a 50 percent stake in the company that owns the right to develop the Cachoeira Caldeirão hydroelectric plant (219 MW) “for a price equivalent to the costs incurred by EDP Brasil up until it committed to a future co-investment.”

CTG taking a stake in EDP has given the Portuguese group some financial “breathing room” and it now has its financing needs covered until mid 2015.

In a statement filed with Portuguese stock market regulator, CMVM, EDP Renováveis (EDPR) announced an agreement with CTG to sell a 49 percent stake in the ENEOP – Eléctricas de Portugal consortium.

The transaction, which is expected to be carried out in 2015, is part of the asset sale agreement that EDP signed with CTG and which outlines a total investment of 2 billion euros by the Chinese company by 2015 in renewable energy and projects under development.

The ENEOP project was awarded licenses for 1,200 MW of wind power in Portugal, and this capacity will be increased to 1,335 MW this year. Once the project is concluded the assets will be split and shared between the shareholders.

The operation is part of the agreement to sell off assets to CTG and was welcomed by analysts from the Espírito Santo Investment Bank and BPI.

“From a strategic point of view this deal is positive for EDP Renováveis, as it allows the company to move ahead with its asset rotation programme,” said analyst Felipe Echevarria of Echevarría do Espírito Santo Investment Bank, in a research note cited by the Negó website.

The partnership outlines total investment of 2 billion euros by CTG by 2015 in renewable energy assets that are in operation and projects under development, including wind assets and some hydroelectric plants, as now agreed by EDP and CTG. (macauhub)