Spanish utility Endesa SA (BME:ELE) is prepared to invest up to EUR 8.6 billion (USD 8.9bn) in 2023-2025 and dedicate half of that amount to grow its renewables capacity in the Iberian Peninsula, the group announced on Wednesday in the presentation of the three-year strategic plan.
The company will aim to spend the bulk of the EUR-4.3-billion renewables investment to build 4,400 MW new solar and wind farms. It said that it will also work to install 200 MW of battery energy storage systems (BESS) by 2025, a technology that is included in its two energy transition projects in Pego, Portugal, and Andorra, Spain.
Endesa expects that this investment rhythm will help it reach 13,900 MW of emissions-free capacity, including BESS and hydrogen, in 2025.
At present, 58% of projects in Endesa’s pipeline are for solar power, 16% for wind and some 20% for BESS, according to the presentation.
The planned investment in distribution grids stands at EUR 2.6 billion, which Endesa will spend on network digitalisation, adaptations to be able to incorporate more self-consumption and distributed generation, and grid resilience.
The next largest spending item in the 2023-2025 plan is the retail business, to which Endesa will allocate EUR 900 million to be able to offer affordable prices and value-added services to customers, the company said.
The overall investment for the upcoming three-year period is 15% higher compared to the 2022-2024 strategic plan, mainly because Endesa will pour more money into the renewables build-out. Endesa’s strategy is in line with the plan that its parent company Enel SpA (BIT:ENEL) presented on Tuesday, which put Italy and Spain, and Portugal by extension, at the centre of the Italian group’s operations in Europe.
As for Endesa’s financial targets, the utility expects its investments to deliver EBITDA of EUR 5.2 billion to EUR 5.5 billion in 2025, up by 4% compared to estimated earnings for 2022.
Ordinary net profit for the fiscal year 2022 is expected to stand at between EUR 2.2 billion and EUR 2.3 billion. At the end of 2025, it will drop to EUR 2 billion to EUR 2.1 million once the Spanish government starts grabbing some EUR 250 million to EUR 300 million per year in the name of tax for energy windfall profits, Endesa added.
(EUR 1.0 = USD 1.033)
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Construction of the Campillo wind farm complex, Spain. Image source: Endesa (hand-out)
