EDP to Book EUR300 Million Impairment as Value of Coal Plants Wanes -- Update
December 19 2019 - 11:54AM
Dow Jones News
By Cristina Roca
EDP-Energias de Portugal S.A. (EDP.LB) said Thursday that it
will book a one-off impairment cost due to the lower
competitiveness of its coal plants in the Iberian peninsula, as
coal power is increasingly phased out across Europe.
The Portuguese energy company said it will book a 300 million
euro ($333.8 million) charge in 2019, which should result in a
negative impact of EUR200 million on its reported net profit.
EDP said the acceleration of the energy transition process over
the past year led to a significant worsening of the operating
outlook of its coal plants in the Iberian market, citing the higher
cost of CO2 emissions, lower gas prices and the speed-up of
renewable installed capacity as factors lowering the assets'
competitiveness.
The Portuguese government intends to close coal plants by 2023,
EDP said.
Energy production from coal has fallen sharply across Europe. In
the third quarter of 2019, coal or lignite accounted for 14.6% of
all energy generated in the continent, and total energy generation
from that type of fuel has dropped 41% from the first quarter of
2015, according to a report by EnAppSys, which provides data and
consultancy services to energy and power market players.
"One of the most significant changes has been in Spain where
coal has been pushed almost entirely out the market by gas,"
EnAppSys said in its report.
In September, Spain's Endesa S.A. (ELE.MC) said it intended to
discontinue all its coal thermal power plants on the peninsula and
book an impairment of up to EUR1.3 billion.
EDP said its dividend policy announced in March 2019, which
defined a floor of EUR0.19 annual dividend per share through 2022,
won't be affected by the charge.
Separately today, the company announced a EUR2.21 billion deal
to sell six large hydro plants in Portugal.
Write to Cristina Roca at cristina.roca@dowjones.com;
@_cristinaroca
(END) Dow Jones Newswires
December 19, 2019 12:39 ET (17:39 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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