Annual Report - EDP

: financial report :(26% of total additions; Romania: +65MW; Italy:+40MW; France: +8MW), higher average, loadfactors (+1pp to 24%) and higher average sellingprices (+12% year-on-year to €107/MWh) – 2012EBITDA includes EUR 32 million gain related tothe allocation of PPA in several companies; (2)Spain (+EUR 61 million, including hedging results),reflecting 110MW of new capacity (25% of totaladded), higher average load factors (+1pp to 27%)and higher average selling prices (+6% yearon-yearto €88/MWh); and (2) the United Statesmarket (+EUR 47 million), reflecting +EUR 24million from Forex (8% year-on-year appreciationof the USD versus the EUR ), +215MW of capacity(49% of total additions), a steady 33% averageload factor and an increase of the average sellingprice (+3% year-on-year to USD47/MWh).In United States of America, installed capacityrose 215MW, to 3,637MW in 2012. Output underPPA contracts went up 10% year-on-year,reflecting the contribution of PPAs signed overprevious periods (359MW of merchant capacity:184MW which PPA started in January 2012 and175MW which PPA started in June 2012). Averageselling price (excluding revenues from PTCs) forenergy sold through PPA/Hedged increased 2%year-on-year to USD52/MWh, reflecting the priceescalators annual updates. Average selling pricefor merchant wind farms improved 3% year-onyearto USD31/MWh, reflecting some recoveryin the last few months, but still at very low prices.Overall, average selling price in US increased 3%year-on-year to USD47/MWh in 2012. Note thatin fourth quarter 2012, EDP Renováveis concludedthe sale of a 49% equity stake in a 599MW windfarms’ portfolio to Borealis for USD230 million(EUR 176 million). Average load factor remainedstable at 33% in 2012.In Spain, in 2012, EDP Renováveis expanded itsportfolio in Spain by 110MW reaching 2.3GW ofinstalled capacity. Average load factor improved1pp year-on-year to 27% in 2012, while electricitygenerated went up by 11% year-on-year to 5.1TWhin 2012. Average selling price for capacityunder the transitory regime reached €88/MWh(excluding hedging results), down 3% year-onyearon lower average achieved pool prices(-6% year-on-year), while average selling pricefor capacity under RD661/2007 was €83/MWh,up 7% year-on-year. Note that in 2012, 88% of thegeneration (4.5TWh) was sold without exposureto market prices, through fixed tariffs (2.3TWh),hedges (2.0TWh) or fixed floor mechanism(0.1TWh), while only 12% (0.6TWh) were sold atmarket prices plus €38.3/MWh premium. Overall,average selling price in Spain, including hedgingresults, rose 6% year-on-year to €88/MWh,following better hedging prices (€52/MWh versus€44/MWh), the strategic decision of choosing thefixed tariff option under RD 661/2007, inflationindexation and lower production sold at marketprices (-26% year-on-year).In Portugal, EDP Renováveis has 615MW of windcapacity remunerated under the ‘old tariff regime’,with tariffs set for 15 years and indexed to both CPIand annual operating hours. In September 2012,an extension to this tariff scheme was agreed,under which EDP Renováveis will annually investEUR 3.6 million between 2013 and 2020 for anadditional 7 years of a new framework with capand floor selling prices of €98/MWh and €74/MWh,respectively, to be applied from the 16th year ofoperation of the wind farm. In 2012, average loadfactor was stable at 27%, while wind productionincreased 4% year-on-year to 1.4TWh in 2012.Average tariff rose 3% year-on-year to €102/MWh, reflecting inflation indexation, voltage dipsremuneration and the adjustment by working hoursindexation. Still in Portugal, ENEOP consortiumEDP - Annual Report 2012(equity consolidated), licensed to build 1,200MWof wind capacity (480MW attributable to EDPRenováveis) had an installed capacity of 974MW(390MW attributable to EDP Renováveis). Note thatin December 2012, EDP Renováveis executed itsfirst minority stake transaction with CTG, sellinga 49% equity stake, and 25% of the shareholdersloans, in its 615MW of wind capacity in operationand in 29MW ready-to-build (all in Portugal), forEUR 359m (cash-in expected in the first half of2013).In European markets out of Iberia, EDPRenováveis installed 113MW over the last 12months (including the first 40MW in Italy),increasing its capacity to 951MW as of December2012. Output rose 30% year-on-year to 1.7TWhin 2012, reflecting the new capacity brought onstream, while average load factor improved 1ppto 24% in 2012. Average selling price rose 12%year-on-year to €107/MWh, driven by the strongincrease of prices in Romania (+61% year-on-yearin local currency) and by its higher weight of windproduction (28% versus 18% in 2011).In France, EDP Renováveis has 314MW of capacity(+8MW year-on-year). Wind power in France issold through fixed tariffs indexed to inflationfor 15 years. In 2012, average tariff was €89/MWh (+2% year-on-year). In Belgium, our 57MWwind farm sells its power through a 5 year PPA(2014 maturity) at a fixed selling price of €112/MWh. In Italy, EDP Renováveis commissioned itsfirst 40MW of wind capacity, which will receive‘market price plus green certificate’ until 2015(green certificate price set at 0.78 x (€180/MWh -previous year average market price); after 2015,it will be absorbed into a ‘pool + premium’ scheme(premium of €180/MWh minus previous yearaverage market price).In Poland, EDP Renováveis has 190MW of installedcapacity: (i) 120MW from Margonin wind farm,which power is sold in the wholesale market andfor which EDP Renováveis has a 15 years longterm contract for the sale of the green certificates(GCs); and (ii) 70MW from Korsze wind farm,which output is sold through a 10 year PPA. In2012, average selling price was PLN427/MWh,down 5% year-on-year mostly due to lowerwholesale prices in one of the wind farms.In Romania, EDP Renováveis has 350MW ofcapacity (+65MW year-on-year), of which 39MWare solar PV. Wind production is sold at ‘marketprice plus green certificate’, which value issubject to a floor and a cap set in Euros (for 2012,floor was set at €28.2/MWh and the cap at €57.4/MWh). In 2012, average selling price was up 61%year-on-year to RON608/MWh, following theimplementation of the 2 green certificates schemeper MWh produced, in place until 2017. Note thatsolar PV energy is entitled to receive, in additionto the electricity price, 6 green certificates perMWh produced in the first 15 years of operation.In Brazil, EDP Renováveis has 84MW in operationremunerated through long term contracts (20years). In 2012, average load factor fell 4pp yearon-yearto 31%, given a change in productionmix, as a 70MW wind farm (Tramandaí) startedoperations in May 2011, during one of the bestwind resource season of the year. Average sellingprice went up 3% year-on-year to BRL 286/MWh,on inflation update.EDP Energias do Brasil’s contribution toconsolidated EBITDA declined 22% year-onyear,penalised by unfavourable forex impact(-EUR 42 million in the wake of a 7% depreciationof BRL versus EUR) and by a 15% (-BRL 245million) decline in local currency EBITDA.In local currency, EBITDA in distribution declinedby 26%, backed by increasing negative tariffdeviation. EBITDA in generation dropped by 7% in155