If we don't do it ourselves, we'll lose our land to foreigners.
EDP Chief Maps Solar Strategy on Cheap Land in U.S. (Update1)
By Joao Lima and Juan Pablo Spinetto
Oct. 15 (Bloomberg) -- EDP-Energias de Portugal SA, the country’s biggest power company, said the U.S. is the most attractive market for expanding in solar energy.
The company, the world’s fourth-biggest generator of wind power since acquiring Texas-based Horizon Wind Energy LLC from Goldman Sachs Group Inc. in 2007, is considering solar projects after developing wind farms from New York to Oregon.
“Concerning solar energy, we are mainly considering the U.S. market,” EDP Chief Executive Officer Antonio Mexia said in an interview with Bloomberg Television. “We believe it makes more sense: closer to big consumption centers and because the opportunity cost of land is much lower than in Europe.”
Lisbon-based EDP is investing about $1.3 billion on average every year in the U.S., where President Barack Obama has set a goal of getting 25 percent of the country’s power from renewable sources by 2025. Solar developers from Germany and Japan are also entering the U.S., attracted by the Treasury’s plan to pay out $3 billion in cash for solar, wind and biomass energy projects as part of Obama’s $787 billion economic stimulus plan.
SolarWorld AG, a Bonn, Germany-based maker of solar panels, said Oct. 5 it’s adding production capacity at its Hillsboro site in Oregon because of “good growth prospects” in the U.S. Juno Beach, Florida-based FPL Group Inc., the biggest U.S. producer of wind and solar power, said this week it requested permission to increase the capacity of the DeSoto solar-power plant in Florida at least sixfold to 150 megawatts.
Oklahoma, Illinois, Iowa
EDP Renovaveis SA, the renewable-energy unit of the former Portuguese power monopoly, started building the Blue Canyon V, Top Crop I and Lost Lakes wind projects in Oklahoma, Illinois and Iowa in the second quarter. The unit said Sept. 1 the U.S. Treasury approved a $48 million cash grant for its Wheat Field wind project.
Electricity output in the first-nine months of the year increased 36 percent as EDP Renovaveis installed more wind parks, the unit said in a regulatory filing last night.
EDP Renovaveis plans to install 1,200 megawatts to 1,300 megawatts this year globally, targeting wind-energy capacity of 10,500 megawatts across Europe and the U.S. in 2012. A 1- megawatt plant running at full capacity can supply about 1,500 European homes on average. The Portuguese power company is also targeting offshore wind-energy projects in the U.K.
The Portuguese government owns 20 percent of EDP, and state-owned bank Caixa Geral de Depositos SA holds 5 percent. EDP is up 18 percent this year in Lisbon trading, valuing the company at 11.6 billion euros ($17.3 billion).
Down in Iberia
EDP is increasing generation capacity in Portugal, even as power demand declines. EDP forecast July 31 that demand this year will fall 2.8 percent in Portugal and 4 percent in Spain.
Power producers may try to cut exposure to drops in prices that follow lower demand by using forward sales or relying on long-term contracts. For 2010, EDP has done forward contracts for more than 70 percent of its liberalized output at an average selling price of about 50 euros a megawatt-hour, according to a July 31 statement.
“Well before the others, we started a hedging policy that makes a huge difference,” EDP’s Mexia said today. “As an example, 2009 will probably be the toughest year in the Spanish market, and we are probably going to have the best results ever in the Spanish market.”
EDP seeks to increase adjusted net income 10 percent a year through 2012 and forecasts earnings before interest, taxes, depreciation, and amortization will rise at an average annual pace of 12 percent as it cuts costs and develops more wind projects.
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