At this year's The smarter E Europe, EDP campaigned for more climate protection with the We Choose Earth Tour Conference and is also involved in the global Utilities for Net Zero Alliance. What goals have you set yourself for the switch to renewable energies and how far have you already come?
EDP has a 20-year track record in the energy transition, and we have set clear goals going forward. To be 100% green in our energy generation by 2030 and achieving carbon neutrality throughout our value chain by 2040. We are well on track, with 98% of the energy we generated in the first half of 2024 coming fully from renewable sources.
EDP is committed to continue this path with an investment plan of 17 billion euros in the energy transition by 2026, of which 2.5 billion euros will be allocated to distributed solar energy projects for families and companies, making a decisive contribution to the energy transition.
The world’s capacity to generate renewable electricity is expanding faster than ever, and EDP is well positioned to capture this growth globally. With a presence across Europe, South America, North America, and Asia-Pacific, we currently have more than 26.6 GW of renewable capacity installed worldwide and aim to add around 3 GW per year of renewables until 2026.
Implementing net-zero pledges demands collective effort, innovation, and stakeholder engagement. Conferences like the We Choose Earth Tour are crucial for mobilizing individuals and corporations to tackle the climate crisis and promote environmental and social preservation.
Are you also active in the field of green hydrogen and green gases - and what role do natural gas and LNG currently play?
Yes, EDP is active in the development of renewable hydrogen projects, having a dedicated business unit responsible for the creation of growth opportunities in this field. We are leveraging on our leading position in renewables, existing assets and competences, and innovation track record to successfully develop green molecules to complement our offer of energy solutions to our clients, supporting the decarbonization of all industries, including those hard to electrify.
EDP’s transition strategy away from fossil fuel operations is providing an opportunity for the development of renewable hydrogen hubs in sites of former coal power plants, maintaining the local and regional socioeconomic dynamics (and employability), leveraging on the know-how, industrial capability and premium location of these sites, our employees and our local business partners.
Today, EDP has a solid pipeline of renewable hydrogen projects, out of which ~500 MW are in advanced stage of development. We have one pilot project in operation in Brazil (1,25 MW that began operation in Dec-2022) and another pilot project under commissioning in Portugal (another 1,25 MW that should begin operations soon).
When it comes to commercial scale projects, our most advanced projects are in Portugal and in Spain, where we have projects between 5 and 150 MW, including 3 IPCEI (Important Project of Common European Interest) projects, 2 that have received Innovation Funds, and several with public funding secured through both national and European supporting instruments. In total, EDP has already secured ~400 M€ in public funding for the most mature projects and we expect to reach FID (Final Investment Decision) for some of them in the upcoming months.
While there are still significant challenges to overcome, hydrogen production is expected to grow massively by 2030 and beyond, and EDP, as a leader in the energy transition, has a business strategy fully aligned with this vision.
How do you see the future of nuclear power?
The energy transition should be approached in a way that positively impacts the economy and the welfare of citizens. Being realistic about affordability is essential, as the effort required on this transition is significant. So we at EDP advocate and work every day to achieve a diversified energy mix, combining many technologies, that can foster the transition while supporting the economy.
For this reason, it is important to prioritize technologies with a short time to market: in addition to renewables, battery storage is expected to play a crucial role in this diversified capacity mix. Nuclear is expensive and with a very long time to market so we do not see this technology playing a massive role in the next few years, apart from a few countries with specific conditions. Coal is doomed and must be removed from the mix, renewables will play the central part and gas will have a role as backup in the system.
How do you deal with negative electricity exchange prices when switching to more renewable energies? Will this jeopardize the financing of new projects?
We've seen a significant drop in energy prices throughout the last year after the spike following the invasion of Ukraine. Current prices reflect not only this normalization, but they've also been influenced by specific conditions in recent months: higher production coming from water, wind, and sun.
In Europe we have a high penetration of renewables, so when there's a lot of renewable production, prices plummet, sometimes even going negative. We will continue to witness volatility in the market, so to keep investment in renewables attractive, it is important to have mechanisms that can give predictability and stability.
PPAs are an example of these mechanisms and give renewable energy producers this visibility while allowing companies that contract them to have price stability and clean energy. At EDP we have a strong track record in creating these partnerships with companies across a wide range of sectors, thus contributing to decarbonization efforts across the globe.
Government-promoted auctions are other mechanisms that are stable. Additionally, it's crucial to introduce solutions like capacity mechanisms, ensuring certain technologies are available to operate, when necessary.
Are more energy storage, better coordination of energy generation and consumption and more and smarter grids the ideal way to achieve a more efficient, renewable electricity supply?
To meet the expected 60% increase in generation and consumption of electricity by 2030 in Europe, we need more and better investment in grids. To do this, we undoubtedly need to invest more in expanding grids, both transmission and distribution, but also to use the current grid assets more efficiently by investing in automation, digitalization, and just generally making the grids smarter.
We also need to be more innovative in the way we use existing grid connections. By enabling hybrid projects with multiple renewable technologies in the same interconnection point, we enhance grid use and create complementary technologies that promote a steady energy supply to the grid. Storage, on the other hand, can also help us promote a smarter use of the grid and avoid energy to be wasted.
The build-out of networks or the development of new renewable technologies, like other infrastructure projects, still face significant bottlenecks and we need a collective effort and strong political and regulatory support to get the infrastructure in place to accelerate the energy transition.
How much are you investing in this area? Do you already operate hybrid renewable plants coupled with storage systems on a large scale?
Hybridization is a logical growth path in the electricity generation industry, since it can promote a balance in availability of supply, energy prices, infrastructure optimization and a smaller environmental footprint.
So, we are looking to explore hybridization in its multiple forms: we were the first company to put into operation hybrid plants that combine wind and solar sources in Portugal, Spain and Poland and we’re looking to do so in other geographies where regulation allows it. We also inaugurated Europe's largest solar energy production floating platform on a lake, the Alqueva floating solar plant installed in a reservoir that features the combination of hydro and a photovoltaic plant.
Our ambition doesn’t end here as we are looking to develop more hybrid assets by adding storage systems. We’ve recently launched a 200 MW solar energy park in California that includes a 40 MW battery energy storage system (BESS) that will generate enough energy to power approximately 68,000 average California homes annually. So we keep exploring options depending on the market conditions in which we operate, but always we the same premise of deploying more renewables and creating positive impact in the communities in which we operate.
Interview by Hans-Christoph Neidlein
