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FINANCIAL PERFORMANCE

EDP RENOVÁVEIS EUROPE

EDPR EU in 2010 increased its installed capacity by 347 MW, closing the year with 3,200 operating MW, spread over six countries – Spain, Portugal, France, Belgium, Poland and Romania.

The electricity generated in 2010 improved 33% year-on-year to 6,632 GWh due to the capacity brought into operation throughout 2010, the full impact of the capacity added in 2009, and a positive evolution on load factors.

The average selling price for 2010 was €84.2/MWh, 3% lower than the one achieved in 2009. Most of the production was covered by regulatory schemes with feed-in tariffs or long term PPAs, protecting revenues from electricity price volatility.

Gross profit grew 29% year-on-year to 562 million euros as a result of: I) the +115 million euros impact from the new capacity brought into operation in the period; II) the positive effect from the strong load factor (+24 million euros); more than compensating III) the unfavorable price evolution impact in the Gross profit (-14 million euros).

Solid operating performance and secured remuneration frameworks


Operating costs increased 14% year-on-year to 101 million euros, mainly reflects the ongoing growth program and revenue expansion.

EBITDA reached the 462 million euros, increasing 33% from the 348 million euros achieved in 2009.

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SPAIN

In Spain, EDPR’s wind installed capacity increased by 189 MW, amounting to 2,050 MW at December 2010.

As seen in previous periods, EDPR’s wind farms performed better than its competitors achieving a 27% load factor, 200 bps above the market average. Such performance, coupled with the MW additions in 2010, led to a 33% year-on-year production increase to 4,355 GWh.

EDPR’s average selling price fell by 6% year-on-year, due mainly to a change in the mix of production towards the RD661/2007 and differences between the 2010 hedging contracts vs. 2009 (on the production under the “transitory” regime).

In 2010, EDPR continued its hedging strategy for the capacity under the transitory regime and sold forward 1,826 GWh at €44/MWh (on top of which received €38/MWh of renewable premium). Out of the total 4,355 GWh generated in 2010 in Spain, close to 80% were sold through hedges or at the fixed floor price mechanism (1,826 GWh hedged + 1,600 GWh with floor), while only 20% were sold at market prices plus renewable premium (929 GWh). For 2011, circa 85% of the expected production is already covered by hedges, floors and fixed tariffs.

Gross profit in 2010 increased to 343 million euros, 25% above the one achieved in 2009, with the positive impact from the capacity additions and the strong improvement in the load factor being partially offset by the negative effect from the decrease on the average selling price.

As a result, EBITDA in Spain for 2010 increased 22% year-on-year to 274 million euros, while the EBITDA margin reached 80%.

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PORTUGAL

In portugal, EDPR’s installed wind capacity as of December 2010 totaled 599 MW of consolidated capacity plus 239 MW equity consolidated through its interest in the Eólicas de Portugal consortium.

EDPR’s load factor in portugal in 2010 reached 29%, +1 pp vis-à-vis 2009, given the above-average wind resource during the period. Such performance, along with the full 12 months of the capacity installed in 2009, explains the production growth to 1,472 GWh in 2010, 16% above the one for 2009.

Average electricity prices remained stable in 2010, reaching €93.8/MWh. the small difference when comparing with 2009 is mostly explained by the tariff formula which includes a negative indexation to the annual working hours. Portugal is a regulated market offering a stable feed-in tariff, reflected in long-term PPAs with the distribution company, which allows obtaining sustainable and consistent remuneration levels.

The operating performance, through I) higher electricity output, II) above average load factors and III) the full impact of the capacity installed in 2009; IV) along with the stability in selling prices, led to a 14% year-on-year improvement on Gross profit to 140 million euros.

All in all, in 2010, EBITDA increased by 14% to 116 million euros, following a strong Gross profit performance combined with a robust EBITDA margin of 83%. portugal continued to be in 2010 a positive highlight amongst the several geographies where EDPR is present due to its regulatory framework and a solid load factor.

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REST OF EUROPE

At the end of 2010, EDP Renováveis had assets operating in France, Belgium, Poland, and Romania, where it installed the first wind farm. as of December 2010 EDPR installed capacity totaled 551 MW, of which 284 MW in France, 57 MW in Belgium, 120 MW in Poland and 90 MW in Romania. This represents a 154 MW increase comparing to 2009.

The higher installed capacity, together with an improvement in the average load factor to 24% (+1 pp year-on-year) led to a sound output growth of 89% to 804 GWh.

In 2010, the average selling price increased 5% versus 2009 to €93.8/MWh, mainly as a result of the increased contribution of the polish assets which are achieving attractive prices of €111.5/MWh (electricity price plus a long-term contract to sell green certificates at stable prices for 15 years). In France, and in spite of benefiting from a stable tariff (growing at an inflation type rate) the average selling price fell by 3% year-on-year to €83.9/MWh, explained by the trial period of the recently installed capacity (which production is sold at a lower tariff). In Belgium the average price was €112/MWh, benefiting from a long-term power purchase agreement (PPA).

As a result of a strong increase in electricity generation (benefiting from the growth in the installed capacity and the load factor figures), along with a 5% average selling price increase, Gross profit increased in 2010 by an impressive 101% year-on-year to 78 million euros.

EBITDA grew to 71 million euros, 165% above the 2009 level, representing the strongest contribution for the company’s EBITDA growth

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