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    EDP   PTEDP0AM0009

EDP - ENERGIAS DE PORTUGAL, S.A.

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Floods wreck towns, but Europe's wind power goals tangled in red tape

07/21/2021 | 03:00am EDT

EVIA, Greece, July 21 (Reuters) - Climber Tassos Baltas points up at a 22-metre high mast which is monitoring wind speeds on the summit of a rocky hillside on the Greek island of Evia and declares, "This mast which has been installed next to us is an omen of catastrophe."

The mountaineer's views are one of a host of obstacles to efforts to boost wind power across the European Union.

As parts of Europe reel from devastating flooding and Germany's Chancellor Angela Merkel says governments must redouble their efforts to tackle the impact of climate change, developers and governments are racing to capture green power investment. They are running into local opposition, bureaucratic red tape and legal tangles in the permitting process - to the point where the EU is veering off track for its emissions-cutting goals, wind industry data show.

The EU has unveiled ambitious plans to cut carbon dioxide emissions by 55% by 2030, which will mean renewable sources in its energy generation should increase to 40%. For that, it needs 27 GW of new wind capacity - enough to meet almost one third of European electricity demand - to be installed every year.

That's nearly double the 15 GW currently put in place annually, according to WindEurope, an association that represents the industry in Europe.

The drive to speed up renewable energy is pitting greens against each other. Theodota Nantsou, policy director for the World Wide Fund for Nature in Greece, said the country decided belatedly to shut down its coal plants and is now racing to build up renewables at the risk of hurting its biodiversity.

Last year, WindEurope says, the EU and Britain invested 43 billion euros ($51 billion) in new wind farms - the second highest annual amount on record after 2016. Banks lent over 21 billion euros for the construction of new wind farms - the most ever.

"The problem is not money: there is lots of money available," said Giles Dickson, the association's chief executive. "The problem is the projects: we are not getting enough new permitted projects coming through."

The EU Commission has recognised that. The EU's renewable energy directive says it should not take more than two years to grant a permit for a power plant, or three in extraordinary circumstances.

But these timelines have yet to be fully implemented.

The Commission says it is trying to speed things up. However, some of its plans need to be negotiated by 27 EU countries and the European Parliament. That itself can take around two years.

Worldwide, according to the Global Wind Energy Council, new wind capacity needs to be installed at about twice the current rate if the globe is to meet a goal in the Paris Agreement climate pact of limiting temperature rise to below 2 degrees Celsius this century.

"I think (permitting) is one of the key factors that could potentially slow down the energy transition," Miguel Stilwell de Andrade, chief executive of Portuguese energy company Energias de Portugal (EDP) SA which develops renewable energy, such as wind and solar, told Reuters.

"If we want to meet the Paris Agreement targets we really need to find a way of making sure that permitting is efficient, transparent."

FAST-TRACK

On Evia, Baltas and other Greek campaigners object to eight new wind farms, planned to span 80 km (50 miles) over an area which encompasses a pristine fir forest overlooking the Aegean. They say it will ruin acres of ancient forests, and turn a largely agricultural region into an industrial zone.

They are also fighting the fact that the Greek government, trying to avoid the delays that hobble some developments, fast-tracked the application to build 100 turbines, adding to 600 already in place on the island.

Greece, aiming for renewables to help transform the country's economy, wants to shorten its permitting process to about two to three years, the government says. That's down from the eight years more typical for such schemes in Greece, according to the Hellenic Wind Energy Association, which represents the industry.

As falling costs have made wind power attractive, there's an incentive to move fast. According to the International Renewable Energy Agency, an intergovernmental organisation that supports countries in their transition to sustainable energy, the overall cost of new projects both onshore and offshore roughly halved in the decade to 2020.

This is visible in places like Evia, which has high winds from the Caucasus and Aegean Sea and is only about 80 km from the mainland power grid.

"There is a very strong interest in renewable energy sources," said Greece's Secretary General for Energy Alexandra Sdoukou. Greece hopes renewable energy will help secure power ahead of a shutdown of coal-fired plants by 2025.

Other countries are also trying to streamline procedures to help win access to some of the EU's 750 billion euro post-pandemic recovery fund - which will only be disbursed if projects move ahead.

Greece's fast-track process is no guarantee of a license, the government's investment agency said. An environmental impact assessment will happen later.

OBSOLETE EQUIPMENT

Elsewhere in the EU, it can take as long as a decade for wind projects on land to be greenlighted, case studies provided by the industry show. In at least one country, Sweden, the Wind Energy Association says it's not unusual for the process to take even longer, because municipalities can vote on projects and there is no legal deadline for appeals processes to end.

For offshore projects, negotiations with businesses such as fishing, tourism and shipping mean the permitting processes can take up to six years, said Jonathan Cole, head of offshore wind at Spanish energy company Iberdrola SA. For projects on land, problems range from rules that require turbines to be certain distances away from buildings to local disputes.

In one case in Germany, WindEurope said, permissioning was so slow that by the time the farm was greenlighted, the turbine model in the plans was obsolete. Updated height restrictions meant the developer had to dismantle part-built foundations, as well as persuading the manufacturer to revive an old model.

In another German example, renewables developer Abo Wind AG applied to build a wind project south of Frankfurt in 2016. The plan was initially rejected due to a risk to black stork habitats. After back-and-forth legal actions and appeals with the local authority, the company says the wind farm will be built next year.

"This project is a prime example of why wind power expansion in Germany suffers," said ABO Wind executive Kristof Frank. "Courts are overburdened and there's not enough personnel to quickly handle the numerous processes."

A spokeswoman for Germany's economic affairs ministry said almost half Germany's electricity is supplied by renewable sources, but that Germany must accelerate the implementation of green energy. This will be the task of the next government, she added. The current government has pushed four laws to speed up new infrastructure through parliament, but nothing major has changed.

Germany does not have enough qualified experts in local administration, people in the industry say. And when its strong environmental laws slow down new wind farms, they divide the green movement.

ABANDONED PLANS

Italy is the biggest recipient of the EU's recovery resources. To meet targets agreed under the EU's Green Deal plan to become the first climate-neutral continent, it needs to add at least 7 GW of renewable capacity every year, compared with a recent average of less than 1 GW per year. It has identified almost 60 billion euros of projects for that funding.

But a group of European renewable energy associations says almost half of all renewables projects are abandoned in the country, and the other half subject to six years of permitting delays.

Italy's energy transition minister Roberto Cingolani said the consequences of delays will be far-reaching.

"If we don't get the permits, we'll be late in reaching the goal of having 72% of our electricity generated from renewables by 2030," Cingolani told Reuters.

"So we won't be able to press ahead with plans to replace furnaces, produce green hydrogen, and generate electricity for electric cars."

DETERRENT

Spending on the permitting process can run into tens of millions of euros, people in the industry say.

Delays are starting to deter investment.

"We could invest more in certain countries in Europe if we had better visibility on the permitting timeline," said Carlo Zorzoli, head of business development for the green power unit of Italy-based utility Enel SpA, which has the biggest capacity for renewable energy of any listed company worldwide. He declined to name the countries he was referring to.

Generally, wind industry groups say authorities are scrutinising projects more carefully, but permitting agencies have not been expanded enough: "The permitting agencies are often under-resourced and with the market growing faster than was ever expected it's going to be hard for them to keep up," said Iberdrola's Cole.

The EU Commission is proposing one body be made responsible for coordinating permits of some offshore projects. But that proposal needs to be negotiated by EU countries and the European Parliament.

Rather than wait, Greece plans to hire certified private evaluators, the country's energy ministry said in May.

Evia's opposition groups have rallied.

"To appeal against the project at the court, we have collected money by talking to local residents, shopkeepers, hotels, farmers with environmental concerns, beekeepers," said Baltas.

"And we did that rather fast." ($1 = 0.8499 euros) (Angeliki Koutantou reported from Evia, Nina Chestney reported from London, Stephen Jewkes from Milan; Additional reporting from Markus Wacket in Berlin, Christoph Steitz in Frankfurt, Kate Abnett in Brussels, Isla Binnie in Madrid and Tim Barsoe in Copenhagen; Edited by Veronica Brown and Sara Ledwith)


© Reuters 2021
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IBERDROLA, S.A. -0.17% 9.354 Delayed Quote.-20.05%
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Sales 2021 12 789 M 14 996 M 14 996 M
Net income 2021 850 M 996 M 996 M
Net Debt 2021 12 342 M 14 471 M 14 471 M
P/E ratio 2021 21,1x
Yield 2021 4,22%
Capitalization 18 028 M 21 163 M 21 138 M
EV / Sales 2021 2,37x
EV / Sales 2022 2,28x
Nbr of Employees 12 124
Free-Float 67,6%
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EDP - Energias de Portugal, S.A. Technical Analysis Chart | EDP | PTEDP0AM0009 | MarketScreener
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Number of Analysts 22
Last Close Price 4,57 €
Average target price 5,71 €
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Managers and Directors
Miguel Stilwell de Andrade Chief Executive Officer, CFO & Executive Director
Luís Filipe Marques Amado Chairman-Supervisory Board
Rita Sousa Head-Compliance
Maria Celeste Ferreira Lopes Cardona Member-Supervisory Board
Fernando Maria Masaveu Herrero Member-Supervisory Board
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