Acquisition of Wind Farms by EDP

The Situation

One of the main electricity operators in Portugal, Energias de Portugal (EDP), had plans to acquire assets of generation through renewable energy sources, mainly wind farms and mini-hydro plants. However, because of its market share in the Portuguese market, some concerns were expected to arise from the competition authority, Autoridade da Concorrência (AdC).

NERA's Role

NERA was commissioned by EDP to analyze the effects of the planned acquisitions. NERA's careful analysis took into account not only the current regulations and their incidence in the competitive dynamics of the market, but also the different scenarios likely to occur when expected reforms to the regulations are implemented in the near future. The diverse natures of the various technologies of generation of electricity and the incentives related to them were other key issues in the analysis.

The Result

NERA concluded that the planned consolidation over renewables did not raise competition concerns under any of the scenarios that could be envisaged. To a large extent, this conclusion relied upon the fact that wind farms generation is not economically withdrawable. The client submitted the report prepared by NERA to the AdC, which finally cleared the acquisitions.