EDP. Salaries in Portugal and Spain are not attractive.

The current rate of return on investments in regulated assets (grids) in Portugal and Spain is "not attractive" and does not attract investment to either country. This warning was issued by EDP's CEO in response to analysts after the presentation of first-half results .

Miguel Stilwell de Andrade was being questioned about the 6.46% cap on the remuneration rate for network investments imposed by the Spanish regulator. EDP operates in the Spanish distribution market, albeit on a much smaller scale than in the domestic market, and the manager's response included Portugal. In the public consultation launched by the Spanish National Markets and Competition Commission (CNMC), the power companies requested a higher remuneration rate of 7.5%, in line with that recently approved by the United Kingdom.

The need to invest more in networks gained visibility after the blackout on April 28.

In Portugal, the remuneration rate for distribution networks (in 2025 tariffs) is 5.53% and EDP argues that it should be raised to more than 7% in order to enable investments in the modernization and digitalization of networks.

"We would like to see effective movement in this direction," said EDP's CEO regarding Portugal and Spain, warning that there is competition for capital worldwide, and investment flows follow the best returns. "If you want to encourage investment, you need to adequately remunerate it."

Investment in regulated assets is financed through electricity tariffs and higher remuneration rates imply a greater impact on the final price.

E-Redes will allocate 20% of the planned investment to make networks more robust

E-Redes, the EDP group company that manages the distribution network, presented a €1.6 billion investment plan between 2026 and 2030. The proposal foresees a 50% increase in investment amounts and was deemed appropriate by the Portuguese regulator, with some recommendations. The plan has already received the green light from the government, but it assumes a higher remuneration rate than the current one.

The rate update will be assessed by the Energy Services Regulatory Authority (ERSE) when it defines the tariff and revenue proposal for regulated assets for next year and the regulatory assumptions for the period 2026 and 2029. The final decision will be known on December 15.

According to EDP, the cumulative impact of the proposed investment on final prices is limited, around 0.7%.

EDP reported profits of €709 million in the first half of the year, a 7% drop compared to the same period last year. The company revised its year-end profit forecast upward to €1.3 billion.

During the conference call with analysts, EDP's CEO considered that the growth in electricity consumption seen in the first half of the year is structural and reflects the robustness of the Portuguese and Spanish economies, as well as electrification and increased demand from customers, such as data centers.

Miguel Stilwell de Andrade also commented on the impact of the Constitutional Court's recent ruling against the CESE (extraordinary contribution for the energy sector), which currently only applies to the application of this tax to gas networks. Not only is it "an unconstitutional tax," but it also "makes no sense" because it was created during an extraordinary period more than ten years ago that no longer exists. Noting that the CESE's value is decreasing because it excludes investments, the EDP CEO hopes to gain some visibility in the legal challenges the company has filed against the tax, which it stopped paying a few years ago.