EDP Renovaveis SA (EDPR), the renewables unit of Portugal's largest utility, EDP, is exploring opportunities to sell power directly to companies in Japan and South Korea, aiming to accelerate its growth in Asia. This marks a departure from the company's conventional contracts with state entities and demonstrates its strategy to tap into the Asia-Pacific market by striking deals with corporate customers.
EDPR plans to invest a substantial amount of 21 billion euros ($23.12 billion) in renewable energy projects over the next four years, with 80% of the investments focused on North America and Europe. However, the company sees potential for expansion in the Asia-Pacific region through collaborations with Japanese and South Korean corporations.
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Pedro Vasconcelos, the chief operating officer for Asia-Pacific, expressed the company's enthusiasm about the negotiations, stating, “We're actually in negotiation… and actually starting to open up to the Japanese and South Korean corporates, which can itself be a huge enabler for growth.”
Currently, the Asia-Pacific region constitutes only 5% of EDP's total energy portfolio. However, the company has made significant strides in boosting its power generation capacity in Asia through notable investments in renewable energy projects in Vietnam and the acquisition of solar firm Sunseap. As a result, its Asia power generation capacity has grown 25-fold in just one year, reaching 712 megawatts (MW).
EDPR's future plans include expanding its presence in Australia, China, Vietnam, and Singapore, with a focus on replicating its successful operations in Singapore. In Singapore, the company supplies green energy to Meta, Amazon, and Microsoft.
The lack of well-defined regulations and policies on fiscal support for renewables in many Asian countries, unlike Europe and the U.S., poses a challenge. Miguel Stilwell d'Andrade, the CEO of EDP and EDPR, emphasized the importance of establishing a clear regulatory framework to facilitate long-term investments. He noted that countries with links to grid networks and mechanisms like auctions, which enable long-term power supply agreements, would benefit from increased investments in renewable energy.
See also: EDP Renewables Continues Global Expansion and Breaks Records in Q1 2023
Governments worldwide are striving to strike a balance between tax revenues and incentives to attract investments in renewable energy as part of their efforts to transition to greener grids and achieve carbon neutrality. In response to the U.S. Inflation Reduction Act (IRA), which raised concerns about potential disadvantages for European companies, the European Commission introduced a green deal industrial plan in February.
EDPR is among the companies that have decided to allocate more capital to the United States following the IRA. Stilwell d'Andrade pointed out that taxes and limitations on power tariffs in certain European nations hindered new investments, whereas U.S. policies encouraged companies to invest there. He warned against imposing additional taxes, as they discourage further investments, noting that the combined profits of Europe's top 10 utilities are still less than the profit of one of the top five oil and gas companies.
As EDP's renewables unit expands its global footprint, its strategic shift towards engaging with corporate customers in Japan and South Korea represents a significant milestone in its pursuit of growth in the Asia-Pacific region. By forging partnerships with corporations and advocating for clear regulatory frameworks, EDPR aims to unlock the vast potential for renewable energy investment in these countries.
