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EDP Renováveis, S.A.
and subsidiaries
Independent auditor´s report
Consolidated Annual Accounts at 31 December 2020
Consolidated Management Report
PricewaterhouseCoopers Auditores, S.L., Torre PwC, Pº de la Castellana 259 B, 28046 Madrid, España
Tel.: +34 915 684 400 / +34 902 021 111, Fax: +34 915 685 400,
1
R. M. Madrid, hoja 87.250-1, folio 75, tomo 9.267, libro 8.054, sección 3ª
Inscrita en el R.O.A.C. con el número S0242 - CIF: B-79 031290
Independent auditor´s report on the
consolidated annual accounts
To the shareholders of EDP Renováveis, S.A.
Report on the consolidated annual accounts
Opinion
We have audited the consolidated annual accounts of EDP Renováveis, S.A. (the Parent company)
and its subsidiaries (the Group), which comprise the statement of financial position at December 31,
2020, the income statement, the statement of comprehensive income, the statement of changes in
equity, the statement of cash flows and related notes, all consolidated, for the year then ended.
In our opinion, the accompanying consolidated annual accounts present fairly, in all material respects,
the equity and financial position of the Group as at December 31, 2020, as well as its financial
performance and cash flows, all consolidated, for the year then ended, in accordance with
International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and other
provisions of the financial reporting framework applicable in Spain.
Basis for opinion
We conducted our audit in accordance with legislation governing the audit practice in Spain. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the
audit of the consolidated annual accounts
section of our report.
We are independent of the Group in accordance with the ethical requirements, including those relating
to independence, that are relevant to our audit of the consolidated annual accounts in Spain, in
accordance with legislation governing the audit practice. In this regard, we have not rendered services
other than those relating to the audit of the accounts, and situations or circumstances have not arisen
that, in accordance with the provisions of the aforementioned legislation, have affected our necessary
independence such that it has been compromised.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated annual accounts of the current period. These matters were addressed in
the context of our audit of the consolidated annual accounts as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
EDP Renováveis, S.A. and subsidiaries
2
Key audit matter
How our audit addressed the key audit matter
Assessment of the recovery of the carrying
amount of certain non
-current assets of the
Group
The accompanying consolidated annual
accounts present goodwill, intangible assets,
property, plant and equipment, right of use
assets and investments, accounted for under
the equity method, amounting to €
1,222,666
,
€
314,228
, €1
3,941,718
, €6
74,045 and
€
474,884
thousand, respectively at 31
December 20
20
. These assets are allocated to
cash generating units (CGUs) as indicated in
note 19 to the accompanying consolidat
ed
annual accounts.
These assets mainly relate to electricity
generating facilities through renewable sources
in Europe, North America and Brazil, that are
directly affected by the regulatory framework
(note 1) applicable in each of the countries in
whic
h the Group operates.
At each year end, management carries out
impairment tests of the carrying amount of
these assets at CGU level, as described in note
2.
M, by estimating the present value future
cash flows generated by these assets,
considering the business plans approved by
management.
The key assumptions used in the preparation of
these cash flows are detailed in note 19 to the
accompanying consolidated annual accounts.
In addition, management has carried out a
sensitivity analysis on the key assumptions
which, based on earlier experi
ence, may
reasonably show variations, as detailed in note
19.
As a result of these analyses, Group
management has
considered necessary to
recognise/
reverse the
valuation adjustments
detailed in notes 13 and 1
9.
This area is key because it entails the
application of critical judgements and significant
estimates by management
(note 4)
concerning
the key assumptions used in the calculations
performed, which are subject to uncertainty,
and the fact that significant future changes in
them could have a significant impact on the
Group’s consolidated annual accounts.
We started our analysis by gaining an
understanding of the process and the relevant
controls that the Group has in place to analyse the
recovery of its n
on-current assets.
In addition, we considered the adequacy of the
allocation of assets to CGUs and the process for
identifying those requiring an assessment of
impairment, in accordance with accounting
legislation.
We assessed the adequacy of the measurement
models employed, the assumptions and estimates
used in the calculations, including, among others,
estimated performance of electricity prices,
consistency with the applicable regulatory
framework and the evolution of discount rates.
We also verified whether the electr
icity prices
included in the cash flow projections prepared by
the Group in the past were consistently in keeping
with real data.
Respect to discount rates, in collaboration with our
valuation experts, we verified the methodology
used in their estimation
and that their value is
within a reasonable range.
Also, we
have
checked the mathematical accuracy
of the calculations and models prepared by
management and assessed the sensitivity
calculations carried out and the estimates of the
magnitude of the
and we have compared the
recoverable value calculated by the Group with the
assets’ carrying amount.
Finally, we also assessed the sufficiency of the
information disclosed in the consolidated annual
accounts with respect to the assessment of the
recoverable
amount of these assets.
Based on the procedures carried out, we consider
that management’s approach and conclusions and
the information disclosed in the accompanying
consolidated annual accounts are reasonable and
consistent with the evidence obtained.
EDP Renováveis, S.A. and subsidiaries
3
Key audit matter
How our audit addressed the key audit matter
Offshore Joint Venture agreement
As indicated in note 6 of the accompanying
consolidated annual accounts, during 2020 the
Group has signed an agreement with the Engie
group through which the joint management of
the offshore business of both groups is agreed.
As a result of this agreement, the Group
approved a capital increase in the subsidiary
OW Offshore, S.L. (previously EDPR Offshore
España, S.L.) for the same amount that the
EDP
R Group held in said Company. This
capital increase has been fully subscribed and
paid up by the Engie Group, thus acquiring
50% of the shares in said company. Likewise,
the EDPR Group has sold all of its shares in
the offshore business to the company OW
O
ffshore, S.L. (note 6).
As a result of the
realization
of the described
agreement, the Group has recorded a profit of
€
217,633 thousand in the consolidated income
statement as of December 31, 2020 (notes 6
and 9).
Accounting for this transaction requires
an
analysis of whether or not the Group maintains
control (note 2.B) once the transaction has
been carried out, as well as the fair value of the
transferred business, which implies the
application of critical judgments as indicated in
note 4, and assumes the existence of relevant
estimates in relation to the results of the
transaction, and requires special attention in
our audit due to the magnitude of the amounts
indicated, for which we have considered this a
key
matter.
In auditing the transaction car
ried out by the
Group, we applied, among other, the following
procedures:
x
Obtention, reading and analysis of sales-
purchase agreements and the accounting
analyses performed by management.
x
A
nalysis of compliance with the contractual
conditions for the loss of control over th
e
offshore business
by the Group as a result
of the operations performed.
x
Understanding and verifying the calculations
performed by management to determine the
profit on each operation.
x
Assessing the disclosures and information
included in the consolidated annual
accounts regarding this joint venture
agreement.
Based on the procedures performed, we consider
that the accounting treatment followed by
management regarding the aforementioned
transaction, and the disclosures considered in the
accompanying consolidated annual accounts, are
reasonable and consistent with the evidence
obtained.
Sales of controlling interests in subsidiaries that
are not considered as a business
As indicated in note
6 to the accompanying
consolidated annual accounts, during 2020 the
Group sold its interest in the subsidiaries Bon
Vent de Corbera, S.L.U., Eólica Sierra de Ávila,
S.L.U., Parc Eòlic de Torre Madrina, S.L.U.,
Parc Eòlic de Coll de Moro, S.L.U., Parc Eòlic
de Vilalba dels Arcs, S.L.U.
, Aprofitament
D'Energies Renovables de L'Ebre, S.L.
and
EDPR Wind Ventures XVII, LLC
and its
subsidiaries
, with the consequent loss of
control.
In auditing the sales transactions carried out by
the Group, we applied, among other, the following
procedures:
x
Obtention, reading and analysis of sales-
purchase agreements and the accounting
analyses performed by management.
x
Analysis of compliance wit
h the contractual
conditions for the loss of control over these
subsidiaries by the Group as a result of the
operations performed.
EDP Renováveis, S.A. and subsidiaries
4
Key audit matter
How our audit addressed the key audit matter
These transactions have generated a profit
amounting to
€21
2,267 thousand (note 9)
recognised in the consolidated income
statement at December
31, 2020.
Recognition of these transactions according to
the accounting policies indicate in note
2.B
requires analysing whether the Group
maintains control or not, once the transaction is
closed, and it entails the application of critical
judgments
, as indicated in note 4,
and assumes
the existence of relevant estimates in relation to
the results of
the sale, and requires special
attention in our audit
because of the magnitude
of the amounts indicated
, for which w
e have
therefore considered this a key audit matter.
x
Understanding and verifying the calculations
performed by management to determine the
profit on each operation.
x
Assessing the disclosures and information
included in the consolidated annual
accounts regarding these sales.
Based on the procedures performed, we consider
that the accounting treatment followed by
management for the operations mentioned and the
disclosures made in the accompanying
consolidated annual accounts are reasonable and
consistent with the evidence obtained.
Acquisition of the renewable energy business
of Viesgo Group
As indicated in notes 6 and 42 of the
accompanying consolidated annual accounts,
during 2020 the Group acquired 100% of the
shares in a renewable energy business with a
presence in Spain and Portugal for the amount
of €537,487 thousand.
The Group's management has qualified this
operation as a
business combination and,
consequently, has estimated the fair value of
the assets acquired and the liabilities assumed,
and has assigned the acquisition price of the
business to these assets and liabilities
provisionally in accordance with as described in
note 42.
The key assumptions used in determining the
fair value of the assets acquired in this
business combination are detailed in note
s
4
and 42
of the accompanying consolidated
annual accounts
.
This area is key because it
entails the
application of critical judgments and significant
estimates by management (note 4) concerning
the key assumptions used,
which are
subject to
uncertainty, and the fact that significant future
changes in them could hav
e a significant
impact in the Group
’s
consolidated annual
accounts.
In auditing
the business combination
carried out by
the Group, we applied, among other, the following
procedures:
x
Obtention, reading and analysis of
business
purchase
agreements and the accounting
analyses performed by management.
x
Analysis of compliance with the contractual
conditions for gain of control over the
business by the Group.
On the other hand, with the collaboration of our
valuation experts, we have evaluated the
adequacy of the valuation models used to
determine the fair value of the assets acquired
and
liabilities assumed, the assumptions and
estimates used in the calculations that include,
among others, estimates of the evolution of
electricity prices, coherence with the applicable
regulatory framework and the evolution of discount
rates.
Respect to discount rates, in collaboration with our
valuation experts, we verified the methodology
used in their estimation and that their value is
within a reasonable range.
EDP Renováveis, S.A. and subsidiaries
5
Key audit matter
How our audit addressed the key audit matter
Likewise, we have verified the mathematical
accuracy
of the calculations and models prepared
by management and we have verified the
provisional allocation of the acquisition price to the
fair value of the assets and liabilities acquired, as
well as the accounting record of the associated
impacts.
Based on the procedures performed, we consider
that the provisional accounting record
s
applied by
management, and the disclosures considered in
the accompanying consolidated annual accounts,
are reasonable and consistent with the evidence
obtained.
Recognition and measurement of derivative
financial instruments
As indicated in note 5 to the accompanying
consolidated annual accounts, the Group is
exposed to certain financial risks, namely,
exchange rate risk, interest rate risk and
electricity price risk, due to the activities
performed and the countries where it operates.
In order to manage these risks, management
has contracted several derivatives amounting
to €
110.840
thousand and €
89.015
thousand,
in assets and liabilities, respectively (note 37)
at December
31, 2020.
The fair value of the derivatives is estimated
through complex v
aluation techniques that
require the application of judgement and the
use of significant assumptions by management
(nota 4)
.
On the other hand, the derivatives designated
as accounting hedges have to meet some
criteria in relation to the documentation of the
hedge
as it indicated in note 2.D.
Due to the uncertainty associated with the
estimations of the fair value of these
instruments and the complexity of complying
with accounting legislation on the application of
hedge accounting, we consider this a key audit
matter.
We started our analysis by understanding the
procedure established by management to identify
and measure the derivatives and the relevant
controls on this area.
For a sample of derivatives financial instruments
selected, we checked their main characteristics
with their respective contracts.
Similarly, and with the involvement of our experts
in the valuation of derivatives, we assessed the
valuation methodology used and for a sample of
instruments, we performed a contrast assessment
over the management’s valuation.
Moreover, for a sample of the instruments
designated as accounting hedges, we assessed
the documentation is according to requirements
established in prevailing accounting regulations.
Finally, we an
alysed the sufficiency of the
disclosures included in the accompanying
consolidated annual accounts regarding financial
derivatives.
As a result of our tests, we consider that the
measurement of financial derivatives
financial
instruments
and the informa
tion disclosed in the
accompanying consolidated annual accounts are
reasonable and consistent with the information
available.
EDP Renováveis, S.A. and subsidiaries
6
Other information: Consolidated management report
Other information comprises only the consolidated management report for the 2020 financial year, the
formulation of which is the responsibility of the Parent company´s directors and does not form an
integral part of the consolidated annual accounts.
Our audit opinion on the consolidated annual accounts does not cover the consolidated management
report. Our responsibility regarding the consolidated management report, in accordance with
legislation governing the audit practice, is to:
a)
Verify only that the statement of non-financial information and certain information included in the
Annual Corporate Governance Report, as referred to in the Auditing Act, has been provided in
the manner required by applicable Portuguese legislation and, if not, we are obliged to disclose
that fact.
b)
Evaluate and report on the consistency between the rest of the information included in the
consolidated management report and the consolidated annual accounts as a result of our
knowledge of the Group obtained during the audit of the aforementioned financial statements,
as well as to evaluate and report on whether the content and presentation of this part of the
consolidated management report is in accordance with applicable regulations. If, based on the
work we have performed, we conclude that material misstatements exist, we are required to
report that fact.
On the basis of the work performed, as described above, we have verified that the information
mentioned in section a) above has been provided in the manner required by applicable legislation and
that the rest of the information contained in the consolidated management report is consistent with that
contained in the consolidated annual accounts for the 2020 financial year, and its content and
presentation are in accordance with applicable regulations.
Responsibility of the directors and the audit, control and related party transactions committee
for the consolidated annual accounts
The Parent company´s directors are responsible for the preparation of the accompanying consolidated
annual accounts, such that they fairly present the consolidated equity, financial position and financial
performance of the Group, in accordance with International Financial Reporting Standards as adopted
by the European Union and other provisions of the financial reporting framework applicable to the
Group in Spain, and for such internal control as the directors determine is necessary to enable the
preparation of consolidated annual accounts that are free from material misstatement, whether due to
fraud or error.
In preparing the consolidated annual accounts, the Parent company´s directors are responsible for
assessing the Group´s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless the aforementioned directors
either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
The Parent company´s audit, control and related party transactions committee is responsible for
overseeing the process of preparation and presentation of the consolidated annual accounts.
Auditor's responsibilities for the audit of the consolidated annual accounts
Our objectives are to obtain reasonable assurance about whether the consolidated annual accounts
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor´s report that includes our opinion.
EDP Renováveis, S.A. and subsidiaries
7
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with legislation governing the audit practice in Spain will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated annual accounts.
As part of an audit in accordance with legislation governing the audit practice in Spain, we exercise
professional judgment and maintain professional scepticism throughout the audit. We also:
x
Identify and assess the risks of material misstatement of the consolidated annual accounts,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
x
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group´s internal control.
x
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Parent company´s directors.
x
Conclude on the appropriateness of the Parent company´s directors´ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group´s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor´s report to the related disclosures in the consolidated annual
accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor´s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
x
Evaluate the overall presentation, structure and content of the consolidated annual accounts,
including the disclosures, and whether the consolidated annual accounts represent the
underlying transactions and events in a manner that achieves fair presentation.
x
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated annual accounts.
We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with the Parent company´s audit control and related party transactions committee
regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Parent company´s audit control and related party transactions committee with a
statement that we have complied with relevant ethical requirements, including those relating to
independence, and we communicate with the audit control and related party transactions committee
those matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with the Parent company´s audit control and related party
transactions committee, we determine those matters that were of most significance in the audit of the
consolidated annual accounts of the current period and are therefore the key audit matters.
EDP Renováveis, S.A. and subsidiaries
8
We describe these matters in our auditor´s report unless law or regulation precludes public disclosure
about the matter.
Report on other legal and regulatory requirements
European single electronic format
We have examined the digital files of the European single electronic format (ESEF) of EDP
Renovaveis, S.A. and its subsidiaries for the 2020 financial year that comprise an XHTML file which
includes the consolidated annual accounts for the financial year and XBRL files with tagging
performed by the entity, which will form part of the annual financial report.
The directors of EDP Renovaveis, S.A. are responsible for presenting the annual report for the 2020
financial year in accordance with the formatting and markup requirements established in the EU
Delegated Regulation 2018/815 of the European Commission (hereinafter the ESEF Regulation).
Our responsibility is to examine the digital files prepared by the Parent company´s directors, in
accordance with legislation governing the audit practice in Spain. This legislation requires that we plan
and execute our audit procedures in order to verify whether the content of the consolidated annual
accounts included in the aforementioned digital files completely agrees with that of the consolidated
annual accounts that we have audited, and whether the format and markup of these accounts and of
the aforementioned files has been effected, in all material respects, in accordance with the
requirements established in the ESEF Regulation.
In our opinion, the digital files examined completely agree with the audited consolidated annual
accounts, and these are presented and have been marked up, in all material respects, in accordance
with the requirements established in the ESEF Regulation.
Report to the Parent company´s audit, control and related party transactions committee
The opinion expressed in this report is consistent with the content of our additional report to the Parent
company's audit, control and related party transactions committee dated 24 February 2021.
Appointment period
The General Ordinary Shareholders' Meeting held on 3 April 2018 appointed to
PricewaterhouseCoopers Auditores, S.L. as auditors of the Group for a period of 3 years, as from the
year ended 31 december 2018.
Services provided
Services provided to the Group for services other than the audit of the accounts, are indicated in the
note 45 to the consolidated annual accounts.
PricewaterhouseCoopers Auditores, S.L. (S0242)
Iñaki Goiriena Basualdu (16198)
24 February 2021
22725304Q IÑAKI GOIRIENA
2021-02-24 11:06
Signer:
CN=22725304Q IÑAKI GOIRIENA
C=ES
2.5.4.42=IÑAKI
2.5.4.4=GOIRIENA BASUALDU
Public key:
R
S
A
/
2
0
4
8
b
i
ts
At EDP
R
, we are in the business of innovating. Our 4 decade long track record
has turned us into better energy providers and pioneers of the green evolution.
Change has been our driver as we deliver an agile network with more efficient,
smart and sustainable solutions. As leaders in the energy transition, we see
investment in renewables as an active way to engage with future generations,
promoting decarbonisation in energy production and consumption.
We are playing our part for a more balanced and sustainable world,
one that is inclusive, diverse and humane.
We’re changing tomorrow now.
INDEX
2020 Consolidated Annual Accounts
2020 Consolidated Annual Accounts
3
2020 Consolidated Management Report
Message from the CEO
3
01 The Company
EDPR in Brief
10
2020 in Review
20
Organisation
24
02 Strategic Approach
Business Environment
37
Strategy
44
Risk Management
48
03 Execution
Financial Capital
58
Human Capital
69
Supply Chain Capital
74
Social Capital
76
Natural Capital
80
Digital Capital
82
Innovation Capital
86
Sustainable Development Goals
88
04 Sustainability
93
05 Corporate Governance
154
06 Remuneration Report
253
Concepts and Definitions
264
G
FROM DISRUPTION
TO EVOLUTION
2020 Consolidated Annual Accounts
Consolidated income statement
3
Consolidated statement of comprehensive
income
4
Consolidated statement of financial position
5
Consolidated statement of changes in equity
6
Consolidated statement of cash-flows
7
Notes to the Consolidated Annual Accounts
9
2020 CONSOLIDATED ANNUAL
ACCOUNTS
3
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
Consolidated income statement for the years ended 31 December 2020 and 2019
THOUSAND EUROS
NOTES
2020
2019
Revenues
7
1,528,974
1,642,129
Income from institutional partnerships in U.S. wind farms
8
201,783
181,570
1,730,757
1,823,699
Other income
9
498,414
399,680
Supplies and services
10
-304,437
-309,032
Personnel costs and employee benefits
11
-141,156
-130,693
Other expenses
12
-122,614
-134,086
Impairment losses on trade receivables and debtors
23
-88
-1,535
-69,881
-175,666
Joint ventures and associates
20
-6,151
3,392
1,654,725
1,651,425
Provisions
32
-702
-1,236
Amortisation and impairment
13
-600,034
-591,625
Operating profit
1,053,989
1,058,564
Financial income
14
76,735
38,028
Financial expenses
14
-361,793
-387,484
Financial result
–
net
-285,058
-349,456
Profit before tax and CESE
768,931
709,108
Income tax expense
15
-82,907
-82,945
Extraordinary contribution to the energy sector (CESE)
15
-3,173
-3,496
Net profit for the year
682,851
622,667
ATTRIBUTABLE TO
Equity holders of EDP Renováveis
29
555,680
475,128
Non-controlling interests
30
127,171
147,539
Net profit for the year
682,851
622,667
Earnings per share basic and diluted - Euros
28
0.64
0.54
4
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Consolidated statement of comprehensive income for the years ended at 31 December 2020 and 2019
2020
2019
THOUSAND EUROS
EQUITY
HOLDERS OF
THE PARENT
NON-
CONTROLLING
INTERESTS
EQUITY
HOLDERS OF
THE PARENT
NON-
CONTROLLING
INTERESTS
Net profit for the year
555,680
127,171
475,128
147,539
Items that will never be reclassified
to profit or loss
Actuarial gains/(losses)
-3
-4
-114
-9
Tax effect of actuarial gains/(losses)
8
1
27
3
5
-3
-87
-6
Items that are or may be reclassified
to profit or loss
Fair value reserve (Equity instruments at fair value)
-2,954
-240
-92
-7
Tax effect of fair value reserve
(Equity instruments at fair value)
-
-
-
-
Fair value reserve (cash flow hedge)
-8,372
-487
91,963
-1,423
Tax effect from the fair value reserve
(cash flow hedge)
2,968
501
-22,285
321
Share of other comprehensive income
of joint ventures and associates, net of taxes
13,515
-
-12,917
-
Reclassification to profit and loss due
to changes in control
74,511
-
-1,489
-
Exchange differences arising on consolidation
-200,061
-99,195
-6,108
17,072
-120,393
-99,421
49,072
15,963
Other comprehensive income for the year,
net of income tax
-120,388
-99,424
48,985
15,957
Total comprehensive income for the year
435,292
27,747
524,113
163,496
5
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
Consolidated statement of financial position as at 31 December 2020 and 2019
THOUSAND EUROS
NOTES
2020
2019
ASSETS
Property, plant and equipment
16
13,491,718
13,263,860
Right-of-use assets
17
674,045
615,964
Intangible assets
18
314,228
290,317
Goodwill
19
1,222,666
1,199,210
Investments in joint ventures and associates
20
474,884
460,185
Equity instruments at fair value
40
13,318
15,960
Deferred tax assets
21
122,168
126,172
Debtors and other assets from commercial activities
23
23,048
18,940
Other debtors and other assets
24
272,853
107,196
Collateral deposits associated to financial debt
31
21,544
20,393
Total Non-Current Assets
16,630,472
16,118,197
Inventories
22
54,528
34,085
Debtors and other assets from commercial activities
23
255,986
284,072
Other debtors and other assets
24
585,056
393,370
Current tax assets
25
140,761
55,530
Collateral deposits associated to financial debt
31
9,061
11,446
Cash and cash equivalents
26
474,384
581,759
Assets held for sale
27
12,307
214,194
Total Current Assets
1,532,083
1,574,456
Total Assets
18,162,555
17,692,653
EQUITY
Share capital
28
4,361,541
4,361,541
Share premium
28
552,035
552,035
Reserves
29
-245,009
-124,617
Other reserves and Retained earnings
29
2,123,302
1,708,752
Consolidated net profit attributable to equity holders of the parent
555,680
475,128
Total Equity attributable to equity holders of the parent
7,347,549
6,972,839
Non-controlling interests
30
1,276,282
1,361,861
Total Equity
8,623,831
8,334,700
LIABILITIES
Medium / Long term financial debt
31
3,449,621
2,598,688
Provisions
32
309,607
272,380
Deferred tax liabilities
21
427,102
355,484
Institutional partnerships in U.S. wind farms
33
1,933,542
2,289,784
Trade and other payables from commercial activities
34
439,103
459,966
Other liabilities and other payables
35
853,475
923,974
Total Non-Current Liabilities
7,412,450
6,900,276
Short term financial debt
31
496,895
817,849
Provisions
32
5,697
5,667
Trade and other payables from commercial activities
34
1,346,110
1,269,455
Other liabilities and other payables
35
167,649
245,123
Current tax liabilities
36
109,812
92,828
Liabilities held for sale
27
111
26,755
Total Current Liabilities
2,126,274
2,457,677
Total Liabilities
9,538,724
9,357,953
Total Equity and Liabilities
18,162,555
17,692,653
6
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Consolidated statement of changes in equity for the years ended at 31 December 2020 and 2019
THOUSAND EUROS
TOTAL
EQUITY
SHARE
CAPITAL
SHARE
PREMIUM
RESERVES
AND
RETAINED
EARNINGS
EXCHANGE
DIFFERENCES
HEDGING
RESERVE
FAIR
VALUE
RESERVE
EQUITY
ATTRIBUTABLE
TO
EQUITY
HOLDERS
OF
EDP
RENOVÁVEIS
NON-
CONTROLLING
INTERESTS
Balance as at 31 December
2018
8,122,404
4,361,541
552,035
1,767,963
-68,927
-109,962
6,364
6,509,014
1,613,390
COMPREHENSIVE INCOME
- Fair value reserve (equity
instruments at fair value) net of
taxes
-99
-
-
-
-
-
-92
-92
-7
- Fair value reserve (cash flow
hedge) net of taxes
68,576
-
-
-
-
69,678
-
69,678
-1,102
- Share of other comprehensive
Income in joint ventures and
associates, net of taxes
-12,917
-
-
-
-2,587
-10,330
-
-12,917
-
- Reclassification to profit and loss
due to changes in control
-1,489
-
-
-
-1,697
208
-
-1,489
-
- Actuarial gains/(Losses)
-93
-
-
-87
-
-
-
-87
-6
Exchange differences arising on
consolidation
10,964
-
-
-
-6,108
-
-
-6,108
17,072
- Net profit for the year
622,667
-
-
475,128
-
-
-
475,128
147,539
Total comprehensive income
for the year
687,609
-
-
475,041
-10,392
59,556
-92
524,113
163,496
Dividends paid
-61,061
-
-
-61,061
-
-
-
-61,061
-
Dividends attributable to
non-controlling interests
-44,707
-
-
-
-
-
-
-
-44,707
Sale with loss of control
of EDPR Europe subsidiaries
-289,345
-
-
-
-
-
-
-
-289,345
Other changes resulting
from acquisitions/sales
and equity increases
-73,299
-
-
9,127
-667
-497
-
7,963
-81,262
Other
-6,901
-
-
-7,190
-
-
-
-7,190
289
Balance as at 31 December
2019
8,334,700
4,361,541
552,035
2,183,880
-79,986
-50,903
6,272
6,972,839
1,361,861
COMPREHENSIVE INCOME
- Fair value reserve (equity
instruments at fair value) net of
taxes
-3,194
-
-
-
-
-
-2,954
-2,954
-240
- Fair value reserve (cash flow
hedge) net of taxes
-5,390
-
-
-
-
-5,404
-
-5,404
14
- Share of other comprehensive
Income in joint ventures and
associates, net of taxes
13,515
-
-
-
15,179
-1,664
-
13,515
-
- Reclassification to profit and loss
due to changes in control
74,511
-
-
-
39,791
34,720
-
74,511
-
- Actuarial gains/(Losses)
2
-
-
5
-
-
-
5
-3
Exchange differences arising on
consolidation
-299,256
-
-
-
-200,061
-
-
-200,061
-99,195
- Net profit for the year
682,851
-
-
555,680
-
-
-
555,680
127,171
Total comprehensive income
for the year
463,039
-
-
555,685
-145,091
27,652
-2,954
435,292
27,747
Dividends paid
-69,784
-
-
-69,784
-
-
-
-69,784
-
Dividends attributable to
non-controlling interests
-38,231
-
-
-
-
-
-
-
-38,231
Other changes resulting
from acquisitions/sales
and equity increases
-65,972
-
-
9,293
-
-
-
9,293
-75,265
Other
79
-
-
-92
1
-
-
-91
170
Balance as at 31 December
2020
8,623,831
4,361,541
552,035
2,678,982
-225,076
-23,251
3,318
7,347,549
1,276,282
7
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
Consolidated statement of cash flows for the years ended 31 December 2020 and 2019
THOUSAND EUROS
2020
2019
OPERATING ACTIVITIES
Cash receipts from customers
1,502,906
1,680,947
Payments to suppliers
-365,012
-382,839
Payments to personnel
-137,899
-129,606
Other receipts / (payments) relating to operating activities
-47,068
-40,609
Net cash from operations
952,927
1,127,893
Income tax received / (paid)
-45,247
-38,036
Net cash flows from operating activities
907,680
1,089,857
INVESTING ACTIVITIES
Cash receipts relating to:
Changes in cash resulting from perimeter variations (*)
32,907
-
Property, plant and equipment and intangible assets
1,859
2,907
Interest and similar income
12,510
19,106
Dividends
28,695
22,347
Loans to related parties
320,538
598,493
Sale of subsidiaries with loss of control
1,072,259
499,190
Other receipts from investing activities
18,509
534,619
1,487,277
1,676,662
Cash payments relating to:
Changes in cash resulting from perimeter variations (*)
-22,333
-104,433
Acquisition of subsidiaries
-579,644
-13,310
Property, plant and equipment and intangible assets
-1,547,262
-1,209,725
Loans to related parties
-673,164
-245,770
Other payments in investing activities
-302,259
-671,464
-3,124,662
-2,244,702
Net cash flows from investing activities
-1,637,385
-568,040
FINANCING ACTIVITIES
Payments/receipts related with transactions with non-controlling
interest without change of control
-1,007
-20,386
Receipts / (payments) relating to loans from third parties
24,340
57,781
Receipts / (payments) relating to loans from non-controlling interests
-41,568
-42,304
Receipts / (payments) relating to loans from Group companies
813,832
-159,027
Interest and similar costs including hedge derivatives from third parties
-33,957
-54,597
Interest and similar costs from non-controlling interests
-6,943
-8,608
Interest and similar costs including hedge derivatives from Group
companies
-136,858
-185,254
Payments of lease liabilities
-43,555
-41,122
Dividends paid
-106,630
-98,686
Receipts / (payments) from derivative financial instruments
35,010
4,038
Receipts / (payments) from institutional partnerships in North America
248,728
105,627
Other cash flows from financing activities
-76,883
-56,737
Net cash flows from financing activities
674,509
-499,275
Changes in cash and cash equivalents
-55,196
22,542
Effect of exchange rate fluctuations on cash held
-52,179
7,674
Cash and cash equivalents at the beginning of the period
581,759
551,543
Cash and cash equivalents at the end of the period (**)
474,384
581,759
(*) Mainly includes (i) 32,906 thousand Euros related to cash and cash equivalent balances of Viesgo acquired companies (see note 6 and 42); and ii)
-24,346 related to cash and cash equivalent balances of the Spanish porffolio of companies that were sold during 2020 (see note 6).
(**) See note 26 of the consolidated financial statements for a detailed breakdown of Cash and cash equivalents.
8
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Variations in the following captions, including cash flow variations, during the period ending December 31, 2020
are as follows:
THOUSAND EUROS
BANK
LOANS
(*)
GROUP
LOANS
NON-
CONTROLLING
INTERESTS
LOANS
U.S.
INSTITUTIONAL
PARTNERSHIPS
DERIVATIVES
(**)
TOTAL
Balance as of December 31, 2019
737,965
2,646,733
245,083
2,289,785
151,315
6,070,881
Cash flows
- Receipts / (payments) relating
to loans from third parties
24,340
-
-
-
-
24,340
- Receipts / (payments) relating to
loans from non-controlling interests
-
-
-41,568
-
-
-41,568
- Receipts / (payments) relating
to loans from Group companies
-
813,832
-
-
-
813,832
- Interest and similar costs including
hedge derivatives from third parties
-27,131
-
-
-
-6,826
-33,957
- Interest and similar costs from
non controlling interests
-
-
-6,943
-
-
-6,943
- Interest and similar costs including
hedge derivatives from Group
companies
-
-93,908
-
-
-42,950
-136,858
- Receipts/ (payments) from
derivative financial instruments
-
-
-
-
35,010
35,010
- Receipts / (Payments)
from institutional partnership
in US wind farms
-
-
-
248,728
-
248,728
Changes of perimeter (***)
-83,275
-
-
-320,944
6,477
-397,742
Exchange differences
-68,567
-181,239
-8,593
-181,373
-26,669
-466,441
Fair value changes
-
-
-
-
-8,859
-8,859
Accrued income/expenses
36,268
92,499
12,302
4,414
-146,409
-926
Unwinding
-
-
-
94,718
-
94,718
Changes in U.S. Institutional
Partnerships related to ITC/PTC
-
-
-
-201,783
-
-201,783
Balance as of December 31, 2020
619,600
3,277,917
200,281
1,933,545
-38,911
5,992,432
(*) Net of collateral deposits;
(**) The Group considers as financing activities all derivative financial instruments excluding derivatives related with commodities;
(***) Mainly refer to decreases due to the sale of Spanish and US portfolio of companies (see note 6);
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
COVID-19
. Macroeconomic, regulatory, operational, accounting impact and stakeholders
10
01. The business operations of the EDP Renováveis Group
12
02. Accounting policies
28
03. Recent accounting standards and interpretations issued
45
04. Critical accounting estimates and judgments in applying accounting policies
46
05. Financial risk management policies
49
06. Consolidation perimeter
54
07. Revenues
08. Income from institutional partnerships in u.s. wind farms
61
09. Other income
61
10. Supplies and services
62
11. Personnel costs and employee benefits
12. Other expenses
63
13. Amortisation and impairment
64
14. Financial income and financial expenses
64
15. Income tax expense and Extraordinary Contribution to the Energy Sector (CESE)
65
16. Property, plant and equipment
69
17. Righ of use asset
73
18. Intangible assets
74
19. Goodwill
76
20. Investments in joint ventures and associates
78
21. Deferred tax assets and liabilities
84
22. Inventories
86
23. Debtors and other assets from commercial activities
86
24. Other debtors and other assets
87
25. Current tax assets
88
26. Cash and cash equivalents
88
27. Assets and liabilities held for sale
88
28. Share capital and share premium
89
29. Other comprehensive income, reserves and retained earnings
90
30. Non-controlling interests
92
31. Financial debt
93
32. Provisions
95
33. Institutional partnerships in U.S. wind farms
96
34. Trade and other payables from commercial activities
97
35. Other liabilities and other payables
98
36. Current tax liabilities
100
37. Derivative financial instruments
38. Commitments
104
39. Related parties
106
40. Fair value of financial assets and liabilities
110
41. Relevant subsequent events
113
42. Business combination
116
43. Environment issues
118
44. Operating segments report
119
45. Audit and non-audit fees
Annex I
121
Annex II
138
9
61
66
100
119
10
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
COVID-19. Macroeconomic, Regulatory, Operational, Accounting Impact
and Stakeholders
In late 2019, in the Chinese city of Wuhan, a virus, SARS-COV-2, that can cause a serious respiratory infection like
pneumonia was first identified in humans. During the year 2020, the desease caused by the virus, the COVID-19, was
classified by the World Health Organization (WHO) as a pandemic. The COVID-19 has forced the world to change its habits
and is having several social, economic, regulatory, operational, accounting and public health impacts.
Macroeconomic Impact
The current global crisis with the COVID-19 pandemic incorporates significant risks to the economy and society, remaining
an uncertainty regarding the duration of the epidemic crisis and its long term economic impacts.
In global macroeconomic terms, COVID-19 has impacted the EDPR Group's activity in its various geographies and areas of
the value chain. However, a prudent strategy to hedge energy and financial market risks, the maintenance of robust liquidity
levels as well as an active management of suppliers and critical supplies, have allowed to significantly mitigate the impacts
of this crisis.
EDPR Group's energy business has been impacted by the drop-in demand associated with the lockdown, as well as by a
strong decline in pool prices in the various geographies, partly felt a few months before the COVID-19 crisis in Europe
and somehow recovered at the end of the year. The price risk hedging strategy, with high levels of fixed-price coverage,
has allowed to contain the impacts of the fall in pool prices in several geographies of EDPR Group.
Regarding the financial markets, there was a very significant increase in the volatility of exchange and interest rates
which gradually reduced after March minimum.
In terms of exposure to credit risk, although there has been no material increase in bad debts, there has been an increase
in exposure from Electricity and GC hedges and a general deterioration of the financial situation of counterparties across the
globe. However, since Group’s main customers
and counterparties are utilities, regulated entities and regional market
agents, with a sound credit profile, the impact of the credit exposure has been minimal.
EDP, being the main shareholder of EDPR, has been strengthening its financial position and is taking the appropriate
mitigation measures from the first signs, making it better prepared to absorb the potential impacts that may result
from this pandemic.
Regulatory Impact
A set of extraordinary and urgent measures to respond to the epidemiological situation of the new COVID-19 were
implemented and approved across the different geographies where EDPR has a presence.
Further details on regulatory
changes can be found in note 1 below.
Operational Impact
EDPR operates a solid business model which risks to its day-to-day operations with reduced exposure to merchant prices,
as shown by the 94% of revenues already contracted for 2021, as of December 2020. Due to Covid-19, the company has
suffered some construction and supply chain disruptions leading to a total of c.0.5 GW COD delays, however without impact
in projects´ fundamentals. These delays have been compensated by the +0.5 GW acquisition from Viesgo renewables
business and the anticipation of some projects in Brazil.
11
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Accounting Impact
To assess possible accounting impacts arising from COVID-19, the EDPR Group reassessed the estimates it considers
relevant and which may have been impacted by this fact. Thus, on 31 December 2020, the EDPR Group carried out a
series of analysys of these relevant estimates and concluded that no significant accounting impacts have arisen derived
from COVID-19 pandemic.
Stakeholders
Following the Covid-19 pandemic, EDPR implemented a Response Plan focused on protecting the employees, helping local
communities and minimizing the impacts on the business continuity and the Business Plan. Accordingly, the Company
implemented protective measures, focusing on anticipation and prevention, working to guarantee re-establishment under
safe conditions for all:
•
Employees
As a responsible company, EDPR quickly took measures to minimise the conditions for the virus to spread, focusing on
people’s health and keeping essential services in operation. In February, EDPR implemented travel restrictions, adopted
measures for those who had recently been in affected areas and distributed hand sanitizers in its facilities. In early March,
EDPR activated the Contingency Plan and implemented home office in all geographies, which had the support of two pilot
projects to implement home office a day per week recently put in place, and restricted visits to its facilities while
continuously communicating with employees regarding any updates on the situation and providing instructions in case
of a positive or possible infection. At the end of the year, employees continued to have the option to work from home or to
gradually return to facilities according to a Reopening Plan with geographical specifications, guaranteeing the highest health
and safety standards for all and complying with legal and space limitations.
Even during the global crisis, EDPR was able to continue hiring and maintain the promotions, mobilities and training
sessions, adapting the processes to the current situation. Regarding the recruitment and onboarding processes, all events
were adapted to be done through online interactive sessions, and EDPR welcomed +20% of employees throughout the year
vs 2019. For the promotion of work life balance, EDPR implemented various initiatives focused mainly on family, time and
health and also shared several health, wellbeing and home office tips in its intranet throughout the year. Moreover, the
challenges that the COVID-19 pandemic brought to the training activities and development programs were successfully
overcome by redesigning and adapting training contents and sessions to virtual, e-learning or remote formats. Lastly,
despite the global pandemic, there was a slight increase in the number of mobility processes in 2020 compared to the
previous year.
•
Communities
The COVID-19 pandemic has
disrupted everyone’s lives and daily routines. Faced with this unprecedented situation, EDPR
has carried out a solidarity campaign distributing over €1 million in aid and setting up initiatives in all its markets to he
lp local
communities combat the pandemic and recover from the socioeconomic crisis. EDPR helped people in need mostly through
donations to food banks, purchases of healthcare equipment, medical devices and rapid testing kits, and the facilitation of
online learning and digital educational materials. The Company has provided support in all 15 countries where it is present:
Spain, Portugal, France, Belgium, Italy, Poland, Romania, Greece, Brazil, Colombia, USA, Canada and Mexico, as well as
Mozambique and Nigeria through the Access to Energy - A2
E program. EDPR’s response to the global crisis is aligned with
its commitment to maintain a relationship of proximity with the local communities, seeking to know, respect and support their
needs, looking to contribute to improve the living conditions of the society.
12
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
01. The business operations of the EDP Renováveis Group
EDP Renováveis, Sociedad Anónima (hereinafter referred to as “EDP Renováveis” or “EDPR”) was incorporated
in Spain
on 4 December 2007. Its main corporate objective is to engage in activities related to the electricity sector, namely the
planning, construction, operation and maintenance of electricity generating power stations, using renewable energy
sources, mainly wind and solar. The registered offices of the company are located in Oviedo, Plaza del Fresno 2, Spain. On
18 March 2008 EDP Renováveis was converted into a company incorporated by shares (Sociedad Anónima).
The Company belongs to the EDP Group, of which the ultimate parent company is EDP Energias de Portugal, S.A.,
with registered offices at Avenida 24 de Julho, 12, Lisbon. As at 31 December 2020 and 31 December 2019, EDP Energias
de Portugal, S.A through its Spanish branch EDP S.A. - Sucursal en España ("EDP Branch") held a qualified shareholding
of 82.6% of the share capital and voting rights of EDPR and 17.44% of the share capital was free floated in the Euronext
Lisbon.
In December 2011, China Three Gorges Corporation (CTG) signed an agreement to acquire 780,633,782 ordinary shares
in EDP from Parpública - Participações Públicas SGPS, S.A., representing 21.35% of the share capital and voting rights
of EDP Energias de Portugal S.A., a majority shareholder of the Company. This operation was concluded in May 2012.
The terms of the above-mentioned agreement through which CTG became a shareholder of the EDP Group stipulate that
CTG would make minority investments totaling 2,000 million of Euros in operating and ready-to-build renewable energy
generation projects (including co-funding capex).
Within the agreement mentioned above, the following transactions have taken place:
•
In June 2013, EDPR completed the sale of 49% equity shareholding in EDPR Portugal to CTG through CITIC CWEI
Renewables S.C.A;
•
In May 2015, EDPR closed the sale of 49% of the following EDPR Brasil subsidiaries to CTG through CWEI Brasil
participaçoes LTDA: Elebrás Projetos S.A, Central Nacional de Energia Eólica S.A, Central Eólica Baixa do Feijão I
S.A, Central Eólica Baixa do Feijão II S.A, Central Eólica Baixa do Feijão III S.A, Central Eólica Baixa do Feijão IV
S.A, Central Eólica Jau S.A. and Central Eólica Aventura S.A;
•
In October 2016, EDPR completed the sale of 49% equity shareholding in EDP Renewables Polska SP.Zo.o. to
CTG through ACE Poland S.Á.R.L. and the sale of 49% equity shareholding in EDP Renewables Italia S.r.l. to CTG
through ACE Italy S.Á.R.L.;
•
In June 2017, EDPR Group closed the sale of 49% equity shareholding in EDPR PT - Parques Eólicos, S.A. to CTG
through ACE Portugal S.Á.R.L.;
•
In December 2018, EDPR completed the sale of 10% equity shareholding in the equity consolidated offshore
company Moray East Holdings Limited to CTG through China Three Gorges (UK) Limited.
As at 31 December 2020, EDP Renováveis S.A. directly holds a 100% stake in the share capital of the following companies:
EDP Renewables Europe, S.L. (EDPR EU), EDP Renewables North America, LLC (EDPR NA), EDP Renewables Canada,
Ltd. (EDPR Canada), EDP Renováveis Brasil, S.A. (EDPR BR), Colombian companies Eolos Energía S.A.S. E.S.P.,
Vientos del Norte S.A.S. E.S.P., Solar Power Solutions S.A.S. E.S.P. and Vietnamese company EDP Renewables Vietnam
Ltd.
EDPR EU operates through its subsidiaries located in Spain, Portugal, France, Belgium, Poland, Romania, Italy, United
Kingdom and Greece. EDPR EU's main subsidiaries are: EDP Renovables España, S.L (wind farms in Spain), EDP
Renováveis Portugal, S.A. and EDPR PT
–
Parques Eólicos, S.A. (wind farms in Portugal), EDPR France Holding S.A.S.
(wind farms in France), EDP Renewables Belgium (wind farms in Belgium), EDP Renewables Polska, SP.ZO.O and EDPR
Renewables Polska HoldCo, S.A. (wind farms in Poland), EDPR România S.r.l. (wind and photovoltaic solar farms in
Romania), EDP Renewables Italy, S.r.l. and EDP Renewables Italia Holding, S.r.l. (wind farms in Italy) and Energiaki
Arvanikou M.Epe and Wind Park Aerorrachi M.A.E. (main wind farms in Greece).
13
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Further, during 2020, EDPR EU acquired the renewable business of Viesgo through the acquisition of Viesgo Europa,
S.L.U. and Viesgo Renovables, S.L.U. that operate wind farms in Spain and Portugal (see note 6).
EDPR NA's main activities consist of the development, management and operation of wind and solar farms in the United
States of America and providing management services for EDPR Canada and EDPR Mexico. EDPR Canada and EDPR
Mexico’s main activities consist of the development, management and operation of wind farms in Canada and Mexico.
EDPR BR's main activities consist of the development, management and operation of wind farms in Brazil.
EDPR Group is currently developing wind and solar onshore projects in other countries such as Colombia, Hungary and
Vietnam. Further, EDPR Group signed an agreement with ENGIE on January 2020 to establish a co-controlled 50/50 joint
venture, OW Offshore S.L., in fixed and floating offshore wind business. This entity will be the exclusive vehicle of
investment of EDPR and ENGIE for offshore wind opportunities worldwide (see note 6).
EDP Renováveis Group, through its subsidiaries has an installed capacity, as follows:
INSTALLED CAPACITY MW
31 DEC 2020
31 DEC 2019
United States of America
5,828
5,714
Spain
2,137
1,974
Portugal
1,228
1,164
Romania
521
521
Poland
476
418
France
125
53
Brazil (*)
436
467
Mexico
400
200
Italy
271
271
Belgium
10
-
Canada
68
30
11,500
10,812
(*) Includes 137 MW in 2019 related to Babilônia wind farms since these were operational the entire year until the companies were sold at the end
of 2019 (see note 6).
Additionally, the EDP Renováveis Group through its equity-consolidated companies has an installed capacity, attributed
to EDPR, as follows:
INSTALLED CAPACITY MW
31 DEC 2020
31 DEC 2019
United States of America
471
398
Spain
167
152
Portugal
20
-
Offshore
10
-
668
550
The above installed capacity includes 486 MW from the acquisition of the renewables business of Viesgo at the end of
December 2020 (Spain: 406 MW and Portugal: 80 MW). From this installed capacity, 35 MW refer to equity-consolidated
companies considering that one of the Spanish companies of the Viesgo portfolio, totaling 134 MW, was equity-consolidated
in 2019 (67 MW) and is full-consolidated in 2020 (134 MW). See note 6.
14
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Regulatory framework for the activities in the United States of America
The United States federal government and various state governments have implemented policies designed to promote the
growth of renewable energy, including wind power. The primary federal renewable energy incentive program is the Production
Tax Credit (PTC), which was established by the U.S. Congress as part of 1992 Energy Policy Act. Additionally, many states
have passed legislation, principally in the form of renewable portfolio standards (“RPS”), which require utilities to
purchase a
certain percentage of their energy supply from renewable sources, similar to the Renewable Energy Directive in the EU.
American Recovery and Reinvestment Act of 2009 includes a number of energy related tax and policy provisions to benefit
the development of wind energy generation, namely (i) a three year extension of the PTC until 2012 and (ii) an option to
elect a 30% Investment Tax Credit ("ITC") that could replace the PTC through the duration of the extension. This ITC allows
the companies to receive 30% of the cash invested in projects placed in service or with the beginning of construction in
2009 and 2010. In December 2010, the Tax Relief, Unemployment, Insurance and Reauthorization, and Job Creation Act of
2010 was approved and includes an one year extension of the ITC, which allow the companies to receive 30% of the cash
invested in projects with beginning of construction until December 2011 as long as placed in service until December 2012.
On 1 January 2013, the US Congress approved "The American Taxpayer Relief Act" that includes an extension of the
Production Tax Credit (PTC) for wind energy, including the possibility of a 30% Investment Tax Credit (ITC) instead of the
PTC. Congress set 31 December 2013 as the new expiration date of these benefits and changed the qualification criteria
(projects will only qualify as long as they are under construction by year-end 2013). The legislation also includes a
depreciation bonus on new equipment placed in service which allows the depreciation of a higher percentage of the cost
of the project (less 50% of the Investment Tax Credit) in the year that it is placed in service. This bonus depreciation
was 100% in 2011 and 50% for 2012.
On 16 December 2014 and 15 December 2015, the U.S. Congress approved the "Tax Increase Prevention Act of 2014"
and Consolidated Appropriations Act, 2016”
that included an extension of the PTC for wind, including the possibility
of a 30% Investment Tax Credit instead of the PTC. Developers have until the end of 2016 to start construction of new
wind farms to qualify for 10 years of production tax credits at the full level. Congress introduced a phase out for projects that
start construction after 2016 and before 2020. These projects will still qualify for production tax credits,
but at reduced levels. The levels are 80% for projects starting construction in 2017, 60% in 2018, and 40% in 2019.
Developers of projects that start construction before 2020 may elect to claim 30% investment tax credits instead of
production tax credits, subject to a similar phase out. The phase out reduces the value of the 30% investment tax credit
to 24% in 2017, 18% in 2018, and 12% in 2019.
Neither production tax credits nor investment tax credits are allowed for
wind projects that start construction in 2020 or later.
The aforementioned "Consolidated Appropriations Act, 2016" also extended the Investment Tax Credit (ITC) for solar
projects.
Solar projects that are under construction by the end of 2019 will now qualify for the 30% ITC. The credit is
reduced to 26% for projects starting construction in 2020 and to 22% for projects starting construction in 2021.
The credit drops to a permanent 10% level for projects that begin construction in 2022 or later.
Additionally, on 5 May 2016, the US Internal Revenue Service issued guidance that wind farms have 4 years from their start
of construction to be placed in service and qualify for the PTC. As a result, projects that start construction prior to year-end
2019 and are placed in service prior to year-end 2023 will be eligible for the PTC. The IRS ruling also includes a provision
that allows developers to secure the PTC if 5% of a project's capital components by dollar value are safe harbored in a
given year and construction is complete within 4 years.
Thus, if a developer safe harbors 5% of project Capex in 2016 for a
given project, the project will qualify for 100% PTC if construction is completed by year-end 2020.
15
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
On 22 June 2018, the IRS released Notice 2018-59, which provides guidance to determine when a solar project begins
construction for ITC purposes and specifies that projects have until 2024 to be placed in service and qualify for the ITC
at levels above 10%. The ITC percentage for a solar project is determined based on the year in which construction of the
project begins
–
provided the solar project is also placed in service before Jan 1, 2024
–
as follows: (i) before Jan 1, 2020,
30%; (ii) in 2020, 26%; (iii) in 2021, 22%; and (iv) any time thereafter (regardless of the year in which the solar project is
placed in service), 10%. Similar to the IRS guidance regarding the wind PTC, establishing the beginning of construction is
deemed by (i) engaging significant physical work or (ii) paying or incurring 5% of the ultimate tax basis of the project. Thus,
if a developer safe harbors 5% of project Capex in 2019, the project will be qualified for a 30% ITC if the construction is
concluded before Jan 1, 2024. Similarly, if a developer safe harbors 5% of project Capex in 2021, the project will be
qualified for a 22% ITC if the construction is concluded before Jan 1, 2024.
On 20 December 2019, the President signed the Taxpayer Certainty and Disaster Tax Relief Act of 2019. The act changes the
phase down schedule for the Production Tax Credit for onshore wind energy projects. Under prior law, the PTC phased down
to 40% for projects beginning construction in 2019 and then to 0% for facilites for which construction began in 2020. The new
act leaves in place the 40% PTC rate for 2019 projects, then increases the PTC to 60% for projects beginning construction in
2020. Projects beginning construction in 2021 & later will have no PTC. The act made no changes to the solar ITC.
The Taxpayer Certainty and Disaster Tax Relief Act of 2019 also did not include the creation of any new tax credits for
offshore wind or energy storage, despite previously proposed legislation that sought to do so. Two bills recently introduced
in the U.S. Senate would extend the 30% investment tax credit (ITC) for offshore wind projects for another 6 to 8 years.
Legislation has also been introduced to make energy storage technologies fully eligible for the ITC that is currently available
to solar and some solar-plus-storage projects. More than 100 House Democrats signed a letter asking for a long-term
extension of clean energy tax credits. While tax credits for offshore wind and storage were not included in the Taxpayer
Certainty and Disaster Tax Relief Act of 2019, it is still possible that they could be included in future legislation. Improved
ITC for offshore wind and storage would improve the economic outlook for those resources.
On 9 February 2016, the U.S. Supreme Court stayed implementation of the Clean Power Plan (CPP) announced by the
United States' Environmental Protection Agency (EPA) on 3 August 2015, a rule to cut carbon pollution from existing power
plants. On 7 December 2017, EPA Administrator Scott Pruitt announced at a hearing of the U.S. House Energy and
Commerce Committee that the EPA will introduce a replacement rule to replace the CPP.
As of 29 June 2018, EPA’s
agenda put a final Clean Power Plan repeal date in October with speculation a replacement rule will be proposed at the
same time.
On 21 August 2018, the EPA proposed the Affordable Clean Energy (ACE) rule to replace the CPP to establish emissions
guidelines for states to develop plans to address GHG emissions from existing coal-fired plants. The rule would allow states
full discretion to set heat-rate improvements (HRI) for unit-specific emissions standards. The HRIs may be overstated, since
they appear to be based on potential improvements at inefficient plants that have already retired; i.e. the existing fleet may
have already applied BSER measures and therefore do not have room for improvement. The Affordable Clean Energy
(ACE) rule was issued by the Environmental Protection Agency ("EPA") June 19, 2019. This rule will replace the prior
administration's Clean Power Plan in efforts to support energy diversity.
On 1 June 2017, President Trump announced that the U.S. would withdraw from The Paris Agreement, an international
accord to combat climate change. The ultimate impact of these changes on renewable demand is not yet clear for several
reasons: most of these changes will be contested in court; States regulators decide on the energy mix at State level; the
most important energy players are already implementing the main elements of the Clean Power Plan; and the Executive
Order does not impact ITC/PTC, which is the main development driver for the US renewable energy market. On 23 January
2018, Trump signed a proclamation setting in place four years of tariffs for cell and module imports. The tariffs commence at
30% of reported value, decrease in subsequent years and don’t apply to the first 2.5GW of cell import
s each year.
On 3 April 2018, the Trump administration released a list of more than 1,300 imported products from China that may be
subject to a 25% tariff. The list of imports from China includes “wind
-
powered electric generating sets,” which will have
minimal impact on the U.S. wind industry due to the low number of wind turbines imported from China. The Trump
administration also placed a 25% tariff on steel imports and a 10% tariff on aluminum imports, two raw materials that
are sometimes used in manufacturing wind and solar energy components.
16
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
On 8 January 2018, the Federal Energy Regulatory Commission ("FERC") rejected a proposal from the Department of
Energy to subsidize certain coal and nuclear plants by providing cost recovery for plants with onsite fuel supplies. The
FERC instead asked regional grid operators to assess how best to enhance the resilience of the power system. FERC's five
members unanimously rejected the proposed DoE rule. Instead, FERC asked regional grid operators to review an extensive
list of questions about improving power system resilience and report back within 60 days. It is currently unclear as to
whether or not the DoE will continue to pursue coal and nuclear subsidies and, if so, how the DoE will seek to do so.
On 3 January 2019, the 116th United States Congress convened with a Republican-majority Senate and a Democratic-
majority House of Representatives. In the prior Congress, Republicans held majorities in both the Senate and the House
of Representatives. With this change, a shift in governing philosophy is expected. Democratic representatives have
informally proposed a range of potential legislative actions having to do with climate change. One of these proposals
is a "Green New Deal" which features a 100% United States RPS standard. Such a standard, if implemented, would
increase demand for renewable electricity in the U.S. However, new legislation regarding climate change and renewable
energy has yet to be formally proposed and the details of such legislation, if proposed at all, are unclear. Additionally, any
legislation passing the Democratic-majority House of Representatives would also to have to pass the Republican-majority
Senate and be signed by President Trump before becoming law. While this "Green New Deal" is not currently a likely
success, it is an indicator that Green goals are becoming bolder and seeking greater results such as, in this case, a 100%
renewable mandate. On June 26, 2019, a new bill was introduced to the Senate targeting a national 50% renewable energy
standard (RES) by 2035. While the bill has not been passed and currently has only a handful of sponsors, it supports the
growing bipartisan trend towards climate action.
On 24 September 2020, the House of Representatives passed the Clean Economy Jobs and Innovation Act, a companion
bill to the Senate Innovation Act. While this Act does not directly accelerate the decarbonization of the electric grid, it does
combine a series of bills that would authorize new research, development, and demonstration initiatives at the Department
of Energy (DoE). The Clean Economy Jobs and Innovation Act supports the objectives of Congressional Democrates to
implement policy achieving economy-wide net-zero emissions by 2050. The bill focuses on investing in clean energy
innovation programs and setting up a foundation upon which future energy and climate legislation could be built.
In 2020, Joe Biden was elected to become the 46th President of the United States, while the US Congressional elections
resulted in Democratic majorities in the House and Senate. As a result, a change in governing philosophy and priorites is
expected. As a presidential candiate, Biden & other Democratic candidates were widely perceived as placing climate
change as a higher priority than typical presidential candidates from previous elections. An example of this prioritization is
Biden's proposed plan to, among other things, direct the to U.S. achieves a 100% clean energy economy and reach net-
zero emissions no later than 2050. Because legislation based on this plan will require Congress's approval, it's unclear to
what extent specific aspects of this plan will be enacted or how they will be enforced. However, it's widely expected that the
new adminstration will push for pro-renewables policies such as those outlined in Biden's plan. In the short-term, the most
immediately actionable steps for the new administration may be to nominate new heads of the the Environmental Protection
Agency, Department of Transportation, Department of Energy, and Department of Interior, among other agencies. In
Congress, Chuck Schumer, D-NY, will become the new Senate Majority Leader. In the past, Schumer has pledged to push
for green infrastructure legislation among other climate change-related proposals.
Regulatory framework for the activities in Spain
The main piece regulating the Spanish electricity sector is Law 24/2013 that replaced Law 54/1997. This law is part
of a comprehensive reform of the Spanish energy sector.
The main purposes of this law is to adapt the regulation to the evolution of the electricity sector and to guarantee the
sustainability of the system in the long term, removing existing deficiencies in the system operation. Specifically, the Law
aims at correcting the structural tariff deficit. The law sets principles and provisions governing the electricity sector, with the
objective to effectively guarantee the supply of electricity and to adapt it to the needs of consumers ensuring safety, quality,
efficiency, objectivity, transparency and electricity at the minimum cost.
17
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
As a part or this Energy Reform, Royal Decree-Law 9/2013 was passed in July 2013. The purpose of this Royal Decree-
Law was to adopt a series of measures to ensure the sustainability of the electricity system.
In particular, RDL 9/2013 introduced a new legal and economic regime for existing renewable, cogeneration and waste
energy facilities. The RDL set the principles governing these facilities, and these principles were then developed by law
24/2013 and Royal Decree 413/2014. In accordance with this new framework, renewable facilities
would receive during
their operating lifetime, in addition to the remuneration for the sale of the energy valued at the market price, a specific
remuneration composed by (i) an “investment premium” and (ii) “an operating remuneration premium” designed to cover the
share of a facility’s operating costs that could not
be recovered by means of energy sales.
The calculation of the aforementioned remuneration shall be carried out on the basis of the standard costs and revenues
(initial investment, operation and revenue from the sale of energy) corresponding
to a “standard power plant, over the useful
regulatory life and based on the business activity that would be carried out by and efficient and well-
managed company”.
Under this scheme, projects would receive a remuneration guaranteeing a “reasonable profitability” calculated, for the first
six-year regulatory period, at "300 basis points above the yield on 10-year government bonds over the l
ast ten years”.
The Spanish Government published in June 2014, Order IET/1045/2014, which included the parameters to remunerate the
renewable energy assets, under the new remuneration framework. DL 413/2014 confirmed that wind farms that started
operations in 2003 (or before) would not receive any further incentive, while the rest of wind farms would receive an
incentive calculated in order to reach a 7,398% return. This order describes more than 1.300 possible types of renewables
installation, 23 of them corresponding to wind farms of more than 5 MW classified by the year of first operation (from 1994
to 2016).
In October 2015 the Government approved Royal Decree 947/2015 and a Ministerial Order aimed at allowing the nstallation
of new renewable capacity through competitive tenders.
In January 2016, the first auction renewable auction was held. The auction was designed to provide a similar remuneration
that the one applying to operating installations (RD 413/2014). Following this framework, tender participants were requested
to bid discounts on the “initial investment” (CAPEX) parameter which would then, by being
plugged in the formula set by RD
413/2014 determine the “Rinv” (investment premium) that would eventually be awarded
.
In 2017, two auctions were held. The first one was held in May, and was technology neutral.
Nearly all the capacity was
awarded to wind projects (2.979 MW out of 3.000 MW). The auction was very competitive and all the wining participants bid
the maximum discount.
Following the outcome of the first 2017 tender, the Spanish government decided to launch an additional tender for a
maximum of 3 GW. This new tender was held in July, and was opened to wind and solar PV exclusively. Additionally, the
royal decree ruling the tender (RD 650/2017) included the possibility to increase the allocated capacity to all capacity
bidding the same discount, provided it would not create an overcost to the system. Following this clause, all projects offering
the maximum allowed discount were successful (no tiebreaker rule was triggered).
In October 2018, the Spanish Ministry for Energy transition and environment introduced several measures aiming at limiting
electricity cost for final consumers and serving as a first step towards the long term energy transition. The implemented
measures include the suspension of the 7% generation tax during a period of 6 months, the facilitation of self-consumption
and the administrative extension until March 2020 of the connection rights for the renewable plants awarded in previous
year´s auctions.
On November 22, 2019 Royal Decree Law 17/2019 was passed, introducing a series of measures aimed at guaranteeing
a stable regulatory and economic framework to encourage the development of renewable energy generation in Spain.
The RDL updates the “reasonable return” for renewable generation for the next regulatory period starting on
1 January 2020
at a level of 7,39% for assets before RDL 9/2013 and 7,09% for the new ones.
18
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Another objective of the RDL was to adopt a new regulation governing access to the network in nodes affected by the
closure of coal and nuclear power plants and concessions for the private use of water, where new renewable projects could
offer an alternative. The grid access to renewable projects in areas affected by the closure of thermal facilities, is based on
the technical and economic benefits, as well as the environmental and social ones, in particular job creation.
On February 28th, the final version of the Rinv (investment premium) adjustment was published (as in 2019 ended the
second semi-regulatory period of the RD 413/2014 framework). Three main adjustments were introduced: (i) the estimation
of pool prices using forward prices, (ii) the adjustment of the OPEX to reflect the removal of the 0.5 €/MWh access fee and
(iii) the inclusion of the system operator remuneration.
On March 14, Royal Decree 463/2020 entered into force, declaring the state of alarm for the management of the health
crisis caused by the coronavirus (COVID 19). During extreme situations (among them, health crises) article 116 of the
Spanish Constitution allows the executive to declare the state of alarm, a measure that enables it to prohibit the free
movement of people throughout the country and to take all steps required to guarantee the supply of food to the nation's
markets. It also allows the government to take over the means of production and requisition goods.
Initially the state of alarm was set to last until March 29 but the Congress extended it to June 21st. Also, the government
toughened the lockdown measures requiring the halt of all “non
-
essential” activities from March 30 to April 9, including
wind farms
’ construction. Several subsequent Royal Decrees were published during the State of Alarm. These RD included
economic and social measures to fight the pandemic effects. Despite the lockdown, several consultations were launched
by the Energy Ministry (Hydrogen Strategy, Electric Energy Storage (EES), offshore strategy and FEDER auctions.
Due to the disruption caused by COVID-19, a 2-month extension (from the last day of the state of alarm) of the connection
rights expiring on 31st March 2020, was decided. The final version of the Spanish NECP (National Energy and Climate
Plan) for the period 2021-2030 was sent to the European Commission.
The Government approved Royal Decree Law 23/2020 of 23 June approving measures in the area of energy and other
areas aimed at economic recovery. The objective of this Royal Decree Law is to guide energy policy for economic
recovery, financial resource mobilisation and sustainable job creation. In particular, RD/2020 consists of a battery of
measures intended to help the energy transition, remove barriers to the large-scale deployment of renewable energy
sources and promote energy efficiency.
On July 17th, the Ministerial Order TED/668/2020 was approved, setting the adjusted “Rinv” (investment premium) values
for 2018 and 2019, accounting for the temporal suspension of the 7% levy on generation during Q4 2018 and Q1 2019.
The Ministry for the Ecological Transition and Demographic Challenge (MITECO) decided to allocate 316 million euros
to support innovative projects that favour the integration of renewable energies in the systems. Different lines of action,
drawn up in collaboration with the Autonomous Communities, are expected to contribute to the achievement of the
objectives that Spain, in its NECP, has set in this area: doubling the consumption of renewable energy by 2030, and
reaching climate neutrality in 2050. Specifically, the Official State Gazette (BOE) published on August 3rd set the regulatory
criteria to allocate 246 million euros in aid to renewable projects in a competitive competition regime. On September 10th,
several tenders were announced in Madrid, Andalucía, Extremadura, Asturias, Castilla La Mancha, Cataluña and Murcia
regions.
The announced competitive procedures will allocate 80 million euros to renewable projects.
On November 4, 2020, Royal Decree 960/2020 regulating the economic regime for renewable energies for electricity
production facilities, was approved. The RD sets the framework for a new scheme for RES investment (including hybrid,
energy storage projects and repowering) to be awarded in auctions. It defines some general characteristics of the scheme,
although most aspects remain flexible and will need to be defined in lower level legislation. Additionally, it sets the obligation
of publishing a 5-years auction calendar.
19
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Regarding the auction mechanism, the RD establishes that the auction product may be power, energy or a combination of
both and that auctions would be structured as pay-as-bid ones. A maximum price will be set although it may be confidential
and a minimum price may also be introduced. The awarded price will be defined in €/MWh and will not be indexed.
The RD includes the possibility of defining so-
called “symmetrical incentives” for market participation. In this case, th
e price
received for the energy sold in each market (day-ahead/intra-day) will be adjusted by a factor applied to the difference
between (i) the price of the day-ahead market and (ii) the awarded price.
The tenure of the scheme is set as the sooner of achieving a maximum energy, or 10 to 15 years (exceptionally up to 20
years for technologies with high CAPEX or high technology risk which will need to be defined for each auction).
Following the approval of RD 960/2020, The Ministry for the Ecological Transition and Demographic Challenge (MITECO)
approved Order TED/1161/2020 of December 4, 2020 in which it sets the auction mechanism for the first auction.
The Order also includes the auction calendar for the next 5 years. Over the next 5 years, the Spanish Government plans
to launch tenders for 20GW of renewable power (mainly wind: 8.5GW and solar PV: 10GW) in order to achieve the 60GW
target set out in the Spanish National Energy and Climate Plan for 2021-2030.
After the publication of the Order, the first auction was announced for the 26 of January of 2021. According to the
announcement, 3 GW of RES will be auctioned, of which at least 1 GW will be reserved for wind energy and 1 GW for solar
PV. As expected, the key auction award variable will be energy price (zero euros bids will be allowed) and an unknown
maximum price will be applicable. Winning bids will be awarded 12-year power purchase agreements (PPAs) for PV,
solar thermal, onshore and offshore wind and hydropower, and 15-year PPAs for biomass, biogas and bio-liquid
technologies. The tender requirements set that participants shall prepare and submit a strategic plan including, among
others, estimates in relation to the projects´ contribution to job creation and carbon footprint reduction, and opportunities for
the local, regional and national industrial value chain.
On December 29, 2020, the Royal Decree on access and connection to the energy transmission and distribution networks
(RD 1183/2020) was approved. This Royal Decree establishes the principles and criteria in relation to the application,
processing and granting of permits for access and connection to the electricity transmission and distribution networks. With
the approval of this RD, the government aims at preparing the regulatory framework for the planned deployment of
renewables, while helping to eliminate inefficiencies and speculative behaviours to ensure the achievement of energy policy
objectives.
Regulatory framework for the activities in Portugal
The principal pieces of legislation regulating the Portuguese electricity sector are Decree-Law 29/2006 of 15 February 2006
(amended by Decree-Law 215-A/2012) and Decree-Law 172/2006 of 23 August 2006 (amended by Decree-Law 215-B/2012).
The legislative framework for renewable energy is primarily contained in Ministerial Order 243/2013 of 2 August 2013, which
sets out the terms, conditions and criteria for the licensing of electricity generation under special regime with guaranteed
remuneration.
The Portuguese legal provisions applicable to electricity generation from renewable resources are currently established
by Decree-Law 189/88 dated 27 May, as amended by Decree-Law 168/99 dated 18 May, Decree-Law 312/2001 dated 10
December, and Decree-Law 339-C/2001 dated 29 December. Also relevant is Decree-Law 33-A/2005, dated 16 February
2005 (“DL 33
-
A/2005”), which establishes the remuneration formula applicable to energy produced by renewable sources
(this is, the formula to calculate the feed-in tariff).
In September 2012 and after months of negotiations, the Portuguese wind industry reached an agreement with the
Portuguese government to extend the existing feed-in tariff regime in exchange of an upfront payment.
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Following the agreement, the Portuguese Government published a decree articulating its terms, the Decree Law 35/2013.
The Government proposed four alternative tariff schemes to be chosen by wind developers. EDPR and ENEOP chose a
7-year extension of the tariff defined as the average market price of previous twelve months, with a floor of
74€/MWh
and a cap of 98€/MWh to be updated annually with inflation from 2021 onwards, in exchange of a payment of 5.800€/MW
from 2013 to 2020.
The Environment and Energy Ministry published in July 2014, Decree Law 94/2014 that allowed wind operators to increase
the capacity of their operating wind farms up to 20%. The additional production generated by the increased capacity is
remunerated at 60 €/MWh, whilst the remaining production is remunerated following the feed
-in tariff scheme.
The Portuguese government, in its 2019 Budget, included an extension of the special energy tax (so-called CESE) to
renewables. However, renewable facilities with licenses granted through public tenders are exempted. In line with the 2019
Budget, the 2020 State Budget envisaged that small producers (up to 20 MW) would be exempted from paying the CESE.
Also, passive subjects with more than 60 MW under tariff schemes would also be exempted from paying the tax.
On January 31, Portaria 43/2019 on over-
equipment “sobrequipamientos” (“SE”) was published. The new Portaria set a new
remuneration scheme for SE of 45€/MWh (non
-indexed values) for 15 years, period after which the SE would be under the
ordinary regime not being entitled to be under the tariff extension scheme set by D-L 35/2013. The new scheme exempts
developers from requesting ERSE authorization to the SE.
On June 3rd the DL 76/2019 was published. This DL is a comprehensive review of the legal basis of the Portuguese
electricity sector. Regarding new renewable capacity, the Decree changes the order in which grid capacity reservation
and production license are obtained. New projects will need to obtain the title of grid capacity reservation prior to applying
for the production license. The Decree also introduces three ways to obtain grid capacity reservation, being one of them
through competitive tenders.
Portugal launched its first utility-scale renewable energy auction in July 2019, for 1,4 GW of solar PV capacity. Developers
could present two kinds of offers: one with a fi
xed price below €45/MWh and another with a variable tariff which included
a requirement to pay compensation to the electricity system, depending on spot market power prices. Both systems would
be have a 15-year length.
In December 2019, the DGEG (Direção-Geral de Energia e Geologia) released regulation of the Licensing Monitoring
Committee (Comissão de Acompanhamento dos Processos de Licenciamento) of the solar PV plants resulting from
the 2019’s Auction. This Committee was set up with the aim of contrib
uting to the fulfilment of the obligations arising
from the tender procedure, in particular regarding the deadline for obtaining the licence
In Portugal, a GO (Guarantees of Origin) system was launched starting in March 2020. Registration shall be compulsory
for renewable producers above 5 MW and high efficiency cogeneration. Until 2021YE, renewable plants <1 MW and self-
consumption ones will be exempted.
In order to prevent further spread of the Covid-19, the state of emergency was declared by Presidential Decree
no. 14-
A/2020, of 18 March, as authorized by the Parliament’s Resolution no. 15 A/2020, of March
18, 2020. DGEG
suspended all deadlines linked to licensing procedures for all electrical projects after March 16, 2020. In particular, this
suspension comprehends the deadlines for any administrative proceeding to be performed by solar promoters with projects
awarded in the first solar auction (June 2019). The Emergency State was lifted on May 2, 2020 and replaced by the
Calamity State.
On March 27, 2020 a new solar auction was announced by the Energy Secretary of State. Developers had to choose one
of the following three remuneration schemes:
1)
A fix
ed guaranteed tariff structure, where the bids expressed a discount to a reference price, in €/MWh. Awarded
projects would enter into an hourly two-side CfD with OMIP for 15 years. The CfD would be settled based on the actual
price captured by the specific plant.
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
2)
A market scheme where the promoters bid for a contribution made to the National Electric System (“SEN”) and where
the promoters that bid the largest contributions would be awarded with the capacity title. Participants would then commit
to pay this quantity for 15 years and their projects would get their revenues from participating in the electricity market on
a merchant basis.
3)
A new system consisting of a market scheme for power plants incorporating a storage system, in which participants
bid
the value of the capacity payment that would like to receive in €/MW (MW of connection capacity). In exchange, they
shall sign a “one
-
side” CfD contract (“available contract”) with REN to protect the system against price spikes events
.
On March 31, 2020 Law 3/2020 accompanying the State Budget was published setting the main policies and investments
for the 2020-23 period. In terms of energy, the path to carbon neutrality in 2050 is set by confirming the 55% emission
reduction target in 2030, promoting regional guidelines for carbon neutrality and envisaging the development of 5-year
carbon budgets. Also, the main goals of the Portuguese National Energy and Climate Plan (NCEP) are also confirmed by
the Law (preparation works for coal phase out, installations of 2 GW of solar PV in the next 2 years, reinforcement of
existing onshore, promotion of hybrid and Energy storage, offshore wind, hydrogen, etc.).
Energy efficiency, e-mobility and economic incentives for decarbonization are also among the government priorities. On July
10th, the Ministry Council officially approved the NCEP setting 2030 Renewable targets. The Plan commits to a 47% RES
contribution that translates into 80% RES-E. According to the NCEP, Portugal expects to reach 9,3 GW of wind and 9 GW
of solar PV by 2030.
The Portuguese Parliament rejected in December 2020 the repeal of the law passed in 2013, allowing the extension of the
remuneration for wind farms for a period of 5 to 7 years.
Regulatory framework for the activities in France
The electricity sector in France is primarily governed by Act 2000-108 passed on 10 February 2000, which constitutes
the general legislative framework for the operation of generation facilities.
Act 2000 allowed wind operators to enter into long-term agreements for the purchase and sale of their energy with lectricité
de France (EDF), the national incumbent. The tariffs were initially set in 2006, then updated in the “Arrêté du 17 novembre
2008”
at the following level: i) during the first ten years of the EDF A
greement, EDF would paid a fixed annual tariff, set at
€82/MWh for wind farms that had made the application in 2008 (after 2008, this tariff was updated using an inflation
-related
index); ii) During years 11 to 15 of the EDF Agreement, the initial tariff would be revised considering the load factors
achieved by the facility iii)
After year 16, no specific support scheme would be granted (wind farms would need to sell the
energy in the market and would receive market prices).
In July 2015, the “Energy Transition Bill”, whose aim was to build a long
-term and comprehensive energy strategy, was
passed. In 66 articles, the bill included ambitious emission reduction targets while it also targeted to reduce fossil fuels
use (including nuclear). Regarding renewables, the Energy Transition Bill increased the renewable target up to 32% by
2030.
A new Contract-for-
difference (CfD) was released in December 2016 in line with the European “Guidelines on State aid
for environmental protection and energy 2014-
2020”. Acco
rding to this new scheme, wind farms having requested a PPA in
2016 would receive a 15-years CfD, being the strike price (and the terms of the tariff) very similar to the previous feed-in
tariff.
From 2017 onwards, wind farms of more than 6 wind turbines (and more than 3 MW per turbine) would need to participate
in competitive tenders to obtain a 20-year CfD. The first tender was held in November 2017. However, smaller wind farms
(with 6 turbines or less, and 3 MW per turbine or less) would be exempted from participating in tenders.
On November 27, 2017, the “Pluriannual Energy Planning” (PPE) was released. According to the PPE, 40% of the energy
would be produced from renewable sources by 2030.The PPE included different targets for renewables: 35,6-44,5 GW of
solar capacity, 34-35,6 GW of onshore wind and 4,7-5 GW of offshore wind, by 2028.
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THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
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On November 29, 2017, the government approved the Décret 2018-1054 aimed at accelerating legal procedures following
claims against the administrative authorization of wind farms. In particular, the Decree removes the two-level court system
in the event of litigation.
The third offshore round took place in March 2019 with all major players participating (grouped in 10 consortiums).
The French Parliament approved on 26 September 2019 the so-
called “Energy and Climate Law”, committing the country
to carbon-neutrality by 2050. The adoption of the Energy-Climate law constitutes a major step toward achieving the
government's ambition to address climate change by becoming carbon neutral by 2050. This objective represents a
reduction of France's greenhouse gas emissions by a factor of more than six compared to 1990’s emission level.
In order
to achieve carbon neutrality by 2050, the Energy-Climate law provides for the reduction of fossil fuels consumption by 40%
by 2030 (instead of the previous 30% target) and for the end of coal-based electricity generation by 2022. The law provides
that the share of nuclear in the electricity mix should be reduced to 50% by 2035.
Regarding wind energy, the law redefines the authority responsible for permitting onshore wind projects. Concerning
offshore wind, the law also includes a higher target of auctioning 1 GW of capacity until 2024 (doubling the volumes
defined by France’s initial energy pla
n published in January 2019).
A new version of the PPE (Programmation Plurianuelle de l´Énergie) was approved in 2020, in line with the final version
of France’s NECP (National Energy and Climate Plan). It increased offshore wind targets vs. the previous
version whilst
decreased solar PV’s. In total, the PPE sets that France will need to achieve between 33,2 and 34,7 GW of onshore wind
in 2028, 5,2-6,2 GW of offshore wind and 35,1-44 GW of solar PV. The PPE also includes a schedule of tenders to be held
between 2020 and 2034.
The French Assemblée Nationale approved on March 21, 2020, a law introducing the “State of health emergency” during
the coronavirus pandemic. The law includes measures limiting private liberties (such as lock-downs and requisitions) and
contains provisions regarding postponing the second round of the French municipal elections, economic measures to
support the economy and other measures impacting the French justice and labour law. Measures easing restrictions across
the country were applied from May 11th. Economic rescue packages could amount to up to 110 billion euros, and will
include guarantees, loans, moratorium on debt repayments, among others. In the renewables sector, extensions of several
deadlines have been envisaged to cope w
ith delays and the sector has itself been declared “strategic”. Test periods for
CR16 and CR17 projects have been extended 3 months. Additionally, a 7-month extension of COD deadlines has been
announced but will be restricted to wind and solar projects with (i) COD initially scheduled after March 12th, (ii)
remuneration scheme granted before or during the period March 12th to June 23rd and (iii) nominal capacity less than 200
MW.
On 8 September France published a hydrogen commitment, exceeding previous European national strategies, by pledging
6.5GW of electrolyser capacity by 2030. The plan came after the French government announced an economic recovery
plan due to the coronavirus outbreak of €100bn, including €30bn entirely devoted to ecological transitio
n. The newly
hydrogen strategy included a commitment of €7bn budget for low
-carbon hydrogen between 2020-2030.
Regulatory framework for the activities in Poland
The legislation applicable to renewable energy in Poland was initially contained in the “Energy
Act” passed on 10 April 1997,
which was subsequently amended in 2002 and 2004.
The Energy Act introduced a Green Certificate scheme with mandatory quotas. According to the scheme, energy suppliers
are required to: a) purchase GC and submit them to the Energy Regulator, or b) pay a substitution fee calculated in
accordance with the Energy Act. If suppliers fail to meet their obligation (either the submission of GC or the payment
of substitution fee), they must pay a fine, equal to 130% of the substitution fee in that year.
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The Green Certificate scheme was replaced in 2015 by a new system, consisting in Contracts-for-Difference (CfD) granted
through competitive tenders. However, the law guaranteed that the GC scheme would be maintained (with some
adjustments) for operating plants. The law also introduced the possibility for operating plants to voluntary shift to the CfD
system, through specific tenders for operating assets.
In June 2016, after a long approval process, the so-
called “Wind Turbine Investment Act” was approved, including (i) new
minimum distance for new wind farms and (ii) higher real estate tax burden.
In July 2017 a new methodology to calculate the substitution fee was approved. According to the new formula, the
substitution fee would be calculated every year as 125% of the average CG market price of the previous year capped
at 300PLN.
In October 2018, the Energy Regulatory Office published a call for the first auction in Poland in which wind onshore and
solar PV with capacity above 1MW could participate to get a 15- year CfD. The first auction was held in November 2018.
Poland’s National Energy and Climate Plan (NECP) was sent to the European Commission in December 2019. The Plan
targets a 23% share of renewable energy in 2030. In addition, the share of renewables in electricity generation will rise to
32% in 2030. Onshore wind installed capacity could increase up to 9,6 GW in 2030 while offshore wind to 3,8 GW in 2030
and 8 GW in 2040.
On 13 March 2020, the Minister of Health announced a state of epidemiological threat in Poland, which is a legal situation
aimed at introducing measures to reduce the spread of COVID-19. Following the announcement, some restrictions were
approved, including the prohibition on entering the territory of Poland for foreigners, the obligation of a 14-day home quarantine
or the suspension of all international flight and railway connections, among others. The restrictive measures started to be lifted
on April 20th. Several economic relief measures, the so-called government anti-crisis shields, were approved since the start of
the state of epidemiological threat. In particular, the following ones apply to renewable producers:
•
renewable projects awarded in the 2018 and 2019 auctions would benefit from COD extensions (up to 12 months),
if some delays are proved (for example, (i) delays in the delivery of equipment that is part of the installation, (ii) in
the construction or (iii) the grid connection, among others);
•
also, power companies will be obliged to adjust in the grid connection agreements the date of the first delivery,
considering the deadlines extensions.
Regulatory frameworks for the activities in Romania
A Green Certificate mechanism was introduced in Romania in 2005 to promote renewable energies and to comply with the
European renewable targets. According to this scheme, electricity suppliers and industrial consumers are obliged to source
a certain amount of GC every year (a fine is applicable if this annual quota is not met). On the other side, renewable
generators receive GC by each MWh produced.
Law 220/2008 of November, introduced some changes in the initial GC system, improving the framework for renewable
generators. In particular, it increased the amount of GC to be received by wind generators (from 1 GC/MWh to 2 GC/MWh
until 2015 and 1 GC/MWh from 2016 onwards). The law also guaranteed that the trading value of GC would have a floor
of 27€ and a cap of 55€
.
Law 123/2012 of 19 July 2012 on Electricity and Natural Gas eliminated the provision of bilateral contracts not publicly
negotiated as a mean to sale electricity. Thus, the trading of electricity could only be carried out on a centralized market.
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The Romanian Parliament approved Law of 17 December 2013, introducing several changes to the GC scheme and in
particular:
•
For operating renewable plants: decision to postpone (or “freeze”) part of the granted GC
:
•
wind generators would have 1 GC (out of 2 GC) postponed from trading from 1 July 2013 to 31 March 2017;
•
solar generators would have 2 GCs (out of 6 GCs) postponed from trading from 1 July 2013 to 31 March 2017;
•
postponed GC would be gradually recovered until 31 December 2020 (starting on 1 April 2017 for solar PV and 1
January 2018 for wind).
•
For new renewable plants: decision to reduce the amount of granted GC:
•
wind facilities would receive 1.5 GC/MWh until 2017 and 0.75 GC/MWh from 2018 onwards;
•
solar facilities would only receive 3 GC from 1 January 2014 onwards;
•
these GC could be immediately traded.
On 24 March 2014, the President of Romania approved EGO 57/2013 with the following amendments: (i) Reduction of the
GC validity from 16 months to 12 months; and (ii) the obligation for ANRE (Energy Regulator) to communicate in each year
the GC quota for the following year. Other amendments were introduced in 2015 by Law 122/2015. Among other changes,
the law included: (i) supplier’s obligation to purchase GC on a quarterly basis (ii) the inclusion of imported e
lectricity in the
GC scheme, and (iii) the removal of the right to receive GC for the electricity sold at negative prices.
In March 2017, the government approved a new emergency ordinance (EGO 24/2017) to further amend the renewable law
220/2008. As expected, the GC scheme was extended until 2031 (GC will remain valid until March 2032). The Ordinance
also confirmed the removal of the indexation of the GC parameters (GC floor would remain fixed at 29,4€ and GC cap would
be fixed at 35€). Regarding wind energ
y, the ordinance approved the extension of the GC recovery period from 2018 to
2025, while solar PV’s GC postponement was extended until the end of 2024 (the recovery will take place from 2025 to
2030).
The State of emergency was declared on 16 March 2020, through presidential Decree 195/2020. The Decree aimed at
controlling the spread of COVID-19. Among others, the Decree included restrictions of certain rights (introducing for
example compulsory quarantines). It also included the possibility of price controls for certain goods and/or services (for
example, of electricity prices). The State of emergency was subsequently extended until May 16th. During the State of
emergency period, the government released several economic relief measures such as extension of payment deadlines for
local taxes, a tax debt restructuring program, a reduction of the monetary interest rate, among others.
ANRE published Order 61/2020 of March 31st stating that negative prices would be allowed from September 2020 in line
with Order 236/2019.
Emergency Ordinance 74/2020, amending the Energy Law 123 was approved on May 14th, allowing PPAs signed outside
the centralized markets for new renewable projects operating from June 2020.
In June 2020, the Romanian Energy Ministry proposed a Memorandum with the basic characteristics of a potential CfD
scheme, addressed at low carbon technologies (renewables, CCS and ESS).
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Regulatory frameworks for the activities in Italy
On 6 July 2012, the Government approved a new renewable framework by means of the Decree on Renewables (DM FER)
introducing a feed-in-tariff support scheme. The key aspects of this regulation provided by the DM FER were the following:
(i) wind farms over 5 MW would be remunerated under a feed-in tariff scheme defined by tenders; (ii) capacity to be
tendered
would be determined in line with the agreed technologies’ capacity paths
; (iii) the reference tariff for 2013
was 127 €/MWh for onshore wind and tender participants would bid offering discounts on this reference tariff (in %);
(iv) The reference tariff would decrease 2% per year and (v) tariffs would be granted for 20 years.
The new system replaced the previous one based on GCs. Under the previous system, producers obtained their revenues
from the sale of the electricity in the electricity market and from the sale of GCs. Wind farms built until December 2012
continued to operate under the previous system until 2015 (from 2015 onwards, the GC system was transformed into a
feed-in-premium in which, for the remaining duration of the original incentive period, the value was set
at 78% of the
difference between €180 and the electricity price)
.
Spalma Incentivi Decree, published in November 2014, stipulated that wind farms under the GCs scheme could voluntarily
adhere to an extension of the support period of 7 years in exchange of a permanent reduction of the premium/GCs
received, being the coefficient of reduction calculated individually for each wind farm depending on their remaining
regulatory life.
As the option was voluntary, wind farms that refused to accept this change remained under previous GCs scheme.
On November 10, 2017, The Strategia Energetica Nazionale (National Energy Strategy), known by the acronym SEN,
was presented after several months of public consultation. One of the main features of the SEN is that it included the
complete phase-out of coal power generation by 2025, five years ahead of schedule. The SEN also highlighted the role
of renewables and targeted that renewable energy would increase to 28% of energy consumption in 2030. According
to the SEN, the RES-E (renewables in electricity production) would increase up to 55% in 2030.
The Italian Ministry of Economic Development signed in July 2019 a decree implementing a new set of auctions to be
held between 2019 and 2021, seeking to allocate around 5,5 GW of wind and solar PV.
On 9 March 2020, a national quarantine, restricting the movement of the population was approved, in response to the
growing pandemic COVID-19 . A gradual ease of restrictions started on May 4th. Regarding the electricity sector, several
measures were introduced, including a suspension of all bureaucratic terms for renewables since March 13th, a relief of
several reporting obligations, the implementation of transitory measures between 10 March and 30 June 2020 to limit the
burden of imbalance costs and an extension of all permits expired during the emergency state of 90 days, among others.
The Italian energy agency GSE (Gestore dei Servizi Energetici) announced in May 2020 the results of the second national
auction for renewables projects (with a capacity of more than 1 MW).
In July 2020, Law Decree 76, the so-
called “Decreto Semplificazioni” on urgent measures for simplification and digital
innovation, came into force. The Decree aims to simplify procedures for the following: (i) public contracts and construction;
(ii) public procedures and responsibilities; (iii) digital administration; and (iv) business, environment and green economy
activities.
Regarding renewable projects, one of the key measures is the rationalization of the Environmental Assessment process,
setting several simplification measures and defining specific deadlines.
The Italian grid operator Terna awarded 250 MW of energy storage capacity in a Fast Reserve auction that took place in
December 2020. The auction was heavily oversubscribed with around 1,3 GW competing for 250 MW of tendered capacity.
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THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
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Regulatory frameworks for the activities in Brazil
The Electricity Sector in Brazil is regulated by Federal Law nr 8,987 of 13 February 1995, which generally rules the
concession and permission regime of public services; Law nr 9,074 of 7 July 1995, which rules the grant and extension
of public services concession or permission contracts; Federal Law nr 10,438 of 26 April 2002, which governs the increase
in Emergency Electric Power Supply and creates the 3,300 MW Program of Incentives for Alternative Electricity Sources
(PROINFA); Federal Law nr 10,762 of 11 November 2003 and Law nr 10,848 of 15 March 2004, concerning commercial
rules for the trade of Electric Power; and, subsequent amendments to the legislation.
The institutions that ensure a proper development and functioning of Electricity Sector in Brazil are: a) the Energy Research
Company (“EPE”), responsible for long term planning in the electric sector; b) the Electric Sector Monitoring Committee
(“CMSE”), responsible to continuously assess the secur
ity of electricity supply, c) the Chamber for the Commercialization
of Electric Energy (“CCEE”), an institution dealing with commercialization of electricity in Interconnected System, d) Nation
al
Electricity Regulatory Agency (“ANEEL”), responsible for re
gulate and inspect the electricity sector, as well as establishing
the tariff for the consuming public and promote energy auctions together with MME, EPE and CCEE; f) Ministry of Mines
and Energy (MME) responsible for the creation and implementation of policies, acting as the Conceding Authority;
g) the National Electric System Operator (ONS), which is responsible for the coordination of real time operation and
supervision of the energy generation and transmission grid.
Federal Law nº 9.427 of Dec 26th 1996 establishes the possibility of Renewable Energy producers to sell directly to the final
consumer(s) (aggregated demand > 500kW), at any voltage level. As part of the regulatory incentive framework, Renewable
Energy producers (small hydro, biomass, wind and solar) are granted a reduction of, at least, 50% in the Distribution and
Transmission System Use Tariff (TUSD and TUST) provided that pre-defined rules are met. The Law nº 13.203 of Dec
8th,2015 extended the subsidy for larger solar, wind and biomass plants.
Renewable energy production from plants which receive the above-
mentioned subsidy is defined as “incentivized energy”,
while the electricity production from no-
incentivized sources is defined as “conventional energy”. Special Consumers,
the ones which consumption demand is above 500 kW and under 3 MW, are allowed to purchase electricity only from
incentivized sources. Since Jul 2019, the minimum demand is gradually reducing, so that, as of Jan 2023 those
Special Consumers will be allowed to purchase incentivized or conventional energy by their own free choice.
The Decree nr 5,025 of 30 March 2004, regulates the Federal Law nr 10,438 and states the "Alternative Energy Sources"
economical and legal framework. PROINFA participants have granted a PPA with ELETROBRÁS, and are subject to the
regulator (ANEEL) authority.
The Decree nº 5,163 of 30 July 2004 regulates the Federal Law nº 10,848, establishing two trading environments for sale
and purchase energy: the Regulated Contracting Environment ("ACR"), with the participation of energy producers, traders
and distribution agents, and the Free Contracting Environment ("ACL"), in which Producers, Traders, Importers & Exporters
and Free Consumers participate.
In the ACR, distribution companies are allowed to
buy “distributed energy” (local generation), by observing a limit of 10% of
the total demand of each distribution agent. In terms of tariff moderation for Captive Consumers (consumption demand <
500 kW), Brazilian Energy Sector provides for the purchase of electricity by distributors through regulated auctions, subject
to the lowest cost criteria, aiming to reduce the cost of acquisition of electric energy that is re-passed to captive customer
tariffs. These auctions seek to provide the lowest possible price of electricity to be re-passed to the consuming public.
During the fourth quarter of 2019, Ministry of Mines and Energy set strategic lines of activities to be developed towards
the modernization of the Brazilian electricity sector. One of the first measures taken relates to the PLD (short-term price),
currently calculated on a weekly basis. Hourly PLD has been calculated on a test basis (“shadow operation”) since 2018,
aiming to become economically effective as of 1 January 2021. It aims to improve efficiency between electricity production
and consumption based on an efficient management of price formation and real-time operation.
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NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The government has taken measures in response to Covid-19 impacts in main areas as the energy sector, by means of
Decrees, Provisional Measures and changes in existing regulation. By the end of March, to ensure uninterrupted supply
of energy to consumers, Decree nº 10.282/2020 reinforced electricity generation, transmission and distribution as essential
activities. This included the equipment supply needed for operation and maintenance. By the end of April 2020, the range
was extended to include construction works.
Through Normative Resolution nº 878/2020, the Brazilian Electricity Regulatory Agency (ANEEL) suspended energy supply
cuts regardless of the consumers’ capacity of payment for 90 days as of
23 March 2020. In addition, the low-income
population registered for lower tariffs (the Social Tariff program) will not undergo periodic checks over the next three
months, and therefore will not be subject to the loss of the benefit.
Measures have also been taken to prevent distributors (DSO)´ s financial losses due to a potential high default rate,
and consequently affect their stakeholders. In order to add liquidity, ANEEL authorized the transfer of resources from
sector funds to distributors and consumers, totalizing R$2,43 billion so far.
Provisional Measure nº 950/2020 propose temporary use of resources from National Treasury, other sector funds
and bank loans for DSO to be paid for all consumers, as well as new measures to subsidize low-income consumers,
providing a 90-day exemption from paying the electricity bills.
ANEEL also released a first assessment of Covid-19 impacts to the energy sector, through which reinforced the need
of maintenance of the economic and financial balance of contracts, preservation of contracts and the participation
of all segments (generators, TSO, DSO, consumers) towards the best solutions.
On 23 June 2020, ANEEL enacted the Normative Resolution nº 885/2020 establishing the loan conditions to support the
DSO in reducing the impacts of Covid, without resources from National treasury. A total of 19 banks led by BNDES will
inject up to R$ 16,25 billion
to “Conta Covid”
and will be paid by consumers in 60 months. To benefit from the resources, the
DSOs may declare they wave the right to question any of the conditions in court, preserve the PPAs and limit the
distribution of dividends in the case of a default.
In March 2020, the Chamber of Electric Energy Commercialization (CCEE) and the National Power System Operator (ONS)
estimated a 0,9% decrease in total consumption for 2020 compared with last year, based on a “close to zero” variation of
GDP due to the impacts of COVID-19 on economic activity. On May 1st, Ministry of Economy made a significant downward
revision of GDP forecast, from 0 to 5% decline for the worst-case scenario of Brazilian economy. By the end of June 2020,
Central Bank of Brazil updated the GDP projection for 2020 reducing it from -5% to -6,5%. Under this circumstance,
demand for electricity is expected to further diminish.
Due to the uncertainties on future demand for electricity, the regulated auctions scheduled for 2020 are postponed.
According to CCEE and ONS, it´s also an opportunity to revisit guidelines in order to introduce cheaper and more efficient
power plants. One strategy proposed is to restrict the participation in regulated auctions to thermal plants which unit variable
cost (CVU) are less than R$300/MWh, allowing for lower spot market prices (PLD).
The National Development Bank (BNDES), main financing institution announced several measures to support sectors
of oil and gas, airports, ports, energy, transportation, urban mobility, health, industry and commerce and services.
Other measures regarding public health, tax and employment rules were announced in response to COVID-19.
On 1 September
2020, the Brazilian government issued the Provisional Measure (“MP”) nº 988/2020 with the main pu
rpose
of reducing the electricity bills for consumers. The Brazilian Congress has a 120-day period to approve the MP and convert
it into Law, otherwise it will become ineffective.
28
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
For renewable generators, the main impact is due to the cut in subsidies in the rates of the transmission and distribution
system tariff within a 12-month deadline as of the MP enactment. Power plants authorized during this period and which
requires an increase of power capacity will still be granted with the benefit and shall start commercial operation within
a 48-month period after the published authorization. All those power plants already granted by the benefit before the MP
are not affected. The end of subsidies must be compensated by the development of mechanisms based on the
environmental benefits due to renewable energy sources related to low-carbon emission.
On 8 September 2020, the Law 14.052/2020 was finally enacted and establishes the conditions for hydro generators
to renegotiate debts due to the hydrological risk
s, which caused a low Generation Scaling Factor (“GSF”) during a
prolonged drought, intensified by measures taken by the government to secure the national grid operation.
The debt has
been impacting the short-term market settlement, which currently involves more than R$ 9 billion. ANEEL has a 90-day
period
to propose a regulation, which must be, at first, submitted to a public hearing.
On 8 December 2020, MME announced a regulated auction schedule for the next three years (2021- 2023). Three kinds
of auctions are expected aiming at contracting energy from new and existing power plants and the expansion of the
transmission system. New energy auctions A-3/A-4 and A-5/A-6 for 2021 are scheduled to take place on June and
September, respectively.
As of 1 January 2021, the short-term price (PLD) comes into effect in an hourly basis, after two years of shadow operation.
Although, since the last year, the ONS has been operating based on the new dispatch model results, just now the hourly
PLD became effective for the purpose of commercialization.
02. Accounting policies
A) Basis of preparation
The accompanying consolidated annual accounts (financial statements hereinafter) reflect the results of EDP Renováveis,
S.A. and its subsidiaries (EDPR Group or Group) and the Group's interest in its joint ventures and associated companies.
The consolidated financial statements for 2020 have been prepared to present fairly the consolidated equity and
consolidated financial position of EDP Renováveis, S.A. and subsidiaries at 31 December 2020, the consolidated results
of operations, consolidated statement of comprehensive income, consolidated cash flows and changes in consolidated
equity for the year then ended.
In accordance with Regulation (EC) no. 1606/2002 of 19 July 2002, of the European Council and Parliament, the Group's
consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS),
as endorsed by the European Union (EU). IFRS comprise accounting standards issued by the International Accounting
Standards Board (IASB) and its predecessor body as well as interpretations issued by the International Financial Reporting
Interpretations Committee (IFRIC) and their predecessor bodies.
The Board of Directors approved these consolidated annual accounts on 23 February 2021. The annual accounts are
presented in thousand Euros, rounded to the nearest thousand.
The financial statements have been prepared on a going concern basis under the historical cost convention, modified
by the application of fair value accounting to derivative financial instruments, financial assets at fair value through profit
or loss, financial assets at fair value through other comprehensive income, except those for which a reliable measure
of fair value is not available. Assets and liabilities that are hedged under hedge accounting are stated at fair value in respect
of the hedged risk. Non-current assets and disposal groups held for sale are stated at the lower of carrying amount and fair
value less costs to sell. Liabilities for defined benefit plans are recognised at the present value of the obligation net of plan
assets fair value.
29
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
In accordance with IFRS 3 - Business Combinations, if the initial purchase price allocation of assets, liabilities and
contingent liabilities acquired is identified as provisional, in the subsequent 12 months after the business combination
transaction, the legal acquirer should make the final allocation of the purchase price related to the fair value of the assets,
liabilities and contingent liabilities acquired. These adjustments with impact on the amount of goodwill determined and
booked in previous periods, originate a restatement of the comparative information, which is reflected on the Statement
of financial position, with effect from the date of the business combination transaction.
The preparation of financial statements in accordance with IFRS requires the Board of Directors to make judgments,
estimates and assumptions that affect the application of the accounting policies and of the reported amounts of assets,
liabilities, income and expenses. The estimates and related assumptions are based on historical experience and other
factors considered reasonable in accordance with the circumstances, the results of which form the basis for making
judgments regarding the carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. The areas involving the highest degree of judgment or complexity,
or for which the assumptions and estimates are considered significant, are disclosed in note 4 - Critical accounting
estimates and judgments in applying accounting policies.
Accounting policies have been applied consistently by all Group companies and in all periods presented in the consolidated
financial statements. The new standards and interpretations recently issued but not yet effective and that the Group has not
yet applied on its consolidated financial statements, are detailed in note 3.
Change in results presentation of Joint Ventures and Associated companies
In January 2020, EDPR Group signed an agreement with ENGIE for the establishment of a joint venture company,
OW Offshore, S.L., with equal control for both sides - as an exclusive investment veihicle for worlwide opportunities in wind
offshore projects (fixed and floating projects), combining development and industrial skills of both companies. As part of the
deal, EDPR Group and ENGIE are preparing their offshore wind projects and the in-course projects of this new company,
starting with a total of 1.5 GW in construction and 3.7 GW in development, working together to create a global leader in this
sector. As at 31 December 2020, a total of 1.5 GW is in construction, 5.1 GW in development and 25 MW in operation.
With the relevance of this agreement and the growing expectations for offshore renewable business, EDPR Group decided
to change the way it controls these investments, changing the presentation of results with Joint Ventures and Associate
companies in Consolidated Income Statement. Previously to this change, EDPR Group presented a caption in Consolidated
Income Statement, in which reflected only the results with Joint Ventures and Associates, being the results from acquisitons
or disposals recorded as financial income or expenses.
With this change, and considering the interests of Joint Ventures and Associates, and in special the referred vehicle for
offshore wind activity, are an extension of EDPR Group operating activity, through which conducts its operation and
strategy, EDPR Group starts including after the other operation income and costs caption, a single caption related to Joint
Ventures and Associates, integrating the results from this companies as well the results from acquisitions and/or disposals
in these investments. This criteria has also been applied to 2019 figures.
B) Basis of consolidation
The accompanying consolidated financial statements reflect the assets, liabilities and results of EDP Renováveis, S.A.
and its subsidiaries and the equity and results attributable to the Group, through the investments in associates and jointly
controlled entities.
EDPR Group applies prospectively as from 1 January 2010, IFRS 3 (revised) for the accounting of business combinations.
Controlled entities
Investments in subsidiaries where the Group has control are fully consolidated from the date the Group assumes control
over their financial and operating activities until the moment that control ceases to exist.
30
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the investee, independently of the percentage of voting
rights held.
Accumulated losses are attributed to non-controlling interests in the corresponding proportions held, implying that the Group
can recognise negative non-controlling interests.
On a step acquisition process resulting in the acquisition of control the revaluation of any interest previously held is booked
against the income statement. On a partial disposal resulting in loss of control over a subsidiary, any participation retained is
revalued at market value on the sale date and the gain or loss resulting from this revaluation is booked against the income
statement, as well as any gain or loss resulting from the disposal.
Jointly controlled entities
The Group classifies an arrangement as a joint arrangement when the jointly control is contractually established. Joint
control exists only when decisions about the relevant activities require the unanimous consent of the parties that collectively
control the arrangement. After determining the existence of joint control, the Group classifies joint arrangements into two
types - joint operations or joint ventures.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators)
have rights to the assets, and obligations for the liabilities, relating to the arrangement, so the assets and liabilities (and
related revenues and expenses) in relation to its interest in the arrangement are recognised and measured in accordance
with relevant IFRSs applicable.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint ventures)
have rights to the net assets of the arrangement, so this investment shall be included in the consolidated financial
statements under the equity method.
The consolidated financial statements include the Group's attributable share of total reserves and profits or losses of joint
ventures, included in the consolidated financial statements under the equity method. When the Group’s share
of losses
exceeds its interest in a jointly controlled entity, the Group's carrying amount is reduced to zero and recognition of further
losses is discontinued, except to the extent that the Group has a legal or constructive obligation to cover such losses on
behalf of that entity.
Entities over which the Group has significant influence
Investments in associates are included in the consolidated financial statements under the equity method from the date
the Group acquires significant influence to the date it ceases. Associates are entities over which the Group has significant
influence, but not control, over its financial and operating policies.
The existence of significant influence by the Group is usually evidenced by one or more of the following:
•
Representation on the Executive Board of Directors or equivalent governing body of the investee
•
Participation in policy-making processes, including participation in decisions about dividends and other distributions
•
Existence of material transactions between the Group and the investee
•
Interchange of managerial personnel
•
Provision of essential technical information.
31
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The consolidated financial statements include the Group's attributable share of total reserves and profits or losses of
associates, included in the co
nsolidated financial statements under the equity method. When the Group’s share of losses
exceeds its interest in an associate, the Group's carrying amount is reduced to zero and recognition of further losses is
discontinued, except to the extent that the Group has a legal or constructive obligation to cover such losses on behalf of the
associate.
Accounting for investments in subsidiaries and associates in the company's financial statements
Investments in subsidiaries and associates not classified as held for sale or not included in a disposal group which is
classified as held for sale are accounted for at cost in the company's financial statements, and are subject to periodic
impairment tests, whenever indication exists that certain financial investment may be impaired.
Business combination
From 1 January 2010 the Group has applied IFRS 3 Business Combinations (2008) in accounting for business
combinations.
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which
control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that
currently are exercisable.
Acquisitions on or after 1 January 2010
For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:
•
The fair value of the consideration transferred; plus
•
The recognised amount of any non-controlling interests in the acquiree; plus
•
If the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
•
The net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration
is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes
to the fair value of the contingent consideration are recognised in profit or loss.
After that period, adjustments to initial measurement are only made to correct an error.
Acquisitions between 1 January 2004 and 1 January 2010
For acquisitions between 1 January 2004 and 1 January 2010, goodwill represents the excess of the cost of the acquisition
over the Group’s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and conting
ent
liabilities of the acquire. When the excess was negative, a bargain purchase gain was recognised immediately in profit
or loss.
32
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred
in connection with business combinations were capitalised as part of the cost of the acquisition.
Accounting for acquisitions of non-controlling interests
From 1 January 2010, acquisitions of non-controlling interests are accounted for as transactions with owners in their
capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-
controlling interests are based on a proportionate amount of the net assets of the subsidiary.
Previously, goodwill was recognised on the acquisition of non-controlling interests in a subsidiary, which represented
the excess of the cost of the additional investment over the carrying amount of the interest in the net assets acquired
at the date of the transaction.
Business combinations achieved in stages
In a business combination achieved in stages, on the date of obtaining control, the excess of the aggregate of (i) the
consideration transferred, (ii) the amount of any non-controlling interest recognised in the acquiree and (iii) the fair value
of the previously held equity interest in the acquired business; over the net of amounts of the identifiable assets acquired
and liabilities assumed, is recognised as goodwill.
If applicable, the negative difference, after evaluating the consideration transferred, of the amount of any non-controlling
interest recognised in the acquiree and the fair value of the previously held equity interest in the acquired business; over
the net value of the identifiable assets acquired and liabilities assumed, is recognised in the income statement. The Group
recognises the difference between the fair value of the previously held equity interest in the acquired business and the
carrying value in consolidated results in Other income. Additionally, the Group reclassifies the deferred amounts in other
comprehensive income relating to the previously held equity interest to the income statement or consolidated reserves,
according to their nature.
Investments in foreign operations
The financial statements of the foreign subsidiaries and associates of the Group are prepared using their functional currency,
defined as the currency of the primary economic environment in which they operate. In the consolidation process, the assets
and liabilities of foreign subsidiaries are translated into Euros at the official exchange rate at the balance sheet date.
Regarding the investments in foreign operations that are consolidated using the full consolidation method and equity
method, the exchange differences between the amount of equity expressed in Euros at the beginning of the period
and the amount translated at the official exchange rates at the end of the period, on a consolidated basis, are booked
against reserves.
Foreign currency goodwill arising on the acquisition of these investments is remeasured at the official exchange rate
at the balance sheet date directly against reserves.
The income and expenses of foreign subsidiaries are translated into Euros at the approximate exchange rates at the dates
of the transactions. Exchange differences from the translation into Euros of the net profit for the period, arising from the
differences between the rates used in the income statement and those prevailing at the balance sheet date are recognised
in reserves.
On disposal of a foreign subsidiary, the related exchange differences previously recognised in reserves, are accounted
for in the income statement.
33
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Balances and transactions eliminated on consolidation
Inter-company balances and transactions, including any unrealised gains and losses on transactions between group
companies, are eliminated in preparing the consolidated financial statements. Unrealised gains and losses arising from
transactions with associates and jointly controlled entities are eliminated to the extent of the Group's interest in those
entities.
Common control transactions
The accounting for transactions among entities under common control is excluded from IFRS 3. Consequently, in the
absence of specific guidance, within IFRSs, the EDP Renováveis Group has developed an accounting policy for such
transactions, as considered appropriate. According to the Group's policy, business combinations among entities under
common control are accounted for in the consolidated financial statements using the EDP consolidated book values
of the acquired company (subgroup). The difference between the carrying amount of the net assets received and the
consideration paid, is recognised in equity.
Put options related to non-controlling interests
EDP Renováveis Group records written put options at the date of acquisition of a business combination or at a subsequent
date as an advance acquisition of these interests, recording a financial liability for the present value of the best estimate
of the amount payable, irrespective of the estimated probability that the options will be exercised. The difference between
this amount and the amount corresponding to the percentage of the interests held in the identifiable net assets acquired is
recorded as goodwill.
Until 31 December 2009, in years subsequent to initial recognition, the changes in the liability due to the effect of the
financial discount are recognised as a financial expense in the consolidated income statement, and the remaining changes
are recognised as an adjustment to the cost of the business combination. Where applicable, dividends paid to minority
shareholders up to the date the options are exercised are also recorded as adjustments to the cost of the business
combination. In the event that the options are not exercised, the transaction would be recorded as a sale of interests
to minority shareholders.
As from January 2010, the Group applies IAS 27 (2008) to new put options related to non-controlling interests and,
therefore, subsequent changes in the carrying amount of the put liability are recognised in profit or loss.
Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount of the investment recognised in profit or loss. Fair value is the initial
carrying amount for the purposes of the subsequent recording of the interest retained in the associate, joint venture or
financial asset. In addition to that, any amount previously recorded in other comprehensive income in relation to that entity is
recorded as if the Group had directly sold all the related assets and liabilities. This may mean that amounts previously
recognised in other comprehensive income are reclassified to profit or loss.
If the ownership of a holding in an associate is reduced but significant influence is retained, only the proportional part of the
amounts previously recognised in other comprehensive income will be reclassified to the income statement.
C) Foreign currency transactions
Foreign currency transactions are translated at the exchange rates at the dates of the transactions. Monetary assets
and liabilities denominated in foreign currency are translated into Euros at the exchange rates at the balance sheet date.
These exchange differences arising on translation are recognised in the income statement as financial results.
34
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Foreign currency non-monetary assets and liabilities accounted for at historical cost are translated using the exchange rates
at the dates of the transactions. Foreign currency non-monetary assets and liabilities stated at fair value are translated into
Euros at the exchange rates at the dates the fair value was determined.
D) Derivative financial instruments and hedge accounting
Derivative financial instruments are recognised on the trade date at fair value. Subsequently, the fair value of derivative
financial instruments is re-measured on a regular basis, being the gains or losses on re-measurement recognised directly
in the income statement, except for derivatives designated as hedging instruments. The recognition of the resulting gains or
losses on re-measurement of the derivatives designated as hedging instruments depends on the nature of the risk being
hedged and of the hedge model used.
The fair value of derivative financial instruments corresponds to their market value, if available, or to quotes indicated by
external entities through the use of valuation techniques, which are compared in each date of report to fair values available
in common financial information platforms.
Hedge accounting
The Group uses financial instruments to hedge interest rate risk, exchange rate risk and price risk resulting from
its operational and financing activities. Derivatives not qualified for hedge accounting under IFRS 9 are accounted for
as trading instruments.
Hedging derivatives are recorded at fair value, being the gains and losses recognised in accordance with the hedge
accounting model applied by the Group. Hedge relationship exists when:
i)
The hedging relationship consists only hedging instruments and hedged items that are eligible as per determined
in IFRS 9;
ii)
At the inception of the hedge there is formal documentation of the hedging relationship and the Group's risk
management objective and strategy for the hedge;
iii)
There is an economic relationship between the hedged item and the hedging instrument;
iv)
The effect of credit risk does not dominate the value changes that result from that economic relationship;
v)
The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that
the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity
of hedged item.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged assets and liabilities or group of hedged assets and
liabilities that are attributable to the hedged risk. When the hedging relationship ceases to comply with the requirements
for hedge accounting, the accumulated gains or losses concerning the fair value of the risk being hedged are amortised
over the residual period to maturity of the hedged item.
Cash flow hedge
Changes in the fair value of derivatives qualified as cash flow hedges are recognised in reserves.
The cumulative gains or losses recognised in reserves are reclassified to the income statement when the hedged item
affects the income statement.
35
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
When a hedging relation of a future transaction is discontinued, the changes in the fair value of derivative recognised
in reserves remain recognised in reserves until the future hedged transaction occurs. When the future transaction is no
longer expected to occur, the cumulative gains or losses recognized in reserves are recorded immediately in the income
statement.
Net investment hedge
The net investment hedge model is applied on a consolidated basis to investments in subsidiaries in foreign currencies. This
model allows that the exchange differences recognised in the currency translation reserve to be offset by the foreign
exchange differences in foreign currency loans or currency derivatives contracted, recognised in Currency translation
reserve - Net investment hedge. For cross currency interest rate swaps, the cross-currency basis spread and forward points
are not designated into the hedge relationship, but deferred as a hedging cost in other comprehensive income, in Currency
translation reserve - Net investment hedge - Cost of hedging, and recognized in profit or loss over the period of the hedge.
The ineffective portion of the hedging relationship is recognised in the income statement.
The accumulated foreign exchange gains and losses regarding the net investment and the related hedging instrument
recognised in equity are transferred to the income statement when the foreign currency subsidiary is sold, as part of the
gain or loss resulting from the disposal.
Effectiveness
For a hedge relationship to be classified as such, in accordance with IFRS 9, its effectiveness must be demonstrated.
Therefore, the Group performs prospective tests at the inception date and at each balance sheet date, in order to
demonstrate its effectiveness, showing that any adjustments to the fair value of the hedged item attributable to the risk
being hedged are offset by adjustments to the fair value of the hedging instrument. Any ineffectiveness is recognised
in the income statement when it occurs.
E) Other financial assets
IFRS 9 introduced a model for the classification of financial assets based on the business model for managing the financial
assets ("business model test") and their contractual cash flow characteristics ("SPPI test"), replacing prior requirements
which determined the classification in the categories present in IAS 39.
EDPR Group classifies its financial assets, at the
initial recognition, in accordance with the aforementioned requirements introduced by IFRS 9, on the following categories:
Financial assets at amortised cost
A financial asset is measured at amortised cost if: (i) it is held within a business model whose objective is to hold assets
in order to collect its contractual cash flows; and (ii) the contractual cash flows represent solely payments of principal
and interest. Financial assets included within this category are initially recognised at fair value and subsequently measured
at amortised cost. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other
gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item
in the statement of profit or loss.
Loans and trade receivables are generally held to collect contractual cash flows and are expected to give rise to cash flows
representing solely payments of principal and interest, thus they meet the criteria for amortised cost measurement under IFRS 9.
Financial assets measured at fair value through other comprehensive income (FVOCI)
A financial asset is measured at fair value through other comprehensive income if (i) the objective of the business model
is a
chieved by both collecting contractual cash flows and selling financial assets; and (ii) the asset’s contractual cash flows
represent solely payments of principal and interest. Financial assets included within this category are initially recognised
and subsequently measured at fair value, with the changes in the carrying amount booked in other comprehensive income,
except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses, which
are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously
recognised in other comprehensive income is reclassified to profit or loss.
36
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that do not meet the criteria to be classified as financial assets at fair value through other comprehensive
income (FVOCI) or at amortised cost, are classified at fair value through profit or loss, deemed to be a residual category
under IFRS 9.
Regardless of the business model assessment, EDPR Group can elect to classify a financial asset at fair value through
profit or loss if doing so reduces or eliminates a measurement or recognition inconsistency (“accounting mismatch”).
Changes in the business model assessment over time
Financial assets are not reclassified subsequent to their initial recognition. However, if the Company changes its business
model for managing financial assets, it will classify newly originated or newly purchased financial assets under the new
business model but will keep the classification of existing assets under the previous business model.
Recognition and derecognition of financial assets
Purchases and sales of financial assets are recognised on the trade date, which is the date on which the Company commits
to purchase or sell these financial assets.
Financial assets are derecognised when: (i) the contractual rights to receive their future cash flows have expired, (ii) the
Company has transferred substantially the risks and rewards of ownership, or (iii) although retaining some, but not
substantially all the risks and rewards of ownership, the Company has transferred control over the assets.
Impairment
EDPR Group recognise an impairment loss based on the Expected Credit Loss (ECL) model, before the objective evidence
of a loss event from past actions. This model is the basis for the recognition of impairment losses on held financial assets
that are measured at amortised cost or at fair value through other comprehensive income (which includes cash and cash
equivalents, trade receivables, loans and debt securities).
The impairment methodology applied depends on whether there has been a significant increase in credit risk. If the credit
risk on a financial asset does not increase significantly since its initial recognition, EDPR Group measures the loss
allowance for that financial asset at an amount equal to 12-month expected credit losses. If the credit risk increases
significantly since its initial recognition, EDPR Group measures the loss allowance for that financial asset at an amount
equal to lifetime expected credit losses.
Regardless of the above, a significant increase in credit risk is presumed if there is an objective evidence that the financial
asset is impaired, including if there is observable data that comes to the attention of the holder of the asset about the
following loss events, among others: significant financial difficulty of the issuer or obligor; restructuring of an amount
due to the Company in terms that it would not consider otherwise; a breach of contract, such as a default or delinquency
in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or other financial
reorganization.
As soon as the loss event occurs (what is previous defined in IAS 39 as "objective evidence of impairment"), the impairment
allowance would be allocated directly to financial asset affected, which provide the same accounting treatment, from that
point, as previously provided by IAS 39, including the treatment of
interest revenue. The asset’s carrying amount is reduced
and the amount of the loss is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss
decreases, the previously recognised impairment loss is reversed in profit or loss, if the decrease can be related objectively
to an event occurring after the impairment loss was recognised.
37
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Trade receivables and loans
EDPR Group applies the simplified approach and record lifetime expected losses on all trade receivables including those
with a significant financing component. The estimated ECL are calculated based on actual credit loss experience over a
period that, per business and type of customers, is considered statistically relevant and representative of the specific
characteristics of the underlying credit risk.
Considering the particularities of each business, exposures are segmented based on common credit risk characteristics
such as credit risk grade, geographic region and/or industry. Actual credit loss experience is adjusted by scalar factors
to reflect differences between economic conditions during the period over which historical data was collect, current
conditions and EDPR Group's view of economic conditions over the expected lives of the receivables.
For loans carried at FVOCI, EDPR Group performs an analysis based on the general approach. On making its assessment,
the company has to make assumptions about risk of default and expected loss rates, which requires judgement. The inputs
used for risk assessment and for calculation of the loss allowances for financial assets includes: (i) credit ratings (as far
as available) from external credit rating companies such as Standard and Poor, Moody’s and Fitch.; (ii) significant changes
in the expected performance and behavior of the borrower, including changes in the payment status of borrowers in the
Group and changes in the operating results of the borrower; (iii) Public market data, namely on probabilities of default
and loss given default expectations; and (iv) macroeconomic information (such as market interest rates or growth rates).
F) Trade payables and other liabilities
An instrument is classified as a financial liability when there is a contractual obligation for the issuer to liquidate capital
and/or interests, through delivering cash or other financial asset, regardless of its legal form. Financial liabilities are
recognised at the issuance date (trade date): (i) initially at fair value less transaction costs; and (ii) subsequently at
amortised cost, using the effective interest method. All financial liabilities are booked at amortised cost, with the exception of
the financial liabilities hedged at fair value hedge, which are stated at fair value on risk component that is being hedged.
Initial measurement of lease liabilities (rents due from lease contracts)
As provided by IFRS 16, as from 1 January 2019 EDPR Group measures the lease liability (rents due from lease contracts)
on the commencement date based on the present value of the future payments of that lease contracts, discounted using
EDPR Group's incremental borrowing rate for each portfolio of leases identified.
EDPR Group determines the lease term as the non
‐
cancellable period of a lease, together with both: (i) periods covered by
an option to extend the lease, if the lessee is reasonably certain to exercise that option; and (ii) periods covered by an
option to terminate the lease, if the lessee is reasonably certain not to exercise that option.
EDPR Group applies the recognition exemption provided by IFRS 16 for the leases which lease term is 12 months or less,
or that are for a low-value asset.
After the commencement date, the lease liability (rents due from lease contracts) are increased to reflect interest on the
liability and reduced to reflect the lease payments made.
Remeasurement of the lease liabilities (rents due from lease contracts)
EDPR Group remeasure the lease liability (rents due from lease contracts), and adjusts the corresponding right-of-use
assets, by discounting the revised lease payments, using an unchanged discount rate, if either:
•
There is a change in future lease payments resulting from a change in an index or a rate used to determine those
payments; or
•
There is a change in the amounts expected to be payable under a residual value guarantee.
38
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
If there is a lease modification that do not qualifies to be accounted as a separate lease, EDPR Group remeasures the lease
liability (rents due from lease contracts) and adjusts the corresponding right-of-use assets by discounting the revised lease
payments, using a revised discount rate at the effective date of the modification.
The variable lease payments that do not depend in an index or a rate are not included in the measurement of the liability
regarding the rents due from lease contracts, nor the right-of-use asset. Those payments are recognised as cost in the
period in which the event or condition that gives rise to the payments occurs.
Derecognition
EDPR Group derecognises a financial liability (or a part of a financial liability) from its statement of financial position when,
and only when, the obligation specified in the contract is discharged or cancelled or expires. An exchange between an
existing borrower and lender of debt instruments with substantially different terms is accounted for as an extinguishment
of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the
terms of an existing financial liability, or a part of it, is accounted for as an extinguishment of the original financial liability and
the recognition of a new financial liability.
The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred
to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised
in profit or loss.
G) Equity instruments
A financial instrument is classified as an equity instrument when there is no contractual obligation at settlement to deliver
cash or other financial asset to another entity, regardless of its legal form, and there is a residual interest in the assets
of an entity after deducting all its liabilities.
Costs directly attributable to the issuance of equity instruments are recognised in equity, as a deduction to the amount
issued. Amounts paid or received relating to sales or acquisitions of equity instruments are recognised in equity, net of
transaction costs.
Distributions related to equity instruments are deducted from equity, as dividends, when declared.
Equity instruments at fair value
EDPR Group classifies the equity instruments that are held for trading at fair value to profit or loss. For all other equity
instruments, management has the ability to make an irrevocable election on initial recognition, on an instrument-by-
instrument basis, to present changes in fair value in other comprehensive income.
If this election is made, all fair value changes, excluding dividends that are a return on investment, will be included in other
comprehensive income. There is no recycling of amounts from other comprehensive income to profit and loss (for example,
on sale of an equity investment) being, at that time, transferred to retained earnings.
H) Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of assets are capitalised as part of the cost of
the assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use
or sale. To the extent that funds are borrowed generally, the amount of borrowing costs eligible for capitalisation are
determined by applying a capitalisation rate to the expenditures on these assets.
The capitalisation rate corresponds to the weighted average of the borrowing costs applicable to the borrowings of the
enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining
a qualifying asset. The amount of borrowing costs capitalised during a period does not exceed the amount of borrowing
costs incurred during the period.
39
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The capitalisation of borrowing costs commences when expenditures for the asset are being incurred, borrowing costs have
been incurred and activities necessary to prepare all or part of the assets for their intended use or sale are in progress.
Capitalisation ceases when substantially all the activities necessary to prepare the qualifying assets for their intended use or
sale are completed. Capitalisation of borrowing costs shall be suspended during extended periods in which active
development is interrupted.
I) Property, plant and equipment
Property, plant and equipment are stated at acquisition cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. In case of projects in a development
stage, costs are only capitalized when it is probable that the project will be finally built. If due to changes in regulation or
other circumstances costs capitalized are derecognized from property plant and equipment, they are recognized in the profit
and loss caption of “Other expenses”.
Replacements or renewals of complete items are recognized as increases in the
value of propert
y, plant and equipment and the items replaced or renewed are derecognized and recognized in the “Other
expenses” caption.
The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to
bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and
restoring the site on which they are located. Cost also may include transfers from equity of any gain or loss on qualifying
cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of that equipment.
The cost of acquisition includes interest on external financing and personnel costs and other internal expenses directly or
indirectly related to work in progress accrued solely during the period of construction. The cost of production is capitalised
by charging costs attributable to the asset as own work capitalised under financial expenses and personnel costs and
employee benefit expense in the consolidated income statement.
Subsequent costs are recognised as separate assets only when it is probable that future economic benefits associated
with the item will flow to the Group. Repair and maintenance costs are charged to the income statement during the financial
period in which they are incurred.
The Group assesses assets impairment, whenever events or circumstances may indicate that the book value of the asset
exceeds its recoverable amount and, at least, anually, being the impairment recognised in the income statement.
Land is not depreciated. Depreciation on the other assets is calculated using the straight-line method over their estimated
useful lives, as follows:
NUMBER OF YEARS
Buildings and other constructions
8 to 40
Plant and machinery:
- Renewable assets
30 to 35
- Other plant and machinery
4 to 12
Transport equipment
3 to 5
Office equipment and tools
2 to 10
Other tangible fixed assets
3 to 10
J) Intangible assets
The Group´s intangible assets are booked at acquisition cost less accumulated amortisation and impairment losses.
The Group does not own intangible assets with indefinite lives.
40
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The Group performs impairment tests, whenever events or circumstances may indicate that the book value of the asset
exceeds its recoverable amount, being any impairment recognised in the income statement.
Acquisition and development of software
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the
specific software. These costs are amortised on the basis of their expected useful lives.
Costs that are directly associated with the development of identifiable specific software applications by the Group,
and that will probably generate economic benefits beyond one year, are recognised as intangible assets. These costs
include employee costs directly associated with the development of the referred software and are amortised using the
straight-line method during their expected useful lives.
Maintenance costs of software are charged to the income statement when incurred.
Industrial property and other rights
The amortisation of industrial property and other rights is calculated using the straight-line method for an expected useful
live expected of less than 6 years.
Green Certificates
In some jurisdictions, on top of the market price, generators receive certificates (GCs) for their performance, which are sold
to the off-takers obliged to fulfil a quota obligation (a share of energy that must be sourced from renewable sources).
Being these certificates considered subsidies under IAS 20 they are recognised when generated as intangible assets at fair
market value. The intangible assets registered will be discharged at the time of their effective sale and difference between
the selling price and the fair value of the GCs will be registered in the profit and loss account.
Power purchase agreements
Acquired Power Purchase Agreements (PPAs) are booked as intangible assets and amortised using the straight-line
method according with the duration of the contract.
K) Leases/ Right-of-use assets
EDPR Group has adopted IFRS 16 and therefore presents the information related to lease contracts in the caption Right-of-
use assets, creating a separate line in the Consolidated Statement of Financial Position. These assets are accounted for
at cost less accumulated depreciation and impairment losses. The cost of these assets comprises the initial costs and the
initial measurement of the liabilities regarding the rents due from lease contracts, deducted from the prepaid amounts and
any incentives received.
Depreciation of right-of-use assets is calculated on a straight-line basis over their estimated useful lives, considering
the lease contract terms.
Remeasurement of right-of-use assets
If EDPR Group remeasures the lease liability (rents due from lease contracts) (see f), the corresponding right-of-use assets
shall be adjusted accordingly.
L) Non-current assets held for sale and discontinued operations
Non-current assets or groups of non-current assets held for sale (groups of assets and related liabilities that include at least
one noncurrent asset) are classified as held for sale when their carrying amounts will be recovered mainly through sale,
the assets or groups of assets are available for immediate sale and the sale is highly probable.
41
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The Group also classifies as non-current assets held for sale, non-current assets or groups of assets acquired exclusively
for its subsequent resale, that are available for immediate sale and the sale is highly probable.
Prior to their classification as held for sale, the measurement of all non-current assets and all assets and liabilities included
in a disposal group, is adjusted in accordance with the applicable IFRS standards. Subsequently, these assets or disposal
groups are measured at the lowest between their carrying amount and fair value less costs to sell.
M) Impairment of non-financial assets
The carrying amounts of the Group's non-financial assets, other than inventories and deferred tax assets, are reviewed
to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount
is then estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs
to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose
of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or groups of assets (the cash-generating
unit). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-
generating units which are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated
recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of
cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then
to reduce the carrying amount of the other assets in the unit (group of units) on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised
in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.
An impairment loss is reversed if there has been a change in circumstances that caused the impairment. An impairment
loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
N) Inventories
Inventories are measured at the lower of the acquisition cost and net realisable value. The cost of inventories includes
purchases, conversion and other costs incurred in bringing the inventories to their present location and condition.
The net realisable value is the estimated selling price in the ordinary course of business less the estimated selling costs.
The cost of inventories is assigned by using the weighted average method.
O) Classification of assets and liabilities as current and non-current
The Group classifies assets and liabilities in the consolidated statement of financial position as current and non-current.
Current assets and liabilities are determined as follows:
Assets are classified as current when they are expected to be realised or are intended for sale or consumption in the
Group
’s normal operating cycle, they are held primarily for the purpose of trading, they are expected to be realised within
twelve months of the balance sheet date or are cash or a cash equivalent, unless the assets may not be exchanged or used
to settle a liability for at least twelve months from the balance sheet date.
Liabilities are classified as current when they are expected to be settled in the Group’s normal operating cycle, they are he
ld
primarily for the purpose of trading, they are due to be settled within twelve months of the balance sheet date or the Group
does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
42
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Financial liabilities are classified as current when they are due to be settled within twelve months after the reporting period,
even if the original term was for a period longer than twelve months, and an agreement to refinance, or to reschedule
payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are
authorised for issue.
P) Provisions
Provisions are recognised when: (i) the Group has a present legal or constructive obligation, (ii) it is probable that settlement
will be required in the future and (iii) a reliable estimate of the obligation can be made.
Dismantling and decommissioning provisions
The Group recognises dismantling and decommissioning provisions for property, plant and equipment when a legal or
contractual obligation is settled to dismantling and decommissioning those assets at the end of their useful life.
Consequently, the Group has booked provisions for property, plant and equipment related with renewables assets, for the
expected cost of restoring sites and land to its original condition. The provisions correspond to the present value of the
expenditure expected to be required to settle the obligation and are recognised as part of the initial cost or an adjustment
to the cost of the respective asset, being depreciated on a straight-line basis over the asset useful life.
Discounting and inflation rates used for 2020 are:
EUROPE
NORTH AMERICA
BRAZIL
Discount Rate
[0.00% - 4.04%]
[0.13% - 1.45%]
[2.79% - 7.64%]
Inflation Rate
[0.60% - 2.85%]
[2.00% - 3.50%]
[3.76% - 4.47%]
Discounting and inflation rates used for 2019 were:
EUROPE
NORTH AMERICA
BRAZIL
Discount Rate
[0.00% - 4.53%]
[1.56% - 2.32%]
[4.46% - 6.61%]
Inflation Rate
[0.85% - 3.90%]
[2.00% - 3.75%]
[4.37% - 5.72%]
Decommissioning and dismantling provisions are remeasured on an annual basis based on the best estimate of the
settlement amount and
EDPR’s
technical department performed an in-depth analysis taking into account the reality of the
EDPR’s
fleet. This analysis led to the conclusion that the average cost per megawatt and salvage value of the renewable
assets required to be updated with effect December 2020 (see note 32).
The unwinding of the discount at each balance sheet date is charged to the income statement.
Tax liabilities
Liabilities for payment of taxes or levies related to an activity of the Group are recognized as the activity which triggers
the payment is carried out, according to the laws regulating such taxes or levies. However, in the cases of taxes or levies
with right of reimbursement of the amount already paid proportionally to the period of time in which there is no activity
or the asset which triggers the payment is no longer owned, liabilities are recognized on a proportional basis.
Q) Recognition of revenue from contracts with customers
EDPR Group recognises revenue in accordance with the core principle introduced by IFRS 15. Thus, the Group recognises
revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for these goods or services, as provided in the 5 steps
methodology, namely: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii)
determine the transaction price; (iv) allocate the transaction price to performance obligations; and (v) recognise revenue
when (or as) the entity satisfies a performance obligation.
43
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Costs and revenues are recorded in the year to which they refer regardless of when paid or received, in accordance with the
accrual basis. Differences between amounts received and paid and the corresponding revenue and cost are recorded under
Other assets and Other liabilities.
Revenue in EDPR Group arises essentially from electricity generation. The transfer of control occurs when the energy is
generated and injected into the transport/distribution grids. The electricity generated is sold under free market conditions
or through the establishment of medium/long term power purchase agreements.
In what concerns variable transaction prices, EDPR Group only recognises revenue when it is highly probable that there
will not be any significant reversal of the recognised revenue, when it becomes certaint. IFRS 15 requires that this estimate
of variable transaction prices is determined using either (i) the expected value method
–
based on probability-weighted
amounts, or (ii) the most likely outcome method. EDPR Group considers the facts and circumstances when analyzing
the terms of each contract with customers, applying the requirements that determine the recognition and measurement of
revenue in a harmonized manner, when considering contracts with the same characteristics and in similar circumstances.
R) Financial results
Financial results include interest costs on borrowings, interest income on funds invested, dividend income, foreign exchange
gains and losses, realised gains and losses, changes in fair value of derivative financial instruments related to financing
activity classified by the Group, within IFRS 9, as held for trading and consequently measured at fair value through profit or
loss and changes in the fair value of hedged risks, when applicable.
Interest is recognised in the income statement on an accrual basis. Dividend income is recognised on the date the right
to receive is established.
Considering the accounting model provided by IFRS 16, as from 1 January 2019 the financial results start to include the
interest expenses (unwinding) calculated on the liabilities regarding the rents due from lease contracts.
S) Income tax
Income tax recognised in the income statement includes current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which case it is also recognised in equity.
Deferred taxes arising from the revaluation of assets measured at fair value through other comprehensive income and cash
flow hedge derivatives recognised in equity are recognised in the income statement in the period the results that originated
the deferred taxes are recognised.
Current tax is the tax expected to be paid on the taxable income for the period, using tax rates enacted at the statement of
financial position date and any adjustment to tax payable in respect of previous years.
Deferred taxes are calculated in accordance with the balance sheet liability method, considering temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax basis, using
the tax rates enacted or substantively enacted at the balance sheet date for each jurisdiction and that are expected to be
applied when the temporary differences are reversed.
Deferred tax liabilities are recognised for all taxable temporary differences except for goodwill not deductible for tax
purposes, differences arising on initial recognition of assets and liabilities that affect neither accounting nor taxable profit
and differences relating to investments in subsidiaries, to the extent that these will probably not be reversed in the future.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available to absorb
deductible temporary differences for taxation purposes.
44
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The Group offsets, as established in IAS 12, the deferred tax assets and liabilities if, and only if:
i)
the entity has a legally enforceable right to offset current tax assets against current tax liabilities; and
ii)
the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on
either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on
a net basis, or to realise the assets and settle the liabilities simultaneously, in future periods in which deferred tax
liabilities or assets are expected to be settled or recovered.
When accounting for interest and penalties related to income taxes, EDPR Group considers whether a particular amount
payable or receivable is, in its nature, a taxable income and, if so, applies IAS 12 to this amount. Otherwise, IAS 37 is applied.
T) Earnings per share
Basic earnings per share are calculated by dividing the consolidated net profit attributable to equity holders of EDP
Renováveis S.A. by the weighted average number of ordinary shares outstanding during the year, excluding the average
number of ordinary shares purchased by the Group and held as treasury stock.
For the diluted earnings per share calculation, the weighted average number of ordinary shares outstanding is adjusted
to consider conversion of all dilutive potential ordinary shares, such as convertible debt and stock options granted
to employees. The dilution effect corresponds to a decrease in earnings per share resulting from the assumption
that the convertible instruments are converted or the options granted are exercised
U) Cash and cash equivalents
Cash and cash equivalents include balances with maturity of less than three months from the date of acquisition, including
cash and deposits in banks. This caption also includes other short-term, highly liquid investments that are readily convertible
to known amounts of cash and specific demand deposits in relation to institutional partnerships that are funds required to be
held in escrow sufficient to pay the remaining construction related costs of projects in institutional equity partnerships in
U.S.A., in the next twelve months.
The Group classifies as cash and cash equivalents the balance of the current accounts with EDP Group formalized under
cash-pooling agreements.
V) Government grants
Government grants are recognised initially as deferred income under non-current liabilities when there is reasonable
assurance that they will be received and that the Group will comply with the conditions associated with the grant. Grants
that compensate the Group for expenses incurred are recognised in profit or loss on a systematic basis in the same periods
in which the expenses are recognised.
W) Environmental issues
The Group takes measures to prevent, reduce or repair the damage caused to the environment by its activities.
Expenses derived from environmental activities are recognised as other operating expenses in the period in which they
are incurred.
X) Institutional partnerships in U.S. wind farms
The Group has entered in several partnerships with institutional investors in the United States, through limited liability
Company operating agreements that apportion the cash flows generated by the wind farms between the investors and the
Company and allocates the tax benefits, which include Production Tax Credits (PTCs), Investment Tax Credits (ITCs) and
accelerated depreciation, largely to the investor.
45
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The institutional investors purchase their minority partnership interests for an upfront cash payment with an agreed targeted
internal rate of return over the period that the tax credits are generated. This anticipated return is computed based on the
total anticipated benefit that the institutional investors will receive and includes the value of PTCs / ITCs, allocated taxable
income or loss and cash distributions received.
The control and management of these wind farms are a responsibility of EDPR Group and they are fully consolidated
in these financial statements.
The financial instruments held by the institutional investors issued by the partnerships represent compound financial
instruments as they contain characteristics of both financial liabilities and equity. The Group has determined that at the
funding dates, the fair values of the original proceeds is equal to the fair values of the liabilities at that time and no value
was assigned to the equity component. Subsequently, these liabilities are measured at amortized cost.
This liability is reduced by the value of tax benefits provided and cash distributions made to the institutional investors during
the contracted period. The value of the tax benefits delivered, primarily accelerated depreciation and ITC are recognized as
Income from institutional partnerships on a pro-rata basis over the useful life of the underlying projects
(see note 8). The value of the PTCs delivered are recorded as generated. This liability is increased by an interest accrual
that is based on the outstanding liability balance and the targeted internal rate of return agreed.
After the Flip Date, the institutional investor retains a non-significant interest for the duration of the structure. This non-
controlling interest is entitled to distributions ranging from 2.5% to 10% and taxable income allocations ranging from 5%
to 10%. EDPR NA has an option
to purchase the institutional investor’s residual interest at fair market value during a
defined period following the flip date. This amount is reclassified from the total equity attributable to the Parent to non-
controlling interests caption in the period in which the flip date takes place.
Y) Statement of Cash Flow
The Statement of Cash Flow is presented under the direct method, by which gross cash flows from operating, financing
and investing activities are disclosed. The Group classifies cash flows related to interest and dividends paid as financing
activities and interest and dividends received as investing activities.
03. Recent accounting standards and interpretations issued
Standards, amendments and interpretations issued effective for the Group
The amendments to standards already issued and effective and that the Group applied in the preparation of its financial
statements, can be analysed as follows:
•
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
The amendments in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) have been issued
by International Accounting Standards Board (IASB) in September 2019 and endorsed by the EU on January 15, 2020,
and became effective as of 1 January 2020 and must be applied retrospectively.
The amendments clarify that entities would continue to apply certain hedge accounting requirements assuming that
the interest rate benchmark on which the hedged cash flows and cash flows from the hedging instrument are based
will not be altered as a result of interest rate benchmark reform. The amendments for IFRS 9 include a number of reliefs
that apply to all hedging relationships of interest rate risk that are affected by interest rate benchmark reform. The reliefs are
intended to be narrow in their effect. Accordingly, entities will cease to apply the relief when the earlier of the following
occurs: (i) uncertainty regarding timing and amount of the resulting cash flows is no longer present; or (ii) hedging
relationship terminates.
46
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The EDPR Group adopted, retroactively, the requirements of IBOR Reform to the existing hedging relationships on 1
January 2020 and to those that were subsequently designated, and that are directly affected. In particular, a hedge
relationship is considered to be directly affected if the respective reform creates uncertainty regarding: (i) The reference
interest rate designated in a hedge relationship to hedge a given risk or, (ii) The term or amount of the flows associated with
the reference interest rate of the hedged item or the hedged instrument. The reform will impact fair value measurement, the
effects of hedge accounting and the net financial results when the alternative rates are defined. As of 31 December 2020,
no changes were made to the contracts with respect to IBOR Reform. The EDPR Group is monitoring the contractual
relationships affected by IBOR Reform in order to minimize the uncertainty regarding the applicable interest rates and
the timing of the flows associated with the reference interest rate. As of this date, no significant impacts are expected.
The new standards that have been issued and that are already effective and that the Group has applied on its financial
statements, with no significant impacts are the following:
•
IAS 1 (Amended) and IAS 8 (Amended) - Definition of material
•
IFRS 3 (Amended) - Definition of a business;
•
Amendments to References to the Conceptual Framework in IFRS; and
•
IFRS 16 (Amended) - Covid 19 - Related Rent Concessions.
Standards, amendments and interpretations issued but not yet effective for the Group
The standards, amendments and interpretations issued but not yet effective for the Group (whose effective application
date has not yet occurred or, despite their effective dates of application, they have not yet been endorsed by the UE)
are the following:
•
IFRS 17 - Insurance Contracts
•
IAS 1 (Amended) - Classification of Liabilities as Current or Non-current;
•
IFRS 3 (Amended) - Reference to the Conceptual Framework;
•
IAS 16 (Amended) - Proceeds before Intended Use;
•
IAS 37 (Amended) - Onerous Contracts
–
Cost of Fulfilling a Contract;
•
Annual Improvement Project (2018-2020);
•
IFRS 4 (Amended) - Deferral of effective dates to apply two optional solutions (temporary exemption from IFRS 9
and overlay approach); and
•
Amendments to IFRS 9, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate Benchmark Reform (Phase 2).
04. Critical accounting estimates and judgments in applying accounting
policies
The IFRS set forth a range of accounting treatments and require the Board of Directors to apply judgment and make
estimates in deciding which treatment is most appropriate.
The main accounting estimates and judgements used in applying the accounting policies are discussed in this note in order
to improve the understanding of how their application affects the Group’s reported results and disclosures. A broad
er
description of the accounting policies employed by the Group is disclosed in note 2 to the Consolidated Financial
Statements.
47
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Although estimates are calculated by the Board of Directors based on the best information available at 31 December 2020
and 2019, future events may require changes to these estimates in subsequent years. Any effect on the financial
statements of adjustments to be made in subsequent years would be recognised prospectively.
Considering that in many cases there are alternatives to th
e accounting treatment adopted by EDP Renováveis, the Group’s
reported results could differ if a different treatment was chosen. EDP Renováveis believes that the choices made are
appropriate and that the financial statements are presented fairly, in all ma
terial respects, the Group’s financial position
and results. The alternative outcomes discussed below are presented solely to assist the reader in understanding the
financial statements and are not intended to suggest that other alternatives or estimates would be more appropriate.
Measurement of the fair value of financial instruments
Fair values are based on listed market prices, if available. Otherwise, fair value is determined either by the price of similar
recent transactions under market conditions, or determined by external entities, or based on valuation methodologies,
supported by discounting future cash flows techniques, considering market conditions, time value, yield curves and volatility
factors. These methodologies may require the use of assumptions or judgements in determining fair values.
Consequently, the use of different methodologies and different assumptions or judgements in applying a particular model,
could generate different financial results from those reported.
Additionally, financial
instruments’ classification as debt or equity requires judgement in the interpretation of contractual
clauses and in the evaluation of the existence of a contractual obligation to deliver cash or other financial assets.
Review of the useful life of the assets
The Group reviews periodically the reasonableness of the assets' useful lives that are used to determine the depreciation
rates of assets assigned to the activity, and prospectively changes the depreciation charge of the year based on such
review.
Lease Liabilities (Rents due from lease contracts)
With the adoption of IFRS 16, the Group recognises right-of-use assets (ROU assets) and lease liabilities (rents due from
lease contracts), if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses
whether: i) the contract involves the use of an identified asset; ii) it has the right to obtain substantially all of the economic
benefits from the use of the asset throughout the period of use; and iii) it has the right to direct the use of the asset. EDPR
Group uses judgement on its assessment, namely concerning the termination and extension contract options and the
determination of the incremental borrowing rate to be applied for each portfolio of leases identified.
Impairment
Impairment of long-term assets and Goodwill
Impairment test are performed whenever there is an indication that the recoverable amount of property, plant, equipment
and intangible assets is less than the corresponding net book value of assets.
On an annual basis, the Group reviews the assumptions used to assess the existence of impairment in goodwill resulting
from acquisitions of shares in subsidiaries. The assumptions used are sensitive to changes in macroeconomic indicators
and business assumptions used by management. The net interest in associates is reviewed when circumstances indicate
the existence of impairment.
Considering the uncertainties regarding the recoverable amount of property, plant and equipment, intangible assets and
goodwill as they are based on the best information available, changes in the assumptions could result in changes on the
determination of the amount of impairment and, consequently, in results.
48
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Certain interpretations and estimates are required
in determining the global amount for income taxes.
There are several transactions and calculations for which the ultimate tax determination is uncertain during the ordinary
course of business. Different interpretations and estimates would result in a different level of income taxes, current and
deferred, recognised in the period.
Tax Authorities are entitled to review EDP Renováveis, and its subsidiaries’ determination of its annual taxable earnings,
for a determined period that may be extended in case there are tax losses carried forward. Therefore, it is possible that
some additional taxes may be assessed, mainly as a result of differences in interpretation of the tax law. However, the EDP
Renováveis and its subsidiaries, do not anticipate any significant changes to the income tax booked in the financial statements.
Dismantling and decommissioning provisions
The Board of Directors considers that Group has contractual obligations with the dismantling and decommissioning of
property, plant and equipment related to wind and solar electricity generation. For these responsibilities the Group has
recorded provisions for the expected cost of restoring sites and land to its original condition. The provisions correspond
to the present value of the expenditure expected to be required to settle the obligation.
EDPR’
s technical department performed an in-
depth analysis taking into account the reality of the EDPR’s fleet.
This analysis led to the conclusion that the average cost per megawatt and salvage value of the renewable assets
required to be updated, with effect December 2020 (see note 2.P and 32).
The use of different assumptions in estimates and judgments referred may have produced different results from those
that have been considered.
Entities included in the consolidation perimeter
In order to determine which entities must be included in the consolidation perimeter, the Group evaluates whether it is
exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee.
This evaluation requires judgement, assumptions and estimates in order to conclude whether the Group is in fact exposed
to variable returns and has the ability to affect those returns through its power over the investee.
Other assumptions and judgments could lead to a different consolidation perimeter of the Group, with direct impact in the
consolidated financial statements.
Business combinations
Under IFRS 3 (Business Combination) in a business combination, the acquirer shall recognise and measure in the
consolidated financial statements the assets acquired and liabilities assumed at fair value at the acquisition date.
The difference between the purchase price and the fair value of the assets and liabilities acquired leads to the recognition
of goodwill or a gain from a purchase at a low price (bargain purchase).
The fair value determination of the assets acquired and liabilities assumed is carried out internally or by independent
external evaluators, using the discounted cash flows method, using the replacement cost or other fair value determination
techniques, which rely on the use of assumptions including macroeconomic indicators such as inflation rates, interest rates,
exchange rates, discount rates, sale and purchase prices of energy, cost of raw materials, production estimates, useful life
and business projections.
Consequently, the determination of the fair value and goodwill or gain from a purchase at a low price is subject to numerous
assumptions and judgments and therefore changes could result in different impacts on results.
49
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Fair value measurement of contingent consideration
Contingent consideration from a business combination or a sale of a financial investment is measured at fair value
at the acquisition date as part of the business combination or at the date of the sale in the event of a sale of a financial
investment. This contingent consideration is subsequently remeasured at fair value at each report date. Fair value is based
on discounted cash flows. The main assumptions consider the probability of achieving each objective and the discount
factor, corresponding to the best estimates of management at each report date. Changes in assumptions could have
significant impact on the values of contingent assets and liabilities recognised in the financial statement.
05. Financial risk management policies
The businesses of EDP Renováveis Group are exposed to a variety of risks, including the effects of changes in electricity
market prices, foreign exchange and interest rates. The main financial risks arise from interest-rate and the exchange-rate
exposures. The volatility of financial markets is analysed on an on-
going basis in accordance with EDPR’s risk management
policies. Financial instruments are used to mitigate potential adverse effects on EDP Renováveis financial performance
resulting from interest rates and foreign exchange rates changes.
The Board of Directors of EDP Renováveis is responsible for the definition of general risk-management policies and the
establishment of exposure limits. Recommendations to manage financial risks of EDP Renováveis Group are proposed
by EDPR's Finance and Global Risk Departments and discussed in the Financial Risk Committee of EDP Renováveis,
which is held quarterly. The pre-agreed strategy is shared with the Finance Department of EDP - Energias de Portugal,
S.A., to verify the accordance with the policies approved by the Board of Directors of EDP. The evaluation of appropriate
hedging mechanisms and the execution is done by EDPR but may also be outsourced to the Finance Department of EDP.
All transactions undertaken using derivative financial instruments require the prior approval of the Board of Directors,
which defines the parameters of each transaction and approves the formal documents describing their objectives.
Exchange-rate risk management
EDPR/EDP Group’s Financial Department are responsible for managing the foreign exchange exposure of the Group, seeking
to mitigate the impact of exchange rate fluctuations on the net assets and net profits of the Group. Instruments used for hedging
are foreign exchange derivatives, foreign exchange debt and other hedging structures with offsetting exposure versus the item
to be hedged. The effectiveness of these hedges is reassessed and monitored throughout their lives.
EDPR operates internationally and is exposed to the exchange-rate risk resulting from investments in foreign subsidiaries.
With the objective of minimizing the impact of exchange rates fluctuations, EDP Renováveis general policy is to fund each
project in the currency of the operating cash flows generated by the project.
Currently, the main currency exposure is the U.S. Dollar, resulting from the shareholding in EDPR NA. EDPR is also
exposed to Polish Zloty, Romanian Leu, Brazilian Real, British Pound, Canadian Dollar, Colombian Peso and in the near
future EDPR will also be exposed to the Hungarian Forint and Vietnamese Dong. Currencies in emerging markets have
suffered a depreciation following COVID-19, but net investment hedges currently in place have mitigated the potential
impact in EDPR balance sheet.
To hedge the risk originated with net investment in EDPR NA, EDP Renováveis uses financial debt expressed in USD
and also entered into a CIRS in USD/EUR with EDP - Energias de Portugal, S.A. Following the same strategy adopted to
hedge these investments in USA, EDP Renováveis has also entered into CIRS in PLN/EUR, BRL/EUR, GBP/EUR,
CAD/EUR and in COP/EUR to hedge the investments in Poland, Brazil, United Kingdom, Canada and Colombia (see note
37).
50
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Sensitivity analysis - Foreign exchange rate
As a consequence, a depreciation/appreciation of 10% in the foreign currency exchange rate, with reference to
31 December 2020 and 2019, would originate an increase/(decrease) in EDP Renováveis Group income statement
and equity before taxes, as follows:
31 DEC 2020
THOUSAND EUROS
PROFIT OR LOSS
EQUITY
+10%
-10%
+10%
-10%
USD/EUR
8,321
-10,171
-11,209
13,670
8,321
-10,171
-11,209
13,670
31 DEC 2019
THOUSAND EUROS
PROFIT OR LOSS
EQUITY
+10%
-10%
+10%
-10%
USD / EUR
12,281
-15,010
-66,568
81,360
12,281
-15,010
-66,568
81,360
This analysis assumes that all other variables, namely interest rates, remain unchanged.
Interest rate risk management
The Group’s operating cash flows are substantially independent from the fluctuation in interest
-rate markets.
The purpose of the interest-rate risk management strategy is to reduce the exposure of debt cash flows to market
fluctuations. As such, whenever considered necessary and in accordance to the Group's policy, interest-rate financial
instruments are contracted to hedge interest rate risks. These financial instruments hedge cash flows associated
with future interest payments, converting floating rate loans into fixed rate loans.
All these hedges are undertaken on liabilities in the Group’s debt portfolio and are mainly perfect hedges with a high
correlation between changes in fair value of the hedging instrument and changes in fair value of the interest-rate risk
or upcoming cash flows.
The EDP Renováveis Group has a portfolio of interest-rate derivatives with maturities up to 15 years. The Financial
Department of EDP Group undertakes sensitivity analyses of the fair value of financial instruments to interest-rate
fluctuations or upcoming cash flows.
About 93% of EDP Renováveis Group financial debt bear interest at fixed rates, considering operations of hedge accounting
with financial instruments.
Sensitivity analysis - Interest rates
EDPR/EDP Group’s Financial Department are responsible for managing the interest rate risk associated to activities
developed by the Group, contracting derivative financial instruments to mitigate this risk.
51
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Based on the EDPR Group debt portfolio and the related derivative financial instruments used to hedge associated interest
rate risk, as well as on the shareholder loans received by EDP Renováveis, a change of 50 basis points in the interest rates
with reference to 31 December 2020 and 2019 would increase/(decrease) in EDP Renováveis Group income statement and
equity before taxes, as follows:
31 DEC 2020
THOUSAND EUROS
+50 BPS
-50 BPS
+50 BPS
-50 BPS
Cash flow hedge derivatives
-
-
722
-9,259
Unhedged debt (variable interest rates)
-1,660
1,660
-
-
-1,660
1,660
722
-9,259
31 DEC 2019
THOUSAND EUROS
+50 BPS
-50 BPS
+50 BPS
-50 BPS
Cash flow hedge derivatives
-
-
-10,595
-19,797
Unhedged debt (variable interest rates)
-1,752
1,752
-
-
-1,752
1,752
-10,595
-19,797
This analysis assumes that all other variables, namely foreign exchange rates, remain unchanged.
Counter-party credit-rate risk management in financial transactions
The EDP Renováveis Group counter-party risk exposure in financial and non-financial transactions is managed by an
analysis of technical capacity, competitiveness and probability of default to the counter-party. EDP Renováveis has defined
a counter-party risk policy inspired in Basel III, which is implemented across all departments in all EDP Renováveis
geographies. EDP Renováveis Group is exposed to counter-party risk in financial derivatives transactions in energy sales
(electricity, GC and RECs) and in supply contracts.
Counterparties in derivatives and financial transactions are restricted to high-quality credit institutions or to the EDP Group.
Most relevant counterparties in derivatives and financial transactions are companies within EDP Group. Financial
instruments contracted outside EDP Group are generally engaged under ISDA Master Agreements and credit quality
of external counterparties is analysed and collaterals required when needed.
In the process of selling the energy (electricity, GCs and RECs produced), counter-party exposure arises from trade
receivables, but also from mark-to-market of long-term contracts:
•
In
the specific case of the energy sales of EDPR EU Group, the Group’s main customers are utilities and regulated
entities in the different countries (EDP and CNMC in the case of the Spanish market). Credit risk from trade
receivables is not significant due to the limited average collection period for customer balances and the quality of its
debtors. Additional counter-party risk comes from the countries with renewables incentives, which it is usually
treated as regulatory risk
•
In
the specific case of EDPR NA Group, the Group’s main customers are regulated utility companies and regional
market agents in the US. As it occurs in Europe, credit risk from trade receivables is not significant due to the limited
average collection period for customer balances and the quality of the debtors. However, the exposure due to the
mark-to-market of long-term contracts may be significant. This exposure is managed by a detailed assessment
of the counter-party before signing any long term agreement and by a requirement of collaterals when financial
soundness of the counterparty deteriorates.
52
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Regarding Trade receivables and other debtors, they are recognized net of the impairment losses. The Group believes
that the credit quality of these receivables is adequate and that no significant impaired credits exist that have not been
recognised as such and provided for.
Counter-party exposure to suppliers arises mainly from contracts with equipment manufacturers and civil engineering
contractors. Counter-party analyses are performed for each new contract. If needed, either parent company guarantees
or bank guarantees are requested to comply with the limits of exposure established by EDP Renováveis counter-party
risk policy.
The maximum exposure to customer credit risk by counterparty type is detailed as follows:
THOUSAND EUROS
DEC 2020
DEC 2019
CORPORATE SECTORS AND INDIVIDUALS
Supply companies
19,952
46,248
Business to business
4,718
151
Other
25,781
15,035
Total Corporate sectors and individuals
50,451
61,434
Public sector
2,131
19,356
Total Public sector and Corporate sectors/individuals
52,582
80,790
Trade receivables by geographical market for the Group EDPR, is as follows:
THOUSAND EUROS
DEC 2020
EUROPE
NORTH AMERICA
BRAZIL
TOTAL
Corporate sectors and individuals
33,121
17,217
113
50,451
Public sector
2,131
-
-
2,131
Total
35,252
17,217
113
52,582
THOUSAND EUROS
DEC 2019
EUROPE
NORTH AMERICA
BRAZIL
TOTAL
Corporate sectors and individuals
47,406
10,646
3,382
61,434
Public sector
8,005
-
11,351
19,356
Total
55,411
10,646
14,733
80,790
In accordance with accounting policies - note 2 e), impairment losses are determined using the simplified approach
precluded in IFRS 9, based on life time expected losses.
Regarding specific counter-party exposure caused by COVID-19, during the first semester of 2020 there was a general
deterioration of the financial situation of counterparties across the globe, with the subsequent increase in credit risk
from Electricity hedges, PPAs and supply contracts. However, there was no impact for EDPR due to the quality of its
counter-parties. During the second semester of 2020, the situation normalized with a general improvement in global
credit risk.
Liquidity risk
Liquidity risk is the possibility that the Group will not be able to meet its financial obligations as they fall due. The Group
strategy to manage liquidity is to ensure, as far as possible, that it will always have significant liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Group's reputation.
53
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The liquidity policy followed ensures compliance with payment obligations acquired, through maintaining sufficient credit
facilities and having access to the EDP Group facilities who manages the Group liquidity risk through the engagement and
maintenance of credit lines and financing facilities with a firm underwriting commitment with international reliable financial
institutions as well as term deposits, allowing immediate access to funds. These credit lines are used to complement and
backup national and international commercial paper programs, allowing the EDP Group’s short
-term financing sources to
be diversified.
The Directors have estimated cash flows that show that the Group will meet the commitments existing at the close of the
2020 financial year and those foreseen for 2021.
The maturity analysis for financial debt (see note 31), including expected future interests, is as follows:
THOUSAND EUROS
DEC
2021
DEC
2022
DEC
2023
DEC
2024
DEC
2025
FOLLOWING
YEARS
TOTAL
Bank loans
77,747
74,874
65,849
60,940
42,169
328,624
650,203
Loans received from EDP Group
418,905
513,111
461,180
430,669
202,829
1,258,163
3,284,857
Other loans
1,027
1,005
1,202
1,011
1,031
13,114
18,390
Expected future interests
80,509
105,856
91,908
71,759
51,346
194,633
596,011
578,188
694,846
620,139
564,379
297,375
1,794,534
4,549,461
Electricity market price risk
As of 31 December 2020, electricity market price risk affecting the EDP Renováveis Group is not significant. In the case
of EDPR NA, the great majority of the plants are under power purchase agreements or long term financial contracts,
with fixed or escalating prices. In the case of EDPR EU, the electricity is sold in Spain, France, Italy, Portugal and Poland
through regulated tariffs, physical or financial PPAs. In Romania the green certificates have a floor.
For the small share of energy with merchant exposure after tariff regimes, PPAs or long term financial contracts (electricity,
green certificates and RECs), market risk is managed through the execution of electricity, green certificate and REC forward
contracts. For this marginal exposure EDPR EU and EDPR NA have electricity, green certificates and REC financial swaps
that qualify for hedge accounting (cash flow hedge) that are related to sales for the years 2021 to 2025 (see note 37).
The purpose of EDP Renováveis Group is to hedge in advance a significant volume of the merchant exposure to reduce
the volatility of energy prices in each reporting year.
With COVID-19, electricity market prices dropped during 2020 in most of EDPR geographies due to the reduction in
demand following the loc
kdown and the decrease in economic activity. However, impact of lower energy prices on EDPR’s
results was negligible, as EDPR’s marginal merchant exposure was already hedged for 2020 and 2021
.
Capital management
The Group’s goal in managing equity, in acco
rdance with the policies established by its main shareholder, is to safeguard
the Group’s capacity to continue operating as a going concern, grow steadily to meet established growth targets and
maintain an optimum equity structure to reduce equity cost.
In conformity with other sector groups, the Group controls its financing structure based on the leverage ratio. This ratio is
calculated as net financial borrowings divided by total equity and net borrowings. Net financial borrowings are determined as
the sum of financial debt, institutional equity liabilities corrected for non-current deferred revenues, less cash and cash
equivalents.
Climate-related risk
The Earth's climate has changed throughout history. Scientists attribute the current global warming trend observed since the
mid-20th century to the human expansion of the "greenhouse effect"
–
warming that results when the atmosphere traps heat
radiating from Earth toward space. Over the last century, the burning of fossil fuels like coal and oil has increased the
concentration of atmospheric carbon dioxide (CO2).
54
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
EDPR is a clear example of how fighting against climate change creates business opportunities. The Company’s core
business, to deliver clean energy by developing, building and operating top quality wind farms and solar plants, inherently
implies the reduction of greenhouse gas emissions, contributing to the world’s fight against climate change and its impacts.
Nevertheless, on the risk side, meteorological changes may pose a risk for EDPR’s acti
vities and results since they are
carried out in areas of the planet that are being affected by climate change. In addition, future estimations of wind and
solar production are based on analysis of historical measurements for more than 20 years and they are considered to be
representative of the future. However, relevant unexpected meteorological changes could lead to a lower production than
the one expected from historical data. Thus, when evaluating a new investment, EDPR considers potential changes in the
production forecasted but, even so, the size of the potential deviation in the case of relevant meteorological changes is
uncertain.
Moreover, renewable plants in construction and in operation are exposed to weather hazards, natural disasters, etc.
These risks depend on the location of the assets. At EDPR, all plants are insured from the physical damage during
construction and operation. During operation, any natural disaster, weather hazard or accident will also be partially insured
to revenue losses d
ue to the event. Thus, no material impacts are identified in the EDPR’s consolidated financial statements
as a consequence of climate-related matters.
06. Consolidation perimeter
During the year ended in 31 December 2020, the changes in the consolidation perimeter of the EDP Renováveis Group
were:
Companies acquired:
EDPR Group, through its fully owned subsidiary EDP Renewables Europe S.L., acquired 100% of the companies Viesgo
Europa, S.L.U., Viesgo Renovables, S.L.U. and related affiliates in the context of the conclusion, by the end of December
2020, of the acquisition of the renewables business of Viesgo for a total consideration of 563,488 thousand Euros of which
an amount of 26,001 thousand Euros refers to shareholders loans. Related affiliates and indirect stake acquired are the
following ones:
FULL-CONSOLIDATED METHOD
Viesgo Mantenimiento, S.L.U.
100%
Northeolic Monte Buño, S.L.
75%
Compañía Eólica Aragonesa, S.A.
100%
Parque Eólico do Barlavento, S.A.
89.98%
S.E.E. - Sul Energía Eólica, S.A
100%
IE2 Portugal, SGPS, S.A.
100%
Eoliser - Serviços de Gestão para Parques Eólicos, Lda.
100%
EQUITY-CONSOLIDATED METHOD
Elecdey Carcelén, S.A.
23%
Eos Pax IIa, S.L.
48.5%
Geólica Magallón, S.L.
36.24%
San Juan de Bargas Eólica, S.L.
47.01%
Unión de Generadores de Energía, S.L.
50%
Eólica de São Julião, Lda.
45%
EQUITY INSTRUMENTS AT FAIR VALUE
Elecdey Ascoy, S.A.
19.5%
Eólica de Levante, S.L
25%
Eólicas Páramo de Poza, S.A.
15%
55
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
This transaction has been considered, for consolidation purposes, within the scope of IFRS 3
–
Business Combinations
and has implied the recognition of goodwill in the consolidated financial estatements of 148,341 thousand Euros that
includes previous Goodwill recognized in the book value at acquisition date amounting to 112,279 thousand.
This transaction includes a business combination achieved in stages for the company Compañía Eólica Aragonesa, S.A.,
where EDPR had 50% of the shares of the company previously to this transaction, which has generated a gain in the
amount of 1,887 thousand Euros, which was recorded in the consolidated income statement (see notes 9, 19 and 42).
The following acquisitions were classified as asset purchases, out of scope of IFRS 3
–
Business Combinations,
due to the substance of these transactions, the type of assets acquired and the very early stage of the projects:
•
EDPR France Holding, S.A.S. acquired 100% of the company Société D'Exploitation du Parc Eolien Source
de Sèves, S.A.R.L.;
•
EDP Renewables Italia Holding, S.R.L. acquired 100% of the company Aliseo, S.r.l., 100% of the company VRG
Wind 153, S.r.l. and 60% of the companies Energia Emissioni Zero 4, S.r.l., Wind Energy San Giorgio, S.r.l. and
Giglio, S.r.l.;
•
EDP Renewables Polska, Sp. zo.o. acquired 100% of the companies Wind Field Wielkopolska, Sp. zo.o.,
FW Warta, Sp. z o.o.; Neo Solar Farms, Sp. z o.o.; and R.Wind, Sp. z o.o.;
•
Korean Floating Wind Power Co., Ltd. acquired 90% of the company East Blue Power Co., Ltd.;
•
EDP Renováveis S.A. and EDP Renewables Europe S.L. acquired 100% of the company Parque Solar Los
Cuervos,
S. de R.L. de C.V.;
•
EDP Renewables Polska HoldCo, S.A. acquired 100% of the company Budzyn, Sp. z o.o.;
•
EDP Renováveis, S.A. acquired 100% of the company Solar Power Solutions, S.A.S. E.S.P. which holds 100%
of the companies Elipse Energía, S.A.S. E.S.P., Omega Energía, S.A.S. E.S.P. and Kappa Energía, S.A.S. E.S.P.;
•
EDP Renewables Europe, S.L. acquired 85% of the companies Sunlight Solar, Kft and ESC ER
Ő
M
Ű
, Kft. and
100%
of the companies Wind Shape, Ltd., Altnabreac Wind Farm Limited, Ben Sca Wind Farm Limited, Moorshield Wind
Farm Limited, Drummarnock Wind Farm Limited, and Wind 2 Project 1 Limited;
•
EDP Renewables North America LLC acquired 100% of the companies RE Scarlet LLC and Misenheimer Solar
LLC;
•
EDP Renováveis Brasil S.A. acquired 100% of the companies Central Solar Lagoa I, S.A. and Central Solar Lagoa
II, S.A.
Disposals with loss of control:
•
In the fourth quarter of 2020, EDP Renewables North America LLC through its fully owned subsidiary EDPR Wind
Ventures XVII, LLC sold to CC&L Java Wind USA LLC by 231,714 thousand Euros, the equivalent of 264,646
thousand US dollars, 80% of its direct and indirect interests in the following companies:
•
2017 Vento XVII, LLC;
•
Quilt Block Wind Farm LLC;
•
Meadow Lake V LLC;
•
Redbed Plains Wind Farm LLC;
•
Hog Creek Wind Project, LLC.
56
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
In accordance with the Shareholders Agreement and other relevant contracts, it has been established a shared control
of the Companies which led to a loss of control over the companies and their consolidation by the equity method.
This disposal with loss of control generated a gain which has
been registered within the “Other income” caption
of the consolidated financial statements in the amount of 99,359 thousand Euros (see note 9).
Companies sold and liquidated:
•
In the fourth quarter of 2020, EDPR Group, through its fully owned subsidiary EDP Renewables España S.L.,
sold to FRGE 2 S.a.r.l the EDPR’s entire stake in the
following portfolio of Spanish companies:
•
Bon Vent de Corbera, S.L.U.
•
Eólica Sierra de Ávila, S.L.U.
•
Parc Eòlic de Torre Madrina, S.L.U.
•
Parc Eòlic de Coll de Moro, S.L.U.
•
Parc Eòlic de Vilalba dels Arcs, S.L.U.
•
Aprofitament D'Energies Renovables de L'Ebre, S.L.
Total proceeds for the transaction amount to 449,658 thousand Euros from which an amount of 112,724 thousand
Euros refer to shareholders loans. This transaction has generated a gain, net of transaction costs, amounting to
112,908
thousand Euros, which has been registered within the “Other income” caption of the consolidated income
statement (see note 9);
•
EDP Renewables North America LLC sold the company Rosewater Wind Farm LLC for a total amount of 160,741
thousand Euros, the equivalent of 183,586 thousand US dollars. This transaction has generated a gain, as of 31
December 2020,
which has been registered within the “Other income” caption of the consolidated financial
statements in the amount of 14,438 thousand Euros (see note 9 and 34);
•
The companies Frontier Beheer Nederland, B. V. and Frontier, C.V., in which OW Offshore, S.L. held, directly or
indirectly, a 30% financial interest, were liquidated;
•
EDP Renewables North America LLC liquidated the following companies: Horizon Wind Ventures VI LLC, 2009
Vento VI LLC, Horizon Wind Ventures VII LLC, 2010 Vento VII LLC, Horizon Wind Ventures VIII LLC and 2010
Vento VIII LLC.
Companies merged:
•
Merger of the companies EDPR RO PV, S.R.L., Studina Solar, S.A., Cujmir Solar, S.A., Potelu Solar, S.A., Vanju
Mare Solar, S.A., Foton Delta, S.A., Foton Epsilon, S.A. into the company EDPR România, S.R.L. with no impact in
the consolidated financial statements.
57
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Companies Incorporated:
•
Vanosc Energie, S.A.S.;
•
Transition Euroise Roman II, S.A.S.;
•
Mordel Limited
•
EDPR Offshore South Korea Co., Ltd.;
•
EDP Renewables Hungary Kft.;
•
EDP Renewables Vietnam Ltd.;
•
Duff Solar Park II LLC*;
•
EDPR Northeast Allen Solar Park LLC*;
•
Indiana Crossroads Solar Park II LLC*;
•
RTSW Solar Park LLC*;
•
RTSW Solar Park II LLC*;
•
RTSW Solar Park III LLC*;
•
RTSW Solar Park IV LLC*;
•
RTSW Solar Park V LLC*;
•
RTSW Solar Park VI LLC*;
•
EDPR Wind Ventures XXII LLC*;
•
2020 Vento XXII LLC*;
•
Rosewater Ventures LLC*;
•
Timber Road II Storage LLC*;
•
Timber Road III Storage LLC*;
•
Top Crop I Storage LLC*;
•
Top Crop II Storage LLC*;
•
Twin Groves I Storage LLC*;
•
Twin Groves II Storage LLC*;
•
Cattlemen Solar Park LLC*;
•
Rail Splitter Wind Farm II LLC*;
•
Azalea Springs Solar Park LLC*;
•
Riverstart Development LLC;
•
Riverstart Ventures LLC*;
•
Timber Road Solar Park II LLC*;
•
Timber Road Solar Park III LLC*;
•
Edwardsport Solar Park LLC*;
•
Crescent Bar Solar Park LLC*;
•
Esker Solar Park II LLC*;
•
Bluebird Prairie Solar Park LLC*;
•
Tillman Solar Park LLC*;
•
EDPR NA DG Holding LLC*.
* EDPR Group holds, through its subsidiary EDPR NA, a set of subsidiaries legally established in the United States without share capital and that,
as at 31 December 2020, do not have any assets, liabilities, or any operating activity.
Other changes:
•
A joint control partnership has been executed following the strategic memorandum of understanding dated May
2019 and signed between EDPR and ENGIE by which a co-controlled 50/50 joint venture in fixed and floating
offshore wind business, OW Offshore S.L., has been established, including its subsidiaries:
•
OW FS Offshore, S.A.;
•
4THEWIND I, B.V.;
•
4THEWIND II, B.V.
•
4THEWIND III, B.V.;
•
4THEWIND IV, B.V.
•
4THEWIND V, B.V.
•
4THEWIND VI, B.V.
•
4THEWIND VII, B.V.
•
4THEWIND VIII, B.V.
•
Ancoris Beheer Nederland, B.V.
•
Les Eoliennes Flottantes du Golfe du Lion,
S.A.S.;
•
Éoliennes en Mer Dieppe - Le Tréport, S.A.S.;
•
Éoliennes en Mer Îles d'Yeu et de Noirmoutier,
S.A.S.;
•
EDPR Japan Godo Kaisha;
•
Les Eoliennes en Mer Services, S.A.S.;
•
EDPR Offshore South Korea Co., Ltd.;
•
OW France, S.A.S.;
•
Moray East Holdings Limited;
•
Relax Wind Park IV, Sp. z o.o.;
•
Moray Offshore Windfarm (East) Limited;
•
Morska Farma Wiatrowa Neptun, Sp. z o.o.;
•
Delphis Holdings Limited;
•
B-Wind Polska, Sp. z o.o.;
•
Moray West Holdings Limited;
•
C-Wind Polska, Sp. z o.o.;
•
Moray Offshore Windfarm (West) Limited;
•
Ocean Wind UK Ltd;
•
Korean Floating Wind Power Co., Ltd.;
•
Mordel Limited;
•
East Blue Power Co. Ltd.;
•
Moray Offshore Renewable Power Limited;
•
Windplus, S.A.;
•
B&C Wind Polska sp. z o.o. s.c.;
•
Ventum Ventures III Holding, B.V.;
•
Redwood Coast Offshore Wind LLC;
•
Ventos do Atlântico - Projetos de Energía Eólica Ltda;
•
Electrabel Offshore Energy, CVBA;
•
SeaMade, N.V;
•
North Sea Wave, N.V.;
•
OW North America LLC;
•
North River Wind LLC;
•
Mayflower Wind Energy LLC.
58
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
As a result of this transaction, EDP Renováveis has registered a gain in the amount of 217,633 thousand Euros in
the other income caption of the consolidated income statement (see note 9);
•
EDPR owns 100% of Nation Rise LP trough Quatro Limited Partnership (99,99%) and Nation Rise Wind Farm GP
Inc. (0,01%).
•
EDPR France Holding, S.A.S. sold 15% of the company Transition Euroise Roman II, S.A.S. with no significant
impacts in the consolidated financial statements.
During the year ended in 31 December 2019, the changes in the consolidation perimeter of the EDP Renováveis Group
were:
Companies acquired:
•
EDP Renováveis, S.A. acquired 100% of the Colombian companies Eolos Energías, S.A.S. E.S.P. and Vientos del
Norte, S.A.S. E.S.P. These operations were classified as asset purchases, out of scope of IFRS 3
–
Business
Combinations, due to the substance of these transactions, the type of assets acquired and the very early stage of
the projects;
•
EDP Renováveis Brasil, S.A. acquired 100% of the companies Central Eólica Boqueirão I, S.A., Central Eólica
Boqueirão II, S.A., Monte Verde Holding, S.A. and Jerusalém Holding, S.A.. These operations were classified as
asset purchases, out of scope of IFRS 3
–
Business Combinations, due to the substance of these transactions, the
type of assets acquired and the very early stage of the projects;
•
EDP Renováveis Brasil, S.A. acquired 100% of the companies Central Eólica Catanduba I, S.A. and Central Eólica
Catanduba II, S.A.;
•
EDPR Offsore España, S.A.S. acquired, directly or indirectly, 100% of the companies B-Wind Polska, Sp. z o.o., C-
Wind Polska, Sp. z o.o.,Ventum Ventures III Holding, B.V., Fluctus V, B.V., Fluctus VI, B.V., Fluctus VII, B.V. and
30% of the companies Frontier Beheer Nederland, B. V. and Frontier, C.V.;
•
EDP Renewables Polska, Sp. z o.o., acquired 100% of the company EDPR Polska Solar Sp. z.o.o.;
•
EDP Renewables Polska, Sp. z o.o., acquired 100% of the companies Lichnowy Windfarm Sp. Zo.o., EW Dobrzyca
sp. z o.o., Ujazd, Sp. zo.o., Winfan, Sp. zo.o., Kowalewo Wind, Sp. zo.o., European Wind Power Krasin, Sp. zo.o.,
Nowa Energia 1, Sp. zo.o. and Farma Wiatrowa Bogoria, Sp. zo.o. These operations were classified as asset
purchases, out of scope of IFRS 3
–
Business Combinations, due to the substance of these transactions, the type of
assets acquired and the very early stage of the projects;
•
EDP Renewables Polska HoldCo, S.A. acquired 100% of the company Gudziki Wind Farm Sp. z o.o;
•
Monte Verde Holding, S.A. acquired 100% of the company Central Eólica Monte Verde VI, S.A. This operation was
classified as an asset purchase, out of the scope of IFRS 3
–
Business Combinations, due to the substance of the
transaction, the type of assets acquired and the very early stage of the projects;
•
EDP Renewables Europe and EDP Renováveis S.A. acquired 100% of the Greek company Aioliko Parko Fthiotidos
Erimia E.P.E. This operation was classified as an asset purchase, out of the scope of IFRS 3
–
Business
Combinations,
due to the substance of the transaction, the type of assets acquired and the very early stage of the projects.
Sale of companies without loss of control:
•
EDPR France Holding, S.A.S. sold 10% of its financial interest in Parc Éolien d’Entrains
-sur-Nohain, S.A.S.
(formerly Parc Éolien de Citernes, S.A.S.) by 46 thousand Euros.
59
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Companies sold and liquidated:
•
In the second quarter of 2019, EDPR Group, through the companies EDP Renewables Europe S.L.U. and EDPR
Yield, S.A.U. sold to Beta Energy Investments S.A.R.L. and BETA II S.
R.L. the EDPR’s stake of 51% in the
companies EDPR Participaciones, S.L.U. and EDP Renewables France, S.A.S. respectively, with a subsequent
sale of the entire stake held by EDPR in following subsidiaries:
•
EDPR Participaciones’ subsidiaries: Bon Vent de Vi
lalba, S.L.U., Bon Vent de L'Ebre, S.L.U., Eólica Don
Quijote, S.L.U., Eólica Dulcinea, S.L.U., Eólica de Radona, S.L.U., Eólica del Alfoz, S.L.U., Eólica La Navica,
S.L.U., Parc Éolien de Dammarie, S.A.R.L., Parc Éolien de Preuseville, S.A.R.L., Parc Éolien d'Escardes,
S.A.S., Parc Éolien de Montagne Fayel, S.A.S., Parc Éolien de Francourville, S.A.S., Green Wind, S.A, Eólica
do Castelo, S.A., Eólica da Lajeira, S.A., Eólica do Velão, S.A. and Eólica do Cachopo, S.A. Additionally,
EDPR Group sold the stake held by the company EDPR Eólica de Radona, S.L.U in the company
Infraestructuras Medinaceli, S.L. (8.76%) and the stake held by the companies Bon Vent de l'Ebre S.L and
Bon Vent de Vilalba S.L. in the company Aprofitament Energies Renovables Terra Alta, S.A. (9.70% and
10.42% respectively);
•
EDP Renewables France’ subsidiaries: Neo Plouvien, S.A.S., Centrale Eolienne Gueltas Noyal
-Pontivy,
S.A.S., Centrale Eolienne Segur, S.A.S., Centrale Eolienne Saint Barnabé, S.A.S., Centrale Eolienne Patay,
S.A.S., Centrale Eolienne Canet-Pont de Salars, S.A.S., Centrale Eolienne Neo Truc de L'Homme, S.A.S.,
SOCPE de Sauvageons, S.A.R.L., SOCPE Le Mee, S.A.R.L., SOCPE Petite Pièce, S.A.R.L., SOCPE de la
Vallée du Moulin, S.A.R.L., SOCPE de la Mardelle, S.A.R.L., SOCPE des Quinze Mines, S.A.R.L., Parc
Éolien de Tarzy, S.A.R.L., Eolienne de Saugueuse, S.A.S., Parc Éolien de Roman, S.A.R.L., Parc Éolien des
Vatines, S.A.S., Parc Éolien de Varimpre, S.A.S. and Parc Éolien du Clos Bataille, S.A.S.;
Total proceeds for the transaction amount to 806,090 thousand Euros from which an amount of 304,732 thousand
Euros refer to shareholders loans. This transaction has generated a gain, net of transaction costs, amounting to
225,644 thousand Euros, which has b
een registered within the “Other income” caption of the condensed
consolidated income statement (note 9).
•
In the fourth quarter of 2019, EDPR Group through the company EDP Renováveis Brasil, S.A. sold to Allif SLP I LP
the EDPR’s stake of 100% in the comp
any Babilônia Holding, S.A. with a subsequent sale of the entire stake held
by EDPR in the following subsidiaries:
•
Central Eólica Babilônia I, S.A.
•
Central Eólica Babilônia II, S.A.
•
Central Eólica Babilônia III, S.A.
•
Central Eólica Babilônia IV, S.A.
•
Central Eólica Babilônia V, S.A.
Estimated total proceeds amount to 132,227 thousand Euros (the equivalent of 597,096 thousand Brazilian Real).
This transaction has generated a gain, net of transaction costs, amounting to 87,078 thousand Euros, which has
bee
n registered within the “Other income” caption of the condensed consolidated income statement (note 9)
;
•
EDP Renewables Polska, Sp. z o.o., sold 100% of the company EDP Renewables Polska OPCO, S.A. for a
residual consideration;
•
Moray East Holdings Limited liquidated the companies Telford Offshore Windfarm Limited, MacColl Offshore
Windfarm Limited and Stevenson Offshore Windfarm Limited.
60
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Companies Incorporated:
•
Little Brook Solar Park LLC *
•
EDPR Solar Ventures III LLC
•
Bright Stalk Solar Park LLC *
•
2019 SOL III LLC
•
Crossing Trails Wind Power Project II LLC *
•
Greenbow Solar Park LLC *
•
Headwaters Wind Farm IV LLC*
•
Holly Hill Solar Park LLC *
•
North River Wind LLC*
•
Pleasantville Solar Park LLC *
•
EDPR Japan GK.
•
Mineral Springs Solar Park LLC *
•
Custolito, S.R.L.
•
Solar Ventures Acquisition LLC
•
EDPR Hellas 1 M.A.E.
•
EDPR Solar Ventures IV LLC
•
EDPR Hellas 2 M.A.E.
•
2019 SOL IV LLC
•
EDPR Terral S.L.U.
•
Fotovoltaica Lote A, S.A.
•
EDPR Amaris S.L.U.
•
Solar Ventures Purchasing LLC
•
EDPR Suvan S.L.U.
•
Goldfinger Ventures LLC
•
Black Prairie Solar Park LLC *
•
Goldfinger Ventures II LLC
•
Duff Solar Park LLC *
•
Blackford County Wind Farm LLC*
•
Eastmill Solar Park LLC *
•
Blackford County Solar Park LLC*
•
Lowland Solar Park LLC *
•
2019 SOL V LLC*
•
Moonshine Solar Park LLC *
•
EDPR Solar Ventures V LLC*
•
Sedge Meadow Solar Park LLC *
•
Goldfinger Ventures III LLC*
•
EDPR Wind Ventures XX LLC
•
EDPR Sicilia PV, S.R.L.
•
2019 Vento XX LLC
•
EDPR FS Offshore, S.A.
•
EDPR Wind Ventures XXI LLC
•
Alabama Solar Park LLC*.
* EDPR Group holds, through its subsidiary EDPR NA, a set of subsidiaries legally established in the United States without share capital and that,
as at 31 December 2019, do not have any assets, liabilities, or any operating activity.
Other changes:
•
In the fourth quarter of 2019, EDP Renewables North America LLC (EDPR NA), through the company Solar
Ventures Purchasing LLC (Solar VP), sold 50% of its interest in Solar Ventures Acquisition, LLC (Solar VA) to
Goldeneye SVA LLC (wholly owned by ConnectGen). Further, EDPR NA sold 50% of its interest in the companies
Goldfinger Ventures, LLC (Goldfinger I) and Goldfinger Ventures II, LLC (Goldfinger II) to ConnectGen. Subsequent
to EDPR NA’s selling transaction referred for Solar VA, this joint venture acquired
the companies Sunshine Valley
Solar, LLC (Sunshine Valley), Sun Streams, LLC (Sun Streams) and Windhub Solar A, LLC (Windhub Solar).
Subsequent to EDPR NA’s selling transaction referred above for Goldfinger I and Goldfinger II, the joint venture
Solar VA sold the companies Sunshine Valley and Windhab Solar to a subsidiary of Goldfinger I and sold the
company Sun Streams to a subsidiary of Goldfinger II;
•
EDP Renewables Europe, S.L.U. acquired 32% of the company Dunkerque Éoliennes en Mer, S.A.S.;
•
EDP Renewables Europe, S.L.U. and EDP Renováveis S.A. acquired from RG Renovatio Group Limited 15% of the
share capital of the companies Cernavoda Power, S.A., Pestera Wind Farm, S.A., VS Wind Farm, S.A. and Sibioara
Wind Farm, S.R.L., increasing to 100% its share interest in the companies;
•
EDP Renovables España, S.L. acquired 25% of the Spanish companies Sitemas Eólicos Tres Cruces, S.L.U.
and Desarrollos Energéticos del Val, S.L.;
•
EDPR Offshore España, S.L. acquired 61% of the South Korean company Korean Floating Wind Power Co., Ltd.
The companies included in the consolidation perimeter of EDPR Group as at 31 December 2020 and 2019 are listed
in Annex I.
61
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
07. Revenues
Revenues are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
REVENUES BY BUSINESS AND GEOGRAPHY
Electricity in Europe
802,171
887,838
Electricity in North America
648,225
636,074
Electricity in Brazil
36,215
75,073
1,486,611
1,598,985
Other revenues
8,182
6,682
1,494,793
1,605,667
Services rendered
27,336
7,654
CHANGES IN INVENTORIES AND COST OF RAW MATERIAL
AND CONSUMABLES USED
Cost of consumables used and changes in inventories
6,845
28,808
Total Revenues
1,528,974
1,642,129
The breakdown of revenues by segment is presented in the segmental reporting (see note 44).
08. Income from institutional partnerships in U.S. wind farms
Income from institutional partnership in U.S. Wind Farms in the amount of 201,783 thousand Euros (31 December 2019:
181,570 thousand Euros), includes revenue recognition related to production tax credits (PTC), investments tax credits
(ITC) and other tax benefits, mostly from accelerated tax depreciation related to projects Sol I and II, Blue Canyon I, Vento I
to V, Vento IX to XVIII and Vento XX to XXI (see note 33).
09. Other income
Other income is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Amortisation of deferred income related to power purchase agreements
2,244
2,578
Contract and insurance compensations
21,653
23,707
Gains on business combinations
1,887
-
Gains on disposals
444,340
313,444
Other income
28,290
59,951
498,414
399,680
The power purchase agreements between EDPR NA and its customers were valued based on market assumptions,
at the acquisition date of the business combination, using discounted cash flow models. At that date, these agreements
were valued at approximately 190,400 thousand of USD and booked as a non-current liability (see note 34). This liability
is amortised over the period of the agreements against other income. As at 31 December 2020, the amortisation for the
period amounts to 2,244 thousand Euros (31 December 2019: 2,578 thousand Euros) and the non-current liability amounts
to 6,438 thousand Euros (31 December 2019: 9,318 thousand Euros).
62
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The amount of 1,887 thousand Euros in caption Gains of business combinations refers to the business combination
achieved in stages for the company Compañía Eólica Aragonesa, S.A., where EDPR had 50% of the shares of the
company and gained control through the acquisition of the remaining 50% of the shares in the context of the acquisition
transaction of Viesgo’s renewable business (see note 6 and 42).
As at 31 December 2020, the caption Gains on disposals essentially includes:
•
Gain amounting to 217,633
thousand Euros resulting from loss of control in the EDPR’s offshore business
during
2020 as a consequence of the the joint control partnership in this business following the strategic memorandum of
understanding dated May 2019 and signed between EDPR and ENGIE by which a co-controlled 50/50 joint venture
in fixed and floating offshore wind business, OW Offshore, S.L., has been established (see note 6);
•
Gain amounting to 112,908 thousand Euros resulting from the sale of the entire stake in the companies Bon Vent
de Corbera, S.L.U., Eólica Sierra de Ávila, S.L.U., Parc Eòlic de Torre Madrina, S.L.U., Parc Eòlic de Coll de Moro,
S.L.U., Parc Eòlic de Vilalba dels Arcs, S.L.U. and Aprofitament D'Energies Renovables de L'Ebre, S.L. (see note
6);
•
Gain amounting to 99,359 thousand Euros related to the sale of the 80% stake and loss of control in the companies
EDPR Wind Ventures XVII, LLC and subsidiaries (see note 6); and
•
Gain amounting to 14,438 thousand Euros resulting from the sale of the entire stake in the company Rosewater
Wind Farm LLC (see note 6).
As at 31 December 2019, the caption Gains on disposals essentially included
: (I) gain related to the sale of the EDPR’s
stake of 51% in the companies EDPR Participaciones, S.L.U. and EDP Renewables France, S.A.S. (see note 6) in the
amount of 225,644 thousand Euros; and (ii) gain related to the sale of 100% of the stake in the company Babilônia Holding,
S.A. and subsidiaries (see note 6) in the amount of 87,078 thousand Euros.
As at 31 December 2020, the caption other income includes: i) management and cost reinvoicing for UK offshore projects
in the amount of 8,686 thousand Euros; and ii) price adjustment amounting to 3,335 thousand Euros according to the
corresponding agreements in the transaction of selling 49% of Baixas de Feijão portfolio of companies to CTG that took
place in 2015.
10. Supplies and services
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Rents and leases
22,993
21,306
Maintenance and repairs
190,934
204,655
SPECIALISED WORKS:
- IT Services, legal and advisory fees
13,354
12,730
- Shared services
12,004
7,037
- Other services
30,604
17,754
Other supplies and services
34,548
45,550
304,437
309,032
As per the adoption of IFRS 16 on 1 January 2019, the caption Rents and leases mainly includes costs for variable lease
payments and rental costs for short-term leases.
63
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
11. Personnel costs and employee benefits
Personnel costs and employee benefits is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
PERSONNEL COSTS
Board remuneration (see note 39)
569
606
Remunerations
115,284
103,367
Social charges on remunerations
18,587
17,054
Employee's variable remuneration
26,896
26,049
Other costs
3,331
4,042
Own work capitalised (see note 16)
-38,324
-34,417
126,343
116,701
EMPLOYEE BENEFITS
Costs with pension plans
5,752
5,480
Costs with medical care plans and other benefits
9,061
8,512
14,813
13,992
141,156
130,693
As at 31 December 2020, Costs with pension plans relates essentially to defined contribution plans in the amount of
5,636 thousand Euros (31 December 2019: 5,365 thousand Euros) and defined benefit plans amounting to 3 thousand
Euros (14 thousand Euros as at 31 December 2019).
The average breakdown by management positions and professional category of the permanent staff during 2020 and 2019
is as follows:
2020
2019
Directors
228
199
Managers
157
157
Specialists
1,034
906
Technicians
216
207
1,635
1,469
The breakdown by gender of the permanent staff as of 31 December 2020 and 2019 is as follows:
31 DEC 2020
31 DEC 2019
Male
1,206
1,090
Female
529
476
1,735
1,566
The consolidation perimeter, available in Annex I of the consolidated annual accounts, includes the companies
of the acquisition transaction reported at the end of December 2020. The information presented above do not include
45 employees of the companies whose shares were acquired since their integration is in the analysis phase.
64
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
In the companies in Spain where there is a legal obligation to have people with disabilities in the workforce to comply
with the LISMI due to the number of employees, EDPR has opted for the exceptionality measures provided by the Law.
The Company is able to comply with the quota that legally applies to it through contracts of goods or services with
companies that promote t
he hiring of disabled people and also through donations. EDPR’s companies under this obligation
are covered with the exceptionality measures since February 2018 and for a period of three years. For the rest of EDPR
countries, the approach is the same. Recently, as part of EDPR's global strategy, a Diversity and Equality Committee has
been set up with the participation of the Executive Committee, whose objective is to integrate the commitment to this issue
within the company. One of the objectives of this Committee is focused on the group of people with disabilities as one of the
most important topics to be developed.
12. Other expenses
Other expenses are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Taxes
76,072
73,760
Losses on fixed assets
1,492
16,460
Other costs and losses
45,050
43,866
122,614
134,086
The caption Taxes, on 31 December 2020, includes the amount of 23,666 thousand Euros (31 December 2019: 21,313
thousand Euros) related to taxes for energy generators in Spain, affecting all the wind farms in operation, amounting
to 7% of revenues for each wind farm.
Other costs and losses includes an amount of 10,439 thousand Euros that refers to a change in the fair value of the
contingent consideration related to the sale in 2018 to Sumitomo Corporation of 13,5% stake in the companies Éoliennes
en Mer Dieppe - Le Tréport, S.A.S. and Éoliennes en Mer Îles d'Yeu et de Noirmoutier, S.A.S., in accordance with the
relevant agreements signed (see note 24).
13. Amortisation and impairment
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
PROPERTY, PLANT AND EQUIPMENT
Buildings and other constructions
1,501
1,722
Plant and machinery
558,837
544,396
Other
4,641
4,988
Impairment loss
348
15,380
565,327
566,486
RIGHT-OF-USE ASSETS
Right-of-use assets
34,311
32,524
INTANGIBLE ASSETS
Industrial property, other rights and other intangibles
16,841
9,942
616,479
608,952
Impairment of goodwill
132
-
132
-
Amortisation of deferred income (Government grants)
-16,577
-17,327
600,034
591,625
65
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Right of use assets includes depreciation of related assets due to the implementation of IFRS 16 on 1 January 2019.
Amortisation of deferred income (Government grants) refers to grants for fixed assets received by EDPR NA subgroup
under the American Recovery and Reinvestment Act promoted by the United States that are amortised through the
recognition of revenue in the income statement over the useful life of the related assets (see note 34).
14. Financial income and financial expenses
Financial income and financial expenses are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
FINANCIAL INCOME
Interest income
16,344
20,659
Derivative financial instruments:
Interest
1,161
1,657
Fair value
19,431
5,588
Foreign exchange gains
39,443
9,732
Other financial income
356
392
76,735
38,028
FINANCIAL EXPENSES
Interest expense
137,206
184,770
Derivative financial instruments:
Interest
46,554
84,724
Fair value
15,352
4,388
Foreign exchange losses
49,807
6,819
Own work capitalised
-26,120
-17,742
Unwinding
129,740
118,785
Other financial expenses
9,254
5,740
361,793
387,484
Net financial income / (expenses)
-285,058
-349,456
Derivative financial instruments include interest liquidations on the derivative financial instrument established between
EDPR and EDP Finance BV and EDP - Energias de Portugal, S.A. (see notes 24, 35 and 37).
In accordance with the corresponding accounting policy, the borrowing costs (interest) capitalised in tangible fixed
assets in progress as at 31 December 2020 amounted to 26,120 thousand Euros (at 31 December 2019 amounted
to 17,742 thousand Euros) (see note 16), which are included under Own work capitalised (financial interest). The interest
rates used for this capitalisation vary in accordance with the related loans’ Interest expense refers to interest on loans
bearing interest at contracted and market rates.
Interest expense refers to interest on loans bearing interest at contracted and market rates.
Unwinding expenses refers essentially to: (i) the implied return in institutional partnerships in U.S. wind farms amounting
to 94,718 thousand Euros (31 December 2019: 85,320 thousand Euros) (see note 33); (ii) financial update of lease liabilities
in the amount of 29,594 thousand Euros
due to the implementation of IFRS 16 on 1 January 2019 (31 December 2019:
27,994 thousand Euros); and (iii) financial update of provisions for dismantling and decommissioning of wind farms in
the amount of 5,420 thousand Euros (31 December 2019: 5,462 thousand Euros) (see note 32).
66
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
15. Income tax expense and Extraordinary Contribution to the Energy
Sector (CESE)
The following note includes an analysis on the reconciliation between the theoretical and the effective income tax rate
applicable at the level of the EDPR Group, on a consolidated basis. In general terms, the analysis on the reconciliation
between the theoretical and the effective income tax rate aims at quantifying the impact of the income tax, recognised in the
income statement, which includes both current and deferred tax. The note also includes an analysis on the extraordinary
contribution to the energy sector (CESE).
As the EDPR Group prepares and discloses its financial statements in accordance with IFRS, an alignment between the
accounting of income tax expense or income and the corresponding cash flow is not mandatory. Accordingly, this analysis
does not represent the income tax paid or received by the EDPR Group for the corresponding reporting period.
Notwithstanding the above, the income tax paid by the EDPR Group on a country-by-country basis is disclosed in the
Annual Report, which is available on EDPR's website (
www.edpr.com). This website also includes the details on the general
principles concerning EDPR Group's mission and tax policy and the overall tax contribution to public finance in 2020.
Main features of the tax systems of the countries in which the EDP Renewables Group operates
The statutory corporate income tax rates applicable in the countries in which EDP Renewables Group operates are as
follows:
COUNTRY
31 DEC 2020
31 DEC 2019
EUROPE:
Belgium
25%
29.58%
France
28%
28% - 32.02%
Greece
24%
24%
Hungary
9%
9%
Italy
24% - 28.8%
24% - 28.8%
Poland
19%
19%
Portugal
21% - 31.5%
21% - 31.5%
Romania
16%
16%
Spain
25%
25%
United Kingdom
19%
19%
AMERICA:
Brazil
34%
34%
Canada
26.5%
26.5%
Colombia
32%
33%
Mexico
30%
30%
United States of America
24.91%
24.91%
EDP Renováveis S.A. and its subsidiaries file individual tax returns in accordance with the applicable tax legislation.
Nevertheless, the company and the majority of its Spanish subsidiaries are taxed under the tax consolidation group regime
foreseen in the Spanish law. EDP - Energias de Portugal, S.A. - Sucursal en España (Branch) is the dominant company
of this Group, which includes other subsidiaries that are not within the renewables energy industry.
As per the applicable tax legislation, tax periods may be subject to inspection by the various Tax Administrations during
a limited number of years. Statutes of limitation differ from country to country as follows: USA, Belgium, Colombia and
France: 3 years; Spain, United Kingdom and Portugal: 4 years; Brazil, Romania, Poland, Italy, Greece and Mexico: 5 years;
and Canada: 10 years. Notwithstanding this, it is important to note that, in case of Portugal and France, if tax losses/credits
being carried-forward are utilized, the statute of limitation is extended to the years when such tax losses/credits were
generated. In Spain, tax losses may be subject to the Tax Authorities' verification up to 10 years after they are generated;
once this period has expired, taxpayers must prove the origin of the tax losses whose utilization is intended.
67
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Tax losses generated each year are also subject to Tax Administrations’ review and reassessment. As per the legislation
currently in force, losses may be used to offset yearly taxable income assessed in the subsequent periods as follows:
5 years in Portugal, Greece and Poland; 7 in Romania; 10 in Mexico; 12 in Colombia; 20 in Canada; and indefinitely in the
United States, Spain, France, Italy, Belgium, Brazil and United Kingdom. Notwithstanding this, it is important to note that,
in some geographies, tax losses generated in previous years might be subject to the limitation period that was applicable
at the moment when they were generated (e.g., Portugal and the United States). Moreover, in France tax losses in a given
year may be carried back against the taxable base assessed in the previous tax year, and in Canada in the 3 previous
years. Nothwithstanding this, the deduction of tax losses in the USA, Portugal, Spain, Brazil, France, Italy, the United
Kingdom and Poland is limited to a percentage of the taxable income of each period, or subject to other limitations.
EDP Renováveis Group companies may, in accordance with the law, benefit from certain tax benefits or incentives under
specific conditions. Most importantly, Production Tax Credits in the US which are the dominant form of wind remuneration in
that country, and represent an extra source of revenue per unit of electricity over the first 10 years of the asset’s life.
Wind
farms that qualify for the application of the PTC prior to 1 January 2017, benefit from 100% of the credit ($28/MWh in 2018,
$25/MWh in 2019 and 2020 and $26/MWh in 2021
–
being adjusted to inflation in subsequent years). The PTC amount is
reduced by 20% for wind farms qualifying in 2017, 40% in 2018 and 60% in 2019 Additional legislation in 2020 and 2021
extended the aforementioned regime to wind facilities, with start of construction in 2020 or 2021, attributing 60% of the tax
credit amount.
Additionally, EDP Group companies benefit from the Investment Tax Credit which avails solar projects to a
credit based upon its capital expenditures.
This credit amount equates to 26% for projects that start construction before
2022 and 22% for projects starting construction in 2023 as long as these projects go into service by 2025.
Transfer pricing legislation is duly complied with by EDP Renováveis Group. Its policy follows the rules, guidelines and best
international practices applicable across all geographies where the Group operates, in due compliance with the spirit and
letter of the Law.
Changes in the tax law with relevance to the EDP Renewables Group in 2020
As from 2020, the statutory CIT rates applicable in Belgium, France and Colombia are reduced as follows are reduced
as follows:
•
In Belgium, with effect from 1 January 2020, the standard rate of CIT is reduced to 25% and the austerity surcharge
is abolished;
•
In France, the Finance Bill 2018 voted on 30 December 2017 (LOI n° 2017-1837 du 30 décembre 2017 de finances
pour 2018) approved a progressive reduction of the general CIT rate to 25% by 2022. For fiscal years starting in
2020, the CIT rate amounts to 28%;
•
In Colombia, the CIT rate is lowered from 33% to 32%. A further progressive reduction of 1% per year is expected
until year 2022, dropping the final CIT rate to 30%.
Corporate income tax provision.
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Current tax
-32,098
-54,743
Deferred tax
-50,809
-28,202
Income tax expense
-82,907
-82,945
68
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The effective income tax rate as at 31 December 2020 and 2019 is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Profit before tax
768,931
709,108
Income tax expense
-82,907
-82,945
Effective Income Tax Rate
10.78%
11.70%
The difference between the theoretical and the effective income tax expense, results from the application of the law
provisions in the determination of the tax base, as demonstrated below.
The reconciliation between the nominal and the effective income tax rate for the Group during the years ended 31
December 2020 and 2019 is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Profit before taxes
768,931
709,108
Nominal income tax rate (*)
25,00%
25.00%
Theoretical income tax expense
-192,233
-177,277
Fiscal revaluations, amortization, depreciation and provisions
1,437
-8,144
Tax losses and tax credits
30,788
14,604
Financial investments in associates
-6,231
725
Difference between tax and accounting gains and losses
56,363
73,212
Effect of tax rates in foreign jurisdictions and CIT rate changes
3,090
-6,959
Taxable differences attributable to non-controlling interests (USA)
15,298
15,921
Other
8,581
4,973
Efective income tax expense as per the Consolidated Income Statement
-82,907
-82,945
(*)
Statutory corporate income tax rate applicable in Spain
The main captions are the following:
•
The caption "Tax losses and tax credits" mainly reflects the effect of the abovereferred PTCs retained by EDPR
North America and the effect of tax losses in different geographies.
•
The caption "Difference between tax and accounting gains and losses" refers to changes in the Group’s perimeter
not subject to income taxes.
•
The caption "Taxable differences attributable to non-controlling interests (USA)" essentially includes the effect
inherent to the attribution of taxable income to non-controllable interests in the subgroup EDPR NA, as determined
by the tax legislation of that geography.
During 2020, the EDPR Group had various tax audits regarding different topics. The most relevant one was a general tax
audit made to the tax consolidation group headed by EDP - Energias de Portugal, S.A. - Sucursal en España (Branch),
whose scope covered fiscal years 2013 - 2016 and mainly focused on certain EDPR holding companies in Spain.
The process was closed in November, 2020 without significant impacts in the consolidated financial statements.
69
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Extraordinary Contribution to the Energy Sector (CESE)
Law 83-C/2013, of the State Budget 2014 ("Lei do Orçamento de Estado 2014"), approved by the Portuguese Government
on 31 December 2013,
introduced an extraordinary contribution applicable to the energy sector (CESE), with the objective
of financing mechanisms that promote the energy sector systemic sustainability, through the establishment of a fund which
aims to contribute for the reduction of tariff debt and to finance social and environmental policies in the energy sector. This
contribution focuses generally on the economic operators that develop the following activities: (i) generation, transportation
or distribution of electricity; (ii) transportation, distribution, storage or wholesale supply of natural gas; and (iii) refining,
treatment, storage, transportation, distribution and wholesale supply of crude oil and oil products.
CESE is calculated based on the companies’ net assets as at 1 January, which comply, cumulatively, to: (i) property, plant
and equipment; (ii) intangible assets, except industrial property elements; and (iii) financial assets assigned to concessions
or licensed activities. In the case of regulated activities, CESE focuses on the value of regulated assets if it is higher than
the value of those assets.The CESE system has been successively extended and is now valid for 2020 through Law
nº 71/2018 of 31 December.
As mentioned in note 1, Portuguese government has extended the CESE to renewables.
As at 31 December 2020, EDPR Group recorded in caption Tax Liabilities a value for this contribution of 3,173 thousand Euros.
16. Property, plant and equipment
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
COST
Land and natural resources
29,585
31,724
Buildings and other constructions
19,276
15,666
Plant and machinery:
- Renewables generation
16,446,322
17,396,990
- Other plant and machinery
10,985
9,764
Other
67,562
61,600
Assets under construction
2,571,806
1,446,787
19,145,536
18,962,531
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Depreciation charge
-564,979
-551,106
Accumulated depreciation in previous years
-4,941,938
-4,993,990
Impairment losses
-348
-15,380
Impairment losses in previous years
-146,553
-138,195
-5,653,818
-5,698,671
Carrying amount
13,491,718
13,263,860
The movement in Property, plant and equipment during 2020, is analysed as follows:
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFF
TRANSFERS
EXCHANGE
DIFFERENCES
CHANGES IN
PERIMETER/
OTHER
BALANCE
AT 31 DEC
COST
Land and natural resources
31,724
770
-1,369
-
-1,608
68
29,585
Buildings and other
constructions
15,666
3,537
-250
72
-1,601
1,852
19,276
Plant and machinery
17,406,754
300,260
-80,025
722,866
-1,063,063
-829,485
16,457,307
Other
61,600
3,401
-586
2,527
-3,009
3,629
67,562
Assets under construction
1,446,787
2,012,655
-5
-725,465
-187,822
25,656
2,571,806
18,962,531
2,320,623
-82,235
-
-1,257,103
-798,280
19,145,536
70
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
THOUSAND EUROS
BALANCE
AT 01 JAN
CHARGE FOR
THE PERIOD
IMPAIRMENT
LOSSES/
REVERSES
DISPOSALS/
WRITE-OFF
EXCHANGE
DIFFERENCES
CHANGES IN
PERIMETER /
OTHER
BALANCE
AT 31 DEC
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Buildings and other
constructions
11,513
1,501
-
-130
-1,148
-
11,736
Plant and machinery
5,567,921
558,837
-275
-78,988
-308,117
-215,406
5,523,972
Assets under construction
76,129
-
623
-
-3,771
-
72,981
Other
43,108
4,641
-
-535
-2,211
126
45,129
5,698,671
564,979
348
-79,653
-315,247
-215,280
5,653,818
Plant and machinery includes the cost of the wind farms and solar plants under operation.
Additions include the investment in wind farms and solar plants under development and construction mainly in the United
States, Brazil, Poland and France. This caption also includes the allocation of the acquisition cost of certain companies due
to the nature of the transactions, the type of assets and the initial stage of completion of the projects acquired (see note 6).
The most significant ones, including additions from their acquisition, are:
•
Mexican company Parque Solar Los Cuervos, S. de R.L. de C.V. in the amount of 122,379 thousand Euros;
•
Polish companies Wind Field Wielkopolska, Sp. zo.o, Neo Solar Farm, Sp. z o.o., R.Wind, Sp. z o.o.
and FW Warta, Sp. z o.o.for a total amount of 75,725 thousand Euros;
•
Colombian companies Elipse Energía, S.A.S. E.S.P., Omega Energía, S.A.S. E.S.P. and Kappa Energía, S.A.S.
E.S.P.
for a total amount of 55,862 thousand Euros;
•
UK companies Wind 2 Project 1 Limited, Altnabreac Wind Farm Limited, Ben Sca Wind Farm Limited, Moorshield
Wind Farm Limited and Drummarnock Wind Farm Limited for a total amount of 55,765 thousand Euros;
•
Italian companies Energia Emissioni Zero 4, S.r.l., Aliseo, S.r.l., Wind Energy San Giorgio, S.r.l., Giglio, S.r.l. and
VRG
Wind 153, S.r.l. for a total amount of 29,336 thousand Euros;
•
French company Vaudrimesnil Energie, S.A.R.L. in the amount of 13,731 thousand Euros;
•
Greek company Wind Shape, Ltd. in the amount of 5,159 thousand Euros.
Transfers from assets under construction into operation mainly refer to wind and solar farms that became operational
mainly in the United States, Spain and France.
Exchange differences are mainly generated by the variation in the exchange rate of the Brazilian Real, Polish Zloty and US
Dollar.
The caption Changes in perimeter/Other mainly includes:
•
Increase amounting to 209,736 thousand Euros related to the acquisition of the renewables business of Viesgo. The
effect of the fair value adjustment of the assets, in the amount of 214,254 thousand Euros, has been included in the
caption Additions (see note 6 and 42).
•
Decrease due to the sale of the 80% stake and loss of control in the companies EDPR Wind Ventures XVII, LLC
and subsidiaries in the amount, net of accumulated depreciation, of 476,964 thousand Euros (see note 6);
71
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
•
Decrease due to the sale of the following Spanish portfolio of companies: Bon Vent de Corbera, S.L.U., Eólica
Sierra de Ávila, S.L.U., Parc Eòlic de Torre Madrina, S.L.U., Parc Eòlic de Coll de Moro, S.L.U., Parc Eòlic de
Vilalba dels Arcs, S.L.U. and Aprofitament D'Energies Renovables de L'Ebre, S.L. in the amount, net of
accumulated depreciation, of 332,602 thousand Euros (see note 6);
•
Decrease due to the sale of the entire stake in the company Rosewater Wind Farm LLC in the amount, net of
accumulated depeciation, of 109,754 thousand Euros (see note 6).
The Company has taken out an insurance global program to cover risks relating to property, plant and equipment.
The coverage provided by these policies is considered to be sufficient.
Loans with credit institutions formalized as ‘Project Finances’ are sec
ured by the shares of the corresponding wind
farms and, ultimately, by the fixed assets of the wind farm to which the financing is related (see note 31). Additionally,
the construction of certain assets has been partly financed by grants received from different Government Institutions.
The movement in Property, plant and equipment during 2019, is analysed as follows:
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFF
TRANSFERS
EXCHANGE
DIFFERENCES
CHANGES
IN
PERIMETER/
OTHER
BALANCE
AT 31 DEC
COST
Land and natural resources
32,589
1,196
-
-
-40
-2,021
31,724
Buildings and other
constructions
21,905
197
-
-
230
-6,666
15,666
Plant and machinery
18,489,046
15,050
-62,894
501,213
166,855
-1,702,516
17,406,754
Other
128,252
3,196
-666
1,194
1,371
-71,747
61,600
Assets under construction
923,436
1,087,899
-11,747
-502,407
9,325
-59,719
1,446,787
19,595,228
1,107,538
-75,307
-
177,741
-1,842,669
18,962,531
THOUSAND EUROS
BALANCE
AT 01 JAN
CHARGE
FOR THE
PERIOD
IMPAIRMENT
LOSSES/
REVERSES
DISPOSALS
/ WRITE -
OFF
EXCHANGE
DIFFERENCES
CHANGES
IN
PERIMETER
/ OTHER
BALANCE
AT 31 DEC
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Buildings and other
constructions
13,462
1,722
-
-
158
-3,829
11,513
Plant and machinery
5,491,951
544,396
9,771
-56,137
44,984
-467,044
5,567,921
Assets under construction
70,021
-
5,609
-
499
-
76,129
Other
98,000
4,988
-
-626
1,150
-60,404
43,108
5,673,434
551,106
15,380
-56,763
46,791
-531,277
5,698,671
Plant and machinery includes the cost of the wind farms and solar plants under operation.
Additions include the investment in wind farms and solar plants under development and construction mainly in the United
States, Spain, Italy, France, Brazil and Portugal. This caption also includes the allocation of the acquisition cost of certain
companies due to the nature of the transactions, the type of assets and the initial stage of completion of the projects
acquired (see note 6). The most significant ones, including additions from their acquisition, are:
•
Polish companies B-Wind Polska, Sp. z o.o. and C-Wind Polska, Sp. z o.o., Lichnowy Windfarm, Sp. z o.o, EW
Dobrzyca, sp.z o.o., Kowalewo Wind, Sp. zo.o., European Wind Power Krasin, Sp. zo.o., Nowa Energia 1, Sp. zo.o.
and
Farma Wiatrowa Bogoria, Sp. zo.o. totalling 62,058 thousand Euros
•
Colombian companies Eolos Energías, S.A.S. E.S.P. and Vientos del Norte, S.A.S. E.S.P. amounting to
26,828 thousand Euros and 9,202 thousand Euros respectively
72
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
•
Brazilian portfolio of companies Pereira Barreto amounting to Euro 5,906 thousand Euros.
Disposals/Write-offs, net of accumulated depreciation, include, among others, 16,172 thousand Euros for EDPR NA that
mainly refers to the abandonment of ongoing projects in North America (see note 12).
Transfers from assets under construction into operation mainly refer to wind and solar farms that become operational
in the United States, Portugal, Italy, Spain and France.
Exchange differences are mainly generated by the variation in the exchange rate of the US Dollar and Romanian Leu.
The caption Changes in perimeter/Other mainly includes:
•
Decrease due to the sale of the companies EDPR Participaciones S.L., EDP Renewables France S.A.S. and their
subsidiaries (see note 6), in the amount, net of accumulated depreciation, of 1,046,834 thousand Euros
•
Decrease due to the sale of Brazilian portfolio of companies Babilônia (see note 6) in the amount, net of
accumulated depreciation, of 190,365 thousand Euros; and
•
Decrease due to the reclassification to held-for-sale of the assets related to the UK company EDPR UK and the
Polish companies B-Wind Polska, Sp. z o.o. and C-Wind Polska, Sp. z o.o. (see note 27) in the amount, net of
depreciation,
of 570 thousand Euros and 9,907 thousand Euros respectively.
Assets under construction as at 31 December 2020 and 2019 are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
EDPR NA Group
1,485,274
1,003,395
EDPR EU Group
712,437
345,918
EDPR BR Group
229,503
61,279
Others
144,592
36,195
2,571,806
1,446,787
Assets under construction as at 31 December 2020 are mainly related to wind and solar farms under construction
and development in the United States of America, Poland, Brazil, Canada, Colombia, Mexico, Italy, Spain and France.
Financial interests capitalized during the period amount to 26,120 thousand Euros as at 31 December 2020 (31 December
2019: 17,742 thousand Euros) (see note 14).
Personnel costs capitalised during the period amount to 38,324 thousand Euros as at 31 December 2020 (31 December
2019: 34,417 thousand Euros) (see note 11).
The EDP Renováveis Group has purchase obligations disclosed in Note 38 - Commitments.
73
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
17. Righ of use assets
In the context of the adoption of IFRS 16 as of 1 January 2019 (see note 3), the caption Right of use assets was created,
which presents the following detail:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
COST
Land and natural resources
699,214
625,386
Buildings and other constructions
30,246
17,710
Plant and machinery:
118
166
Other
4,150
3,196
733,728
646,458
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Depreciation charge
-34,311
-30,494
Accumulated depreciation
-25,372
-
-59,683
-30,494
Carrying amount
674,045
615,964
The movements in Right of use assets, for the Group, for the period ended 31 December 2020, are as follows:
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFF
EXCHANGE
DIFFERENCES
CHANGES IN
PERIMETER/
OTHER
BALANCE
AT 31 DEC
COST
Land and natural
resources
625,386
137,186
-8
-48,206
-15,144
699,214
Buildings and other
constructions
17,710
14,915
-281
-1,485
-613
30,246
Plant and machinery:
166
-
-
-48
-
118
Other
3,196
858
-9
-69
174
4,150
646,458
152,959
-298
-49,808
-15,583
733,728
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFF
EXCHANGE
DIFFERENCES
CHANGES IN
PERIMETER/
OTHER
BALANCE
AT 31 DEC
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Land and natural
resources
-25,064
-27,517
1
2,635
1,803
-48,142
Buildings and other
constructions
-4,353
-5,641
136
330
180
-9,348
Plant and machinery:
-5
-4
-
2
-
-7
Other
-1,072
-1,149
4
24
7
-2,186
-30,494
-34,311
141
2,991
1,990
-59,683
The caption Changes in perimeter/Other mainly includes:
•
Increase amounting to 15,403 thousand Euros related to the acquisition of the renewables business of Viesgo
(see note 6 and 42);
•
Decrease, net of accumulated depreciation, amounting to 29,646 thousand Euros due to the sale of the 80% stake
and loss of control in the companies EDPR Wind Ventures XVII, LLC and subsidiaries (see note 6);
74
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
•
Decrease, net of accumulated depreciation, amounting to 8,919 thousand Euros due to the sale of the following
Spanish portfolio of companies: Bon Vent de Corbera, S.L.U., Eólica Sierra de Ávila, S.L.U., Parc Eòlic de Torre
Madrina, S.L.U., Parc Eòlic de Coll de Moro, S.L.U., Parc Eòlic de Vilalba dels Arcs, S.L.U. and Aprofitament
D'Energies Renovables de L'Ebre, S.L (see note 6).
The movements in Right of use assets, for the Group, for the period ended 31 December 2019, are as follows:
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFF
EXCHANGE
DIFFERENCES
CHANGES IN
PERIMETER/
OTHER
BALANCE
AT 31 DEC
COST
Land and natural
resources
585,989
95,409
-
-1,392
-54,620
625,386
Buildings and other
constructions
19,763
2,714
-7
-15
-4,745
17,710
Plant and machinery:
172
-
-
-4
-2
166
Other
2,601
808
-51
3
-165
3,196
608,525
98,931
-58
-1,408
-59,532
646,458
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFF
EXCHANGE
DIFFERENCES
CHANGES IN
PERIMETER/
OTHER
BALANCE
AT 31 DEC
ACCUMULATED DEPRECIATION AND IMPAIRMENT LOSSES
Land and natural
resources
-
-26,535
-
47
1,424
-25,064
Buildings and other
constructions
-
-4,873
4
6
510
-4,353
Plant and machinery:
-
-5
-
-
-
-5
Other
-
-1,111
8
-
31
-1,072
-
-32,524
12
53
1,965
-30,494
The caption Changes in perimeter/Other mainly includes a decrease due to the sale of the the companies EDPR
Participaciones S.L., EDP Renewables France S.A.S. and their subsidiaries (see note 6), in the amount, net of accumulated
depreciation, of 53,295 thousand Euros and a decrease in the amount of 4,270 thousand Euros due to the reclassification
to held for sale of certain offshore companies (see note 27).
18. Intangible assets
This caption is analysed as follows:
THOUSAND EUROS EUROS
31 DEC 2020
31 DEC 2019
COST
Industrial property, other rights and other intangible assets
369,249
345,384
Concession Rights
27,786
15,182
Intangible assets under development
44,199
44,906
441,234
405,472
ACCUMULATED AMORTISATION
Amortisation charge
-16,841
-9,942
Accumulated amortisation in previous years
-98,207
-92,949
Impairment losses
-
-
Impairment losses in previous years
-11,958
-12,264
-127,006
-115,155
Carrying amount
314,228
290,317
75
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Industrial property, other rights and other intangible assets mainly include:
•
Generated green certificates pending to be sold amounting to 148,668 thousand Euros (31 December 2019:
152,940 thousand Euros) (see note 2 i));
•
Sofware and applications in the amount of 108,243 thousand Euros (31 December 2019: 81,612 thousand Euros);
•
Wind generation licenses amounting to 64,228 thousand Euros in the EDPR NA Group (31 December 2019:
72,649 thousand Euros).
The movement in Intangible assets during 2020, is analysed as follows:
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS /
WRITE-OFFS
TRANSFERS
EXCHANGE
DIFFERENCES
OTHERS
BALANCE
AT 31 DEC
COST
Industrial property, other
rights and other intangible
assets
345,384
719
-14
24,479
-13,783
12,464
369,249
Concession rights
15,182
-
-
12,304
-23
323
27,786
Intangible assets under
development
44,906
37,006
-
-36,783
1
-931
44,199
405,472
37,725
-14
-
-13,805
11,856
441,234
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFFS
EXCHANGE
DIFFERENCES
OTHERS
BALANCE
AT 31 DEC
ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES
Industrial property, other
rights and other intangible
assets
110,712
14,681
-14
-4,964
-111
120,304
Concession Rights
4,443
2,160
-
-9
108
6,702
115,155
16,841
-14
-4,973
-3
127,006
Additions mainly refer to software license acquisitions during the period.
The caption Others mainly includes an increase amounting to 13,340 thousand Euros related to the acquisition of the
renewables business of Viesgo (see note 6 and 42).
The movement in Intangible assets during 2019, is analysed as follows:
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFFS
EXCHANGE
DIFFERENCES
OTHERS
BALANCE
AT 31 DEC
COST
Industrial property, other
rights and other intangible
assets
264,361
32,254
-14,141
-1,853
64,763
345,384
Concession rights
-
-
-402
-
15,584
15,182
Intangible assets under
development
48,260
7,052
-
-
-10,406
44,906
312,621
39,306
-14,543
-1,853
69,941
405,472
76
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
THOUSAND EUROS
BALANCE
AT 01 JAN
ADDITIONS
DISPOSALS/
WRITE-OFFS
EXCHANGE
DIFFERENCES
OTHERS
BALANCE
AT 31 DEC
ACCUMULATED AMORTISATION AND IMPAIRMENT LOSSES
Industrial property, other rights
and other intangible assets
61,975
9,643
-14,125
-237
53,456
110,712
Concession Rights
-
299
-402
-
4,546
4,443
61,975
9,942
-14,527
-237
58,002
115,155
Additions include the recognition of deferred green certificates rights in Romania and Poland in the amount of 17,192
thousand Euros and 6,243 thousand Euros respectively.
19. Goodwill
For the Group, the breakdown of Goodwill resulting from the difference between the cost of the investments and the
corresponding share of the fair value of the net assets acquired, is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Goodwill booked in EDPR EU Group:
577,547
495,516
- EDPR Spain Group
470,784
388,180
- EDPR France Group
25,904
25,904
- EDPR Portugal Group
43,712
43,712
- Other
37,147
37,720
Goodwill booked in EDPR NA Group
644,499
702,818
Goodwill booked in EDPR BR Group
620
876
1,222,666
1,199,210
The movements in Goodwill, by subgroup, during 2020 are analysed as follows:
THOUSAND
EUROS
BALANCE
AT 01 JAN
INCREASES
DECREASES
IMPAIRMENT
EXCHANGE
DIFFERENCES
CHANGE
PERIMETER /
OTHERS
BALANCE
AT 31 DEC
EDPR EU Group:
- EDPR Spain Group
388,180
-
-
-132
-
82,736
470,784
- EDPR France
Group
25,904
-
-
-
-
-
25,904
- EDPR Portugal
Group
43,712
-
-
-
-
-
43,712
- Other
37,720
-
-
-
-573
-
37,147
EDPR NA Group
702,818
-
-
-
-58,319
-
644,499
EDPR BR Group
876
-
-
-
-256
-
620
1,199,210
-
-
-132
-59,148
82,736
1,222,666
Changes in the perimeter / others refer to:
•
Increase in the amount of 148,341 thousand Euros
related with the acquisition of Viesgo’s renewable business
(see note 6 and 42) of which an amount of 4,641 thousand Euros refers to associate companies consolidated by
the equity method, thus presented in Investments in joint ventures and associates caption (see note 20);
•
Decrease in the amount of 60,964 thousand Euros related with the sale of the following Spanish portfolio of
companies: Bon Vent de Corbera, S.L.U., Eólica Sierra de Ávila, S.L.U., Parc Eòlic de Torre Madrina, S.L.U., Parc
Eòlic de Coll de Moro, S.L.U., Parc Eòlic de Vilalba dels Arcs, S.L.U. and Aprofitament D'Energies Renovables de
L'Ebre, S.L. (see note 6).
77
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The movements in Goodwill, by subgroup, during 2019 are analysed as follows:
THOUSAND EUROS
BALANCE
AT 01 JAN
INCREASES
DECREASES
EXCHANGE
DIFFERENCES
CHANGES
PERIMETER /
OTHERS
BALANCE
AT 31 DEC
EDPR EU Group:
- EDPR Spain Group
490,385
-
-
-
-102,205
388,180
- EDPR France Group
61,460
-
-
-
-35,556
25,904
- EDPR Portugal
Group
43,712
-
-
-
-
43,712
- Other
40,318
-
-
-161
-2,437
37,720
EDPR NA Group
689,799
-
-
13,019
-
702,818
EDPR BR Group
888
-
-
-12
-
876
1,326,562
-
-
12,846
-140,198
1,199,210
Changes in the perimeter/ others includes the decrease in the amount of 138,704 thousand Euros due to the sale of the the
companies EDPR Participaciones S.L., EDP Renewables France S.A.S. and their subsidiaries (see note 6).
Impairment tests - EDPR Group
Goodwill, property, plant and equipment, right of use assets, intangible assets and investments in joint ventures and
associates of the EDPR Group are tested for impairment each year. In the case of operational wind farms, it is performed
by determining the recoverable value through the value in use. Goodwill is allocated to each country where EDPR Group
performs its activity, so the EDPR Group aggregate all the CGUs cash flows in each country in order to calculate the
recoverable amount of goodwill and the rest of the assets allocated.
To perform this analysis, a Discounted Cash Flow (DCF) method was used. This method is based on the principle that the
estimated value of an entity or business is defined by its capacity to generate financial resources in the future, assuming
these can
be removed from the business and distributed among the company’s shareholders, without compromising the
maintenance of the activity. Therefore, for the businesses developed by EDPR's CGUs, the valuation was based on free
cash flows generated by the business, discounted at appropriate discount rates.
The future cash flows projection period used is the useful life of the assets (30 to 35 years) which is consistent with the
current depreciation method. The cash flows also incorporate the long-term off-take contract in place and long-term
estimates of power prices, whenever the asset holds merchant exposure.
The main assumptions used for the impairment tests are as follows:
•
Power produced:
net capacity factors used for each CGU utilize the wind studies carried out, which takes into
account
the long-term predictability of wind output and that wind generation is supported in nearly all countries by regulatory
mechanisms that allow for production and priority dispatching whenever weather conditions permit;
•
Electricity remuneration:
regulated or contracted remuneration has been applied where available, as for the
CGUs that benefit from regulated remuneration or that have signed contracts to sell their output during all or part of
their useful life; where this is not available, prices were derived using price curves projected by the company based
on its experience, internal models and using external data references;
•
New capacity:
tests were based on the best information available on the wind farms expected to be built in coming
years, adjusted by probability of success and by the growth prospects of the company based on the Business Plan
Targets, which includes the commitment to develop under construction wind farms, its historical growth and market
size projections. The tests considered the contracted and expected prices to buy turbines from various suppliers;
•
Operating costs:
established contracts for land leases and maintenance agreements were used; other operating
costs were projected consistent with the company’s experience and internal models;
78
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
•
Terminal value:
considered as a 15% of the initial investment in each wind farm, considering inflation;
•
Discount rate:
the discount rates used are post-
tax, reflect EDPR Group’s best estimate of the risks specific to
each CGU and range as follows:
2020
2019
Europe
3.55-6.01%
3.1% - 5.8%
North America
4.9%-7.1%
4.9%-6.3%
Brazil
8.51%-10.17%
8.8% - 10.4%
Others
8.24%
-
Impairment tests done have taken into account the regulation changes in each country, as disclosed in note 1.
EDPR has performed the following sensitivity analyses in the results of goodwill impairment tests performed in Europe,
North America and Brazil in some of the key variables, such as:
•
5% reduction of Merchant Prices used in the base case. This sensitivity analysis performed for this assumption
independently would not suppose any impairment for the goodwill allocated to each country
•
100 basis points increase of the discount rate used in the base case. This sensitivity analysis performed for this
assumption independently would not suppose any impairment for the goodwill allocated to each country.
20. Investments in Joint Ventures and Associates
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
INVESTMENTS IN ASSOCIATES
Interests in joint ventures
388,337
429,743
Interests in associates
86,547
30,442
Carrying amount
474,884
460,185
For the purpose of the consolidated financial statements presentation, goodwill arising from the acquisition of joint ventures
and associated companies is presented in this caption. During 2020, and in the context of the acquisition of the renewable
business of Viesgo, there has been an increase of goodwill arising from the acquisition of associated companies in the
amount of 4,641 thousand Euros (see note 42).
The movement in Investments in joint ventures and associates, is analysed as follows:
THOUSAND EUROS
2020
2019
Balance as at 1 January
460,185
348,725
Changes in the consolidation perimeter
5,965
-
Changes in consolidation method
-18,574
-
Acquisitions / Increases
101,664
214,582
Share of profits of joint ventures and associates
-6,151
3,392
Dividends
-28,197
-21,882
Exchange differences
-38,410
3,660
Hedging reserve in joint ventures and associates
-1,633
-10,330
Transfer of losses to loans/liabilities
-
12,282
Transfer to assets held-for-sale
-
-90,280
Others
35
36
Balance as at 31 December
474,884
460,185
79
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Changes in the consolidation perimeter refers to:
•
Increase amounting to 9,436 thousand Euros in interests in associates for the companies
Elecdey Carcelén, S.A.,
Eos Pax IIa, S.L.,
Geólica Magallón, S.L.,
San Juan de Bargas Eólica, S.L.,
Unión de Generadores de Energía,
S.L. and Eólica de São Julião, Lda. related to the acquisition of the renewable business of Viesgo (see note 6). The
effect of the fair value adjustment of the interest in associates, in the amount of 44,023 thousand Euros, has been
included in the caption Acquisitions / Increases. Further, Acquisitions / Increases also includes the result of the
purchase price allocation exercise, according to IFRS 3 requirements, that has resulted in the recognition of
Goodwill in the amount of 4,641 thousand Euros (see note 42);
•
Net decrease amounting to 2,369 thousand Euros due to the reorganization resulting from loss of control in the
EDPR’s offshore business
during 2020 as a consequence of the the joint control partnership in this business
following the strategic memorandum of understanding dated May 2019 and signed between EDPR and ENGIE by
which a co-controlled 50/50 joint venture in fixed and floating offshore wind business, OW Offshore, S.L., has been
established. This entity will be the exclusive vehicle of investment of EDPR and ENGIE for offshore wind
opportunities worldwide (see note 6);
•
Decrease amounting to 1,102 thousand Euros related to the company Aprofitament D'Energies Renovables de
L'Ebre, S.L.in the context of the transaction of the sale of the entire stake of certain Spanish portfolio (see note 6).
Changes in the consolidation method refers to:
•
Increase amounting to 37,368 thousand Euros related to the 20% of interest in the portfolio of companies EDPR
Wind Ventures XVII, LLC and subsidiaries (see note 6) as a consecuence of the sale of the 80% stake and loss of
control in such portfolio (see note 6). The effect of the fair value adjustment of the interest in joint ventures, in the
amount of 20,561 thousand Euros, has been included in the caption Acquisitions / Increases;
•
Decrease amounting to 46,527 thousand Euros related to the company Compañía Eólica Aragonesa, S.A. where
EDPR had 50% of the shares of the company and gained control, throught a business combination achieved in
stages, by acquiring
the remaining 50% of the shares in the context of the acquisition transaction of Viesgo’s
renewable business (see note 6 and 42).
•
Decrease amounting to 9,415 thousand Euros related to the company Nation Rise Wind Farm GP Inc. Nation Rise
has reached the construction phase of a 100 MW wind farm in Ontario, Canada. This facility was scheduled to begin
commercial operations in the first quarter of 2020. On December 6th, 2019, the Ontario Minister of the Environment,
Conservation and Parks issued a decision
to revoke Nation Rise’s Renewable Energy Approval (REA). This was a
reversal of prior approvals by the same Ministry and was also previously ratified by the Environmental Review
Tribunal. As a result of this decision, EDPR was forced to halt all construction activities. Immediately following this
revocation, Nation Rise filed a Notice of Application for Judicial Review of the Ministers revocation of the REA.
Subsequent to the filing for judicial review, Nation Rise was successful in obtaining a determination of force
majeure, providing for a delay in the start date of the project’s power sales contract. On M
ay 13, 2020, the Ontario
Superior Court rendered its decision fully in favor of the Nations Rise project and overturned the Ministry’s actions.
Considering the positive outcome of the litigation, the project will continue its development and construction. As a
consequence of the delays caused by the legal procedure, and according with the agreements reached in the
selling contract of the project with Axium, as of 3 of June 2020, EDPR returned the original consideration received
plus interest and now owns 100% of the project.
Additions / Increases caption, besides the fair value adjustments mentioned above in the amount of 64,584 thousand Euros,
mainly includes capital contributions to North American companies.
80
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The following table resumes the companies' financial information of joint ventures included in the Group consolidated
accounts, as of December 2020:
THOUSAND EUROS
FLAT ROCK
WIND-POWER
GOLDFINGER
VENTURES II
PORTFOLIO
VENTO XVII
PORTFOLIO
GOLDFINGER
VENTURES
PORTFOLIO
VENTO XIX
PORTFOLIO
COMPANIES' FINANCIAL INFORMATION OF JOINT VENTURES
Non-Current Assets
196,645
296,754
506,707
202,360
449,712
Current Assets (including cash and cash
equivalents)
3,021
2,859
4,590
533
11,435
Cash and cash equivalents
1,927
1,044
-126
41
4,569
Total Equity
192,900
162,372
166,781
118,492
120,578
Long term Financial debt
-
-
-
-
-
Non-Current Liabilities
3,714
132,423
338,441
80,810
336,584
Short term Financial debt
-
89
-
-
-
Current Liabilities
3,052
4,818
6,075
3,591
3,985
Revenues
7,106
19,068
39,505
10,838
25,448
Fixed and intangible assets amortisations
-
-
-
-
-
Other financial expenses
-55
-4,664
-29,782
-2,759
-18,485
Income tax expense
-
-
-
-
-
Net profit (loss) for the year
-19,919
4,102
-1,694
-818
20,055
AMOUNTS PROPORTIONALLY ATTRIBUTED TO EDPR GROUP
Net assets
103,315
69,539
53,917
51,794
44,943
Goodwill (included in Net assets)
-
-
-
-
-
Dividends paid
10,149
6,231
-
3,180
5,477
THOUSAND EUROS
FLAT ROCK
WIND-POWER II
EVOLUCIÓN
2000
OCEANWINDS
OTHER
COMPANIES' FINANCIAL INFORMATION OF JOINTVENTURES
Non-Current Assets
80,247
31,945
872,533
841
Current Assets (including cash and cash equivalents)
2,334
2,581
133,404
2,613
Cash and cash equivalents
1,085
589
38,740
343
Total Equity
79,905
19,922
8,790
2,886
Long term Financial debt
-
3,679
-
-
Non-Current Liabilities
1,411
8,750
166,013
541
Short term Financial debt
-
4,522
10,611
-
Current Liabilities
1,265
5,854
831,854
27
Revenues
2,726
6,743
1,108
-
Fixed and intangible assets amortisations
-
-
-
-
Other financial expenses
-25
-125
-29,414
-
Income tax expense
-
-657
305
-
Net profit (loss) for the year
-7,996
1,970
-18,096
-3,472
AMOUNTS PROPORTIONALLY ATTRIBUTED TO EDPR GROUP
Net assets
39,952
14,431
9,027
1,419
Goodwill (included in Net assets)
-
2,667
5,352
-
Dividends paid
-
-
-
1,262
81
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The following table resumes the companies' financial information of joint ventures included in the Group consolidated
accounts, as of December 2019:
THOUSAND EUROS
FLAT ROCK
WIND-POWER
GOLDFINGER
VENTURES II
PORTFOLIO
GOLDFINGER
VENTURES
PORTFOLIO
VENTO XIX
PORTFOLIO
FLAT ROCK
WIND-POWER II
COMPANIES' FINANCIAL INFORMATION OF JOINT VENTURES
Non-Current Assets
231,447
296,964
219,354
493,325
94,214
Current Assets (including cash
and cash equivalents)
1,547
1,037
1,396
25,138
1,465
Cash and cash equivalents
593
1,037
1,396
16,732
635
Total Equity
225,323
185,572
137,831
100,274
92,251
Long term Financial debt
-
-
-
-
-
Non-Current Liabilities
4,001
111,368
81,447
377,751
1,516
Short term Financial debt
-
-
-
198
-
Current Liabilities
3,670
1,061
1,472
40,438
1,912
Revenues
8,378
-
-
25,063
3,203
Fixed and intangible assets amortisations
-
-
-
-
-
Other financial expenses
-56
-114
-140
-13,616
-26
Income tax expense
-
-
-
-
-
Net profit (loss) for the year
-18,771
-84
-124
22,701
-7,534
AMOUNTS PROPORTIONALLY ATTRIBUTED TO EDPR GROUP
Net assets
121,607
79,136
59,237
51,837
46,125
Goodwill (included in Net assets)
-
-
-
-
-
Dividends paid
12,688
-
-
3,289
-
THOUSAND EUROS
COMPAÑÍA EÓLICA
ARAGONESA
EVOLUCIÓN
2000
NATION RISE
PORTFOLIO
OTHER
COMPANIES' FINANCIAL INFORMATION OF JOINTVENTURES
Non-Current Assets
124,191
34,271
81,180
842
Current Assets (including cash and cash equivalents)
7,883
4,174
5,577
2,817
Cash and cash equivalents
6,263
2,450
-
340
Total Equity
109,738
18,406
41,974
3,097
Long term Financial debt
-
8,200
-
-
Non-Current Liabilities
19,621
14,764
9,770
540
Short term Financial debt
-
3,959
458
-
Current Liabilities
2,715
5,275
35,013
22
Revenues
19,262
8,092
-
-
Fixed and intangible assets amortisations
-
-
-
-
Other financial expenses
-342
-126
-19
-
Income tax expense
1,359
-840
-
-1
Net profit (loss) for the year
1,018
2,521
-223
46,812
AMOUNTS PROPORTIONALLY ATTRIBUTED TO EDPR GROUP
Net assets
45,830
13,581
10,861
1,529
Goodwill (included in Net assets)
26,108
2,667
-
-
Dividends paid
3,086
1,416
-
-
82
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The following table resumes the companies' financial information of associates included in the Group consolidated
accounts, as of December 2020:
THOUSAND EUROS
EÓLICA
SÃO JULIÃO
PQ. EÓLICO SIERRA
DEL MADERO
GEÓLICA
MAGALLÓN
SAN JUAN
DE BARGAS
COMPANIES' FINANCIAL INFORMATION OF
ASSOCIATES
Non-Current Assets
6,145
45,647
6,884
8,740
Current Assets
11,197
14,281
3,698
2,141
Equity
2,780
33,412
4,960
7,973
Non-Current Liabilities
13,504
3,974
1,615
642
Current Liabilities
1,058
22,542
4,007
2,266
Revenues
9,122
9,895
3,903
2,679
Net profit (loss) for the year
1,389
2,547
1,038
-340
AMOUNTS PROPORTIONALLY ATTRIBUTED TO EDPR GROUP
Net assets
24,031
14,031
11,658
10,939
Goodwill (included in Net assets)
1,457
-
683
-
Dividends paid
-
1,470
-
-
THOUSAND EUROS
DESARROLLOS
EÓLICOS DE
CANARIAS
EOS PAX II
PQ. EÓLICO
BELMONTE
OTHER
COMPANIES' FINANCIAL INFORMATION OF ASSOCIATES
Non-Current Assets
2,690
1,479
18,590
25,946
Current Assets
1,529
1,915
2,033
9,065
Equity
2,616
2,640
8,234
20,501
Non-Current Liabilities
1,035
414
4,790
12,727
Current Liabilities
568
340
7,599
1,783
Revenues
1,788
2,820
4,575
9,108
Net profit (loss) for the year
154
493
1,187
-2,794
AMOUNTS PROPORTIONALLY ATTRIBUTED TO EDPR GROUP
Net assets
7,641
5,966
4,184
8,097
Goodwill (included in Net assets)
6,479
-
1,726
3,976
Dividends paid
428
-
-
-
The following table resumes the companies' financial information of associates included in the Group consolidated
accounts, as of December 2019:
THOUSAND EUROS
PQ. EOLICO
BELMONTE
DESARROLLOS
EÓLICOS DE CANARIAS
PQ. EÓLICO SIERRA
DEL MADERO
OTHER
COMPANIES' FINANCIAL INFORMATION OF ASSOCIATES
Non-Current Assets
20,849
3,163
47,410
46,683
Current Assets
6,188
2,294
13,810
11,658
Equity
7,039
3,405
34,419
22,490
Non-Current Liabilities
13,708
1,283
5,446
34,158
Current Liabilities
6,290
769
21,355
1,693
Revenues
4,057
3,238
11,109
11,492
Net profit (loss) for the year
1,384
1,610
3,662
3,036
AMOUNTS PROPORTIONALLY ATTRIBUTED TO EDPR GROUP
Net assets
3,830
8,003
14,456
4,153
Goodwill (included in Net assets)
1,726
6,479
-
1,479
Dividends paid
-
720
-
683
83
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
During 2020, the significant companies' financial information of joint ventures and associates presented the following fair
value reconciliation of net assets proportionally attributed to EDPR Group:
THOUSAND EUROS
EQUITY
% INVESTMENT
FAIR VALUE
ADJUSTMENTS
GOODWILL
OTHERS
NET
ASSETS
Flat Rock Windpower
192,900
50,00%
-
-
6,865
103,315
Vento XIX portfolio
120,578
20,00%
21,881
-1,053
44,943
Flat Rock Windpower II LLC
79,905
50,00%
-
-
-
39,952
Vento XVII portfolio
166,781
20,00%
20,561
-
-
53,917
Evolución 2000
19,922
49,15%
1,972
2,667
-
14,431
Goldfinger Ventures II LLC
162,372
50,00%
-11,647
-
-
69,539
OceanWinds
8,790
50,00%
-
5,352
-720
9,027
Goldfinger Ventures LLC
118,492
50,00%
-7,452
-
-
51,794
Eólica de São Julião, Lda.
2,780
45,00%
21,321
1,457
-
24,031
Parque Eólico Sierra del Madero
33,412
42,00%
-
14,031
Geólica Magallón, S.L.
4,960
36,24%
9,177
683
-
11,658
San Juan de Bargas Eólica, S.L.
7,973
47,01%
7,190
-
10,939
Desarrollos Eólicos Canarias, S.A.
2,616
44,75%
-
6,479
-9
7,641
Eos Pax IIa, S.L.
2,640
48,50%
4,298
-
388
5,966
Parque Eólico Belmonte
8,234
29,90%
-
1,726
-4
4,184
During 2019, the significant companies' financial information of joint ventures and associates presents the following fair
value reconciliation of net assets proportionally attributed to EDPR Group:
THOUSAND EUROS
EQUITY
% INVESTMENT
FAIR VALUE
ADJUSTMENTS
GOODWILL
OTHERS
NET
ASSETS
Flat Rock Windpower
225,323
50,00%
-
-
8,945
121,607
Goldfinger Ventures II portfolio
185,572
50,00%
-13,650
-
-
79,136
Goldfinger Ventures portfolio
137,831
50,00%
-9,679
-
-
59,237
Vento XIX portfolio
100,274
20,00%
31,782
-
-
51,837
Flat Rock Windpower II LLC
92,251
50,00%
-
-
-
46,125
Compañía Eólica Aragonesa
109,738
50,00%
-9,039
-
-
45,830
Parque Eólico Sierra del Madero
34,419
42,00%
-
-
-
14,456
Evolución 2000
18,406
49,15%
1,867
2,667
-
13,581
Nation Rise portfolio
41,974
25,00%
367
-
-
10,861
Desarrollos Eólicos de Canarias
3,405
44,75%
-
6,479
-
8,003
Parque Eólico Belmonte
7,039
29,90%
-
1,726
-
3,830
EDPR commitments to provide funding to Joint Ventures as at 31 December 2020 are:
2020
CAPITAL OUTSTANDING BY MATURITY
THOUSAND EUROS
TOTAL
LESS THAN
1 YEAR
FROM 1 TO
3 YEARS
FROM 3 TO
5 YEARS
MORE THAN
5 YEARS
EDPR Commitments to provide
funding to Joint Ventures
305,000
305,000
-
-
-
305,000
305,000
-
-
-
EDPR Commitments to provide funding for Joint Ventures in 2020 refer to funds agreed to be provided to OceanWinds
during 2021 for financing the offshore business, in the form of shareholder loans.
84
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
EDPR commitments to provide funding to Joint Ventures as at 31 December 2019 are:
2019
CAPITAL OUTSTANDING BY MATURITY
THOUSAND EUROS
TOTAL
LESS THAN
1 YEAR
FROM 1 TO
3 YEARS
FROM 3 TO
5 YEARS
MORE THAN
5 YEARS
EDPR Commitments to provide
funding to Joint Ventures
67,533
67,533
-
-
-
67,533
67,533
-
-
-
EDPR Commitments to provide funding for Joint Ventures refer to:
•
C
ommited funds for Offshore projects through formalized shareholder’s loan agreements which outstanding
undisbursed amount as of December 31, 2019 is 16,911 thousand Euros
•
Commited funds for Offshore projects through formalized capital contributions which outstanding undisbursed
amount as of December 31, 2019 is 9,792 thousand Euros
•
Commited funds by EDPR North America in relation to Goldfinger joint ventures that refers to the outstanding
obligation to complete the construction of the related solar farm facilities in the amount of 40,830 thousand Euros.
EDPR Group granted parent company guarantees for certain joint venture projects. Total guarantees granted refer to
financial and operational guarantees granted by EDPR to joint ventures in the amount of 29,946 thousand Euros and
287,736 thousand Euros respectively. Further, EDP Energías de Portugal Sucursal en España has granted financial and
operational guarantees to EDPR’s joint ventures in the amount of
244,708 thousand Euros and 10,187 thousand Euros
respectively.
21. Deferred tax assets and liabilities
EDP Renováveis Group records the tax effect resulting from temporary differences between the assets and liabilities
determined on an accounting basis and on a tax basis. As at 31 December 2020, on a consolidated basis, the movement
by nature of Net Deferred Tax Assets and Liabilities are as follows:
NET DEFERRED TAX ASSETS
THOUSAND EUROS
BALANCE
AT 31.12.2019
MOV.
RESULTS
MOV.
RESERVES
PERIMETER
VARIATIONS, EXCHANGE
DIFFERENCES AND
OTHERS
BALANCE
AT
31.12.2020
Tax losses and tax credits
701,336
-24,006
-
-59,306
618,024
Provisions
11,538
432
-
-1,330
10,640
Financial instruments
14,305
194
350
-2,654
12,195
Property plant and equipment
52,232
11,000
831
732
64,795
Non-deductible financial expenses
35,502
-331
-
-641
34,530
Other temporary differences
40,605
-1,230
3,795
-2,773
40,397
Assets/liabilities compensation of
deferred taxes
-729,346
-10,019
-975
81,927
-658,413
126,172
-23,960
4,001
15,955
122,168
85
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
NET DEFERRED TAX LIABILITIES
THOUSAND EUROS
BALANCE
AT 31.12.2019
MOV.
RESULTS
MOV.
RESERVES
PERIMETER
VARIATIONS, EXCHANGE
DIFFERENCES AND
OTHERS
BALANCE
AT
31.12.2020
Financial instruments
6,119
3,661
1,623
-460
10,943
Property plant and equipment
323,362
2,786
-
-41,547
284,601
Allocation of fair value to assets and
liabilities acquired
384,082
8,960
-
40,401
433,443
Income from institutional partnerships
(US wind farms)
348,976
23,930
53
-29,491
343,468
Other temporary differences
26,870
-5,306
-923
1,463
22,104
Assets/liabilities compensation of
deferred taxes
-733,925
-12,370
267
78,571
-667,457
355,484
21,661
1,020
48,937
427,102
The compensation between deferred tax assets and liabilities is performed at each subsidiary, and therefore the
consolidated financial statements reflect the total deferred tax assets and deferred tax liabilities of the Group's subsidiaries.
The Group tax losses carried forward are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
EXPIRATION DATE
2020
-
8,787
2021
41,339
47,691
2022
11,692
15,860
2023
23,438
34,799
2024
32,270
31,288
2025
18,867
10,897
2026
10,946
5,388
2027 to 2041
2,039,491
2,216,496
Without expiration date
384,497
248,522
2,562,540
2,619,728
In addition to the above, EDPR North America LLC has State tax losses that are recorded in the Group's accounts.
The associated deferred tax asset raised to 65,449 thousand Euros as at 31 December 2020 (72,020 thousand Euros as
at 31 December 2019).
Of the total tax losses available to carry forward as at 31 December 2020, an amount of 216,022 thousand Euros does not
have an associated deferred tax asset, in accordance with the applicable accounting standards since, at the present date,
there is still not sufficient visibility about the future period in which such tax losses will be used.
86
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
22. Inventories
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Advances on account of purchases
8,328
669
Finished and intermediate products
8,874
13,352
Raw and subsidiary materials and consumables
37,326
20,064
54,528
34,085
23. Debtors and other assets from commercial activities
Debtors and other assets from commercial activities are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
DEBTORS AND OTHER ASSETS FROM COMMERCIAL ACTIVITIES - NON-
CURRENT
Trade receivables
600
1,355
Deferred costs
20,157
15,369
Sundry debtors and other operations
2,291
2,216
23,048
18,940
DEBTORS AND OTHER ASSETS FROM COMMERCIAL ACTIVITIES - CURRENT
Trade receivables
200,425
228,188
Services rendered
12,252
5,808
Advances to suppliers
5,363
6,160
Deferred costs
26,488
30,659
Sundry debtors and other operations
12,723
14,444
257,251
285,259
Impairment losses
-1,265
-1,187
279,034
303,012
Decrease of trade receivables-current, besides the normal course of the business, is also explained by the company sale
transactions that took place during the year (see note 6) with an impact in trade receivables of a decrease in the amount
of 17,332 thousand Euros, partially compensated with the acquisition of renewable business of Viesgo, with an impact in
trade receivables of an increase in the amount of 11,664 thousand Euros. The amount as at 31 December 2020 principally
refers to EDPR EU in the amount of 101,919 thousand Euros (118,490 thousand Euros as at 31 December 2019) and to
EDPR NA in the amount of 83,107 thousand Euros (86,374 thousand Euros as at 31 December 2019), which mainly
includes electricity generation invoicing.
The caption of Debtors and other assets from commercial activities
–
Current includes 1,265 thousand Euros, which is
the result of increases in impairment losses under the expected credit loss model recommended in IFRS 9.
The credit risk analysis are disclosed in note 5, under the Counterparty credit risk management section.
87
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
24. Other debtors and other assets
Other debtors and other assets are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
OTHER DEBTORS AND OTHER ASSETS - NON-CURRENT
Loans to related parties
6,688
2,686
Derivative financial instruments
28,412
11,081
Sundry debtors and other operations
237,753
93,429
272,853
107,196
OTHER DEBTORS AND OTHER ASSETS - CURRENT
Loans to related parties
409,453
8,234
Derivative financial instruments
82,428
20,347
Sundry debtors and other operations
93,175
364,789
585,056
393,370
857,909
500,566
Sundry debtors and other operations- non current mainly include:
•
fair value of the contingent consideration in connection with the sale in 2020 and 2018 of 29,5% and 13,5% stake
of the French companies Éoliennes en Mer Dieppe - Le Tréport, S.A.S and Éoliennes en Mer Îles d'Yeu et de
Noirmoutier, SAS to OW Offshore S.L. and Sumitomo Corporation respectively, in accordance with the relevant
agreements signed, that amounts to 69,557 thousand Euros and 27,031 thousand Euros (36,551 thousand Euros
as at 31 December 2019);
•
68,204 thousand Euros to be received in the long-term upon the achievement of certain milestones in accordance
with the relevant agreements related to the sale transaction in 2020 of the entire stake in the company Rosewater
Wind Farm LLC (see note 6, 9 and 34);
•
29,515 thousand Euros (19,738 thousand Euros as at 31 December 2019) mainly related to Interconnection and
transmission deposits in EDPR NA;
•
16,352 thousand Euros (the same amount as at 31 December 2019) as advances for the acquisition of the Italian
project Aria del Vento; and
•
13,056 thousand Euros (the same amount as at 31 December 2019) as part of the price adjustment, according
to the corresponding agreements, in the transaction of selling 49% of EDP Renováveis Portugal S.A to CTG that
took place in 2013.
Loans to related parties mainly include loans granted to OceanWinds in the amount of 398,262 thousand Euros in the short-term
and 5,815 thousand Euros in the long-term, in the context of the agreement with ENGIE on January 2020 to establish a co-
controlled 50/50 joint venture, OW Offshore S.L., to jointly develop fixed and floating offshore wind business. These loans bear
interest at market rates, which are made of a reference rate indexed to Euribor or Libor in its majority, plus a market spread.
At 31 December 2020 the caption Sundry debtors and other operations includes estimated corporate income tax due by
EDP Energias de Portugal, S.A. Sucursal en España in the amount of 11,748 thousand Euros. Significant decrease in this
caption with respect to 31 December 2019 mainly refer to i) proceeds received in 2020 in the amount of 132,227 thousand
Euros related to the sale at the end of 2019 of the Brazilian portfolio of companies Babilônia; ii) a decrease amounting to
123,041 thousand Euros related to financing proceeds of Nation Rise project (see note 20) and iii) proceeds received in
2020 for loans related with the transaction of acquisition of the certain projects in 2019 by the Joint Ventures Goldfinger
Ventures and Goldfinger Ventures II that amounted to 54,506 thousand Euros as at 31 December 2019.
For derivatives, refer to note 37.
88
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
25. Current tax assets
Current tax assets is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Income tax
14,088
17,985
Value added tax (VAT)
120,002
29,266
Other taxes
6,671
8,279
140,761
55,530
26. Cash and cash equivalents
Cash and cash equivalents are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Cash
5
38
BANK DEPOSITS
Current deposits
169,367
95,347
Term deposits
55,927
49,419
Specific demand deposits in relation to institutional partnerships
34,287
60,957
259,581
205,723
Other short term investments
214,798
375,998
474,384
581,759
Term deposits include temporary financial investments to place treasury surpluses.
Specific demand deposits in relation to institutional partnerships are funds required to be held in escrow sufficient to pay the
remaining construction related costs of projects in institutional equity partnerships (see note 33), under the accounting policy
2 x). The governing agreements of these partnerships and specific escrow agreements define the appropriate expenditure
of these funds.
The caption “Other short term investments”
essentially includes, as at 31 December 2020 and 2019, the debit balance
of the current account with EDP Servicios Financieros España S.A. in accordance with the terms and conditions of the
contract signed between the parties (see note 39).
27. Assets and liabilities held for sale
The criteria for classifying assets and liabilities as held for sale and discontinued operations, as well as their presentation in
the EDPR Group’s consolidated financial statements, are presented under accounting policies
- note 2 k).
This caption is analysed as follows:
31 DEC 2020
31 DEC 2019
THOUSAND EUROS
ASSETS HELD
FOR SALE
LIABILITIES
HELD FOR
SALE
ASSETS HELD
FOR SALE
LIABILITIES
HELD FOR
SALE
Electricity generation assets
–
Offshore
12,307
111
214,194
26,755
12,307
111
214,194
26,755
89
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
On May 2019, EDPR and Engie announced the signing of a strategic Memorandum of Understanding (MoU), to create
a co-controlled 50/50 joint-venture in fixed and floating offshore wind. Under the terms of the MoU, EDPR and ENGIE,
would combine their offshore business in this joint-venture. As a consequence of such agreement, and according to the
analysis performed under IFRS 5 and IFRS 10, the transaction were considered highly probable and related assets and
liabilities for the companies developing the offshore projects, principally joint ventures, were classified as held for sale at 31
December 2019. This sale transaction was concluded during 2020 (see note 6).
Balances as at 31 December 2020 refer to a 33,4% stake in the UK offshore company Moray West Holdings Ltd for which
EDPR has a commitment for plan to sell such stake, thus related equity investment and loans granted to the company are
classified as held for sale.
28. Share capital and share premium
At 31 December 2020 and 2019, the share capital of the Company is represented by 872,308,162 shares of Euros 5 per
value each, all fully paid. The shares are in book-entry bearer form, the company is entitled to request the listing of its
shares and all the shareholders are registered in the relevant book-entry records. These shares have the same voting and
profit-sharing rights and are freely transferable.
EDP Renováveis, S.A. shareholder's structure as at 31 December 2020 and 2019 is analysed as follows:
NO. OF SHARES
% CAPITAL
% VOTING
RIGHTS
EDP - Energias de Portugal, S.A.
Sucursal en España (EDP Branch)
720,191,372
82.56%
82.56%
Other (*)
152,116,790
17.44%
17.44%
872,308,162
100.00%
100.00%
(*) Shares quoted on the Lisbon stock exchange
There was no movements in Share capital and Share premium during 2020. The Share Premium is freely distributable.
Earnings per share attributable to the shareholders of EDPR are analysed as follows:
31 DEC 2020
31 DEC 2019
Profit attributable to the equity holders of the parent(in thousand Euros)
555,680
475,128
Profit from continuing operations attributable to the equity
holders of the parent (in thousand Euros)
555,680
475,128
Weighted average number of ordinary shares outstanding
872,308,162
872,308,162
Weighted average number of diluted ordinary shares outstanding
872,308,162
872,308,162
Earnings per share (basic) attributable to equity holders of the parent (in Euros)
0.64
0.54
Earnings per share (diluted) attributable to equity holders of the parent (in Euros)
0.64
0.54
Earnings per share (basic) from continuing operations
attributable to the equity holders of the parent (in Euros)
0.64
0.54
Earnings per share (diluted) from continuing operations
attributable to the equity holders of the parent (in Euros)
0.64
0.54
The EDPR Group calculates its basic and diluted earnings per share attributable to equity holders of the parent using
the weighted average number of ordinary shares outstanding during the period.
The company does not hold any treasury stock as at 31 December 2020 and 2019.
90
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The average number of shares was determined as follows:
31 DEC 2020
31 DEC 2019
Ordinary shares issued at the beginning of the period
872,308,162
872,308,162
Average number of realised shares
872,308,162
872,308,162
Average number of shares during the period
872,308,162
872,308,162
Diluted average number of shares during the period
872,308,162
872,308,162
29. Other comprehensive income, reserves and retained earnings
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
OTHER COMPREHENSIVE INCOME
Fair value reserve (cash flow hedge)
-23,251
-50,903
Fair value reserve (equity instruments at fair value)
3,318
6,272
Exchange differences - Currency translation arising on consolidation
344,738
455,827
Exchange differences - Net investment hedge
-569,648
-535,701
Exchange differences - Net investment hedge - Cost of hedging
-166
-112
-245,009
-124,617
OTHER RESERVES AND RETAINED EARNINGS
Retained earnings and other reserves
1,986,665
1,572,115
Additional paid in capital
60,666
60,666
Legal reserve
75,971
75,971
2,123,302
1,708,752
1,878,293
1,584,135
Currency translation reserve - Net investment hedge and Cost of hedging
The changes in these captions for the period are as follows:
THOUSAND EUROS
NET INVESTMENT HEDGE
COST OF HEDGING
Balance as at 31 December 2019
-535,701
-112
Changes in fair value
187,995
-53
Tax effect changes in fair value
-46,999
-
Exchange rate
-180,824
-
Others
5,881
-1
Balance as at 31 december 2020
-569,648
-166
Additional paid in capital
The accounting for transactions among entities under common control is excluded from IFRS 3. Consequently, in the
absence of specific guidance, within IFRSs, the Group EDPR has adopted an accounting policy for such transactions,
judged appropriate. According to the Group's policy, business combinations among entities under common control are
accounted for in the consolidated financial statements using the book values of the acquired company (subgroup) in the
EDPR consolidated financial statements. The difference between the carrying amount of the net assets received and the
consideration paid is recognised in equity.
91
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Legal reserve
The legal reserve has been appropriated in accordance with Article 274 of the Spanish Companies Act whereby companies
are obliged to transfer 10% of the profits for the year to a legal reserve until such reserve reaches an amount equal to 20%
of the share capital. This reserve is not distributable to shareholders and may only be used to offset losses, if no other
reserves are available, or to increase the share capital.
Profit distribution (parent company)
The EDP Renováveis, S.A. Board of Directors proposal for 2020 profits distribution to be presented in the Annual General
Meeting is as follows:
EUROS
BASE FOR DISTRIBUTION
Profit for the period 2020
1,388,573,084.60
DISTRIBUTION
Legal Reserve
138,857,308.46
Dividends
69,784,652.96
Retained earnings
1,179,931,123.18
The EDP Renováveis, S.A. Board of Directors proposal for 2019 profits distribution that was presented in the Annual
General Meeting is as follows:
EUROS
BASE FOR DISTRIBUTION
Loss for the period 2019
-8,788,570.89
Retaining earnings from previous periods
69,784,652.96
DISTRIBUTION
Prior years' losses
-8,788,570.89
Dividends
69,784,652.96
Fair value reserve (cash flow hedge)
The Fair value reserve (cash flow hedge) comprises the effective portion of the cumulative net change in the fair value
of cash flow hedging instruments.
Fair value reserve (equity instruments at fair value)
This reserve includes the cumulative net change in the fair value of equity instruments at fair value as at the balance
sheet date:
THOUSAND EUROS
Balance as at 1 January 2019
6,364
Parque Eólico Montes de las Navas, S.L.
-92
Balance as at 31 December 2019
6,272
Parque Eólico Montes de las Navas, S.L.
-2,954
Balance as at 31 December 2020
3,318
92
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Exchange differences arising on consolidation
This caption reflects the amount arising on the translation of the financial statements of subsidiaries and associated
companies from their functional currency into Euros. The exchange rates used in the preparation of the consolidated
financial statements are as follows:
EXCHANGE RATES
AT 31 DECEMBER 2020
EXCHANGE RATES
AT 31 DECEMBER 2019
CLOSING RATE
AVERAGE RATE
CLOSING RATE
AVERAGE RATE
US Dollar
USD
1.227
1.142
1.123
1.120
Zloty
PLN
4.615
4.444
4.257
4.298
Brazilian Real
BRL
6.374
5.889
4.516
4.414
New Leu
RON
4.869
4.837
4.783
4.745
Pound Sterling
GBP
0.899
0.890
0.851
0.878
Canadian Dollar
CAD
1.563
1.530
1.460
1.486
Mexican Peso
MXN
24.35
24.51
21.22
21.56
Colombian Peso
COP
4,191
4,215
3,686
3,674
Japanese Yen
JPY
126.5
121.8
121.9
122.0
Hungarian Forint
HUF
363.9
351.2
-
-
Vietnamese Dong
VND
28,309
26,605
-
-
30. Non-controlling interests
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Non-controlling interests in income statement
127,171
147,539
Non-controlling interests in share capital and reserves
1,149,111
1,214,322
1,276,282
1,361,861
Non-controlling interests, by subgroup, are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
EDPR NA Group
821,118
914,554
EDPR EU Group
399,419
369,398
EDPR BR Group
55,745
77,909
1,276,282
1,361,861
The movement in non-controlling interests of EDP Renováveis Group is mainly related to:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Balance as at 1 January
1,361,861
1,613,390
Dividends distribution
-38,231
-44,707
Net profit for the year
127,171
147,539
Exchange differences arising on consolidation
-99,195
17,072
Acquisitions and sales without change of control
-
-23,023
Increases/(Decreases) of share capital
-75,265
-57,720
Other changes
-59
-290,690
Balance as at 31 December
1,276,282
1,361,861
93
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Other changes mainly included at 31 December 2019 a decrease amounting 289,345 thousand Euros related to the sale of
the companies EDPR Participaciones S.L., EDP Renewables France S.A.S. and subsidiaries (see note 6) where non-
controlling interest held certain stake in these companies.
31. Financial debt
Financial debt current and Non-current is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
FINANCIAL DEBT - NON-CURRENT
Bank loans:
- EDPR EU Group
231,156
361,397
- EDPR BR Group
156,014
112,031
- EDPR NA Group
185,288
215,280
Loans received from EDP group entities:
- EDP Renováveis, S.A.
303,966
460,444
- EDP Renováveis Servicios Financieros, S.L.
2,555,834
1,449,186
Other loans:
- EDPR EU Group
17,363
350
Total Debt and borrowings - Non-current
3,449,621
2,598,688
Collateral Deposits - Non-current (*)
Collateral Deposit - Project Finance and others
-21,544
- 20 393
Total Collateral Deposits - Non-current
-21,544
-20,393
FINANCIAL DEBT - CURRENT
Bank loans:
- EDPR EU Group
57,508
53,872
- EDPR BR Group
7,788
13,147
- EDPR NA Group
11,877
12,806
Loans received from EDP group entities:
- EDP Renováveis, S.A.
117,452
134,239
- EDP Renováveis Servicios Financieros, S.L.
269,181
569,003
Other loans:
- EDPR EU Group
1,029
147
Interest payable
32,060
34,635
Total Debt and borrowings - Current
496,895
817,849
Collateral Deposits - Current (*)
Collateral Deposit - Project Finance and others
-9,061
- 11,446
Total Collateral Deposits - Current
-9,061
- 11,446
Total Debt and borrowings
–
Current and Non-current
3,946,516
3,416,537
Total Debt and borrowings net of collaterals
–
Current and Non-current
3,915,911
3,384,698
(*) Collateral deposits mainly refer to amounts held in bank accounts to comply with obligations under project finance agreements entered into by certain
EDP Renewable subsidiaries.
Loans received from EDP group entities current and non-current as at 31 December 2020 mainly refer to a set of loans granted
by EDP Finance BV amounting to 2,832,418 thousand Euros, including accrued interests and deducted of debt origination fees
(2,415,213 thousand Euros non-current and 417,205 thousand Euros current) and by EDP Servicios Financieros España S.A.
amounting to 445,499 thousand Euros (non-current). The bundled average maturity regarding long-term loans is approximately
4 and a half years and bear interest at weighted average fixed market rates of 1.9% for EUR loans and 3.7% for USD loans.
94
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The main events regarding financing and refinancing of the group refers to
new corporate loans signed for
1,460,992 thousand Euros that replaced amortization of 497,783 and 261,348 thousand Euros, extending the average
maturity and reducing the debt average cost. On the external debt side,
the disposal of certain portfolio of Spanish
companies (see note 6) resulted in a decrease in financial debt in the amount of 83,097 thousand Euros whilst the
acquisiton of Viesgo added new 18,059 thousand Euros financing facilities. At the same time in Brazil two disbursements,
for a total of 48,896 thousand Euros, were made from the facility signed with BEI and EDPR Brazil.
Bank loans bear interest at market rates, which are made of a reference rate indexed to Libor or Euribor in its majority,
plus a market spread.
As at 31 December 2020, future debt and borrowings payments and accrued interest by type of loan and currency
are analysed as follows:
THOUSAND EUROS
2021
2022
2023
2024
2025
FOLLOWING
YEARS
TOTAL
BANK LOANS
Euro
35,168
35,597
34,257
29,220
16,208
55,308
205,758
American Dollar
25,056
11,304
11,546
9,776
12,846
172,338
242,866
Brazilian Real
8,226
15,009
3,657
2,569
3,257
82,914
115,632
Others
9,297
12,964
16,389
19,375
9,858
18,064
85,947
77,747
74,874
65,849
60,940
42,169
328,624
650,203
LOANS RECEIVED FROM EDP GROUP
Euro
4
211,587
233,000
-
-
-
444,591
American Dollar
418,901
301,524
228,180
430,669
202,829
1,258,163
2,840,266
418,905
513,111
461,180
430,669
202,829
1,258,163
3,284,857
OTHER LOANS
Euro
1,027
1,005
1,202
1,011
1,031
13,114
18,390
1,027
1,005
1,202
1,011
1,031
13,114
18,390
Origination fees
-784
-1,046
-938
-886
-437
-2,843
-6,934
496,895
587,944
527,293
491,734
245,592
1,597,058
3,946,516
As at 31 December 2019, future debt and borrowings payments and accrued interest by type of loan and currency are
analysed as follows:
THOUSAND EUROS
2020
2021
2022
2023
2024
FOLLOWING
YEARS
TOTAL
BANK LOANS
Euro
40,817
43,687
43,997
40,989
39,302
117,166
325,958
American Dollar
18,198
12,605
12,348
12,612
12,720
150,836
219,319
Brazilian Real
13,540
9,463
13,232
4,132
3,443
83,159
126,969
Others
8,133
10,033
14,049
17,763
21,572
32,778
104,328
80,688
75,788
83,626
75,496
77,037
383,939
776,574
LOANS RECEIVED FROM EDP GROUP
Euro
262,302
-
211,587
233,000
-
-
706,889
American Dollar
476,011
422,824
329,357
249,243
463,935
-
1,941,370
738,313
422,824
540,944
482,243
463,935
-
2,648,259
OTHER LOANS
Euro
153
104
34
211
-
-
502
153
104
34
211
-
-
502
Origination fees
-1,305
-765
-831
-735
-745
-4,417
-8,798
817,849
497,951
623,773
557,215
540,227
379,522
3,416,537
95
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The Group has project finance financings that include the usual guarantees on this type of financings, namely the pledge or
a promise of pledge of bank accounts and assets of the related projects. As at 31 December 2020, these financings amount
to 643,984 thousand Euros (31 December 2019: 771,854 thousand Euros), which are included within the financial debt
caption. At 31 December 2020, the Group confirms the fulfillment of all the covenants of the Project Finance Portfolio under
the Facilities Agreements. Additionally, there are 18,034 thousand Euros of other loans that are guaranteed by EDPR,
which are also included within the financial debt caption.
The fair value of EDP Renováveis Group's debt is analysed as follows:
31 DEC 2020
31 DEC 2019
THOUSAND EUROS
CARRYING
VALUE
(*)
MARKET
VALUE
CARRYING
VALUE
(*)
MARKET
VALUE
Financial debt - Non-current
3,449,621
3,506,887
2,598,688
2,640,975
Financial debt - Current
496,895
496,895
817,849
817,849
3,946,516
4,003,782
3,416,537
3,458,824
(*) Net of origination fees
The market value of the medium/long-term (non-current) debt and borrowings that bear a fixed interest rate is calculated
based on the discounted cash flows at the rates ruling at the balance sheet date. The market value of debt and borrowing
that bear a floating interest rate is considered not to differ from its book value as these loans bear interest at a rate indexed
to Euribor. The book value of the short-term (current) debt and borrowings is considered to be the market value.
32. Provisions
Provisions are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Dismantling and decommission provisions
305,628
270,353
Provision for other liabilities and charges
9,454
7,514
Long-term provision for other liabilities and charges
3,757
1,847
Short-term provision for other liabilities and charges
5,697
5,667
Employee benefits
222
180
315,304
278,047
Dismantling and decommission provisions refer to the costs to be incurred for dismantling wind and solar farms and
restoring sites and land to their original condition, in accordance with the corresponding accounting policy. The above
amount refers to: (i) 151,704 thousand Euros for wind farms in North America (31 December 2019: 128,615 thousand
Euros); (ii) 149,249 thousand Euros for wind farms in Europe (31 December 2019: 139,475 thousand Euros); and (iii)
4,675 thousand Euros for wind farms in Brazil (31 December 2019: 2,263 thousand Euros).
The variation in the dismantling provision is mainly explained by:
•
Update on the estimated dismantling cost according to an in-
deep analysis performed by the EDPR’s technic
al as
well as update in the discount and inflation rates used for determining the provisions, with a net impact of an
increase
in the amount of 31,384 thousand Euros;
•
Increase in the amount of 18,519 thousand Euros related to the acquisition of the renewable business of Viesgo
(see note 6);
•
Increase in the amount of 5,420 thousand Euros due to the financial update of the provision during 2020 (see note
14);
96
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
•
Decrease in the amount of 17,816 thousand Euros related to the sale transactions that took place during the year
(see note 6).
There were no significant movements in provisions for other liabilities and charges either in 2020 or in 2019.
EDP Renováveis believes that the provisions booked on the consolidated statement of financial position adequately cover
the foreseeable obligations described in this note. Therefore, it is not expected that they will give rise to liabilities in addition
to those recorded.
33. Institutional partnerships in U.S. wind farms
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Deferred income related to benefits provided
799,094
1,002,871
Liabilities arising from institutional partnerships in U.S. wind farms
1,134,448
1,286,913
1,933,542
2,289,784
The movements in Institutional partnerships in U.S. wind farms are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Balance at the beginning of the period
2,289,784
2,231,249
Proceeds received from institutional investors
307,860
188,490
Deferred transaction costs
-3,252
-2,235
Cash paid to institutional investors
-55,880
-82,480
Income (see note 7)
-201,783
-181,570
Unwinding (see note 14)
94,718
85,320
Loss of control of companies with institutional partnerships
-320,944
-
Exchange differences
-181,373
42,832
Others
4,412
8,178
Balance at the end of the period
1,933,542
2,289,784
The Group has entered in several partnerships with institutional investors in the United States, through limited liability
companies operating agreements that apportions the cash flows generated by the wind farms between the investors
and the Company and allocates the tax benefits, which include Production Tax Credits (PTC), Investment Tax Credits (ITC)
and accelerated depreciation, largely to the investor.
During the first quarter of 2020, EDPR NA, has secured and received proceeds amounting to 130,055 thousand Euros
(148,539 thousand dollars) related to institutional equity financing from JP Morgan, in exchange for an interest in onshore
wind projects. Additionally, during the third quarter of 2020, EDPR NA, has secured and received proceeds amounting
to 177,805 thousand Euros (203,075 thousand dollars) related to institutional equity financing from Bank of America,
in exchange for an interest in the 405 MW onshore wind projects.
EDPR has lost control in 2020 over the Vento XVII portfolio upon the completion of the sale of 80% of equity shareholding
(see note 6), implying a decrease in the amount of 320,944 thousand Euros in the Institutional partnerships liabilities related
to this portfolio.
Others mainly include proceeds received by EDPR during 2020 amounting to 7,780 thousand Euros related to PTC
generated after flip date in the context of certain tax equity deals that are structured to include an option to allocate
substantially all of the projects’ generated PTCs to the tax
equity investors after the Flip Date.
97
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
EDPR NA is providing its tax equity investors with standard corporate guarantees typical of these agreements to indemnify
them against costs they may incur as a result of fraud, willful misconduct or a breach of EDPR NA of any operational
obligation under the tax equity agreements.
34. Trade and other payables from commercial activities
Trade and other payables from commercial activities are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
TRADE AND OTHER PAYABLES FROM COMMERCIAL ACTIVITIES - NON-
CURRENT
Government grants / subsidies for investments in fixed assets
303,408
347,770
Electricity sale contracts - EDPR NA
6,438
9,318
Property, plant and equipment suppliers
122,349
36,132
Other creditors and sundry operations
6,908
66,746
439,103
459,966
TRADE AND OTHER PAYABLES FROM COMMERCIAL ACTIVITIES -
CURRENT
Suppliers
66,781
60,500
Property, plant and equipment suppliers
1,167,391
1,119,486
Other creditors and sundry operations
111,938
89,469
1,346,110
1,269,455
1,785,213
1,729,421
Government grants for investments in fixed assets are essentially related to grants received by EDPR NA subgroup
under the American Recovery and Reinvestment Act promoted by the United States of America Government.
At the moment of the EDPR North America acquisition, the contracts signed between this subsidiary and its customers,
determined under the terms of the Purchase Price Allocation, were valued through discounted cash flow models and market
assumptions at 190,400 thousands of USD, being booked as a non-current liability under Electricity sale contracts - EDPR
NA, which is depreciated over the useful life of the contracts under Other income (see note 9).
Property plant and equipment suppliers-non current mainly includes success fees payables in the long term for
the acquisition of certain projects in Colombia for a total amount of 61,658 thousand Euros, UK for a total amount
of 31,647 thousand Euros and Poland for a total amount of 16,664 thousand Euros that, due to the nature of such
transactions, the type of assets acquired and the initial stage of completion of the projects, they have been considered asset
acquisitions (see note 6).
Variation in other creditors and sundry operations
–
non current is mainly explained by: i) the evolution of the energy pool
prices in the Spanish market related to the establishment of the pool boundaries adjustment as a result of the publication
of Royal Decree-Law 413/2014 and Order IET/1045/2014; and ii) the sale of certain portfolio of Spanish companies
(see note 6) with an impact in such caption of a decrease in the amount of 9,646 thousand Euros.
Property plant and equipment suppliers -current refer to wind and solar farms in construction mainly in the USA in
the amount of 586,681 thousand Euros (968,998 thousand Euros as of December 31, 2019), Mexico in the amount of
120,758 thousand Euros (124 thousand Euros as of December 31, 2019), Canada in the amount of 82,332 thousand Euros
(34,566 thousand Euros as of December 31, 2019), Poland in the amount of 65,036 thousand Euros (15,911 thousand
Euros as of December 31, 2019), Italy in the amount of 55,265 thousand Euros (28,902 thousand Euros as of December 31,
2019) and Spain in the amount of 46,769 thousand Euros (19,690 thousand Euros as of December 31, 2019). This caption
also includes success fees payables for the acquisition of certain projects in Colombia, UK, Greece, Brazil, Italy, France
and Poland for a total amount of 60,173 thousand Euros that due to the nature of such transactions, the type of assets
acquired and the initial stage of completion of the projects, they have been considered asset acquisitions.
98
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The Company has prepared the below information for Spanish subsidiaries, according to criterion required by the Spanish
Accounting and Auditing Institute (ICAC) resolution of 29 January 2017 on disclosures in notes to financial statements
of late payments to suppliers in commercial transactions:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
DAYS
Average payment period
51
50
Ratio paid operations
56
50
Ratio of pending operations
20
49
Total payments made
102,986
152,192
Total outstanding payments
20,206
13,430
35. Other liabilities and other payables
Other liabilities and other payables are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
OTHER LIABILITIES AND OTHER PAYABLES - NON-CURRENT
Amount payable for the acquisition of subsidiaries
850
831
Loans from non-controlling interests
155,630
210,701
Derivative financial instruments
62,895
135,051
Rents due from lease contracts
633,794
572,993
Other creditors and sundry operations
306
4,398
853,475
923,974
OTHER LIABILITIES AND OTHER PAYABLES - CURRENT
Amount payable for the acquisition of subsidiaries
19,260
102,243
Derivative financial instruments
26,120
51,150
Loans from non-controlling interests
44,651
34,383
Rents due from lease contracts
55,915
45,255
Other creditors and sundry operations
21,703
12,092
167,649
245,123
1,021,124
1,169,097
The caption Loans from non-controlling interests Current and Non-Current mainly includes:
i)
Loans granted by ACE Portugal (CTG Group) due to the sale in 2017 of 49% of shareholding in EDPR PT
–
Parques Eólicos S.A and subsidiaries for a total amount of 29,282 thousand Euros, including accrued interests
(32,302 thousand Euros as of 31 December 2019), bearing interest at a fixed rate of 3.75%;
ii)
Loans granted by ACE Poland (CTG Group) due to the sale in 2016 of 49% of shareholding in EDP Renewables Polska
HoldCo, S.A. and subsidiaries for a total amount of 88,950 thousand Euros including accrued interests (109,287 thousand
Euros as at 31 December 2019), bearing interest at a fixed rate of a range between 2.95% and 7.23%;
iii)
Loans granted by ACE Italy (CTG Group) due to the sale in 2016 of 49% of shareholding in EDP Renewables Italia,
S.r.l. and subsidiaries for a total amount of 50,284 thousand Euros including accrued interests (55,474 thousand Euros
as at 31 December 2019), bearing interest at a fixed rate of 4.50%;
iv)
Loans granted by CITIC CWEI Renewables (CTG Group) due to the sale in 2013 of 49% of shareholding in EDP
Renováveis Portugal, S.A. for a total amount of 26,462 thousand Euros including accrued interests
(31 December 2019: 38,654 thousand Euros), bearing interests at a fixed rate of 5.50%.
99
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Derivative financial instruments non-current includes 12,014 thousand Euros (31 December 2019: 102,088) mainly related
to hedge instruments of USD and EUR with EDP - Energias de Portugal, S.A., which was formalised in order to hedge the
foreign exchange risk of the net investment held in EDPR NA, expressed in USD (see note 37 for non-current and current
derivatives). The amount receivable as at 31 December 2020 related to these hedge instruments is 43,974 thousand Euros
(see note 24).
The caption Rents due from lease contracts - Non-Current and Current includes lease liabilities as a consequence of the
adopton of IFRS 16 on 1 January 2019. Variation in both captions is as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Balance as at 1 January
618,248
598,211
Increases due to new lease contracts
149,816
93,305
Unwinding (note 14)
29,594
27,994
Payment of leases
-43,555
-41,122
Exchange differences
-48,866
-1,396
Changes in the perimeter and other changes
-15,528
-53,128
Others
-
-5,616
Balance at the end of the period
689,709
618,248
Increases due to new lease contracts are mainly located in the USA, Poland, Mexico, France and Brasil.
Changes in the perimeter and other changes in 2020 mainly refers to:
•
Increase in the amount of 15,579 thousand Euros related to the acquisition of the renewable business of Viesgo
(see note 6);
•
Decrease in the amount of 31,433 thousand Euros due to the sale of the 80% stake and loss of control in the
companies EDPR Wind Ventures XVII, LLC and subsidiaries (see note 6);
•
Decrease in the amount of 9,202 thousand Euros due to the sale of the following portfolio of companies: Bon Vent
de Corbera, S.L.U., Eólica Sierra de Ávila, S.L.U., Parc Eòlic de Torre Madrina, S.L.U., Parc Eòlic de Coll de Moro,
S.L.U., Parc Eòlic de Vilalba dels Arcs, S.L.U. and Aprofitament D'Energies Renovables de L'Ebre, S.L (see note 6).
Changes in the perimeter and other changes in 2019 refers to the sale of EDPR Participaciones S.L., EDP Renewables
France S.A.S. and subsidiaries in 2019 (see note 6).
As at 31 December 2020, the nominal value of the rents due from lease contracts is detailed as follows: (i) less than
5 years: 252,537 thousand Euros; (ii) from 5 to 10 years: 216,956 thousand Euros; (iii) from 10 to 15 years:
218,379 thousand Euros; and (iv) more than 15 years: 470,789 thousand Euros.
Amount payable for the acquisition of subsidiaries at 31 December 2020 is mainly related to the remaining cost to incur
in the amount of 19,210 thousand Euros in the Rosewater project sold in 2020 but EDPR retains the obligation to complete
the construction of the related wind farm facilities at the EDPR’s sole cost (see note
6, 9 and 24).
100
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
36. Current tax liabilities
This caption is analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Income tax
16,947
35,276
Withholding tax
1,682
2,816
Value added tax (VAT)
56,027
19,672
Other taxes
35,156
35,064
109,812
92,828
37. Derivative financial instruments
As of 31 December 2020, the fair value and maturity of derivatives is analysed as follows:
THOUSAND EUROS
FAIR VALUE
NOTIONAL (THOUSAND UNITS)
ASSETS
LIABILITIES
UNITS
UNTIL
1 YEAR
1 TO
5 YEARS
MORE THAN
5 YEARS
TOTAL
NET INVESTMENT HEDGE
Cross currency rate swaps
55,594
-12,566
EUR
718,584
903,784
-
1,622,368
55,594
-12,566
718,584
903,784
-
1,622,368
FAIR VALUE HEDGE
Cross currency rate swaps
6,511
-12
EUR
22,865
164,750
-
187,615
6,511
-12
22,865
164,750
-
187,615
CASH FLOW HEDGE
Power price swaps
18,963
-41,469
MWh
11,595
15,148
8,236
34,979
Interest rate swaps
2,271
-24,834
EUR
97,089
265,514
80,551
443,154
Currency forwards
14,282
-429
EUR
296,022
20,508
-
316,530
35,516
-66,732
TRADING
Power price swaps
8,454
-3,035
MWh
2,708
1,562
-
4,270
Interest rate swaps
-
-1,705
EUR
639
2,578
10,631
13,848
Cross currency rate swaps
1,893
-421
EUR
81,140
-
-
81,140
Currency forwards
2,872
-4,544
EUR
203,985
56,419
-
260,404
13,219
-9,705
110,840
-89,015
101
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
As of 31 December 2019, the fair value and maturity of derivatives is analysed as follows:
THOUSAND EUROS
FAIR VALUE
NOTIONAL (THOUSAND UNITS)
ASSETS
LIABILITIES
UNITS
UNTIL
1 YEAR
1 TO
5 YEARS
MORE
THAN 5
YEARS
TOTAL
NET INVESTMENT HEDGE
Cross currency rate swaps
2,524
-133,483
EUR
536,806
1,610,066
-
2,146,872
2,524
-133,483
536,806
1,610,066
-
2,146,872
FAIR VALUE HEDGE
Cross currency rate swaps
642
-456
EUR
61,182
60,720
-
121,902
642
-456
61,182
60,720
-
121,902
CASH FLOW HEDGE
Power price swaps
22,107
-29,330
MWh
11,080
11,972
3,088
26,140
Interest rate swaps
114
-15,383
EUR
108,087
406,074
145,303
659,464
Currency forwards
2
-5,457
EUR
43,616
74,111
-
117,727
22,223
-50,170
TRADING
Power price swaps
4,466
-1,201
MWh
1,814
2,179
-
3,993
Cross currency rate swaps
-
-407
EUR
-
38,881
-
38,881
Currency forwards
1,573
-484
EUR
87,848
22,887
-
110,735
6,039
-2,092
31,428
-186,201
The fair value of derivative financial instruments is recorded under Other debtors and other assets (note 24) or Other
liabilities and other payables (note 35), if the fair value is positive or negative, respectively.
The net investment derivatives are mainly related to the CIRS in USD and EUR with EDP SA as referred in the notes 39
and 40. The net investment derivatives also include CIRS in CAD, PLN, BRL and COP with EDP with the purpose of
hedging EDP Renováveis Group's operations in Canada, Poland, Brazil and Colombia.
Interest rate swaps relate to the project finances and have been formalised to convert variable to fixed interest rates.
Cash flow hedge power price swaps are related to the hedging of the sales price. EDPR NA has entered into a power price
swap to hedge the variability in the spot market prices received in some of its projects. Additionally, both EDPR NA and
EDPR EU have entered in short-term and long-term hedges to hedge the short-term and long-term volatility of certain un-
contracted generation of its wind farms.
In certain US power markets, EDPR NA is exposed to congestion and line loss risks which typically have a negative impact
on the price received for power generated in these markets. To economically hedge these risk exposures, EDPR NA
entered into Financial Transmission Rights (“FTR”) and a three year fixed for floating Locational Marginal Pri
ce (LMP) swap.
The trading derivative financial instruments are derivatives contracted for economic hedging that are not eligible for hedge
accounting.
Fair value of derivative financial instruments is based on quotes indicated by external entities, which are compared in each
date of report to fair values available in common financial information platforms. These entities use discounted cash flows
techniques usually accepted and data from public markets. The only exceptions are the CIRS in USD/EUR with EDP
Finance and EDP SA, which fair values are determined by the Financial Department of EDP, using the same above-
mentioned discounted cash flows techniques and data. As such, according to IFRS13 requirements, the fair value of the
derivative financial instruments is classified as of level 2 (see note 40) and no changes of level were made during this
period.
102
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
In 2020, the future undiscounted cash flows of the derivative financial instruments in EDP Group, are as follows:
NOTIONAL
THOUSAND EUROS
UNTIL 1 YEAR
1 TO 5 YEARS
MORE THAN 5 YEARS
TOTAL
NET INVESTMENT HEDGE
Cross currency rate swaps
10,989
-23,848
-
- 12,859
10,989
-23,848
-
- 12,859
FAIR VALUE HEDGE
Cross currency rate swaps
-1,732
2,381
-
649
-1,732
2,381
-
649
CASH FLOW HEDGE
Power price swaps
2,940
-2,716
-571
-347
Interest rate swaps
-5,143
-8,653
-460
-14,256
Currency forwards
13,617
86
-
13,703
11,414
-11,283
-1,031
-900
TRADING
Power price swaps
4,523
206
-
4,729
Interest rate swaps
-511
-232
-961
-1,704
Cross currency rate swaps
770
-
-
770
Currency forwards
-2,391
870
-
-1,521
2,391
844
-961
2,274
23,062
-31,906
-1,992
-10,836
In 2019 the future undiscounted cash flows of the derivative financial instruments in EDP Group, are as follows:
NOTIONAL
THOUSAND EUROS
UNTIL 1 YEAR
1 TO 5 YEARS
MORE THAN 5 YEARS
TOTAL
NET INVESTMENT HEDGE
Cross currency rate swaps
-81,009
-153,238
-
-234,247
Currency forwards
-
904
-
904
-81,009
-152,334
-
-233,343
FAIR VALUE HEDGE
Cross currency rate swaps
471
-261
-
210
471
-261
-
210
CASH FLOW HEDGE
Power price swaps
-10,275
-3,312
-
-13,587
Interest rate swaps
-5,299
-11,080
-
-16,379
Currency forwards
-3,692
-1,014
-
-4,706
-19,266
-15,406
-
-34,672
TRADING
Power price swaps
1,760
89
-
1,849
Cross currency rate swaps
-563
-
-
-563
1,197
89
-
1,286
-98,607
-167,912
-
-266,519
103
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The changes in the fair value of hedging instruments and risks being hedged are as follows:
31 DEC 2020
31 DEC 2019
CHANGES IN FAIR
VALUE
CHANGES IN FAIR
VALUE
THOUSAND
EUROS
HEDGING
INSTRUMENT
HEDGED ITEM
INSTRUMENT
RISK
INSTRUMENT
RISK
Net Investment
hedge
Cross currency
rate swaps
Subsidiary accounts
in USD, PLN, BRL,
GBP, CAD and COP
187,995
-187,925
-49,179
47,901
Fair Value hedge
Currency forward
Subsidiary accounts
in PLN
6,313
7,875
186
-194
Cash-flow hedge
Interest rate swap
Interest rate
-7,294
-
635
-
Cash-flow hedge
Power price swaps
Power price
-15,283
-
101,131
-
Cash-flow hedge
Currency forward
Exchange rate
19,307
-
-7,864
-
191,038
-180,050
44,909
47,707
During 2020 and 2019 the following market inputs were considered for the fair value calculation:
INSTRUMENT
MARKET INPUT
Cross currency interest
rate swaps
Fair value indexed to the following interest rates: Euribor 3M, Euribor 6M, Libor 3M, daily
brazilian CDI, CAD-BA-CDOR 3M, Wibor 3M and COOVIBR index; and exchange rates:
EUR/BRL, EUR/PLN, EUR/CAD, EUR/GBP, EUR/COP and EUR/USD.
Interest rate swaps
Fair value indexed to the following interest rates: Euribor 3M, Euribor 6M, Wibor 6M,
Libor 3M and CAD-BA-CDOR 3M.
Foreign exchange forwards
Fair value indexed to the following exchange rates: EUR/USD, EUR/PLN, EUR/GBP,
BRL/CNY, BRL/EUR, BRL/USD and COP/USD.
Power price swaps
Fair value indexed to the price of electricity.
The movements in cash flow hedge reserve have been as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Balance at the beginning of the year
-65,249
-143,419
Fair value changes
-10,764
91,963
Transfers to results
4,407
305
Non-controlling interests included in fair value changes
-4,020
-1,423
Effect of derivatives in the equity consolidated companies
33,461
-12,668
Effect of the sale without loss of control of EDPR Europe subsidiaries
9,510
-
Others
-258
-7
Balance at the end of the year
-32,913
-65,249
The gains and losses on the financial instruments portfolio booked in the income statement are as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
Net investment hedge - ineffectiveness
-1,492
-1,278
CASH-FLOW HEDGE
Transfer to results from hedging of financial liabilities
1,094
1,346
Transfer to results from hedging of commodity prices
-5,501
-1,651
Non eligible for hedge accounting derivatives
17,594
6,637
11,695
5,054
104
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The amount from transfers to results from hedging of commodity prices is registered in Revenues while the remaining gains
and losses are registered in Financial income and Financial expense, respectively (see note 14).
The effective interest rates for derivative financial instruments associated with financing operations during 2020, were as
follows:
EDPR GROUP
CURRENCY
PAYS
RECEIVES
INTEREST RATE CONTRACTS
Interest rate swaps
EUR
[ 0.26%
-
3.67% ]
[ 0.52%
-
0.54% ]
Interest rate swaps
PLN
[ 2.48%
-
2.78% ]
[ -0.28% ]
Interest rate swaps
USD
[ 1.86% ]
[ -0.22% ]
Interest rate swaps
CAD
[ 2.10%
-
2.59% ]
[ -0.50% ]
CURRENCY AND INTEREST RATE
CONTRACTS
CIRS (currency interest rate swaps)
EUR/USD
[ 0.45%
-
0.60% ]
[ -0.54% ]
CIRS (currency interest rate swaps)
EUR/CAD
[ 0.22% -
0.86% ]
[ -0.57%
-
-0.51% ]
CIRS (currency interest rate swaps)
EUR/COP
[ 1.17% ]
[ -0.54% ]
CIRS (currency interest rate swaps)
EUR/BRL
[ 0.69%
-
5.95% ]
[ -0.54%
-
-0.44% ]
CIRS (currency interest rate swaps)
EUR/PLN
[ 0.32%
-
3.15% ]
[ -0.54% - 1.84% ]
The effective interest rates for derivative financial instruments associated with financing operations during 2019, were as
follows:
EDPR GROUP
CURRENCY
PAYS
RECEIVES
INTEREST RATE CONTRACTS
Interest rate swaps
EUR
[ 1.06% -
3.67% ]
[ 0.31%
-
0.34% ]
Interest rate swaps
PLN
[ 2.48%
-
2.78% ]
[ -1.79% ]
Interest rate swaps
USD
[ 1.86% ]
[ -2.10% ]
Interest rate swaps
CAD
[ 2.59% ]
[ -1.97% ]
CURRENCY AND INTEREST RATE
CONTRACTS
CIRS (currency interest rate swaps)
EUR/USD
[ 2.11%
-
2.30% ]
[ -0.38% ]
CIRS (currency interest rate swaps)
EUR/CAD
[ -0.04%
-
2.45% ]
[ -0.41%
-
-0.31%
]
CIRS (currency interest rate swaps)
EUR/BRL
[ 5.94%
-
5.95% ]
[ -0.40% ]
CIRS (currency interest rate swaps)
EUR/PLN
[ -0.04%
-
4.69% ]
[ -0.04% -
2.03% ]
38. Commitments
As at 31 December 2020 and 2019, the financial commitments not included in the statement of financial position in respect
of financial, operational and real guarantees provided, are analysed as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
GUARANTEES OF OPERATIONAL NATURE
EDP Renováveis, S.A.
586,594
606,984
EDPR NA Group
854,336
825,839
EDPR EU Group
2,337
1,206
EDPR BR Group
1,447
1,793
Total
1,444,714
1,435,822
105
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
The above operating guarantees, which are not included in the consolidated statement of financial position or in the Notes,
as at 31 December 2020 and 2019, mainly refer to Power Purchase Agreements (PPA), interconnection, permits and
market participation guarantees.
Additionally to the above guarantees, an amount of 200 thousand Euros and 982 thousand Euros refer to guarantees
of operational nature related to the Spanish portfolio of companies and the US company Rosewater Wind Farm LLC
respectively, that were sold as at 31 December 2020 (see note 6) although EDPR assumes temporarily the responsibility
under such guarantees until these are effectively replaced.
Refer to note 39 for guarantees granted by EDP Group companies to EDPR Group companies.
Refer to note 20 for guarantees granted by EDP Group and EDPR Group to joint venture companies.
There are additional financial and operating guarantees granted by EDPR Group that have underlying liabilities already
reflected in its Consolidated Statement of Financial Position and/or disclosed in the Notes.
EDPR does not expect any significant liability arising from the above commitments related to financial, operational
and real guarantees provided.
The EDPR Group future cash outflows not reflected in the measurement of the lease liabilities and purchase obligations
by maturity date are as follows:
31 DEC 2020
CAPITAL OUTSTANDING BY MATURITY
THOUSAND EUROS
TOTAL
UP TO
1 YEAR
1 TO
3 YEARS
3 TO
5 YEARS
MORE
THAN 5
YEARS
Future Cash Outflows not reflected in the
measurement of the Lease Liabilities
63,596
6,952
11,157
6,429
39,058
Purchase obligations
3,706,644
2,377,806
943,891
67,168
317,779
3,770,240
2,384,758
955,048
73,597
356,837
31 DEC 2019
CAPITAL OUTSTANDING BY MATURITY
THOUSAND EUROS
TOTAL
UP TO
1 YEAR
1 TO
3 YEARS
3 TO
5 YEARS
MORE
THAN 5
YEARS
Future Cash Outflows not reflected in the
measurement of the Lease Liabilities
140,968
9,241
20,670
15,962
95,095
Purchase obligations
3,671,859
1,586,407
1,640,889
99,820
344,743
3,812,827
1,595,648
1,661,559
115,782
439,838
As from 1 January 2019 onwards EDPR Group has adopted IFRS 16 and therefore presents the information related to lease
contracts in the caption Right-of-use assets (see note 17).
Purchase obligations include debts related with long-term agreements of property, plant and equipment and operational
and maintenance contracts product and services supply related to the Group operational activity. When prices are defined
under forward contracts, these are used in estimating the amounts of the contractual commitments.
Some of the disposal of non-controlling interests transactions retaining control carried out in previous years incorporate
contingent assets and liabilities according to the terms of the corresponding agreements.
106
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
39. Related parties
The Members of the Board of Directors of the Company and its delegated Committees do not own directly or indirectly any
shares from EDPR, as of 31 December 2020 or 31 December 2019, except for Spyridon Martinis that owns 10,413 shares
that were acquired before his appointment as Director of the Company.
According to Article nr 229 of "Ley de Sociedades de Capital" (Spanish Companies Law), the members of the Board
of Directors of EDP Renováveis have not communicated, or the parent company has knowledge, of any conflict of interests
or incompatibility that could affect the performance of their duties.
Remuneration of the members of the Board of Directors
In accordance with the Company's by-laws, the remuneration of the members of the Board of Directors is proposed by the
Nominations and Remunerations Committee to the Board of Directors on the basis of the overall amount of remuneration
authorized by the General Meeting of Shareholders. The Board of Directors approves the distribution and the exact amount
to be paid to each Director on the basis of this proposal. The average number of members of the Board of Directors during
2020 and 2019 is 15.
The remuneration paid to the members of the Board of Directors in 2020 and 2019 were as follows:
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
CEO
-
-
Board members
569
606
569
606
EDPR signed an Executive Management Services Agreement with EDP, under which EDP bears the cost for the services
rendered by its Executive and Non-Executive Directors, which are João Manso Neto, António Mexia, Vera de Morais Pinto
Pereira Carneiro (from March 2019) and Rui Teixeira (from October 2019). This corporate governance practice of
remuneration is in line with the model adopted by the EDP Group, in which the executive Directors of EDP do not receive
any remuneration directly from the group companies on whose governing bodies they serve, but rather through EDP.
Under this contract, EDPR is due to pay an amount to EDP, for the services rendered by the Executive Managers and the
Non-executive Managers. The amount due under said Agreement for the management services rendered by EDP in 2020
is 1,095 thousand Euros (854 thousand Euros in 2019), of which 960 thousand Euros refers to the management services
rendered by the Executive Members and 135 thousand Euros to the management services rendered by the non-executive
Members.
The retirement savings plan for the members of the Executive Committee that are also Officers, acts as an effective
retirement supplement with a range between 3% to 6% of their annual salary. The percentage is defined according with the
retirement savings plan applicable in their home country.
In the case of the Directors that are also EDPR Executive Officers (Duarte Bello, COO EU&BR; Spyridon Martinis,
COO Offshore and New
Markets
& CDO; and Miguel Ángel Prado Balboa, COO EDPR NA), excluding the Chief Executive
Officer which remuneration is referred above, there are contracts that were signed with other group companies, as follows:
Duarte Bello and Sp
y
r
i
don Martinis with EDP Energias de Portugal S.A. Sucursal en España; and Miguel Ángel Prado
Balboa with EDP Renewables North America LLC. The remuneration under these contracts is as follows:
REMUNERATION
*
PAYER
FIXED
VARIABLE
ANNUAL
VARIABLE
MULTI-ANUAL
TOTAL
Duarte Bello
EDP Energías de Portugal,
S.A. Sucursal en España
228
145
38
411
Miguel Ángel Prado
EDPR North America LLC
467
208
238
913
Spyridon Martinis
EDP Energías de Portugal S.A.
Sucursal en España
228
145
-
373
*All the amounts are in thousand EUR, except Miguel Ángel Prado ones, which are in thousand USD
107
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Additionally, the above members received the following non-monetary benefits: retirement savings plan (as described
above), company car and Health Insurance. In 2020, the non-monetary benefits amounted to 268 thousand Euros.
Further, in application of a deferral policy, in 2020 an amount of 84 thousand Euros was paid to Miguel Amaro (former
Executive CFO of the Group), for the services rendered in 2016-2017.
Relevant balances and transactions with subsidiaries and associates of China Three Gorges Group
Within the context of the transactions with CTG related to the sale of 49% of EDPR Portugal, EDPR PT-PE, EDPR Italia
and EDPR Polska equity shareholding to CTG Group, CTG has granted loans to the EDPR Group in the amount of
194,978 thousand Euros including accrued interests (43,617 thousand Euros as current and 151,259 thousand Euros
as non-current) as at 31 December 2020. As at 31 December 2019, this balance amounted to 235,717 thousand Euros
including accrued interests (29,712 thousand Euros as current and 206,005 thousand Euros as non-current). See note 35.
Balances and transactions with EDP Group companies
In their ordinary course of business, EDPR Group companies establish commercial transactions and operations with other
Group companies, whose terms reflect current market conditions.
As at 31 December 2020, assets and liabilities with related parties, are analysed as follows:
ASSETS
THOUSAND EUROS
LOANS AND
INTERESTS TO RECEIVE
OTHERS
TOTAL
EDP Energias de Portugal, S.A.
-
69,234
69,234
EDP - Energias de Portugal, S.A.
Sucursal en España (EDP Branch)
-
8,175
8,175
Joint Ventures and Associated companies
415,940
75,478
491,418
EDP Serviço Universal, S.A.
-
24,218
24,218
EDP Servicios Financieros España, S.A.
-
214,002
214,002
EDP España S.A.U.
-
21,640
21,640
Other EDP Group companies
-
40,871
40,871
415,940
453,618
869,558
LIABILITIES
THOUSAND EUROS
LOANS AND
INTERESTS TO PAY
OTHERS
TOTAL
EDP Energias de Portugal, S.A.
-
32,101
32,101
EDP - Energias de Portugal, S.A.
Sucursal en España (EDP Branch)
-
8,109
8,109
Joint Ventures and Associated companies
-
2,603
2,603
EDP Finance B.V.
2,832,418
596
2,833,014
EDP Servicios Financieros España, S.A.
445,499
92
445,591
EDP Global Solutions
-
23,817
23,817
Other EDP Group companies
-
3,946
3,946
3,277,917
71,264
3,349,181
Assets mainly refer to:
•
Debit balance of the Euro and US Dollar current accounts with EDP Servicios Financieros España, S.A. (see note
26) amounting to 214,002 thousand Euros as at 31 December 2020 (375,978 thousand Euros as at 31 December
2019);
108
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
•
Loans granted to companies consolidated by the equity method and namely to OceanWinds in the total amount
of 404,077 thousand Euros (see note 24);
•
Commercial receivables related to the sale of energy in EDPR Portugal and EDPR Spain through EDP Serviço
Universal, S.A. (which is a last resort retailer due to regulatory legislation) and EDP España S.A.U. respectively;
•
Derivatives contracted with EDP Energias de Portugal, S.A. which market value as at 31 December 2020 amounts
to 66,392 thousand Euros (see note 37).
Liabilities mainly refer to:
•
Loans obtained by EDP Renováveis S.A. and by EDP Renováveis Servicios Financieros S.L. from EDP Finance BV
in the amount, including interests and deducted from debt origination fees, of 2,832,418 thousand Euros (31
December 2019: 1,939,844 thousand Euros) and from EDP Servicios Financieros España S.A. in the amount of
445,499 thousand Euros (31 December 2019: 706,889 thousand Euros). See note 31;
•
Derivatives with the purpose of hedging the foreign exchange risk of EDP Renováveis mainly with respect of the
investment in EDPR NA, having the EDP Group established Cross-Currency Interest Rate Swaps (CIRS) in USD
and EUR between EDP - Energias de Portugal, S.A.and EDP Renováveis. At each reporting date, these CIRS are
revalued to its market value, which corresponds to a spot foreign exchange revaluation, resulting in a perfect hedge
(revaluation of the investment in EDPR NA and of the USD external financing). As at 31 December 2020, the
amount payable by EDP Renováveis to EDP - Energias de Portugal, S.A.related to these CIRS amounts to 12,014
thousand Euros (31 December 2019: 129,156 thousand Euros) (see notes 35 and 37). The amount receivable as at
31 December 2020 related to these CIRS is 43,974 thousand Euros.
Transactions with related parties for the year ended 31 December 2020 are analysed as follows:
THOUSAND EUROS
OPERATING
INCOME
FINANCIAL
INCOME
OPERATING
EXPENSES
FINANCIAL
EXPENSES
EDP Energias de Portugal, S.A.
36,279
20,626
-2,108
-32,347
EDP Energias de Portugal, S.A.
Sucursal en España (EDP Branch)
1,600
-
-19,746
-881
Joint Ventures and Associated companies
240,095
6,954
-4,600
-31,378
EDP Serviço Universal, S.A.
226,573
-
-26
-
EDP Comercializadora, S.A.U,.
42,513
-
-372
-
EDP Finance B.V.
-
-
-
-108,538
EDP Servicios Financieros España, S.A.
-
649
-
-17,076
EDP España S.A.U.
58,963
-
-796
-495
EDP Clientes S.A.
37,824
-
-1,966
-
Other EDP Group companies
220
-
-5,366
-
644,067
28,229
-34,980
-190,715
Operating income mainly includes: i) the gain for the sale of the offshore business to Oceanwinds in the amount of
217,633 thousand Euros (see note 6); ii) electricity sales to EDP Serviço Universal, S.A. which is a supplier of last resource
in Portugal due to regulatory legislation and to EDP Comercializadora, S.A.U. replaced by EDP España S.A.U. and
subsequently by EDP Clientes S.A as the commercial agent in Spain; and iii) swap commodities transactions with EDP
Energias de Portugal, S.A.
Financial income and financial expenses with EDP Energias de Portugal, S.A. Sucursal en España (EDP Branch) are
related to derivative financial instruments.
Financial expenses with EDP Finance B.V. and EDP Servicios Financieros España S.A., EDP Energias de Portugal, S.A.,
and EDP Branch are mainly related to derivative financial instruments and interests on the loans granted to EDP
Renováveis S.A. and EDP Renováveis Servicios Financieros, S.A. referred above.
109
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
As at 31 December 2019, assets and liabilities with related parties, are analysed as follows:
ASSETS
THOUSAND EUROS
LOANS AND
INTERESTS TO RECEIVE
OTHERS
TOTAL
EDP Energias de Portugal, S.A.
-
16,175
16,175
EDP - Energias de Portugal, S.A.
Sucursal en España (EDP Branch)
-
329
329
Joint Ventures and Associated companies
20,161
3,034
23,195
EDP Serviço Universal, S.A.
-
25,629
25,629
EDP Comercializadora, S.A.U.
-
16,779
16,779
EDP Servicios Financieros España, S.A.
-
375,978
375,978
Other EDP Group companies
-
58
58
20,161
437,982
458,143
LIABILITIES
THOUSAND EUROS
LOANS AND
INTERESTS TO PAY
OTHERS
TOTAL
EDP Energias de Portugal, S.A.
-
9,856
9,856
EDP - Energias de Portugal, S.A.
Sucursal en España (EDP Branch)
-
6,370
6,370
Joint Ventures and Associated companies
-
40
40
EDP Finance B.V.
1,939,844
129,488
2,069,332
EDP Servicios Financieros España, S.A.
706,889
377
707,266
Other EDP Group companies
-
2,429
2,429
2,646,733
148,560
2,795,293
Transactions with related parties for the year ended 31 December 2019 are analysed as follows:
THOUSAND EUROS
OPERATING
INCOME
FINANCIAL
INCOME
OPERATING
EXPENSES
FINANCIAL
EXPENSES
EDP Energias de Portugal, S.A.
3,884
10,596
-1,496
-22,430
EDP Energias de Portugal, S.A. Sucursal en España
(EDP Branch)
1,411
-
-16,115
-1,664
EDP HC Energía Group companies (electric sector)
-
-119
-498
Joint Ventures and Associated companies
12,549
12,596
-318
-39
EDP Serviço Universal, S.A.
282,055
-
-3
-
EDP Comercializadora, S.A.U,.
241,818
-
-2,365
-
EDP Finance B.V.
-
-
-
-152,210
EDP Servicios Financieros España, S.A.
-
247
-
-32,234
Other EDP Group companies
444
23
-4,735
-
542,161
23,462
-25,151
-209,075
110
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
As part of its operational activities, the EDP Renováveis Group must present guarantees in favor of certain suppliers
and in connection with renewable energy contracts. As at 31 December 2020, EDP España and EDP Energías de Portugal
Sucursal en España granted operational guarantees to suppliers in favor of EDP Renováveis S.A. and EDPR NA in the
amount of 356,919 thousand Euros (373,716 thousand Euros as at 31 December 2019). The operational guarantees are
issued following the commitments assumed by EDPR EU and EDPR NA in relation to Power Purchase Agreements (PPA),
interconnection, permits and market participation.
Further, an amount of 5,274 thousand Euros refer to guarantees of operational nature granted by EDP España related to
the companies EDPR Participaciones S.L., EDP Renewables France S.AS. and subsidiaries, that were sold in 2019 (see
note 6) although EDPR assumes temporarily the responsibilidy under such guarantees until these are effectively replaced.
Refer to note 20 for guarantees granted by EDP Group and EDPR Group to joint venture companies.
40. Fair value of financial assets and liabilities
Fair value of financial instruments is based, whenever available, on quoted market prices. Otherwise, fair value is
determined through internal models, which are based on generally accepted cash flow discounting techniques and option
valuation models or through quotations supplied by third parties.
Non-standard instruments may require alternative techniques, which consider their characteristics and the generally
accepted market practices applicable to such instruments. These models are developed considering the market variables
that affect the underlying instrument, namely yield curves, exchange rates and volatility factors.
Market data is obtained from generally accepted suppliers of financial data (Bloomberg and Reuters).
As at 31 December 2020 and 2019, the following table presents the interest rate curves of the major currencies to which
the Group is exposed. These interest rates were used as the base for the fair value calculations made through internal
models referred above:
31 DEC 2020
31 DEC 2019
CURRENCIES
CURRENCIES
EUR
USD
EUR
USD
3 months
-0.55%
0.24%
-0.38%
1.91%
6 months
-0.53%
0.16%
-0.32%
1.91%
9 months
-0.52%
0.17%
-0.29%
0.00%
1 year
-0.52%
0.21%
-0.25%
2.00%
2 years
-0.52%
0.20%
-0.29%
1.70%
3 years
-0.51%
0.24%
-0.24%
1.69%
5 years
-0.49%
0.33%
-0.11%
1.73%
7 years
-0.39%
0.66%
0.02%
1.80%
10 years
-0.26%
0.93%
0.21%
1.90%
Non-listed equity instruments, for which a reliable and consistent fair value estimate is not available either by internal
models or external providers, are recognized at their historical cost.
Equity instruments at fair value and financial assets at fair value through profit or loss
Listed financial instruments are recognized at fair value based on market prices. The financial instruments for which reliable
fair value estimates are not available, are recorded in the statement of financial position at their cost.
111
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Cash and cash equivalents, trade receivables and suppliers
These financial instruments include mainly short term financial assets and liabilities. Given their short term nature at the
reporting date, their book values are not significantly different from their fair values.
Financial debt
The fair value of the financial debt is estimated through internal models, which are based on generally accepted cash flow
discounting techniques. At the reporting date, the carrying amount of floating rate loans is approximately their fair value.
In case of fixed rate loans, mainly the intercompany loans granted by EDP Group, their fair value is obtained through
internal models based on generally accepted discounting techniques.
Derivative financial instruments
All derivatives are accounted at their fair value. For those which are quoted in organized markets, the respective market
price is used. For over-the-counter derivatives, fair value is estimated through the use of internal models based on cash flow
discounting techniques and option valuation models generally accepted by the market, or by dealer price quotations.
CIRS with EDP - Energias de Portugal, S.A. (note 37)
With the purpose of hedging the foreign exchange risk resulting from the net investment in EDPR NA, the Group entered
into CIRS in USD and EUR with EDP - Energias de Portugal, S.A.. These financial derivatives are presented in the
statement of financial position at its fair value, which is estimated by discounting the projected USD and EUR cash flows.
The discount rates and forward interest rates were based on the interest rate curves referred to above and the USD/EUR
exchange rate is disclosed on note 29. See also note 35.
The fair values of assets and liabilities as at 31 December 2020 and 31 December 2019 are analysed as follows:
31 DECEMBER 2020
31 DECEMBER 2019
THOUSAND EUROS
CARRYING
AMOUNT
FAIR
VALUE
DIFFERENCE
CARRYING
AMOUNT
FAIR
VALUE
DIFFERENCE
FINANCIAL ASSETS
Equity instruments at fair value
13,318
13,318
-
15,960
15,960
-
Debtors and other assets from
commercial activities
279,034
279,034
-
303,012
303,012
-
Other debtors and other assets
857,909
857,909
-
500,566
500,566
-
Derivative financial instruments
110,840
110,840
-
31,428
31,428
-
Cash and cash equivalents
474,384
474,384
-
581,759
581,759
-
1,735,485
1,735,485
-
1,432,725
1,432,725
-
FINANCIAL LIABILITIES
Financial debt
3,946,516
4,003,782
57,266
3,416,537
3,458,824
42,287
Suppliers
1,356,521
1,356,521
-
1,216,118
1,216,118
-
Institutional partnerships in U.S.
wind farms
1,933,542
1,933,542
-
2,289,784
2,289,784
-
Trade and other payables from
commercial activities
428,692
428,692
-
513,303
513,303
-
Other liabilities and other
payables
1,021,124
1,021,124
-
1,021,124
1,021,124
-
Derivative financial instruments
89,015
89,015
-
186,201
186,201
-
8,775,410
8,832,676
57,266
8,643,067
8,685,354
42,287
112
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The fair value levels used to valuate EDP Renováveis Group financial assets and liabilities are defined as follows:
•
level 1 -
Quoted prices (unadjusted) in active market for identical assets and liabilities
•
level 2 -
Inputs other than quoted prices included within Level 1 that are observable for assets or liabilities,
either directly (i.e. as prices) or indirectly (i.e., derived from prices)
•
level 3
- Inputs for assets or liabilities that are not based on observable market data (unobservable inputs).
31 DECEMBER 2020
31 DECEMBER 2019
THOUSAND EUROS
LEVEL 1
LEVEL 2
LEVEL 3
LEVEL 1
LEVEL 2
LEVEL 3
FINANCIAL ASSETS
Equity instruments at fair value
-
-
13,318
-
-
15,960
Derivative financial instruments
-
110,840
-
-
31,428
-
-
110,840
13,318
-
31,428
15,960
FINANCIAL LIABILITIES
Liabilities arising from options with
non-controlling interests
-
-
883
-
-
883
Derivative financial instruments
-
89,015
-
-
186,201
-
-
89,015
883
-
186,201
883
The remaining assets and liabilities are valuated within Level 1 or correspond to assets and liabilities which fair value is
the same as its carrying amount. In 2020, there are no transfers between levels.
The movement in 2020 and 2019 of the financial assets and liabilities within Level 3 are analysed was as follows:
EQUITY INSTRUMENTS
AT FAIR VALUE
TRADE AND
OTHER PAYABLES
THOUSAND EUROS
31 DEC 2020
31 DEC 2019
31 DEC 2020
31 DEC 2019
Balance at the beginning of the year
15,960
8,438
883
910
Gains / (Losses) in other comprehensive income
-3,194
-99
-
-
Purchases
1,218
7,662
-
-
Disposals
-
-
-
-27
Others
-666
-41
-
-
Balance at the end of the year
13,318
15,960
883
883
Purchases of equity instruments at fair value mainly refer to the equity instruments acquired in the context of the acquisition
of Viesgo’s renewable business (see note 6 and 42).
The Trade and other payables within level 3 are related to Liabilities with non-controlling interests.
The movements in 2020 and 2019 of the derivative financial instruments are presented in note 37.
113
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
41. Relevant subsequent events
EDPR informs about PPA contracts secured for two solar projects in the US
EDPR through its fully owned subsidiary EDP Renewables North America LLC, has closed two 15-year Power Purchase
Agreement
to sell the energy produced by two solar PV plants totalling 275 MW. In detail, the projects located in the U.S.
states of Mississippi and Indiana, are expected to commence operations in 2023.
With this new agreement, EDPR has now globally 2.0 GW of total solar PV capacity secured for the 2020-2023 period.
EDPR informs about agreement to acquire 85% of a distributed solar platform in the US
EDPR through its fully owned subsidiary EDP Renewables North America, LLC, has entered into an agreement to acquire
a majority interest in C2 Omega LLC, the distributed solar platform of C2 Energy Capital LLC. In detail, EDPR will acquire
an 85% equity stake in a solar generation portfolio that includes 89 MW of operating and imminent completion capacity
and a near-term pipeline of around 120 MW, across nearly 200 sites in 16 states. EDPR
’s investment in C2’s distributed
solar platform business corresponds to an enterprise value of approximately $119m for the acquisition of the operating
capacity (89 MW). The transaction will also include certain earn-out payments based on the growth in future operational
capacity. C2's management team will continue to be engaged in the day-to-day operations of the business.
The transaction will establish EDPR’s presence in the fast
-growing distributed generation segments as an owner-operator
of one of the largest commercial and industrial distributed generation portfolios in the U.S., and will enable EDPR to serve
a rapidly growing market and offer to its customers a range of new services and solutions to meet their renewable energy
needs.
The completion of this transaction is subject to customary conditions precedent, and closing is expected to occur in the first
quarter of 2021.
EDP Renováveis informs about changes in Corporate Bodies
EDPR informs about a resolution approved by EDPR´s Board of Directors in the meeting held on 19 January 2021:
After the public communication of António Mexia and João Manso Neto about their no availability to be re-elected for their
positions in EDP and following the appointment on 19 January 2021
by EDP’s shareholders of a new Executive Board of
Directors team at EDP, and taking in consideration that both informed today that they will put their positions at the disposal
of the Board, the Board of EDPR has agreed to cease António Mexia as Chairman of EDPR´s Board, and João Manso as
Vice-Chairman of EDPR´s Board and CEO of EDPR.
In addition, EDPR informs that has received the following resignations as members of EDPR’s Board of Directors:
•
Francisca Oliveira, with effect
from 30 December 2020 (was also member of EDPR’s Audit, Control and Related
Party Transactions Committee);
•
Duarte Bello, with effect from 19 January 2021 (was also member of the Executive Committee);
•
Spyridon Martinis, with effect from 19 January 2021 (was also member of the Executive Committee);
•
Miguel Angel Prado, with effect from the next General Shareholders Meeting (was also member of the Executive
Committee).
To fulfil the vacant positions, EDPR’s Board has co
-opted:
•
Miguel Stilwell de Andrade, as Executive Director;
•
Ana Paula Marques, as Non-executive Director;
•
Joan Avalin Dempsey, as Non-executive and Independent Director.
114
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
Furthermore, EDPR’s Board has appointed Miguel Stilwell de Andrade as Chairman of EDPR´s Board and CEO of EDPR
and R
ui Teixeira, currently EDPR’s Executive Director and Consejero Delegado, as CFO of the company.
To better maximize EDPR’s Board participation in the management of the company, the Board has decided to eliminate
the Executive Committee body, which included up to now Executive Board members of the company, whose executive staff
will now be integrated in a Management Team composed by:
•
Miguel Stilwell de Andrade, CEO;-
•
Rui Teixeira, CFO;
•
Duarte Bello, COO Europe and Brazil;
•
Miguel Angel Prado, COO North America;
•
Spyridon Martinis, CDO & COO Offshore.
To cover the vacant position in the EDPR’s Audit, Control and Related
-Party Transactions Committee, following the
resignation from Francisca Oliveira, EDPR´s Board of Directors has agreed to name Francisco Seixas da Costa as member
of such Committee.
Following this appointment, EDPR’s Audit, Control and Related
-Party Transactions Committee is composed by:
•
Acácio Jaime Liberado Mota Piloto (Chairman);
•
António do Pranto Nogueira Leite;
•
Francisco Seixas da Costa.
With
this resolution, EDPR’s Audit, Control and Related
-Party Transactions continue to be composed only by independent
members.
Lastly, the Board of Directors has agreed that a General Shareholders’ Meeting will be summoned for the February 22nd
with the following agenda:
•
Ratification of co-opted Directors;
•
Deliberate on the termination of members of the Board of Directors;
•
Establishment of the number of Board Members in 12;
•
Amendment to the By-
Laws to eliminate the role of the Chairman of the Shareholders’ Mee
ting, and allow the
Shareholders Meeting to be chaired by the Board of Directors Chairman;
•
Delegation of powers.
EDP Renováveis, S.A. informs about Spanish and Italian renewable energy auctions
EDPR was awarded long-term Contract-for-
Differences (“CfDs”)
at the Spanish & Italian renewable energy auctions to sell
electricity. In detail, at the Spanish auction, a portfolio of 6 projects of wind and solar, including hybrid projects, with a total
capacity of 143 MW have been awarded.
The projects are expected to become operational in 2022 and 2023. These new long-
term contracts reinforce EDPR’s
footprint in Spain with 2.3 GW in operation and close to 0.4 GW already secured in the country for the following years.
115
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
At the Italian auction, a wind project of 44 MW and expected to become operational in 2022 has also been awarded. In Italy,
EDPR has 271 MW already operational and more than 0.2 GW secured for the coming years.
As of today, EDPR has globally secured 6.7 GW for projects expected to become operational from 2021 onwards.
EDPR enters Hungarian market with a 50 MW solar PV project
EDPR secured a 15-year Contract-for-Difference("CfD") to sell energy produced by a solar PV project in Hungary totalling
50 MW and with expected commercial operation in 2022. With this project, EDPR increases its worldwide footprint by
entering in a new market with a sustainable development of its Renewable Energy Source.
Hungary expects to increase its solar PV capacity to 6.5 GW by 2030, mostly through an auctionbased regulatory
framework.
EDPR approved its new Strategic Plan for the 2021-2025 period
At the end of February, EDPR approved its new Strategic Plan for the 2021-2025 period and the main three pillars are as
follows:
- Growth: accelerated and selective growth with +20 GW of additions for 2021-2025;
-
Value: on going asset rotation with €8bn of proceeds for the period
;
- Excellence: high quality teams and efficient operations targeting a Core Opex/MW CARG 2021-2025 of -2%.
The strategy is set to deliver superior growth through 2025 promoting clean energy while operating in a sustainable way
across the three ESG dimensions.
By 2025, EDPR targets to have 25 GW of installed capacity, €2.3bn of EBITDA and €0.8bn of net income
.
EDPR Extraordinary General Shareholders' Meeting
EDPR informs that at the Extraordinary General Shareholders' Meeting held on 22 February 2021, Shareholders have
adopted the following resolutions:
•
Board of Directors: ratification of appointments of Directors by co-optation.
-
Ratification of the appointment by co-option as Executive Director of Mr. Miguel Stilwell de Andrade.
-
Ratification of the appointment by co-option as Dominical Director Mrs. Ana Paula Garrido de Pina Marques.
-
Ratification of the appointment by co-option as Independent Director of Mrs. Joan Avalyn Dempsey.
•
Board of Directors: dismissal (separación) of Directors.
-
Dismiss (
separar
) Mr. António Luis Guerra Nunes Mexia of his position as Dominical Director.
-
Dismiss (
separar
) Mr. João Manuel Manso Neto of his position as Executive Director.
•
Adjustment of the number of Members of the Board in twelve (12).
•
Amendment of articles 12 (“Notice of General Meetings”) and 16 (“Chairman of the General Meetings”) of Articles of
Association.
•
Delegation of powers to the formalization and implementation of all resolutions adopted at the Extraordinary General
Shareholders’ Meeting, for the execution of any relevant public deed and for its interpretation, correction, addition or
development in order to obtain the appropriate registrations.
All information and
documentation of the Extraordinary General Shareholders’ Meeting is also available in the Company´s
116
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
42. Business Combination
EDPR entered in July 2020 into an agreement with certain funds managed by Macquarie Infrastructure and Real Assets
(together with its managed funds), for the acquisition of the control of the renewable business of Viesgo, and namely
the acquisition of 100% of the shares in the companies Viesgo Europa, S.L.U. and Viesgo Renovables, S.L.U. which in turn
owns a portfolio of affiliates (see note 6). At that moment, the completion of this transaction was subject to customary
conditions precedent.
With this transaction, completed in 16 December 2020 once the aforementioned customary conditions precedent were
fulfilled, EDPR has gained control over the renewable business of Viesgo, that comprises 0.5 GW (EBITDA + Equity MW)
of renewable installed capacity in Spain (84%) and Portugal (16%), for a total consideration of 563,488 thousand Euros
of which an amount of 26,001 thousand Euros refers to shareholders loans. This transaction is considered under the scope
of IFRS 3 - Business combinations.
Within this transaction, EDPR has gained control over the company Compañía Eólica Aragonesa, S.A. (CEASA),
where EDPR had 50% of the shares of the company and acquired the remaining 50% of the shares, considering this
acquisition a business combination achieved in stages under IFRS 3. Until the date in which the control was obtained,
the shareholding previously held was being included in the consolidated financial statements under the equity method. Total
value of the equity investment, previously to the transaction, amounted to 46,527 thousand Euros of which an amount of
1,954 thousand Euros corresponds to the result of the company for the year 2020 attributable to EDPR.
For simplification purposes, and considering this does not have a material effect, the Group used the financial statements as
at 31 December 2020 of the companies acquired, to determine pre-acquisition results and, consequently, the companies
have been consolidated from that date with no impact in the 2020 consolidated profit and loss of the EDPR Group, except
for the result of the aforementioned business combination achieved in stages detailed below.
If this acquisition had occurred in the beginning of the exercise, it would have contributed to the consolidated financial
statements with Revenues, mainly from energy sales, in the approximate amount of 78,000 thousand Euros and with
a Net profit for the period in the approximate amount of 17,000 thousand Euros, referring to the twelve-month period
ended at 31 December 2020.
At the acquisition date, EDPR Group has determined the fair value of the assets acquired and liabilities assumed, based
on a valuation performed internally. The valuation methodology utilized was a discounted cashflow approach, where cash
flows for each project were forecasted for the remaining life of the assets. The main components of cashflow, namely
production, long term power prices and operational costs were estimated using EDPR’s own methodology using historical
data of the assets provided by the seller and information from
similar wind farms in EDPR’s portfolio. The after tax cash
flows were then discounted at the weighted average cost of capital reflecting the risk of each of the country and adjusted for
the contracted profile of each project. Lastly to the aggregate value of the portfolio, adjustments were made for one-off
items, other balance sheet assets or liabilities and synergies, to reach the final equity valuation.
117
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
Such valuation has determined a fair value of the net assets acquired in the amount of 503,312 thousands of Euros.
Fair value of identifiable assets and liabilities at the acquisition date is presented as follows:
THOUSAND EUROS
BOOK VALUE AT
ACQUISITION DATE
FAIR VALUE
ADJUSTMENT
FAIR VALUE AT
ACQUISITION DATE
ASSETS
Property, plant and equipment
203,027
214,254
417,281
Right-of-use assets
15,403
-
15,403
Intangible assets
13,340
-
13,340
Goodwill
112,279
-
112,279
Investments in joint ventures and associates
9,437
44,023
53,460
Equity instruments at fair value
182
366
548
Deferred tax assets
15,184
-
15,184
Other Non-Current Assets
484
-
484
Total Non-Current Assets
369,336
258,643
627,979
Inventories
4,028
-
4,028
Debtors and other assets from commercial activities
12,351
-
12,351
Other debtors and other assets
40,941
-
40,941
Current tax assets
4,553
-
4,553
Cash and cash equivalents
32,907
-
32,907
Total Current Assets
94,780
-
94,780
Total Assets
464,116
258,643
722,759
LIABILITIES
Medium / Long term financial debt
17,095
-
17,095
Provisions
18,719
1,100
19,819
Deferred tax liabilities
11,449
56,631
68,080
Other liabilities and other payables
14,948
-
14,948
Total Non-Current Liabilities
62,211
57,731
119,942
Short term financial debt
964
-
964
Trade and other payables from commercial activities
31,886
-
31,886
Current tax liabilities
5,704
-
5,704
Other current liabilities
6,113
-
6,113
Total Current Liabilities
44,667
-
44,667
Total Liabilities
106,878
57,731
164,609
Total Net assets at fair value
558,150
- Non-controlling interests
-8,311
- Net assets previously held in CEASA (business combination achieved in stages)
-46.527
Total Net assets acquired at fair value
503,312
- Total consideration transferred for the acquisition of the shares
-537,487
Goodwill
36,062
Gain on acquisition (CEASA -business combination achieved in stages)
-1,887
118
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The aforementioned Viesgo's valuation has determined a fair value for Property, plant and equipment in the amount
of 417,281 thousand Euros, generating a fair value adjustment of 214,254 thousand Euros and a corresponding deferred
tax liability in the amount of 56,631 thousand Euros (see note 15 and 19). Further, some of the affiliates of Viesgo
Renovables, S.L.U. are associates companies which are consolidated by the equity method, as well as equity instruments
at fair value where the valuation determined a fair value adjustment in the amount of 44,023 thousand Euros and
366 thousand Euros respectively.
At the acquisition date, certain contingent liabilities have been identified, therefore additional provisions have been
recognized in the amount of 1,100 thousand Euros.
The purchase price allocation exercise carried out in accordance with IFRS 3 resulted as follows:
i)
Goodwill recognition in the amount of 148,341 thousand Euros (see note 20) as per the difference of the net assets
acquired at fair value and the consideration transferred for the acquisition of the shares. This amount includes the
previous Goodwill recognized in the book value at acquisition date amounting to 112,279 thousand Euros and an
additional amount of 36,062 thousand Euros, of which an amount of 4,641 thousand Euros refers to associate
companies consolidated by the equity method, thus presented in the caption Investments in joint ventures and
associates caption (see note 20); and
ii)
Gain in the step acquisition of CEASA in the amount of 1,887 thousand Euros as a consequence of the
remeasurement at fair value of the investment previously held, being registered the corresponding difference between
the fair value and the book value in the Other income caption of the consolidated financial statements (see note 9).
The aforementioned goodwill resulting from the purchase price allocation, which is identified as provisional according
to what is indicated in note 2.A, is mainly attributable to the high-quality of the portfolio with strong wind resource
(29% average load factor) and with a low risk profile, of which 87% of the capacity is regulated, with an average age
of 13 years (~7 years of remaining regulated life) considering that the portfolio also counts with an attractive potential
for future extensions/repowering given the aforementioned profile, as well as to the benefits and synergies that are expected
to arise as a result of its integration into EDPR Group.
43. Environment issues
Expenses of environmental nature are the expenses that were identified and incurred to avoid, reduce or repair damages
of an environmental nature that result from the Group's normal activity.
These expenses are booked in the income statement of the year, except if they qualify to be recognised as an asset,
according to IAS 16.
During the year, the environmental expenses recognised in the income statement in the amount of 5,912 thousand Euros
(31 December 2019: 5,611 thousand Euros) refer to costs with the environmental management plan.
Investments of an environmental nature booked as Property, plant and equipment and intangible assets during 2020
amount to 14,829 thousand Euros (31 December 2019: 18,343 thousand Euros).
As referred in accounting policy 2 p), the Group has established provisions for dismantling and decommissioning
of property, plant and equipment when a legal or contractual obligation exists to dismantle and decommission those assets
at the end of their useful lives. Consequently, the Group has booked provisions for property, plant and equipment related
to electricity wind generation for the responsibilities of restoring sites and land to its original condition, in the amount
of 304,661 thousand Euros as at 31 December 2020 (31 December 2019: 270,353 thousand Euros) (see note 32).
119
NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTS FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
44. Operating segments report
The Group generates energy from renewable resources and has three reportable segments which are the Group’s business
platforms, Europe, North America and Brazil. The strategic business units have operations in different geographic zones
and are managed separately because their characteristics are quite different. For each of the strategic business units,
the Group’s CEO reviews internal management reports on at least a quarterly basis.
The accounting policies of the reportable segments are the same as described in note 2. Information regarding the results of
each reportable segment is included in Annex 2. Performance is based on segment operating profit measures, as included
in the internal management reports that are reviewed by the Management. Segment operating profit is used
to measure performance as management believes that such information is the most relevant in evaluating the results
of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined
on an arm’s length basis.
A business segment is an identifiable component of the Group, aimed at providing a single product or service, or a group
of related products or services, and it is subject to risks and returns that can be distinguished from those of other business
segments.
The Group generates energy from renewable sources in several locations and its activity is managed based on the following
business segments:
•
Europe: refers to EDPR EU Group companies operating in Spain, Portugal, Belgium, France, Italy, Netherlands,
Poland, Romania, United Kingdom, Hungary and Greece
•
North America: refers to EDPR North America, EDPR Canada and EDPR Mexico Group companies that operate in
United States of America, Canada and Mexico, respectively
•
Brazil: refers to EDPR Brasil Group companies that operate in this country.
Segment definition
The amounts reported in each business segment result from the aggregation of the subsidiaries and business units defined
in each segment perimeter, including the intra-segment eliminations, without any inter-segment allocation adjustment.
The financial information disclosed by each business segment is determined based on the amounts booked directly in the
subsidiaries that compose the segment, including the intra-segment eliminations, without any inter-segment allocation
adjustment.
45. Audit and non-audit fees
PricewaterhouseCoopers (PwC) was appointed in
the Shareholder’s Meeting held on April 3rd, 2018 as the external auditor
of the EDPR Group for years 2018, 2019 and 2020. Fees for professional services provided by this company and the other
related entities and persons in accordance with Law 22/2015 of 20 July, for the year ended in 31 December 2020 and 2019
are as follows:
31 DECEMBER 2020
THOUSAND EUROS
EUROPE
NORTH
AMERICA
BRAZIL
TOTAL
Audit and statutory audit of accounts
1,346
1,150
167
2,663
Other non-audit services
170
11
4
185
Total
1,516
1,161
171
2,848
120
THE FOLLOWING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED ANNUAL ACCOUNTS
ANNUAL REPORT EDPR 2020
The amount of Other non-audit services in Europe includes, among others, services that refer to the entire Group such
as the review of the internal control system on financial reporting and review of the non-financial information related to
sustainability
included in the EDPR Group’s annual report, which are invoiced to a European company. This amount also
includes the limited review as of June 30, 2020 of the EDPR Consolidated Financial Statements and other reviews for
Group consolidation purposes which are considered non-audit services according to the respective local regulation.
Total amount for Europe includes 734 thousand Euros of services provided by PricewaterhouseCoopers Auditores S.L.
from which 583 thousand Euros refer to audit services and 151 thousand Euros refer to non-audit services.
The above fees exclude the fees for full consolidated Viesgo companies which are also audited by PwC in the amount
of 90 thousand Euros and the fees for the companies that were sold during 2020 (see note 6).
31 DECEMBER 2019
THOUSAND EUROS
EUROPE
NORTH
AMERICA
BRAZIL
TOTAL
Audit and statutory audit of accounts
1,173
1,328
175
2,676
Other audit-related services
-
-
26
26
1,173
1,328
201
2,702
Other non-audit services
182
42
4
228
182
42
4
228
Total
1,355
1,370
205
2,930
The amount of Other non-audit services in Europe includes, among others, services that refer to the entire Group such as
the review of the internal control system on financial reporting and review of the non-financial information related to
sustainability included in the EDPR Group’s annual report, which
are invoiced to a European company. This amount also
includes the limited review as of June 30, 2019 of the EDPR Consolidated Financial Statements and other reviews for
Group consolidation purposes which are considered non-audit services according to the respective local regulation.
Total amount for Europe includes 644 thousand Euros of services provided by PricewaterhouseCoopers Auditores S.L.
from which 494 thousand Euros refer to audit services and 150 thousand Euros refer to non-audit services.
121
Annex I
The Subsidiary Companies consolidated under the full consolidated method, as at 31 December 2020 and 2019, are as follows:
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
GROUP'S PARENT HOLDING COMPANY AND RELATED ACTIVITIES
EDP Renováveis, S.A. (Group's parent holding company)
Oviedo
PwC
100,00%
100,00%
100,00%
100,00%
EDP Renováveis Servicios Financieros, S.A.
Oviedo
PwC
100,00%
100,00%
100,00%
100,00%
EUROPE GEOGRAPHY / PLATFORM
Spain
EDP Renewables Europe, S.L.U. (Europe Parent
Company)
Oviedo
PwC
100,00%
100,00%
100,00%
100,00%
EDP Renovables España, S.L.U.
Oviedo
PwC
100,00%
100,00%
100,00%
100,00%
Acampo Arias, S.L.
Zaragoza
PwC
95,00%
95,00%
95,00%
95,00%
Aplicaciones Industriales de Energías Limpias, S.L.
Zaragoza
n.a.
61,50%
61,50%
61,50%
61,50%
Aprofitament D'Energies Renovables de la Terra Alta, S.A.
Barcelona
n.a.
28,27%
44,09%
28,27%
44,09%
Bon Vent de Corbera, S.L.U.
Barcelona
PwC
0,00%
0,00%
100,00%
100,00%
Compañía Eólica Aragonesa, S.A.
Zaragoza
PwC
100,00%
100,00%
50,00%
50,00%
Desarrollos Eólicos de Teruel, S.L.
Zaragoza
n.a.
51,00%
51,00%
51,00%
51,00%
EDPR Suvan S.L.U.
Madrid
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Terral S.L.U.
Madrid
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Yield, S.A.U.
Oviedo
PwC
100,00%
100,00%
100,00%
100,00%
Eólica Arlanzón, S.A.
Madrid
PwC
85,00%
85,00%
85,00%
85,00%
Eólica Campollano, S.A.
Madrid
PwC
75,00%
75,00%
75,00%
75,00%
Eólica Fontesilva, S.L.U.
La Coruña
PwC
100,00%
100,00%
100,00%
100,00%
Eólica La Brújula, S.A.U.
Madrid
PwC
100,00%
100,00%
100,00%
100,00%
Eólica La Janda, S.L.U.
Madrid
PwC
100,00%
100,00%
100,00%
100,00%
Eólica Sierra de Ávila, S.L.U.
Madrid
PwC
0,00%
0,00%
100,00%
100,00%
Iberia Aprovechamientos Eólicos, S.A.
Zaragoza
PwC
94,00%
94,00%
94,00%
94,00%
Northeolic Monte Buño, S.L.
Cantabria
n.a.
75,00%
75,00%
0,00%
0,00%
Parc Eòlic de Coll de Moro, S.L.U.
Barcelona
PwC
0,00%
0,00%
100,00%
100,00%
Parc Eòlic de Torre Madrina, S.L.U.
Barcelona
PwC
0,00%
0,00%
100,00%
100,00%
Parc Eòlic de Vilalba dels Arcs, S.L.U.
Barcelona
PwC
0,00%
0,00%
100,00%
100,00%
Parc Eòlic Serra Voltorera, S.L.U.
Barcelona
PwC
100,00%
100,00%
100,00%
100,00%
Parque Eólico Altos del Voltoya, S.A.
Madrid
PwC
92,50%
92,50%
92,50%
92,50%
Parque Eólico de Abrazadilla, S.L.U.
Madrid
n.a.
100,00%
100,00%
100,00%
100,00%
Parque Eólico La Sotonera, S.L.
Zaragoza
PwC
69,84%
69,84%
69,84%
69,84%
Parque Eólico Los Cantales, S.L.U.
Zaragoza
PwC
100,00%
100,00%
100,00%
100,00%
Parque Eólico Santa Quiteria, S.L.
Zaragoza
PwC
100,00%
83,96%
100,00%
83,96%
Renovables Castilla La Mancha, S.A.
Madrid
PwC
90,00%
90,00%
90,00%
90,00%
Tébar Eólica, S.A.U.
Madrid
PwC
100,00%
100,00%
100,00%
100,00%
Viesgo Europa, S.L.U.
Cantabria
PwC
100,00%
100,00%
0,00%
0,00%
Viesgo Mantenimiento, S.L.U.
Cantabria
n.a.
100,00%
100,00%
0,00%
0,00%
Viesgo Renovables, S.L.U.
Cantabria
PwC
100,00%
100,00%
0,00%
0,00%
OW Offshore, S.L.
Madrid
PwC
-
-
0,00%
0,00%
Loss of control in 2020
122
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
OW FS Offshore, S.A.*
Oviedo
PwC
-
-
0,00%
0,00%
Portugal
EDP Renováveis Portugal, S.A.
Porto
PwC
51,00%
51,00%
51,00%
51,00%
EDP Renewables SGPS, S.A.
Porto
PwC
100,00%
100,00%
100,00%
100,00%
EDPR PT - Parques Eólicos, S.A.
Porto
PwC
51,00%
51,00%
51,00%
51,00%
EDPR PT - Promoção e Operação, S.A.
Porto
PwC
100,00%
100,00%
100,00%
100,00%
Eólica da Coutada, S.A.
Soutelo de Aguiar
PwC
100,00%
51,00%
100,00%
100,00%
Eólica da Linha, S.A.
Porto
PwC
100,00%
100,00%
100,00%
100,00%
Eólica da Serra das Alturas, S.A.
Boticas
PwC
50,10%
25,55%
50,10%
25,55%
Eólica da Terra do Mato, S.A.
Porto
PwC
100,00%
51,00%
100,00%
51,00%
Eólica das Serras das Beiras, S.A.
Piódão - Arganil
PwC
100,00%
51,00%
100,00%
51,00%
Eólica de Alagoa, S.A.
Arcos de Valdevez
PwC
60,00%
30,60%
60,00%
30,60%
Eólica de Montenegrelo, S.A.
Vila Pouca de Aguiar
PwC
50,10%
25,55%
50,10%
25,55%
Eólica do Alto da Lagoa, S.A.
Porto
PwC
100,00%
51,00%
100,00%
51,00%
Eólica do Alto da Teixosa, S.A.
Alhões
PwC
100,00%
51,00%
100,00%
51,00%
Eólica do Alto do Mourisco, S.A.
Cerdedo
PwC
100,00%
51,00%
100,00%
51,00%
Eólica do Espigão, S.A.
Vila Nova CMV
PwC
100,00%
51,00%
100,00%
51,00%
Eólica do Sincelo, S.A.
Porto
PwC
100,00%
100,00%
100,00%
100,00%
Eólica dos Altos de Salgueiros-Guilhado, S.A.
Vila Pouca de Aguiar
PwC
100,00%
51,00%
100,00%
51,00%
Eoliser - Serviços de Gestão para Parques Eólicos, Lda.
Lisboa
n.a.
100,00%
100,00%
0,00%
0,00%
Fotovoltaica Lote A, S.A.
Porto
PwC
100,00%
100,00%
100,00%
100,00%
IE2 Portugal, SGPS, S.A.
Lisboa
PwC
100,00%
100,00%
0,00%
0,00%
Malhadizes - Energia Eólica, S.A.
Porto
PwC
100,00%
51,00%
100,00%
51,00%
Parque Eólico do Barlavento, S.A.
Lisboa
PwC
89,98%
89,98%
0,00%
0,00%
S.E.E. - Sul Energía Eólica, S.A.
Lisboa
PwC
100,00%
100,00%
0,00%
0,00%
France
EDPR France Holding, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Bourbriac II, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
La Plaine de Nouaille, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Le Chemin de la Corvée, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Le Chemin de Saint Druon, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Monts de la Madeleine Energie, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Monts du Forez Energie, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien d’Entrains
-sur-Nohain, S.A.S.
Paris
PwC
90,00%
90,00%
90,00%
90,00%
Parc Éolien de Boqueho-Plouagat, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Eolien de Dionay, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien de Flavin, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien de la Champagne Berrichonne, S.A.R.L.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien de la Côte du Cerisat, S.A.S.
Paris
EY
100,00%
100,00%
100,00%
100,00%
Parc Éolien de La Hetroye, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien de Mancheville, S.A.R.L.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien de Marchéville, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien de Paudy, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien de Prouville, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
Parc Éolien des 7 Domaines, S.A.S.
Paris
PwC
100,00%
100,00%
100,00%
100,00%
123
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
Parc Éolien des Longs Champs, S.A.R.L.
Paris
n.a.
100,00%
100,00%
100,00%
100,00%
Parc Eolien Louvières, S.A.R.L.
Paris
n.a.
100,00%
100,00%
100,00%
100,00%
Transition Euroise Roman II, S.A.S.
Paris
n.a.
85,00%
85,00%
0,00%
0,00%
Vanosc Energie, S.A.S.
Paris
n.a.
100,00%
100,00%
0,00%
0,00%
Vaudrimesnil Energie, S.A.R.L.
Paris
n.a.
100,00%
100,00%
0,00%
0,00%
OW France, S.A.S.
Paris
n.a.
-
-
0,00%
0,00%
Poland
EDP Renewables Polska, Sp. z o.o.
Warsaw
PwC
100,00%
100,00%
100,00%
100,00%
EDP Renewables Polska HoldCo, S.A.
Warsaw
PwC
51,00%
51,00%
51,00%
51,00%
EDP Renewables Polska Solar, Sp. z o.o.
Warsaw
n.a.
100,00%
100,00%
100,00%
100,00%
R.Wind, Sp. z o.o.
Warsaw
n.a.
100,00%
100,00%
0,00%
0,00%
Budzyn, Sp. z o.o.
Warsaw
n.a.
100,00%
51,00%
0,00%
0,00%
Elektrownia Wiatrowa Kresy I, Sp. z o.o.
Warsaw
PwC
100,00%
51,00%
100,00%
51,00%
EW Dobrzyca, sp. z o.o.
Warsaw
PwC
100,00%
100,00%
100,00%
100,00%
EWP European Wind Power Krasin, Sp. z o.o.
Warsaw
PwC
100,00%
100,00%
100,00%
100,00%
Farma Wiatrowa Bogoria, Sp. z o.o.
Warsaw
PwC
100,00%
100,00%
100,00%
100,00%
Farma Wiatrowa Starozreby, Sp. z o.o.
Warsaw
n.a.
100,00%
100,00%
100,00%
100,00%
FW Warta, Sp. z o.o.
Warsaw
n.a.
100,00%
100,00%
0,00%
0,00%
Gudziki Wind Farm, sp. z o.o.
Warsaw
n.a.
100,00%
51,00%
100,00%
51,00%
Karpacka Mala Energetyka, Sp. z o.o.
Warsaw
n.a.
85,00%
85,00%
85,00%
85,00%
Korsze Wind Farm, Sp. z o.o.
Warsaw
PwC
100,00%
51,00%
100,00%
51,00%
Kowalewo Wind, Sp. z o.o.
Warsaw
PwC
100,00%
100,00%
100,00%
100,00%
Lichnowy Windfarm, Sp. z o.o.
Warsaw
PwC
100,00%
100,00%
100,00%
100,00%
Masovia Wind Farm I, Sp. z o.o.
Warsaw
PwC
100,00%
100,00%
100,00%
100,00%
Miramit Investments, Sp. z o.o.
Warsaw
n.a.
100,00%
100,00%
100,00%
100,00%
Molen Wind II, Sp. z o.o.
Warsaw
PwC
100,00%
51,00%
100,00%
51,00%
Neo Solar Farm, Sp. z o.o.
Warsaw
n.a.
100,00%
100,00%
0,00%
0,00%
Nowa Energia 1, Sp. z o.o.
Warsaw
PwC
100,00%
100,00%
100,00%
100,00%
Radziejów Wind Farm, Sp. z o.o.
Warsaw
PwC
100,00%
51,00%
100,00%
51,00%
Rampton, Sp. z o.o.
Warsaw
n.a.
100,00%
100,00%
100,00%
100,00%
Relax Wind Park I, Sp. z o.o.
Warsaw
PwC
100,00%
51,00%
100,00%
51,00%
Relax Wind Park III, Sp. z o.o.
Warsaw
PwC
100,00%
51,00%
100,00%
51,00%
Ujazd, Sp. z o.o.
Warsaw
PwC.
100,00%
100,00%
100,00%
100,00%
Wind Field Wielkopolska, Sp. zo.o.
Warsaw
PwC
100,00%
100,00%
0,00%
0,00%
Winfan, Sp. z o.o.
Warsaw
n.a.
100,00%
100,00%
100,00%
100,00%
B-Wind Polska, Sp. z o.o.*
Gdynia
PwC
-
-
100,00%
100,00%
C-Wind Polska, Sp. z o.o.*
Gdynia
PwC
-
-
100,00%
100,00%
MFW Neptun, Sp. z o.o.*
Warsaw
PwC
-
-
100,00%
100,00%
Relax Wind Park IV, Sp. z o.o.*
Warsaw
PwC
-
-
100,00%
100,00%
Romania
EDPR România, S.R.L.
Bucarest
PwC
100,00%
100,00%
100,00%
100,00%
Cernavoda Power, S.A.
Bucarest
PwC
100,00%
100,00%
100,00%
100,00%
Pestera Wind Farm, S.A.
Bucarest
PwC
100,00%
100,00%
100,00%
100,00%
Sibioara Wind Farm, S.R.L.
Bucarest
PwC
100,00%
100,00%
100,00%
100,00%
Loss of control in 2020
124
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
VS Wind Farm, S.A.
Bucarest
PwC
100,00%
100,00%
100,00%
100,00%
EDPR RO PV, S.R.L.
Bucarest
n.a.
0,00%
0,00%
100,00%
100,00%
Cujmir Solar, S.A.
Bucarest
n.a.
0,00%
0,00%
100,00%
100,00%
Foton Delta, S.A.
Bucarest
n.a.
0,00%
0,00%
100,00%
100,00%
Foton Epsilon, S.A.
Bucarest
n.a.
0,00%
0,00%
100,00%
100,00%
Potelu Solar, S.A.
Bucarest
n.a.
0,00%
0,00%
100,00%
100,00%
Studina Solar, S.A.
Bucarest
n.a.
0,00%
0,00%
100,00%
100,00%
Vanju Mare Solar, S.A.
Bucarest
n.a.
0,00%
0,00%
100,00%
100,00%
United Kingdom
Altnabreac Wind Farm Limited
Edinburgh
n.a.
100,00%
100,00%
0,00%
0,00%
Ben Sca Wind Farm Limited
Edinburgh
n.a.
100,00%
100,00%
0,00%
0,00%
Moorshield Wind Farm Limited
Edinburgh
n.a.
100,00%
100,00%
0,00%
0,00%
Drummarnock Wind Farm Limited
Edinburgh
n.a.
100,00%
100,00%
0,00%
0,00%
Wind 2 Project 1 Limited
Edinburgh
n.a.
100,00%
100,00%
0,00%
0,00%
Ocean Winds UK Limited*
London
PwC
-
-
100,00%
100,00%
Moray Offshore Renewable Power Limited
London
PwC
-
-
100,00%
100,00%
Italy
EDP Renewables Italia, S.r.l.
Milan
PwC
51,00%
51,00%
51,00%
51,00%
EDP Renewables Italia Holding, S.r.l.
Milan
PwC
100,00%
100,00%
100,00%
100,00%
Aliseo, S.r.l.
Milan
PwC
65,00%
65,00%
0,00%
0,00%
AW 2, S.r.l.
Milan
PwC
75,00%
75,00%
75,00%
75,00%
Breva Wind, S.r.l.
Milan
PwC
100,00%
100,00%
100,00%
100,00%
Conza Energia, S.r.l.
Milan
PwC
100,00%
100,00%
100,00%
100,00%
Custolito, S.r.l.
Milan
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Sicilia PV, S.r.l.
Milan
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Sicilia Wind, S.r.l.
Milan
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Villa Galla, S.r.l.
Milan
PwC
100,00%
51,00%
100,00%
51,00%
Energia Emissioni Zero 4, S.r.l.
Milan
PwC
60,00%
60,00%
0,00%
0,00%
Giglio, S.r.l.
Milan
n.a.
60,00%
60,00%
0,00%
0,00%
Lucus Power, S.r.l.
Milan
PwC
100,00%
100,00%
100,00%
100,00%
Re Plus, S.r.l.
Milan
n.a.
100,00%
100,00%
100,00%
100,00%
San Mauro, S.r.l.
Milan
PwC
75,00%
75,00%
75,00%
75,00%
Sarve, S.r.l.
Milan
PwC
51,00%
51,00%
51,00%
51,00%
T Power, S.p.A.
Milan
Baker
Tilly
100,00%
100,00%
100,00%
100,00%
TACA Wind, S.r.l.
Milan
PwC
100,00%
100,00%
100,00%
100,00%
Tivano, S.r.l.
Milan
PwC
75,00%
75,00%
75,00%
75,00%
VRG Wind 153, S.r.l.
Milan
n.a.
80,00%
80,00%
0,00%
0,00%
WinCap, S.r.l.
Milan
PwC
100,00%
100,00%
100,00%
100,00%
Wind Energy San Giorgio, S.r.l.
Milan
n.a.
60,00%
60,00%
0,00%
0,00%
Greece
Aioliko Parko Fthiotidos Erimia E.P.E.
Agia Paraskevi
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Hellas 1 M.A.E.
Attica
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Hellas 2 M.A.E.
Attica
n.a.
100,00%
100,00%
100,00%
100,00%
Energiaki Arvanikou E.P.E.
Athens
PwC
100,00%
100,00%
100,00%
100,00%
Loss of control in 2020
125
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
Wind Park Aerorrachi M.A.E.
Athens
PwC
100,00%
100,00%
100,00%
100,00%
Wind Shape, Ltd.
Attica
n.a.
100,00%
100,00%
0,00%
0,00%
Belgium
EDP Renewables Belgium, S.A.
Brussels
PwC
100,00%
100,00%
100,00%
100,00%
The Netherlands
EDPR International Investments, B.V.
Amsterdam
PwC
100,00%
100,00%
100,00%
100,00%
4THEWIND I, B.V.
Zwolle
n.a.
-
-
100,00%
100,00%
4THEWIND II, B.V.*
Zwolle
n.a.
-
-
100,00%
100,00%
4THEWIND III, B.V.*
Zwolle
n.a.
-
-
100,00%
100,00%
Ventum Ventures III Holding, B.V.*
Zwolle
n.a.
-
-
100,00%
100,00%
Hungary
EDP Renewables Hungary
Hungary
PwC
100,00%
100,00%
0,00%
0,00%
Sunlight Solar, Kft.
Hungary
PwC
100,00%
100,00%
0,00%
0,00%
ESC ERŐMŰ, Kft.
Hungary
PwC
100,00%
100,00%
0,00%
0,00%
North America geography / platform
Mexico
EDPR Servicios de México, S. de R.L. de C.V.
Ciudad de México
n.a.
100,00%
100,00%
100,00%
100,00%
Eólica de Coahuila, S.A. de C.V.
Ciudad de México
PwC
51,00%
51,00%
100,00%
51,00%
Parque Solar Los Cuervos, S. de R.L. de C.V.
Ciudad de México
n.a.
100,00%
100,00%
0,00%
0,00%
Vientos de Coahuila, S.A. de C.V.
Ciudad de México
n.a.
100,00%
100,00%
100,00%
100,00%
USA
EDP Renewables North America LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
17th Star Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
2007 Vento I LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2007 Vento II LLC
Delaware
PwC
100,00%
51,00%
100,00%
51,00%
2008 Vento III LLC
Delaware
PwC
100,00%
51,00%
100,00%
51,00%
2009 Vento IV LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2009 Vento V LLC
Delaware
PwC
100,00%
51,00%
100,00%
51,00%
2009 Vento VI LLC
Delaware
n.a.
0,00%
0,00%
100,00%
100,00%
2010 Vento VII LLC
Delaware
n.a.
0,00%
0,00%
100,00%
100,00%
2010 Vento VIII LLC
Delaware
n.a.
0,00%
0,00%
100,00%
100,00%
2011 Vento IX LLC
Delaware
PwC
100,00%
51,00%
100,00%
51,00%
2011 Vento X LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2014 Sol I LLC
Delaware
PwC
100,00%
50,00%
100,00%
51,00%
2014 Vento XI LLC
Delaware
PwC
100,00%
51,00%
100,00%
51,00%
2014 Vento XII LLC
Delaware
PwC
100,00%
51,00%
100,00%
51,00%
2015 Vento XIII LLC
Delaware
PwC
100,00%
51,00%
100,00%
51,00%
2015 Vento XIV LLC
Delaware
PwC
100,00%
51,00%
100,00%
51,00%
2016 Vento XV LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2016 Vento XVI LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2017 Sol II LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2017 Vento XVII LLC*
Delaware
PwC
-
-
100,00%
100,00%
2018 Vento XVIII LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2019 SOL V LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Loss of control in 2020
126
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
2019 Vento XX LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2019 Vento XXI LLC
Delaware
PwC
100,00%
100,00%
100,00%
100,00%
2020 Vento XXII LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Alabama Ledge Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Alabama Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Antelope Ridge Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Arbuckle Mountain Wind Farm LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Arkwright Summit Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Arlington Wind Power Project LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Aroostook Wind Energy LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Ashford Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Athena-Weston Wind Power Project II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Athena-Weston Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Avondale Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
AZ Solar LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Azalea Springs Solar Park LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Bayou Bend Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
BC2 Maple Ridge Holdings LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
BC2 Maple Ridge Wind LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Big River Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Black Prairie Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Black Prairie Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Black Prairie Wind Farm III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Black Prairie Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blackford County Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blackford County Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blackstone Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blackstone Wind Farm III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blackstone Wind Farm IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blackstone Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blackstone Wind Farm V LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Canyon Windpower II LLC
Texas
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Canyon Windpower III LLC
Texas
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Canyon Windpower IV LLC
Texas
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Canyon Windpower V LLC
Texas
n.a.
100,00%
51,00%
100,00%
51,00%
Blue Canyon Windpower VI LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Canyon Windpower VII LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Harvest Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot IX LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot V LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot VI LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
127
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
Blue Marmot VII LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot VIII LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Marmot XI LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Bluebird Prairie Solar Park LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Bright Stalk Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Broadlands Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Broadlands Wind Farm III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Broadlands Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Buffalo Bluff Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Cameron Solar LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Casa Grande Carmel Solar LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Castle Valley Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Cattlemen Solar Park LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Chateaugay River Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Cielo Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Clinton County Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Cloud County Wind Farm LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Coldwater Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Coos Curry Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Crescent Bar Solar Park LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Crittenden Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Cropsey Ridge Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Crossing Trails Wind Power Project II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Crossing Trails Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Dairy Hills Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Diamond Power Partners LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Drake Peak Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Dry Creek Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Duff Solar Park II LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Duff Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
East Klickitat Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Eastmill Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR CA Solar Park II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR CA Solar Park III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR CA Solar Park IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR CA Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR CA Solar Park V LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR CA Solar Park VI LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR NA DG Holding LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
EDPR Northeast Allen Solar Park LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
EDPR Solar Ventures I LLC
Delaware
n.a.
50,00%
50,00%
51,00%
51,00%
EDPR Solar Ventures II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Solar Ventures III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Solar Ventures IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Solar Ventures V LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
128
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
EDPR South Table LLC
Nebraska
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Vento I Holding LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Vento IV Holding LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR WF LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures X LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures XI LLC
Delaware
n.a.
51,00%
51,00%
51,00%
51,00%
EDPR Wind Ventures XII LLC
Delaware
n.a.
51,00%
51,00%
51,00%
51,00%
EDPR Wind Ventures XIII LLC
Delaware
n.a.
51,00%
51,00%
51,00%
51,00%
EDPR Wind Ventures XIV LLC
Delaware
n.a.
51,00%
51,00%
51,00%
51,00%
EDPR Wind Ventures XIX LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures XV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures XVI LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures XVII LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures XVIII LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures XX LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures XXI LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
EDPR Wind Ventures XXII LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Edwardsport Solar Park LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Esker Solar Park II LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Esker Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Estill Solar I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Five-Spot LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Ford Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Franklin Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Goldfinger Ventures III LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Green Country Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Green Power Offsets LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Greenbow Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Gulf Coast Windpower Management Company LLC
Delaware
n.a.
75,00%
75,00%
75,00%
75,00%
Hampton Solar II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Headwaters Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Headwaters Wind Farm III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Headwaters Wind Farm IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Headwaters Wind Farm LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Helena Harbor Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Hidalgo Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Hidalgo Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
High Prairie Wind Farm II LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
High Trail Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Hog Creek Wind Project LLC
Delaware
n.a.
-
-
100,00%
100,00%
Holly Hill Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Chocolate Bayou I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Midwest IX LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Northwest I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Loss of control in 2020
129
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
Horizon Wind Energy Northwest IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Northwest VII LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Northwest X LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Northwest XI LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Panhandle I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Southwest I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Southwest II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Southwest III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Southwest IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Energy Valley I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Freeport Windpower I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind MREC Iowa Partners LLC
Delaware
n.a.
75,00%
75,00%
75,00%
75,00%
Horizon Wind Ventures I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Ventures II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horizon Wind Ventures III LLC
Delaware
n.a.
51,00%
51,00%
51,00%
51,00%
Horizon Wind Ventures IX LLC
Delaware
n.a.
51,00%
51,00%
51,00%
51,00%
Horizon Wind Ventures VI LLC
Delaware
n.a.
0,00%
0,00%
100,00%
100,00%
Horizon Wind Ventures VII LLC
Delaware
n.a.
0,00%
0,00%
100,00%
100,00%
Horizon Wind Ventures VIII LLC
Delaware
n.a.
0,00%
0,00%
100,00%
100,00%
Horizon Wyoming Transmission LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Horse Mountain Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Indiana Crossroads Solar Park II LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Indiana Crossroads Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Indiana Crossroads Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Jericho Rise Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Juniper Wind Power Partners LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Leprechaun Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Lexington Chenoa Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Lexington Chenoa Wind Farm III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Lexington Chenoa Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Little Brook Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Loblolly Hill Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Loki Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Loma de la Gloria Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Lone Valley Solar Park I LLC
Delaware
n.a.
100,00%
50,00%
100,00%
51,00%
Lone Valley Solar Park II LLC
Delaware
n.a.
100,00%
50,00%
100,00%
51,00%
Long Hollow Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Lost Lakes Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Lowland Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Loyal Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Machias Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Madison Windpower LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Marathon Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Marble River LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Martinsdale Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
130
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
Meadow Lake Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Meadow Lake Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Meadow Lake Wind Farm III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Meadow Lake Wind Farm IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Meadow Lake Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Meadow Lake Wind Farm V LLC
Delaware
n.a.
-
-
100,00%
100,00%
Meadow Lake Wind Farm VIII LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Mesquite Wind LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Mineral Springs Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Misenheimer Solar LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Moonshine Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
New Trail Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Nine Kings Transco LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
North Slope Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Number Nine Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Old Trail Wind Farm LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
OPQ Property LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Pacific Southwest Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Paulding Wind Farm II LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Paulding Wind Farm III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Paulding Wind Farm IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Paulding Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Paulding Wind Farm V LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Paulding Wind Farm VI LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Peterson Power Partners LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Pioneer Prairie Wind Farm I LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Pleasantville Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Plum Nellie Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Poplar Camp Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Post Oak Wind LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Prospector Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Quilt Block Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Quilt Block Wind Farm LLC
*
Delaware
n.a.
-
-
100,00%
100,00%
Rail Splitter Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Rail Splitter Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
RE Scarlet LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Redbed Plains Wind Farm LLC*
Delaware
n.a.
-
-
100,00%
100,00%
Reloj del Sol Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Renville County Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Rio Blanco Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Rising Tree Wind Farm II LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Rising Tree Wind Farm III LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Rising Tree Wind Farm LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Riverstart Development LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Loss of control in 2020
131
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
Riverstart Solar Park II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Riverstart Solar Park III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Riverstart Solar Park IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Riverstart Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Riverstart Solar Park V LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Riverstart Ventures LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Rolling Upland Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Rosewater Ventures LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Rosewater Wind Farm LLC
Delaware
n.a.
0,00%
0,00%
100,00%
100,00%
RTSW Solar Park II LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
RTSW Solar Park III LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
RTSW Solar Park IV LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
RTSW Solar Park LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
RTSW Solar Park V LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
RTSW Solar Park VI LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Rush County Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Rye Patch Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Saddleback Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Sagebrush Power Partners LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
San Clemente Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Sardinia Windpower LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Sedge Meadow Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Shullsburg Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Signal Hill Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Simpson Ridge Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Simpson Ridge Wind Farm III LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Simpson Ridge Wind Farm IV LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Simpson Ridge Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Simpson Ridge Wind Farm V LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Solar Ventures Purchasing LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Spruce Ridge Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Stinson Mills Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Sustaining Power Solutions LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Sweet Stream Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Telocaset Wind Power Partners LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Tillman Solar Park LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Timber Road II Storage LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Timber Road III Storage LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Timber Road Solar Park II LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Timber Road Solar Park III LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Timber Road Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Top Crop I Storage LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Top Crop II Storage LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Tug Hill Windpower LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Tumbleweed Wind Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
132
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
Turtle Creek Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Twin Groves I Storage LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Twin Groves II Storage LLC
Delaware
n.a.
100,00%
100,00%
0,00%
0,00%
Waverly Wind Farm II LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Waverly Wind Farm LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Western Trail Wind Project I LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Wheat Field Holding LLC
Delaware
PwC
51,00%
51,00%
51,00%
51,00%
Wheat Field Wind Power Project LLC
Delaware
n.a.
100,00%
51,00%
100,00%
51,00%
Whiskey Ridge Power Partners LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Whistling Wind WI Energy Center LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
White Stone Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Whitestone Wind Purchasing LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Wildcat Creek Wind Farm LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Wilson Creek Power Project LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Wind Turbine Prometheus LP
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
Wrangler Solar Park LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
WTP Management Company LLC
Delaware
n.a.
100,00%
100,00%
100,00%
100,00%
North River Wind LLC
Delaware
n.a.
-
-
0,00%
0,00%
OW North America LLC*
Delaware
n.a.
-
-
0,00%
0,00%
Canada
EDP Renewables Canada Ltd.
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Bridge Solar Park GP Ltd
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
Blue Bridge Solar Park Limited Partnership
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
Bromhead Solar Park GP Ltd
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
Bromhead Solar Park Limited Partnership
Saskatchewan
n.a.
100,00%
100,00%
100,00%
100,00%
EDP Renewables Canada Management Services Ltd
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
EDP Renewables Sask SE GP Ltd
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
EDP Renewables Sask SE Limited Partnership
Ontario
n.a.
100,00%
100,00%
100,00%
100,00%
EDP Renewables SH II Project GP Ltd
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
EDP Renewables SH II Project Limited Partnership
Alberta
n.a.
100,00%
100,00%
100,00%
100,00%
EDP Renewables SH Project GP Ltd.
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
EDP Renewables SH Project Limited Partnership
Alberta
n.a.
100,00%
100,00%
100,00%
100,00%
Halbrite Solar Park GP Ltd
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
Halbrite Solar Park Limited Partnership
Saskatchewan
n.a.
100,00%
100,00%
100,00%
100,00%
Kennedy Wind Farm GP Ltd
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
Kennedy Wind Farm Limited Partnership
Saskatchewan
n.a.
100,00%
100,00%
100,00%
100,00%
Nation Rise Wind Farm GP II Inc.
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
Nation Rise Wind Farm GP Inc.
British Columbia
n.a.
100,00%
100,00%
0,00%
0,00%
Nation Rise Wind Farm Limited Partnership
Ontário
PwC
100,00%
100,00%
0,00%
0,00%
Quatro Limited Partnership
Ontário
n.a.
100,00%
100,00%
100,00%
100,00%
SBWF GP Inc.
British Columbia
n.a.
51,00%
51,00%
51,00%
51,00%
South Branch Wind Farm II GP Inc.
British Columbia
n.a.
100,00%
100,00%
100,00%
100,00%
South Branch Wind Farm II Limited Partnership
Ontário
n.a.
100,00%
100,00%
100,00%
100,00%
South Dundas Windfarm Limited Partnership
Ontário
PwC
51,00%
51,00%
51,00%
51,00%
Loss of control in 2020
133
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
SOUTH AMERICA GEOGRAPHY / PLATFORM:
Brazil
EDP Renováveis Brasil, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Aventura Holding, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Aventura I, S.A.
São Paulo
PwC
51,00%
51,00%
51,00%
51,00%
Central Eólica Aventura II, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Aventura III, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Aventura IV, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Aventura V, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Baixa do Feijão I, S.A.
São Paulo
PwC
51,00%
51,00%
51,00%
51,00%
Central Eólica Baixa do Feijão II, S.A.
São Paulo
PwC
51,00%
51,00%
51,00%
51,00%
Central Eólica Baixa do Feijão III, S.A.
São Paulo
PwC
51,00%
51,00%
51,00%
51,00%
Central Eólica Baixa do Feijão IV, S.A.
São Paulo
PwC
51,00%
51,00%
51,00%
51,00%
Central Eólica Boqueirão I, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Boqueirão II, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Catanduba I, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Catanduba II, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica JAU, S.A.
São Paulo
PwC
51,00%
51,00%
51,00%
51,00%
Central Eólica Jerusalém I, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Jerusalém II, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Jerusalém III, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Jerusalém IV, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Jerusalém V, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Jerusalém VI, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Monte Verde I, S.A.
Lagoa Nova
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Monte Verde II, S.A.
Lagoa Nova
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Monte Verde III, S.A.
Lagoa Nova
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Monte Verde IV, S.A.
Lagoa Nova
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Monte Verde V, S.A.
Lagoa Nova
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica Monte Verde VI, S.A.
Lagoa Nova
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica SRMN I, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica SRMN II, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica SRMN III, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica SRMN IV, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Eólica SRMN V, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Central Nacional de Energia Eólica, S.A.
São Paulo
PwC
51,00%
51,00%
51,00%
51,00%
Central Solar Lagoa I, S.A.
São Paulo
n.a.
100,00%
100,00%
0,00%
0,00%
Central Solar Lagoa II, S.A.
São Paulo
n.a.
100,00%
100,00%
0,00%
0,00%
Central Solar Pereira Barreto I, S.A.
Pereira Barreto
PwC
100,00%
100,00%
100,00%
100,00%
Central Solar Pereira Barreto II, S.A.
Pereira Barreto
PwC
100,00%
100,00%
100,00%
100,00%
Central Solar Pereira Barreto III, S.A.
Pereira Barreto
PwC
100,00%
100,00%
100,00%
100,00%
Central Solar Pereira Barreto IV, S.A.
Pereira Barreto
PwC
100,00%
100,00%
100,00%
100,00%
Central Solar Pereira Barreto V, S.A.
Pereira Barreto
PwC
100,00%
100,00%
100,00%
100,00%
Elebrás Projetos, S.A.
São Paulo
PwC
51,00%
51,00%
51,00%
51,00%
Jerusalém Holding, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
134
ANNUAL REPORT EDPR 2020
2020
2019
Company
Head Office
Auditor
% of
capital
% of
voting
rights
% of
capital
% of
voting
rights
Monte Verde Holding, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
SRMN Holding, S.A.
São Paulo
PwC
100,00%
100,00%
100,00%
100,00%
Colombia
Elipse Energía, S.A.S. E.S.P.
Bogotá
n.a.
100,00%
100,00%
0,00%
0,00%
Eolos Energías, S.A.S. E.S.P.
Bogotá
n.a.
100,00%
100,00%
100,00%
100,00%
Kappa Energía, S.A.S. E.S.P.
Bogotá
n.a.
100,00%
100,00%
0,00%
0,00%
Omega Energía, S.A.S. E.S.P.
Bogotá
n.a.
100,00%
100,00%
0,00%
0,00%
Solar Power Solutions, S.A.S. E.S.P.
Bogotá
n.a.
100,00%
100,00%
0,00%
0,00%
Vientos del Norte, S.A.S. E.S.P.
Bogotá
n.a.
100,00%
100,00%
100,00%
100,00%
ASIA GEOGRAPHY / PLATFORM:
Japan
OW Japan Godo Kaisha*
Tokyo
n.a.
-
-
0,00%
0,00%
Vietnam
EDP Renewables Vietnam Ltd.
Ho Chi Minh
n.a.
100,00%
100,00%
100,00%
100,00%
Loss of control in 2020
The main financial indicators of the jointly controlled companies included in the consolidation under the equity method
as at 31 December 2020, are as follows:
COMPANY
SHARE CAPITAL
HEAD OFFICE
AUDITOR
% OF CAPITAL
% OF VOTING
RIGHTS
4THEWIND I, B.V.
€
100
Zwolle
n.a.
100,00%
50,00%
4THEWIND II, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
4THEWIND III, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
4THEWIND IV, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
4THEWIND V, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
4THEWIND VI, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
4THEWIND VII, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
4THEWIND VIII, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
Ancoris Beheer Nederland, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
Ceprastur, A.I.E.
€ 360.607
Oviedo
n.a.
56,76%
56,76%
Desarrollos Energéticos Canarios, S.A.
€ 37.564
Las Palmas
n.a.
49,90%
49,90%
Desarrollos Energéticos del Val, S.L.
€ 137.070
Soria
n.a.
25,00%
25,00%
Electrabel Offshore Energy
€ 13.606.250
Belgium
Deloitte
100,00%
50,00%
Éoliennes en Mer Dieppe - Le Tréport, S.A.S.
€ 31.436.000
Bois Guillaume
EY
60,50%
30,25%
Éoliennes en Mer Îles d'Yeu et de Noirmoutier, S.A.S.
€ 36.376.000
Nantes
EY
60,50%
30,25%
Evolución 2000, S.L.
€ 117.994
Albacete
PwC
49,15%
49,15%
Les Eoliennes en Mer Services, S.A.S.
€ 40.000
Courbevoie
EY
100,00%
30,25%
Les Eoliennes Flottantes du Golfe du Lion, S.A.S.
€ 40.000
Montpellier
EY
80,00%
40,00%
North Sea Wave, N.V.
€ 362.500
Belgium
n.a.
17,50%
8,75%
OW France, S.A.S.
€ 1.307.527
Paris
PwC
100,00%
50,00%
OW FS Offshore, S.A.
€ 3.500.000
Oviedo
PwC
100,00%
50,00%
OW Offshore, S.L.
€ 3.731.000
Madrid
PwC
50,00%
50,00%
SeaMade, N.V
€ 76.524.001
Belgium
n.a.
17,50%
8,75%
135
ANNUAL REPORT EDPR 2020
COMPANY
SHARE CAPITAL
HEAD OFFICE
AUDITOR
% OF CAPITAL
% OF VOTING
RIGHTS
Sistemas Eólicos Tres Cruces, S.L.
€ 50.000
Soria
n.a.
25,00%
25,00%
Ventum Ventures III Holding, B.V.
€ 100
Zwolle
n.a.
100,00%
50,00%
Windplus, S.A.
€ 1.779.000
Lisboa
PwC
85,17%
42,63%
Ventos do Atlântico - Projetos de Energía Eólica Ltda
BRL 100
São Paulo
n.a.
100,00%
50,00%
B&C Wind Polska sp. z o.o. s.c.
PLN 0
Warsaw
n.a.
100,00%
50,00%
B-Wind Polska, Sp. z o.o.
PLN 60.000
Gdynia
PwC
100,00%
50,00%
C-Wind Polska, Sp. z o.o.
PLN 1.850.000
Gdynia
PwC
100,00%
50,00%
MFW Neptun, Sp. z o.o.
PLN 220.000
Warsaw
PwC
100,00%
50,00%
Relax Wind Park IV, Sp. z o.o.
PLN 4.490.000
Warsaw
PwC
100,00%
50,00%
Delphis Holdings Limited
£ 4,13
Edinburgh
n.a.
100,00%
50,20%
Moray East Holdings Limited
£ 10,000,000
London
PwC
56,60%
28,30%
Moray Offshore Renewable Power Limited
£ 23027589
London
PwC
100,00%
50,00%
Moray Offshore Windfarm (East) Limited
£ 10,000,000
London
PwC
100,00%
28,30%
Moray Offshore Windfarm (West) Limited
£ 1,000
London
PwC
100,00%
64,20%
Moray West Holdings Limited
£ 1,000
London
PwC
33,40%
64,20%
Mordel Limited
£ 2
Edinburgh
PwC
100,00%
50,00%
Ocean Winds UK Limited
£ 9578002
London
PwC
100,00%
50,00%
2017 Vento XVII LLC
€ 536.689.832
Delaware
PwC
20,00%
20,00%
2018 Vento XIX LLC
€ 493.538.562
Delaware
PwC
20,00%
20,00%
2019 SOL III LLC
€ 235.989.831
Delaware
PwC
100,00%
50,00%
2019 SOL IV LLC
€
316.169.431
Delaware
PwC
100,00%
50,00%
Flat Rock Windpower LLC
€ 215.034.270
Delaware
KPMG
50,00%
50,00%
Flat Rock Windpower II LLC
€ 543.598.932
Delaware
KPMG
50,00%
50,00%
Goldfinger Ventures II LLC
€ 194.656.553
Delaware
n.a.
50,00%
50,00%
Goldfinger Ventures LLC
€ 146.473.771
Delaware
n.a.
50,00%
50,00%
Hog Creek Wind Project LLC
€ 96.319.972
Delaware
n.a.
100,00%
20,00%
Mayflower Wind Energy LLC
€ 468.300.200
Delaware
BDO
50,00%
25,00%
Meadow Lake Wind Farm V LLC
€ 147.518.483
Delaware
n.a.
100,00%
20,00%
Meadow Lake Wind Farm VI LLC
€ 264.400.228
Delaware
n.a.
100,00%
20,00%
Nine Kings Wind Farm LLC
€ 0
Delaware
n.a.
50,00%
50,00%
North River Wind LLC
€ 0
Delaware
n.a.
100,00%
50,00%
OW North America LLC
€ 228.689.706
Delaware
n.a.
100,00%
50,00%
Prairie Queen Wind Farm LLC
€ 223.444.606
Delaware
n.a.
100,00%
20,00%
Quilt Block Wind Farm LLC
€ 138.049.755
Delaware
n.a.
100,00%
20,00%
Redbed Plains Wind Farm LLC
€ 154.582.883
Delaware
n.a.
100,00%
20,00%
Redwood Coast Offshore Wind LLC
€ 0
Delaware
n.a.
50,00%
25,00%
Solar Ventures Acquisition LLC
€ 0
Delaware
n.a.
50,00%
50,00%
Sun Streams LLC
€ 317.353.745
Delaware
n.a.
100,00%
50,00%
Sunshine Valley Solar LLC
€ 201.098.196
Delaware
n.a.
100,00%
50,00%
Windhub Solar A LLC
€ 36.343.904
Delaware
n.a.
100,00%
50,00%
OW Japan Godo Kaisha
¥
24.400.001
Tokyo
n.a.
100,00%
50,00%
East Blue Power Co., Ltd.
KRW
200.000.000
Seoul
n.a.
90,00%
27,56%
Korean Floating Wind Power Co., Ltd.
KRW 10.000.000
Seoul
n.a.
61,25%
30,63%
OW South Korea Co., Ltd.
KRW 65.000.000
Seoul
n.a.
100,00%
50,00%
136
ANNUAL REPORT EDPR 2020
The main financial indicators of the jointly controlled companies included in the consolidation under the equity method
as at 31 December 2019, are as follows:
COMPANY
SHARE
CAPITAL
HEAD OFFICE
AUDITOR
% OF
CAPITAL
% OF VOTING
RIGHTS
Ceprastur, A.I.E.
€ 360.607
Oviedo
n.a.
56,76%
56,76%
Compañía Eólica Aragonesa, S.A.
€ 6.701.165
Zaragoza
PwC
50,00%
50,00%
Desarrollos Energéticos Canarios, S.A.
€ 37.564
Las Palmas
n.a.
49,90%
49,90%
Desarrollos Energéticos del Val, S.L.
€ 137.070
Soria
n.a.
25,00%
25,00%
Evolución 2000, S.L.
€ 117.994
Albacete
PwC
49,15%
49,15%
Sistemas Eólicos Tres Cruces, S.L.
€ 50.000
Soria
n.a.
25,00%
25,00%
Éoliennes en Mer Dieppe - Le Tréport, S.A.S.
€
31.436.000
Bois Guillaume
EY
29,50%
29,50%
Éoliennes en Mer Îles d'Yeu et de Noirmoutier,
S.A.S.
€ 36.376.000
Nantes
EY
29,50%
29,50%
Les Eoliennes en Mer Services, S.A.S.
€ 40.000
Courbevoie
EY
100,00%
29,50%
Les Eoliennes Flottantes du Golfe
du Lion, S.A.S.
€ 40.000
Montpellier
EY
35,00%
35,00%
Windplus, S.A.
€ 1.250.000
Lisboa
PwC
54,40%
54,40%
Moray East Holdings Limited
£ 10,000,000
London
PwC
33,30%
33,30%
Moray Offshore Windfarm (East) Limited
£ 10,000,000
London
PwC
100,00%
33,30%
Moray Offshore Windfarm (West) Limited
£ 1,000
London
PwC
100,00%
67,00%
Moray West Holdings Limited
£ 1,000
London
PwC
67,00%
67,00%
2018 Vento XIX LLC
$ 483.122.053
Delaware
PwC
20,00%
20,00%
2019 SOL III LLC
$ 246.422.986
Delaware
PwC
100,00%
50,00%
2019 SOL IV LLC
$ 0
Delaware
PwC
100,00%
50,00%
Flat Rock Windpower LLC
$ 536,426,287
Delaware
KPMG
50,00%
50,00%
Flat Rock Windpower II LLC
$ 211,171,187
Delaware
KPMG
50,00%
50,00%
Goldfinger Ventures II LLC
$ 208.565.999
Delaware
n.a.
50,00%
50,00%
Goldfinger Ventures LLC
$ 154.978.239
Delaware
n.a.
50,00%
50,00%
Mayflower Wind Energy LLC
$ 159.000.000
Delaware
BDO
50,00%
50,00%
Meadow Lake Wind Farm VI LLC
$ 273.341.071
Delaware
n.a.
100,00%
20,00%
Nine Kings Wind Farm LLC
$ $ 0
Delaware
n.a.
50,00%
50,00%
Prairie Queen Wind Farm LLC
$ 191,095,968
Delaware
n.a.
100,00%
20,00%
Solar Ventures Acquisition LLC
$ 0
Delaware
n.a.
50,00%
50,00%
Sun Streams LLC
$ 333,609,989
Delaware
n.a.
100,00%
50,00%
Sunshine Valley Solar LLC
$ 208.520.098
Delaware
n.a.
100,00%
50,00%
Windhub Solar A LLC
$ 37.902.128
Delaware
n.a.
100,00%
50,00%
Nation Rise Wind Farm GP Inc.
CAD 1,276
British
Columbia
n.a.
25,00%
25,00%
Nation Rise Wind Farm Limited Partnership
CAD 62,024,174
Ontário
PwC
25,00%
25,00%
Korean Floating Wind Power Co., Ltd.
KRW 10.000.000
Seoul
n.a.
61,25%
61,25%
137
ANNUAL REPORT EDPR 2020
The Associated Companies included in the consolidation under the equity method as at 31 December 2020, are as follows:
COMPANY
SHARE
CAPITAL
HEAD
OFFICE
AUDITOR
% OF
CAPITAL
% OF
VOTING
RIGHTS
Biomasas del Pirineo, S.A.
€ 454.896
Huesca
n.a.
30,00%
30,00%
Blue Canyon Windpower LLC
€ 63.851.000
Texas
PWC
25,00%
25,00%
Desarrollos Eólicos de Canarias, S.A.
€ 1.817.130
Gran Canaria
PwC
44,75%
44,75%
Elecdey Carcelén, S.A.
€
6.969.600
Albacete
PwC
23,00%
23,00%
Eólica de São Julião, Lda.
€ 500.000
Lisboa
PwC
45,00%
45,00%
Eos Pax IIa, S.L.
€ 6.010
Coruña
PwC
48,50%
48,50%
Geólica Magallón, S.L.
€ 3.400.000
Zaragoza
PwC
36,24%
36,24%
Parque Eólico Belmonte, S.A.
€ 120.400
Madrid
KPMG
29,90%
29,90%
Parque Eólico Sierra del Madero, S.A.
€ 7.193.970
Madrid
KPMG
42,00%
42,00%
San Juan de Bargas Eólica, S.L.
€ 5.000.000
Zaragoza
PwC
47,01%
47,01%
Solar Siglo XXI, S.A.
€ 80.000
Ciudad Real
n.a.
25,00%
25,00%
Solar Works! B.V.
€ 6.769.000
Rotterdam
RSM Global
20,19%
20,19%
Unión de Generadores de Energía, S.L.
€ 23.044
Zaragoza
PwC
50,00%
50,00%
The Associated Companies included in the consolidation under the equity method as at 31 December 2019, are as follows:
COMPANY
SHARE
CAPITAL
HEAD
OFFICE
AUDITOR
% OF
CAPITAL
% OF
VOTING
RIGHTS
Aprofitament D'Energies Renovables
de L'Ebre, S.L.
€ 14,933,030
Barcelona
Jordi
Guilera
Valls
13,29%
13,29%
Biomasas del Pirineo, S.A.
€ 454,896
Huesca
n.a.
30,00%
30,00%
Desarrollos Eólicos de Canarias,
S.A.
€ 1,817,130
Gran Canaria
PwC
44,75%
44,75%
Parque Eólico Belmonte, S.A.
€ 120,400
Madrid
KPMG
29,90%
29,90%
Parque Eólico Sierra del Madero,
S.A.
€7,193,970
Madrid
KPMG
42,00%
42,00%
Solar Siglo XXI, S.A.
€ 80,000
Ciudad Real
n.a.
25,00%
25,00%
Dunkerque Éoliennes en Mer, S.A.S.
€ 10,000
Montpellier
n.a.
32,00%
32,00%
Frontier Beheer Nederland, B. V.
€ 1,000
Zwolle
n.a.
30,00%
30,00%
Frontier, C.V.
€ 1,000
Zwolle
n.a.
30,00%
30,00%
Solar Works! B.V.
€ 2,089
Rotterdam
RSM Global
20,19%
20,19%
Blue Canyon Windpower LLC
$ 63,851,000
Texas
PwC
25,00%
25,00%
138
ANNUAL REPORT EDPR 2020
Annex II
Group Activity by Operating Segment
Operating Segment Information for the years ended 31 December 2020
THOUSAND EUROS
EUROPE
NORTH
AMERICA
BRAZIL
SEGMENTS
TOTAL
Revenues
824,236
669,387
36,497
1,530,120
Income from institutional partnerships in U.S. wind farms
-
201,783
-
201,783
824,236
871,170
36,497
1,731,903
Other operating income
286,789
195,096
3,335
485,220
Supplies and services
-158,130
-163,268
-9,080
-330,478
Personnel costs and Employee benefits expenses
-32,203
-76,147
-1,498
-109,848
Other operating expenses
-68,402
-50,111
-3,258
-121,771
28,054
-94,430
-10,501
-76,877
Joint ventures and associates
3,940
-186
0
3,754
Gross operating profit
856,230
776,554
25,996
1,658,780
Provisions
-690
0
-12
-702
Amortisation and impairment
-222,290
-358,953
-8,834
-590,077
Operating profit
633,250
417,601
17,150
1,068,001
Assets
6,010,251
8,945,159
424,778
15,380,188
Liabilities
542,984
1,051,609
54,800
1,649,393
Operating Investment
514,864
1,176,021
202,816
1,893,701
Note: The Segment "Europe" includes: i) revenues in the amount of 360,244 thousand of Euros from Spanish companies; ii) assets from Spanish
companies in the amount of 2,407,017 thousands of Euros.
139
ANNUAL REPORT EDPR 2020
Reconciliation between the Segment Information and the Financial Statements
THOUSAND EUROS
Revenues of the Reported Segments
1,530,120
Revenues of Other Segments
8,945
Elimination of intra-segment transactions
-10,091
Revenues of the EDPR Group
1,528,974
Gross operating profit of the Reported Segments
1,658,780
Gross operating profit of Other Segments
997
Elimination of intra-segment transactions
-5,052
Gross operating profit of the EDPR Group
1,654,725
Operating profit of the Reported Segments
1,068,001
Operating profit of Other Segments
-6,129
Elimination of intra-segment transactions
-7,883
Operating profit of the EDPR Group
1,053,989
Assets of the Reported Segments
15,380,188
Not Allocated Assets
2,066,385
Financial Assets
1,069,010
Tax assets
255,659
Debtors and other assets
741,716
Assets of Other Segments
8,074,745
Elimination of intra-segment transactions
-7,358,763
Assets of the EDPR Group
18,162,555
Investments in joint ventures and associates
474,884
Liabilities of the Reported Segments
1,649,393
Not Allocated Liabilities
6,682,416
Financial Liabilities
1,393,633
Institutional partnerships in U,S, wind farms
1,933,542
Tax liabilities
475,934
Payables and other liabilities
2,879,307
Liabilities of Other Segments
1,307,863
Elimination of intra-segment transactions
-100,948
Liabilities of the EDPR Group
9,538,724
Operating Investment of the Reported Segments
1,893,701
Operating Investment of Other Segments
204,761
Operating Investment of the EDPR Group
2,098,462
140
ANNUAL REPORT EDPR 2020
THOUSAND EUROS
TOTAL OF THE
REPORTED
SEGMENTS
OTHER
SEGMENTS
ELIMINATION OF
INTRA-SEGMENT
TRANSACTIONS
TOTAL OF
THE EDPR
GROUP
Income from institutional partnerships
in U.S. wind farms
201,783
-
-
201,783
Other operating income
485,220
19,971
-6,777
498,414
Supplies and services
-330,478
-25,147
51,188
-304,437
Personnel costs and Employee
benefits expenses
-109,848
-31,308
-
-141,156
Other operating expenses
-121,771
38,358
-39,289
-122,702
Provisions
-702
-
-
-702
Amortisation and impairment
-590,077
-7,126
-2,831
-600,034
Joint ventures and associates
3,754
-9,588
-317
-6,151
Operating Segment Information for the years ended 31 December 2019
THOUSAND EUROS
EUROPE
NORTH AMERICA
BRAZIL
SEGMENTS TOTAL
Revenues
924,828
650,835
74,180
1,649,843
Income from institutional partnerships in
U.S. wind farms
-
181,570
-
181,570
924,828
832,405
74,180
1,831,413
Other operating income
246,430
50,352
88,263
385,045
Supplies and services
-157,754
-148,252
-15,345
-321,351
Personnel costs and Employee benefits
expenses
-29,016
-63,294
-2,682
-94,992
Other operating expenses
-70,919
-56,685
-5,484
-133,088
-11,259
-217,879
64,752
-164,386
Joint ventures and associates
3,680
-297
-
3,383
Gross operating profit
917,249
614,229
138,932
1,670,410
Provisions
-1,229
-
-8
-1,237
Amortisation and impairment
-254,246
-316,897
-15,703
-586,846
Operating profit
661,774
297,332
123,221
1,082,327
Assets
5,530,854
9,016,481
340,888
14,888,223
Liabilities
321,225
1,497,315
32,397
1,850,937
Operating Investment
258,381
31,663
866,711
1,156,755
Note: The Segment "Europe" includes: i) revenues in the amount of 373,829 thousand of Euros from Spanish companies; ii) assets from Spanish
companies in the amount of 2,437,701 thousands of Euros.
141
ANNUAL REPORT EDPR 2020
Reconciliation between the Segment Information and the Financial Statements
THOUSAND EUROS
Revenues of the Reported Segments
1,649,843
Revenues of Other Segments
49,077
Elimination of intra-segment transactions
-56,791
Revenues of the EDPR Group
1,642,129
Gross operating profit of the Reported Segments
1,670,410
Gross operating profit of Other Segments
-17,707
Elimination of intra-segment transactions
-1,278
Gross operating profit of the EDPR Group
1,651,425
Operating profit of the Reported Segments
1,082,307
Operating profit of Other Segments
-20,038
Elimination of intra-segment transactions
-3,705
Operating profit of the EDPR Group
1,058,564
Assets of the Reported Segments
14,888,223
Not Allocated Assets
1,555,540
Financial Assets
578,827
Tax assets
393,370
Debtors and other assets
583,343
Assets of Other Segments
42,621
Elimination of intra-segment transactions
1,206,269
Assets of the EDPR Group
17,692,653
Investments in joint ventures and associates
460,185
Liabilities of the Reported Segments
1,850,937
Not Allocated Liabilities
1,382,027
Financial Liabilities
-
Institutional partnerships in U,S, wind farms
355,484
Tax liabilities
517,503
Payables and other liabilities
509,040
Liabilities of Other Segments
17,820
Elimination of intra-segment transactions
6,107,169
Liabilities of the EDPR Group
9,357,953
Operating Investment of the Reported Segments
1,156,755
Operating Investment of Other Segments
51,882
Operating Investment of the EDPR Group
1,208,637
142
ANNUAL REPORT EDPR 2020
THOUSAND EUROS
TOTAL OF THE
REPORTED
SEGMENTS
OTHER
SEGMENTS
ELIMINATION OF
INTRA-SEGMENT
TRANSACTIONS
TOTAL OF
THE EDPR
GROUP
Income from institutional partnerships in
U.S. wind farms
181,570
-
-
181,570
Other operating income
385,045
14,948
-313
399,680
Supplies and services
-321,351
-29,375
41,694
-309,032
Personnel costs and Employee benefits
expenses
-94,992
-35,087
-614
-130,693
Other operating expenses
-133,088
-16,289
147,842
-1,535
Provisions
-1,237
-
1
-1,236
Amortisation and impairment
-586,846
-2,350
-2,429
-591,625
Joint ventures and associates
3,383
-607
616
3,392
O
A
C
T
FROM TOMORROW TO BEYOND
INDEX
2020 Consolidated Management Report
Message from the CEO
3
01 The Company
EDPR in Brief
10
2020 in Review
20
Organisation
24
02 Strategic Approach
Business Environment
37
Strategy
44
Risk Management
48
03 Execution
Financial Capital
58
Human Capital
69
Supply Chain Capital
74
Social Capital
76
Natural Capital
80
Digital Capital
82
Innovation Capital
86
Sustainable Development Goals
88
04 Sustainability
93
05 Corporate Governance
154
06 Remuneration Report
253
Concepts and Definitions
264
3
"Clean energy will be at the
center of the post-COVID
recovery, helping to stimulate
the economy and accelerate
the energy transition."
4
ANNUAL REPORT EDPR 2020
February 2021
Dear Stakeholder,
2020 was a challenging year but one that showed the best in our people and in our company. EDPR’s main priority has been
to protect its employees’ health, ensuring business continuity and supporting the local communities in which it operates.
As a company, we’ve remained resilient, delivering on short and long-term objectives, and maintaining our leadership in a
sector of increasing global importance.
I believe EDPR is well placed to build on its pioneering role in renewable energy and continue to grow. Clean energy will be
at the center of the post-COVID recovery, helping to stimulate the economy and accelerate the energy transition. The current
crisis has also helped to galvanize the movement to a net zero global economy, with growing momentum in the public and
private sectors as well as civil society.
In Europe, the €1 trillion Green Deal announced in December 2019 sits firmly at the heart of the EU’s strategy to drive the
economic recovery post COVID-19. A further €750 billion recovery fund the “Next Generation EU” has been established, with
around 30% of it earmarked to support decarbonization efforts. On the first day in office the Biden Administration returned
the US to the Paris Climate Agreement.
During 2020 a number of countries committed to net zero emission targets by 2050, with eight now having enshrined the
commitment into law. That ambition at the national level has been echoed in the private sector, with leading companies
making pledges to become net zero by 2050 or earlier. Total net zero commitments to date represent nearly 50% of global
CO
2
emissions and 50% of global GDP, which could increase significantly if the US were to make the commitment as well.
EDPR made a number of strategic moves in 2020 designed to maintain our position of leadership in the energy transition
and accelerate the global shift to net zero, including:
•
The creation of
Ocean Winds
(OW), a joint venture between EDPR and ENGIE dedicated to the offshore wind energy.
OW aims to be among the world’s top five largest offshore operators by 2025, reaching 5–7 GW of projects in operation
or construction and 5–10 GW at an advanced development phase.
•
The acquisition of
Viesgo
’s renewables portfolio, a total of c.0.5GW in 24 wind farms located in Spain and Portugal.
The purchase of this high-quality portfolio strengthens the position of EDPR in Spain and offers significant opportunities
for future growth.
•
The acquisition of a
solar distributed platform in the US
with 89 MW in operation and a near-term pipeline of 120 MW,
across nearly 200 sites and 16 states. This transaction will establish EDPR’s presence in the fast-growing generation
segments as an owner-operator of one of the largest commercial and industrial distributed generation portfolios in the US.
MESSAGE
FROM THE CEO
Miguel Stilwell de Andrade
5
We have created a leading global renewable energy company through the execution of a focused strategy, with an operating
portfolio of more than 12 GW of onshore wind and solar assets, generating 28.5 TWh of clean energy and avoiding 18.5 mt of
CO
2.
In 2020, EDPR added a total of 1,580 MW and
had 2.4 GW of new capacity under construction by year-end
.
EDPR also continued its program of asset rotation, selling down
766 MW of assets in Brazil, Spain and the US
. We have 6 GW
of secured capacity to be installed in the coming years, providing clear visibility on the execution of our strategic plan.
Our EBITDA totaled €1,655 million, and our net profit, attributable to EDP Renováveis’ shareholders, reached €556 million
mainly driven by the successful execution of the sell-down strategy.
In February 2021 we presented our new Business Plan,
outlining our strategy to deliver superior growth through 2025
.
The company’s strategy is centred on three distinct pillars:
i)
growth
- we will triple growth in renewables from current levels, adding 4 GW/year in core-low risk geographies across
the world. We will strengthen our leadership position in wind onshore, build a sound market presence in solar and be
a global player in offshore wind through the 50:50 JV Ocean Winds while developing new technologies and business
models to ensure long term renewables competitive edge and growth;
ii)
value
- we will accelerate growth, leveraging our distinctive asset rotation model to target €8 billion in proceeds and
continue to provide an attractive return on investment;
iii)
excellence
– we will continue managing the full value chain to deliver competitive and quality projects at the highest
standards and unique O&M knowledge to maximize efficiency while guaranteeing the best ESG standards.
EDPR’s commitment to a sustainable growth model and its contribution to mitigating climate change through the promotion
of renewable energies in emerging markets has been recognized by the Global Challenges Index. This model is based on
environmental protection across the entire value chain, promoting social welfare and development, and fostering best-
practices with regards to governance.
Innovation and Digitalisation are also two key words in EDPR’s sustainable strategy. We work to create clean energy whilst
constantly innovating and improving our digital facilities for more efficient and better results. The company’s efforts have been
acknowledged through its inclusion in various sustainability indexes, including FTSE4Good, Forum Ethibel, and in rankings such
as Top Employer and Bloomberg Gender Equality, amongst others.
On behalf of EDP Renováveis Board of Directors, I would like to thank our stakeholders, namely our employees, contractors,
suppliers and clients. We’ve been inspired by the way EDPR’s 1,735 employees from over 30 countries have overcome this
challenging year, working as a great team and successfully reaching our targets together. I would also like to extend my
thanks to EDPR’s Management Team for their great work in 2020, in particular to João Manso Neto, recognizing his valuable
contribution to the growth and achievements of EDPR, and to Rui Teixeira for his leadership in recent months.
I am honored to be leading EDPR. I can say I look forward to contributing to its continued success and the execution of the new
2021-25 strategic business plan.
The future is net zero - EDPR’s vision and long track-record can only make long-term growth prospects stronger than ever.
A
N
FROM A JUST TRANSITION
TO SUSTAINABLE COMMUNITIES
Changing tomorrow now.
Pioneering
the new
green normal
01
EDPR in Brief
10
Vision, values and commitments
10
EDPR in the world
11
Business description
13
EDPR Main Events 2020
14
Stakeholders focus
16
Sustainability Roadmap
18
2020 in Review
20
Key metrics
20
Share performance
22
Organisation
24
Shareholder structure
24
Governance model
25
Organisation structure
29
Integrity and ethics
31
THE COMPANY
INNOVATION
With the aim of creating value
in the many areas in which we
operate.
SUSTAINABILITY
Aiming to improve the quality
of life of current and future
generations.
HUMANIZATION
Building genuine and trusting
relationships with our employees,
customers, partners and
communities.
SUSTAINABILITY
We assume the social and
environmental responsabilities
that result from our performance
thus contributing towards the
development of the regions in
which we operate.
We ensure the participatory,
competent and honest governance
of our business.
We avoid specific greenhouse
gas emissions with the energy we
produce.
CLIENTS
We place ourselves in our clients'
shoes whenever a decision has to
be made.
We listen to our clients and answer
in a simple and clear manner.
We surprise our clients by
anticipating their needs.
PEOPLE
We join conduct and professional
rigour to enthusiasm and
initiative, emphasizing team work.
We promote the development of
skills and merit.
We believe that the balance
between private and professional
life is fundamental in order-to be
successful.
RESULTS
We fulfil the commitments that
we embraced in the presence of
our shareholders.
We are leaders due to our
capacity of anticipating and
implementing.
We demand excellence in
everything that we do.
VALUES
COMMITMENTS
A global energy company, leading the
energy transition to create superior value
VISION
1.1. EDPR in brief
1.1.1.
10
ANNUAL REPORT EDPR 2020
11
NORTH
AMERICA
SOUTH
AMERICA
United States of America
6,299 MW
16,633 GWh
1,843 MW
Canada
68 MW
78 GWh
62 MW
Mexico
400 MW
710 GWh
96 MW
772
Capacity Installed
Employees
Generation
Capacity secured
Brazil
436 MW
1,093 GWh
1,102 MW
Colombia
490 MW
97
EDPR IN THE
WORLD
In 2020
,
EDPR generated 28.5 TW
h
avoiding
the emissions of 18.5
million tons
of CO
2
.
EDPR is a market leader with top quality assets in 14
countries, and has 1,735 employees
1
.
The company
manages a global portfolio of 12.2 GW of installed capacity,
has added 1,580 MW in 2020 and has 6 GW
already
secured for
the coming years
, as of December 2020.
1
The consolidation perimeter available in Annex I of the Consolidated Financial Statements includes the companies of the acquisition transaction reported at the end
of
December 2020. The tables presented do not include 45 employees of the companies whose shares were acquired, since their integration is currently under analysis.
1.1.2.
12
EUROPE
OFFSHORE
866
Spain
2,304 MW
4,346 GWh
279 MW
Portugal
1,248 MW
2,624 GWh
278 MW
France
126 MW
212 GWh
103 MW
Belgium
10 MW
2 GWh
Poland
476 MW
1,059 GWh
567 MW
Italy
271 MW
595 GWh
200 MW
Romania
521 MW
1,186 GWh
Greece
155 MW
United Kingdom
950 MW
269 MW net for EDPR
France
1,022 MW
312 MW net for EDPR
Belgium
487 MW
43 MW net for EDPR
Portugal
25 MW
10 MW net for EDPR
United States of America
804 MW
201 MW net for EDPR
13
BUSINESS
DESCRIPTION
1.1.3.
Renewable resources
analysis
• Install meteorogical equipment
to collect and study wind
profile and solar radiance.
Long term contract
for the sell of energy
• Secure long term
contracts for energy sale,
guaranteeing stable and
predictable cash-flows.
Obtain permits
• Engage with local
public authorities to
secure environmental,
construction, operating
and other licenses.
Project funding
• Find appropriate
financing for
the project.
DEVELOPMENT
CONSTRUCTION
OPERATION
DISMANTLING
Start of operations
& deliver clean energy
• A better energy, a better
future, a better world!
Construction
• Build access roads, prepare foundations,
assemble wind turbines or solar
panels, construct substation.
Dismantling
• Once wind farms and solar plants reach
the end of useful life (30-35 years), there
is a process of land restoration and proper
treatment of the wastes generated.
Site identification
• Search for sites with top-class
wind conditions or irradiance
resource and analyse grid
connection feasibility.
Design layout &
equipment choice
• Optimise the layout of the
asset and select the best fit
of equipment model based
on the site characteristics.
Data Analysis
• Monitor real-time operational data,
analyse performance and identify
opportunities for improvement.
Ongoing maintenance service
•
Keep availability figures at
the highest level possible and
minimise failure rates.
JAN
EDPR enters the 2020 Bloomberg
Gender-Equality Index for the first time
FEB
EDPR concludes €0.3 billion asset rotation
deal for a 103 MW wind farm in Brazil
MAR
EDPR commits to donate over €1 million
throughout 15 countries to help local
communities overcome the global pandemic
EDPR MAIN EVENTS
IN 2020
1.1.4.
APR
—
MAY
—
JUN
JAN
—
FEB
—
MAR
APR
EDPR announces the payment of a
gross dividend of €0.08 per share
MAY
EDPR is awarded a 20-year CfD
for two projects in Italy for a total
capacity of 54 MW
14
ANNUAL REPORT EDPR 2020
OCT
—
NOV
—
DEC
JUL
—
AUG
—
SEP
JUL
EDPR appoints Rui Teixeira as a
new member of EDPR’s Executive
Committee and as Joint CEO
AUG
EDPR informs about a sale
agreement for 242 MW in Spain
SEP
EDPR announces $700 million
Sell-down deal of an 80% stake in a
wind & solar portfolio in the US with
563 MW (450 MW net)
NOV
EDPR secures a PPA for a portfolio that
comprises a 36 MW wind farm project
and a 27 MW solar power plant in Spain
DEC
EDPR is awarded with long-term CfD for
5 wind and solar projects in Poland with
220 MW
JUL
EDPR informs about agreement to
acquire 100% of the renewables
business of Viesgo
OCT
EDPR reaches an agreement for
the joint-development of a wind
portfolio of 900 MW in Greece
15
STAKEHOLDER FOCUS
1.1.6.
As stated in its Stakeholders Relations Policy, EDPR aims
to maintain an open and transparent dialogue with its
stakeholders in order to build and strengthen trust, promote
information and knowledge sharing, anticipate challenges
and identify cooperation opportunities. The Company
does so through four major guiding commitments:
Communicate, Comprehend, Trust, and Collaborate.
These commitments underlie a Policy that aims to go
beyond mere compliance with formal law requirements,
thereby contributing to an effective and genuine
engagement of and with different stakeholders. These
four pillars also form the basis of EDPR’s annual objectives
regarding stakeholder relationship management.
Governance model
At EDPR, stakeholders’ management is governed by the
Stakeholder Steering Committee (SSC) and the Stakeholder
Working Group (SWG), which focus on strategy and
implementation at an organisational level. The SSC was
formed to deliver the stakeholder end-of-year report,
set yearly objectives and formulate management plans
to achieve them. The SWG, a more operational team, is
composed by managers from different departments and
units and its main purpose is to implement the SSC’s plans
and align on-the-ground operations with executive decisions.
A digital customer-relationship-management (CRM) tool
is in place to manage and monitor EDPR’s relationships
with stakeholders and the achievement of management
milestones and objectives, providing an informed and
systematic approach to a results-driven, comprehensive
model. Performance data is collected through two different
paths: the CRM platform for internal use, and qualitative
and quantitative research for external viewing. In 2020, a
quantitative research survey was conducted to validate
qualitative research (in-depth interviews) that was carried
out over the past two years.
Following the precedent set in previous years,
t
he Stakeholder Management Plan’s methodology
was established with the strategic support of the SCC,
implemented by the SWG and monitored using the
CRM tool.
EDPR regularly identifies the
stakeholders that influence
the company and works to
analyse and understand
their expectations and
interests in the decisions
that directly impact them.
INCLUDE
IDENTFY
PRIORITISE
COMPREHEND
INFORM
LISTEN
RESPOND
Committed in promoting
a two-way dialogue with
stakeholders through
information and consulting
initiatives is a part of
EDPR’s objective. This can
be attainable by listening,
informing and responding to
stakeholders in a consistent,
clear, rigorous and
transparent manner, resulting
in a strong meaningful
and lasting relationship.
COMMUNICATE
INTEGRATE
SHARE
COOPERATE
REPORT
TRANSPARENCY
INTEGRITY
RESPECT
ETHICS
EDPR aims to collaborate
with stakeholders by building
startegic partnerships that
agregate and disperse
knowledge, skills an tools.
These will promote the
creation of shared value
in a differentiating way.
One of the company’s
beliefs is the importance of
a trustworthly relationship
with the stakeholders in
establishing stable, long-
term relationships. These
relationships with the
stakeholders are based on
values like transparency,
integrity and mutual respect.
COLLABORATE
TRUST
16
ANNUAL REPORT EDPR 2020
Stakeholders map
EDPR's Stakeholders are those entities or individuals
that influence or are influenced by the activities and
services of the Company, and they are organised into four
categories: Democracy, Social and Territorial Environment,
Value Chain, and Market. In 2020, three new players were
included in the Stakeholders Map: tax equity investors
were included in the investor and shareholders category,
and off-takers and asset owners were included in the
clients category.
EDPR's stakeholders in 2020 are shown in the following
diagram:
Stakeholders support
Appropriate monitoring and classification of stakeholder
groups assists in decision-making and obtaining
additional and accurate information, allowing EDPR to
fulfil its commitment to them and to increase stakeholder
involvement by adapting its strategies. After having
properly identified the stakeholder groups with which
the company maintains a close relationship, EDPR has
established a series of criteria that helps the company to
classify, analyse, evaluate and readjust its relationships
based on real business interests. Studying the link
between variables—such as power, impact, legitimacy
and visibility, and urgency—has allowed the company to
create a Stakeholders Matrix, identifying the expectations
and demands of stakeholders and integrating them into
organizational strategy.
In addition, communication channels are used to build and
consolidate collaboration, understanding and trust, making
them essential to the effective management of stakeholder
relationships. For almost all stakeholders, the most used
and preferred types of communication are e-mails, phone
calls, meetings and events. Another preferred channel is
EDPR’s website, particularly for stakeholders within the
area of finance such as banks, analysts and investors.
Each group of stakeholders is allocated a specific
communication channel tailored to their needs, which is
vital to maintain good relationships. Through a combination
of these channels, along with the Stakeholders Global
Survey and interviews, EDPR can accurately identify each
stakeholder’s perceptions, expectations, value drivers and
behaviours, therefore improving communication while
strengthening relationships between various groups of
stakeholders. Despite the limitations faced due to the
COVID-19 pandemic, EDPR continued to communicate
and gather feedback from its stakeholders mainly through
online channels.
2020 achievements
For many years, EDPR has actively listened to and
established a dialogue with its various stakeholders to
understand their needs. Consequently, throughout 2020,
EDPR applied its stakeholder methodology in Spain and, for
the first time, in France and North America. The application
of this stakeholder methodology in these three markets
means that it has now been applied to 72% of EDPR’s
installed capacity. In these markets, EDPR conducted
surveys with more than 1,000 people with three main goals
in mind: to measure all opinions on EDPR's performance
regarding its stakeholders; to better understand
expectations to effectively respond to demands; and
to identify concrete actions to improve the Company's
relationships. As a result of the answers collected in the
surveys, an action plan will be implemented in 2021 in
order to better respond to the demands of the stakeholders
and to generate value for both parties. Regardless of the
challenges caused by the global pandemic, EDPR was able
to continue to gather feedback from various stakeholders.
SOCIAL AND
TERRITORIAL
ENVIRONMENT
VALUE
CHAIN
MARKET
DEMOCRACY
Competitors
Financial entities
Investors &
shareholders
Media & opinion leaders
Municipalities
Local comunities
Landowners
NGO's
Public
authorities
& regulation
Parliament & political parties
International
instituitions
Associations
Clients
Employees & unions
Suppliers
Scientific
community
Universities
Off-takers
Asset owners
Tax equity
investors
17
SUSTAINABILITY
ROADMAP
1.1.6.
CORE BUSINESS
SUSTAINABILITY ROADMAP
STRATEGIC LINES (2019-22)
SUSTAINABILITY ROADMAP
GOALS
(2019-22)
EXECUTION 2019-2020
SDGs
DIRECT IMPACT
SUSTAINABILITY ROADMAP
STRATEGIC LINES (2019-22)
SUSTAINABILITY ROADMAP
GOALS
(2019-22)
EXECUTION 2019-2020
SDGs
0
0
Ensure high safety standards
for employees & contractors
Fatal
accidents
Fatal
accidents
0
0
Guarantee high
environmental standards
Significant spills
and fires
Significant spills
and fires
> 30%
30%
Maintain the rate of female
employees
Female
employees
Female
employees
C.7 GW
2.5 GW
Increase renewable energy
installed capacity
Cumulative
build-out
Built
EDPR is aware of the importance of electricity in the sustainable development and is committed to focus
not only on the Sustainable Development Goals directly related to its business such as Climate Action and
Affordable and Clean Energy, but also on a business model that positively impacts others SDGs.
18
ANNUAL REPORT EDPR 2020
€4.6M
Support local communities
in their social development
Social
investment
€8M
22%
Ensure a high participation
in voluntary actions
20%
Employees
participating in
volunteering activities
Employees
participating in
volunteer activities
€4.6M
Foster universal access
to sustainable energy (A2E)
Invested in A2E
1
€20M
Investment
in A2E
100%
86%
Implement digital
transformation plan
promoting digital skills
Employees
participating
in digitalisation
trainings
Employees
participating
in digitalisation
trainings
DIRECT IMPACT
SUSTAINABILITY ROADMAP
STRATEGIC LINES (2019-22)
SUSTAINABILITY ROADMAP
GOALS
(2019-22)
EXECUTION 2019-2020
SDGs
28%
Promote the transition
to electric vehicles
Service vehicles to be replaced
by electric vehicles
Hybrid operational
vehicles
> 75%
75%
Maintain the recovery
waste ratio
Total waste recovered
(and > 90%
hazardous
waste recovered)
Total waste
recovered
(93% hazardous
waste recovered)
1
Cumulative investment impacted by fx rate: SolarWorks! in Mozambique (€2.2 million) and Rensource in Nigeria ($2.9 million)
By incorporating the ESG principles into its strategy, policies and
procedures, and by establishing a culture of integrity, EDPR not only
defends its basic responsibilities with people and the planet, but also sets
the stage for long-term success. Following this long-term commitment,
10 Sustainability goals were defined within the 2019-2022 Business Plan,
framed by eight of the seventeen Sustainable Development Goals.
EDPR monitors closely its contribution to these goals, and annually
reports the evolution on their execution.
19
Social
investment
KEY
METRICS
1.2. 2020 in review
1.2.1.
OPERATIONAL
29 TWh
12.2 GW
Generation
-5% YoY
96.7%
30%
Technical availabiity
vs 96.8% in 2019
Load factor
-1pp vs 2019
Installed capacity
EBITDA + Net Equity
+1,580 MW
New additions
EBITDA + Net Equity
18.5 mt CO
2
Emissions avoided
20
ANNUAL REPORT EDPR 2020
1 –
With the exception of the Executive Committee, the BoD committees are composed exclusively by independent members.
2 –
Calculation based on 2019YE installed capacity. EDPR certifies the facilities the year after the COD (commercial operating date). Thus, the facilities that
have entered into operation in 2020 will be certified in 2021.
€2,100 m
€1,655 m
€55
m
€
m
CAPEX
vs €1,109m in 2019
€48 k/MW
Core OPEX / average MW
+1% YoY
Net income
vs €475m in 2019
€3.4 Bn
Net debt
vs €2.8 Bn in 2019
Operating cash-flow
-17% YoY
EBITDA
Flat YoY
FINANCIAL
ESG
81%
Employees trained
in digitalisation
76%
100%
Total waste
recovered
€2.5 m
S
ocial investment
Independent members
of BoD committees
1
100%
Capacity certified
2
ISO 14001 & ISO 45001
1,735
Employees
+11% YoY
6
21
9
08
22
ANNUAL REPORT EDPR 2020
1.2.2. Share performance
EDPR has 872.3 million shares listed and admitted to trading in NYSE Euronext Lisbon. On December 31
st
, 2020, EDPR
had a market capitalisation of €
19.9
billion, above the €
9.1 billion at previous year-
end, and equivalent to €
22.80 per share.
In 2020, the total shareholder return was +119%, considering the dividend paid on Apr 24
th
of €0.0
8 per share.
Indexed EDPR Share Performance vs. PSI20 & SX6E
EDPR
PSI 20
SX6E
EDPR IN CAPITAL MARKETS
2020
2019
2018
2017
Opening Price (€)
10.42
7.78
6.97
6.04
Minimum Price (€)
8.82
7.72
6.78
5.71
Maximum Price (€)
23.00
10.50
9.17
7.20
Closing Price (€)
(adjusted for dividend and splits)
22.80
10.42
7.78
6.97
Market Capitalisation (€ Millions)
19,889
9,089
6,782
6,077
Total Traded Volume: Listed & OTC (Millions)
381.87
162.72
209.59
421.94
of which in Euronext Lisbon (Millions)
47.96
36.24
44.01
101.63
Average Daily Volume (Millions)
1.49
.64
.82
1.65
Turnover (€ Millions)
4,965.74
1,502.80
1,587.12
2,744.04
Average Daily Turnover (€ Millions)
19.32
5.89
6.22
10.76
Rotation of Capital (% of Total Shares)
44%
19%
24%
48%
Rotation of Capital (% of Floating Shares)
195%
83%
107%
215%
Total Shareholder Return
120%
36%
12%
16%
Share Price Performance
119%
34%
12%
15%
PSI 20
-6%
10%
-12%
15%
Dow Jones Eurostoxx Utilities
10%
22%
0%
16%
23
EDPR’S MAIN EVENTS I
N 2020
1
13-Jan
EDPR secures a PPA for a new 66 MW solar project in Brazil
2
21-Jan
EDPR releases FY 2019 Operating Data
3
23-Jan
EDPR finalises the agreement with ENGIE to create a 50:50 JV for offshore wind
4
29-Jan
EDPR is awarded a 20-year CfD for 109 MW of wind at Italian auction
5
12-Feb
EDPR concludes €0.3
billion asset rotation deal for 103 MW Babilonia wind farm in Brazil
6
20-Feb
EDPR releases FY 2019 results
7
02-Mar
Spanish government published the regulatory revision for wind energy assets
8
26-Mar
EDPR Annual Shareholders Meeting
9
30-Mar
EDPR
announces payment of a gross dividend of €0.08 per share
10
15-Apr
EDPR releases 1Q20 Operating Data
11
16-Apr
EDPR secures a long-term 200 MW solar PPA in Mexico
12
21-Apr
EDPR secures a PPA for 59 MW in Spain
13
24-Apr
EDPR starts the payment of dividends
14
06-May
EDPR secures a 15-year PPA for 100 MW in the state of California, USA
15
07-May
EDPR releases 1Q20 Results
16
28-May
EDPR is awarded a 20-year CfD for 2 projects in Italy for a total capacity of 54 MW
17
07-Jul
EDPR releases Clarification on Public Prosecutor measures regarding EDPR Board members
18
09-Jul
EDPR releases 1H20 Operating Data
19
15-Jul
EDPR informs about agreement to acquire 100% of the renewables business of Viesgo
20
10-Aug
EDPR informs about a sale agreement for 242 MW in Spain
21
02-Sep
EDPR announces sale agreement of an 80% stake in North America
22
03-Sep
EDPR releases 1H20 Results
23
09-Oct
EDPR releases 9M20 Operating Data
24
13-Oct
EDPR secures PPA for 100 MW in the US
25
29-Oct
EDPR releases 9M20 Results
26
19-Nov
EDPR informs about a PPA secured for 63 MW in Spain
27
24-Nov
EDPR announces PPA contract for a 74 MW solar project in the US
28
14-Dec
EDPR is awarded in CfD for 5 project of wind and solar in Poland with 220 MW
29
15-Dec
EDPR announces conclusion of 242 MW sale agreement in Spain
30
16-Dec
EDPR concludes the 100% acquisition of the renewables business of Viesgo
31
28-Dec
EDPR informs about the conclusion of an 80% equity stake sale agreement in North America
Source: BLOOMBERG / EDPR
24
ANNUAL REPORT EDPR 2020
42%
37%
6%
1%
4%
10%
Shareholders (Ex-EDP) by Type
INVESTMENT FUNDS
SRI
RETAIL
PENSION FUND
CORPORATIONS
OTHER
24%
20%
8%
10%
5%
4%
4%
15%
10%
Shareholders (Ex-EDP) by Country
US
UK
PORTUGAL
FRANCE
GERMANY
SWITZERLAND
SWEDEN
ROE
OTHER
1.3. Organisation
1.3.1. Shareholder structure
EDPR shareholders are spread across more than 20 countries, being EDP the main shareholder.
EDPR total share capital is, since its initial public offering (IPO) in June 2008, composed of 872,308,162 shares issued with
a nominal value of five euros each, fully paid. All these shares are part of a single class and series and are admitted to
trading on the Euronext Lisbon regulated market.
Major shareholders, the EDP Group
The majority of the Company’s share capital is owned by EDP Group, holding
82.6% of the share capital and voting rights, since the General and Voluntary
Public Tender Offer closed in August 2017, where EDP Group increased by 5.03%
its shareholding in EDPR’s share capital and voting rights. EDP Group is a
vertically integrated utility company, the largest generator, distributor and supplier
of electricity in Portugal, has significant operations in electricity in Spain and is one
of the largest private generation group in Brazil through its stake in Energias do
Brasil. In the Iberian Peninsula, EDP is the third largest electricity generation
company and one of the largest distributors of electricity. EDP has a worldwide
relevant presence, being present in 19 countries and has about 12,000 employees
around the world. In 2020, EDP had an installed capacity of 23.7 GW, generating
64.3 TWh, of which 74% came from renewables. EDP is part of sustainability
indexes (DJSI World and Europe), following its performance in the economic, social
and environmental dimensions. Its holding company, EDP S.A. is a listed company
whose ordinary shares are traded in the Euronext Lisbon since its privatisation in 1997.
Broad base of investors
EDPR has an international base of investors. Excluding EDP Group,
EDPR shareholders comprise more than 30,000 institutional and private
investors spread worldwide. Within institutional investors, which represent
about 94% of shareholder base (ex-EDP Group), investment funds
are the major type of investor, followed by sustainable and responsible
funds (SRI). EDPR is a member of several financial indexes
that aggregate top performing companies for sustainability.
Worldwide shareholders
EDPR shareholders are spread across 26 countries, the United States being the most
representative country accounting for 24% of EDPRshareholder base (ex-EDP Group),
followed by the UK, France, Portugal, Germany, Sweden and Switzerland. In the Rest
of Europe, the most representative countries are Norway, Belgium, Spain Netherlands.
83%
17%
EDPR Shareholder
EDP
OTHER
25
1.3.2. Governance Model
The organisation and functioning of EDPR corporate governance model aims to achieve the highest standards of
corporate governance, business conduct and ethics referenced on the best national and international practices.
EDPR is a Spanish Company listed in a regulated stock exchange in Portugal, being the regulation of its corporate
organisation subject to the Spanish law, but trying to parallelly also comply to the extent possible with the Portuguese
recommendations contained in the Corporate Governance Code of the Instituto Português de Corporate Governance
(“IPCG”).
Considering the applicable guidelines as of this regulatory framework, EDPR’s model was designed
with the aim of ensuring
a transparent and meticulous separation of duties and management by the same time that provides a specialisation in the
supervision functions. As such, EDPR’s governance structure is comprised by a General Shareholders’ Meeting an
d a
Board of Directors (BoD) that represents and manages the Company, which in accordance with the law and its Articles of
Association has additionally set up 3 delegated Committees entirely composed its members: the Executive Committee, the
Audit, Control and Related-Party Transactions Committee and the Nominations and Remunerations Committee.
Additionally, as detailed in the Corporate Governance chapter, with the purpose of adapting to the extent possible this
structure to the Portuguese legislation, EDPR parallelly seeks to correspond it to the so-
called “Anglo
-
Saxon” model set
forth in the Portuguese Commercial Companies Code, in which the management body is a Board of Directors, and the
supervision and control duties are of the responsibility of an Audit and Control Committee.
This structure and its functioning enable a fluent workflow between all levels of the governance model, as each of the
delegated Committees shall report the decisions taken to the Board of Directors, and additionally all the Committees
Members are also Members of the Board. Hence, this organisation allows Directors to receive the complete information at
Board of Directors level in order to take the corresponding decisions, and all in all, ensuring in time and manner the access
to all the information in order to appraise the performance, current situation and perspectives for the further development of
the Company.
As exposed above, the governance model of EDPR was designed to ensure the transparent and meticulous separation of
duties and the specialisation of supervision through the following structure of its governing bodies:
26
ANNUAL REPORT EDPR 2020
A) General shareholders’ meeting
The General Shareholders’ Meeting is the body where the shareholders participate. Represents the
Company with the full
authority corresponding to its legal personality and has the power to deliberate, vote and adopt decisions, particularly on
matters that the law and Articles of Association reserve for its decision and must be submitted for its approval.
B) Board of Directors
The Board of Directors is the body that represents and administrates the Company under the broadest powers of
management, supervision and governance with no limitations other than the responsibilities expressly and exclusively
gra
nted to the jurisdiction of the General Shareholders Meeting in the Company’s Articles of Association or in the applicable
law.
In line with the best corporate governance practices and in accordance with its Articles of
Association, EDPR’s Board of
Directors shall consist of no less than 5 and no more than 17 members (including a Chairperson), who are elected for 3
years period and that may be re-elected for equal periods. To this extent, a total of 15
positions that composed of EDPR’s
Board of Directors as of December 31st, 2020, there was 1 vacant and 14 Directors out of which 9 were non-executive,
being 5 of them also independent.
1
Related to the BoD composition and in the context of a judicial procedure undergoing related to the activity of EDP
–
Energias de Portugal, António Mexia and João Manso Neto, were suspended from their executive functions in all EDP
Group companies - the process continues in the inquiry phase and they have not been formally accused - and following this,
the Board of Directors of EDPR met on July 6
th
, 2020 and identified Rui Teixera as the best candidate to reinforce the
executive line of the Company, mainly considering his deep knowledge of the business (in particular with regards of
renewables), and he had been CFO of EDP Renováveis during several years, and therefore, his involment would imply a
continuity and support in the completion of the Bussiness Plan in these special circumstances. Based on that, the Board
resolved to appoint him
as a new member of EDPR’s Executive
Committee and Joint CEO, designated as the responsible
person to coordinate the Executive Committee activities and to liaise with EDP
–
EDPR’s principal shareholder
.
Delegated committees of the board of directors
As stated, EDPR BoD has set up three delegated Committees entirely composed by its members: the Executive Committee,
the Audit, Control and Related-Party Transactions Committee and the Nominations and Remunerations Committee.
I) Executive committee
This is the delegated body of the Board of Directors entrusted to perform the daily management of the business. As of
31
st
December 2020,
EDPR’s Executive Committee
was composed by the following members that were also
Joint Directors:
-
João Manso Neto (CEO and Chairman of the Executive Committee)
-
Rui Teixeira (Joint CEO and Executive Committee Coordinator)
-
Duarte Bello (COO Europe & Brazil and member of the Executive Committee)
-
Miguel Ángel Prado (COO North America and member of the Executive Committee)
-
Spyridon Martinis (COO Offshore and New
Markets
, CDO and member of the Executive Committee)
1
Francisca Guedes de Oliveira presented her resignation as Member of the Board with effects 30th December 2020, and therefore also as member of
the Audit, Control, and Related Party Transactions Committee. In order to fill this vacancy at the committee level, the Board of Directors resolved at its
meeting held on January 19th, 2021 to appoint Francisco Seixas as new member of the Audit, Control and Related Party Transactions Committee.
27
II) Audit, control and related party transactions committee
This is the specialised and delegated Committee of the BoD
in charge of, among others, the appointment of the Company’s
auditors and the internal risk management and control systems, supervision of internal audits and compliance and
ratification of transactions between EDPR and EDP and between its related parties, qualified shareholders, directors, key
employees or his relatives and prepares an annual report on its supervisory activities.
The Audit, Control and Related Party Transactions Committee consists of three non-executive and independent members,
during
2020, were the following:
•
Acacio Piloto, who is the Chairman
•
Antonio Nogueira Leite
•
Francisca Guedes de Oliveira
2
III) Nominations and remunerations committee
This is the specialised and delegated Committee of the Board of Directors in charge of, within others, the assistance and
report to the Board about appointments, re-elections, dismissals, evaluation and remunerations of the Directors.
During 2020, the Nominations and Remunerations Committee consists of three independent members, who are the
following:
•
Antonio Nogueira Leite, who is the Chairman
•
Francisco Seixas da Costa
•
Conceição Lucas
2
Francisca Guedes de Oliveira presented her resignation as Member of the Board with effects 30
th
December 2020, and therefore also as member of the
Audit, Control, and Related Party Transactions Committee. In order to fill this vacancy at the committee level, the Board of Directors resolved at its
meeting held on January 19
th
, 2021 to appoint Francisco Seixas as new member of the Audit, Control
a
nd Related Party Transactions Committee.
28
ANNUAL REPORT EDPR 2020
Remuneration policy
EDPR governance model is reinforced by an incentive structure with transparent remuneration through variable
remuneration based on
key performance indicators. The definition of the proposal of the remuneration policy for the
members of the Board of Directors is
incumbent on Nominations and Remunerations Committee, which is appointed by the
Board of Directors.
The 2020-2022 Remuneration Policy is aligned with the strategic grounds of the Company: growth, risk control and
efficiency and establishes that the indicators shall be set in accordance with 6 clusters: (i) Shareholders, (ii) People, (iii)
Environment & Communities, (iv) Assets and Operations, (v) Innovation & Partners, and (vi) Clients though 14 KPIs,
including all dimensions of EDPR ‘s strategy.
Each of such clusters shall have at least one indicator.
For more information, please refer to the Approval of the Remuneration Policy of the members of the Board of Directors,
available at the 10
th
Item of the 2020
General Shareholders’ Meeting agenda.
For further detailed information regarding the responsibilities and roles of the different social bodies, the activity during 2020
and the Company’s up
-to-date articles of association and regulations, please refer to the Corporate Governance chapter of
the report and visit
.
29
1.3.3. Organisation structure
The organisation structure is designed to accomplish the strategic management of the company and a transversal operation
of all the business units, ensuring alignment with the defined strategy, optimising support processes and creating synergies.
Organisational model principles
The EDPR organisation model is organised around five main elements: a Corporate Center Holding, an Onshore Europe &
Brazil platform, an Onshore North America platform, a New Geographies platform and, lastly, an Offshore platform. Each
element includes different business units specialized in each of the countr
ies’
specificities.
The principles on which EDPR bases its organisational model is defined by the Executive Committee. These are a set
of performance aspects that define the characteristics of the relationships, grant the rights between EDPR Holding
and the business units, and ensure optimal efficiency and value creation.
CORPORATE HOLDING
ONSHORE
Europe & Brazil
ONSHORE
North America
OFFSHORE
Joint Venture
NEW
GEOGRAPHIES
Spain
Portugal
France
&
Belgium
Poland
Italy
Romania
Brazil
United
States of
America
Canada
Mexico
Greece
Colombia
30
ANNUAL REPORT EDPR 2020
EDPR Holding
EDPR Holding seizes value creation through the dissemination of best practices in the organisation and the standardisation
of corporate processes to the platforms and the business units to improve efficiency. The internal coordination model and
interface with EDP Group impacts functions and responsibilities of both the company’s processes and structure. The
assignments of the main responsibilities and activities of EDPR Holding to fulfil their respective missions include:
•
Define internal structures;
•
Ensure a global budget and its periodic monitoring;
•
Manage the essential human resources;
•
Provide appropriate management information;
•
Compete for a culture of excellence throughout the Group;
•
Integrate risk management and compliance in each area of responsibility, ensuring the monitoring and effectiveness of
controls.
EDPR Platforms
The four platforms are defined as: Onshore Europe & Brazil, Onshore North America, New Geographies and Offshore.
•
Europe & Brazil Onshore platform:
There are different business units where the company operates, namely Spain,
Portugal, France/Belgium, Italy, Poland, Romania and Brazil.
•
North America Onshore platform:
There are three business units that represent the operational regions in North
America: United States of America, Mexico and Canada.
•
New Geographies platform:
This platform grants EDPR’s international business expansion in any geography where
the company does not currently operate.
•
Offshore platform:
In January 2020, EDPR finalised the agreement with ENGIE to create a 50:50 Joint Venture for
offshore wind that grants the development of projects in the UK, Portugal, France, Belgium, Poland, and the US.
1.3.4. Integrity and ethics
Ethical behaviour is absolutely essential for the functioning of the economy. EDPR recognises its importance and
complexity and is committed to address ethics and its compliance, b
ut it is the employees’ responsibility to comply
with ethical obligations. Ethics are the cornerstone of EDPR strategy, to the extent that EDPR has a Code of Ethics,
an Anti-Corruption Policy and a Compliance Policy that go beyond just defining the Company principles to be
adopted, but also how employees and any other service providers working on behalf of EDPR should behave when
dealing with the Company stakeholders.
Ethics
The Code of Ethics refers to principles of action that include compliance with legislation, integrity regarding matters such as
bribery and corruption, respect for human and labour rights, transparency and corporate social responsibility, including its
contribution to sustainable development and its responsibility for the economic, environmental and social impacts of its
decisions and activities. In addition, the Code has its own regulation that defines a process and channel, open to all
stakeholders, to report any potential claim or doubt on the application of the Code. The Ethics Ombudsperson is behind this
communication channel and is responsible for analysing and presenting to the Ethics Committee any potential ethical
problem. The Code is communicated and distributed to all employees and interested parties and complemented with
tailored training sessions.
This Code is a privileged tool that frames the reflection on Ethics, but it is essentially a guide to support EDPR employees in
their daily decisions when performing their job activities. It does not override the law and regulations
–
which must always be
fully and scrupulously complied with
–
but rather complements them by supporting responsible decision making. In that
sense,
EDPR’s Code of Ethics applies to all Company employees regardless of their
position in the organisation and
working location, and they all must comply with it. Additionally, the commitments in this Code are equally applicable to
EDPR business partners, representatives and suppliers who are, in any way, entitle to act on behalf of EDPR. The Code
and its regulations are published on the intranet and website of EDPR and attached to the labour agreements of the new
hires to their written acknowledgement when they join the Company. Likewise, this Code has been widely circulated to the
employees of the Group through internal communications, and specific training on Ethics is provided during the year to all
employees with the objective of promoting awareness.
Due to legal or regulatory requirements, as well as EDPR
’s
significant presence on the world energy scene, operating in
several countries with over 1,700 employees, a new Code of Ethics has been approved by the Board of Directors in
December 2020. The revision of the Code had the following objectives: (i) adapt the Code of Ethics in terms of content and
format, considering best practices and new trends, (ii) i
ntroduce “living tools” in Ethics, that support EDPR globally across
geographies and businesses, (iii) create a new concept that integrates and systematizes all ethics related topics and
supports the ethics training and (iv) reflect EDPR identity: a people-centred company that focuses on trusted relationships,
operating in a sector in transformation and acting with integrity.
Additionally, the Ethics Ombudsperson plays an essential role in the ethics process. Her role is to provide impartiality and
objectivity in registering and documenting all claims of ethical nature submitted to her. She monitors their progress and
ensures that the identity of the complainants remains confidential, while entering into contact with them whenever
appropriate, until the case is closed. The Ethics Ombudsperson is responsible for presenting all claims to the Ethics
Committee, which is composed by three members: the Chairman of the Audit, Control and Related Party Transactions
Committee, the Chairman of the Appointments and Remuneration Committee, and the Compliance Officer. The Ethics
Committee shall meet at least once a year and whenever the Chairman deems it is necessary, and its meetings shall be
validly convened when one-half plus one of its members are present or represented at the meeting.
In 2020, there were three claims to the Ethics Ombudsperson through the Ethics Channel.Two of them were considered
unfounded and one as inconclusive. Thus, the Ethics Committee declared the closing
1
of the processes and filed the claims.
1
One of the claims was concluded in early 2021.
31
Anti-Corruption
EDPR Anti-Corruption Policy implies a series of procedures regarding the relationships of EDPR employees with external
parties, namely the approval of certain actions regarding hospitality to and from external parties, donations, and
sponsorships. Company Personnel and Transaction Partners are encouraged to raise concerns about any issue or
suspicion of bribery or corruption at the earliest possible stage through the Compliance Channel. In 2020, no claims were
submitted through the Compliance Channel related to Anti-Corruption issues.
The Policy is available at
EDPR’s
website and intranet, and it is attached to the labour agreements of the new hires to their
written acknowledgement when they join the Company. In addition, EDPR analyses all the new markets where it operates
through a Market Overview including sustainability topics such as human rights, labour and environment. This study also
evaluates the corruption risk. Moreover, EDPR has Compliance questionnaires related to the anti-corruption practices of the
suppliers and the counterparts in the M&A processes to ensure that they are all aligned with EDPR’s Anti
-Corruption Policy.
Corporate compliance
The implementation of a solid corporate culture of integrity and transparency is a priority for EDPR, structuring its monitoring
through a regulatory compliance conduct basis and the adoption of ethical principles, both consolidated as central elements
of its business model. In order to lead and manage the necessary measures for this implementation and functioning, the
Company has a Compliance Officer. In addition, EDPR has been working with the support of specialized advisors in the
evaluation of the potential corporate criminal liability risks of the Company in all its geographies and in the assessment of
the compliance structure to be adopted to comply with the requirements of the applicable criminal regulations.
In this context, EDPR has a Criminal and Legal Risk Prevention Model (Compliance Model) with the goal of establishing,
developing, promoting and maintaining an adequate ethical business culture. The Compliance Model is constantly updated
according to the most demanding national and international standards. Moreover, the Company has an international
criminal risk matrix and a Compliance Area created to support and provide assistance to the Compliance Officer.
The main activities performed during 2020 to strengthen corporate compliance were:
•
Revision and update of the International Compliance Model, for the identification and evaluation of the criminal risks in
all geographies of EDPR and review the associated controls.
•
Approval of a Third Party Integrity Due Diligence procedure, reinforcing the mechanisms for identifying and preventing
possible integrity risks for EDPR in the relationship with third parties. In 2020, 157 Compliance analysis to third parties
were performed, of which just 2 presented a special risk of corruption. They were complemented with a deep external
investigation, recommending the inclusion of robust clauses related to corruption in the corresponding agreements.
•
Concerning the risk of interactions with public officials or political exposed persons, EDPR developed a procedure to
guide employees and representatives when leading with such entities and to monitor these relationships.
•
Training and communication are fundamental tools to strengthen and disseminate the culture of ethics and integrity. In
2020, a Compliance training was launched to the new hires.
Other vital aspect of the EDPR Compliance Model is the Compliance programme for Personal Data Protection. EDPR has
strengthened its management system, creating a new governance model with a multidisciplinary team supporting the Data
Protection Officer in implementing and monitoring GDPR obligations. Also, a global Personal Data Protection Policy was
approved to support the management of personal data across EDPR. Both documents are in
EDPR’s
intranet and website.
Additionally, the Compliance Channel allows any employee, supplier, contractor, client or any person or entity outside the
Company who has indications or doubts of behaviour contrary to the law and/or that may imply the materialization of a
criminal risk, to inform it through complianceofficer@edpr.com. Only the Compliance Officer and the Compliance Area have
access to the Channel, and its bylaws are available at the intranet and website of the Company. In 2020, no claims were
submitted through the Compliance Channel.
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ANNUAL REPORT EDPR 2020
D
V
E
S
T
Y
FROM DIVERSIFICATION
TO VALUE CREATION
Changing tomorrow now.
Powering
a sustainable
lifestyle for
a brighter future
02
37
37
39
41
44
45
46
47
Business Environment
Renewables are the backbone of
decarbonization
The evolution of renewables around
the world in 2020
Regulatory Framework
Strategy
Selective growth
Self-funding business
Operational excellence
Risk Management
48
STRATEGIC APROACH
37
Strategic approach
2.1. Business environment
2.1.1. Renewables are the backbone of decarbonization
2.1.1.1. Green recovery
COVID-19 is not only a global pandemic and public health crisis; it has also severely damaged the global economy and
financial markets. However, it has also boosted the climate movement and the sense of urgency in climate action, leading to
bolder commitments from countries all around the world.
We are now at a pivotal moment, as national governments are designing stimulus packages to revive their economies. The
recovery from COVID-19 is showing a new willingness to set ambitious mitigation targets, which can strengthen the case for
accelerating the transition to a climate-neutral society. Low carbon policies can not only mitigate climate and health risks,
but also reactivate the world economy. In this context, renewables must be at the heart of rebuilding policies as they are the
cheapest generating alternative in most countries, while they can also stimulate the economy by creating “green” jobs,
ensuring energy security and saving money from fossil fuel imports.
Demand for “Green recovery” is materializin
g in different ways, including more ambitious emission and renewable targets.
In December 2020, the world celebrated the 5
th
anniversary of the Paris Agreement and the United Nations hosted an
important summit in which 75 countries announced new commitments, with 24 pledging to reach carbon neutrality.
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ANNUAL REPORT EDPR 2020
In Europe, the Green Deal announced in December
2019 is at the heart of the EU’s strategy to drive the
economic recovery from the COVID-19 pandemic, in
particular through the so-
called “Next Generation EU”,
a
€750 billion recovery instrument announced in May
2020. Around 30% of the €750
billion fund will be
used to support decarbonization, in addition to the €1
trillion previously announced by the Green Deal.
Additionally, several EU Member countries are
announcing national recovery plans, some of which
have substantial green components. In parallel, EU
leaders agreed in December 2020 to cut the bloc’s
net emissions by at least 55% by 2030, compared to
1990 levels, increasing considerably from its previous
level of 40%. To achieve this target, the European
Commission (EC) is preparing its
“Fit for 55 Package”
of proposals, an umbrella term for all the revisions
and initiatives linked to the 55% emission reduction
target. The Renewable Energy Directive will need to
be reviewed, to align the current “at least 32%
renewable target by 2030” wi
th the new 55%
emission reduction target.
In the US, president Joe Biden signed on its first day of mandate an executive order to reinstate the US to the Paris Climate
agreement, which highlights the urgency of tackling climate change.
In 2020, many countries have also adopted net zero emission targets by 2050. As of today, at least 8 countries have
already put the commitment into law (Norway, Denmark, New Zealand, the UK, Hungary, Germany, Sweden and France),
while others, like the EU have proposed the legislation (under the E
U
Green Deal) and are awaiting ratification. Together,
net zero commitments so far represent nearly 50% of global CO
2
emissions and 50% of global GDP, which could increase
importantly if the US were to join as well, in line with current President Biden recent announcement. Other large economies
are also considering to becoming carbon neutral, like Japan and South Africa (in 2050) or China (in 2060).
Companies have also shown a growing environmental awareness in 2020, despite the severe turmoil caused by the
COVID-19
pandemic. According to the analysis conducted by the non-profit global Climate-Disclosure Project platform
(CDP), the number of major companies who’ve disclosed their environmental impact and importantly committed t
o reducing
it increased 14% in 2020.
2.1.1.2. The future is green
Despite the slowdown witnessed by the power sector during the COVID-19 pandemic, renewable energy grew in 2020.
According to the International Energy Agency (IEA), around 90% of the power capacity added worldwide was renewable. All
analysts have also highlighted that the renewable energy sector, and in particular, the renewable electricity sector, have
showed a strong resilience to the crisis. While global energy demand has declined by around 5% (according to IEA
estimates), electricity from renewable sources has grown by almost 7%. In total, around 200 GW of additional renewable
capacity has been connected in 2020. A rise of 15% in the auctioned capacity
1
hints at this growing interest in renewable
capacity.
For the medium and long-term, prospects are also excellent. Wind and solar PV capacity is on track to overtake natural gas
in 2023, and coal in 2024, becoming the largest source of electricity generation worldwide in 2025.
Most of the energy analysts foresee a rapid grow of wind and solar PV, thanks to a continued sharp cost reduction, driven
by improving technologies, economies of scale, increasingly competitive supply chains and growing developer experience.
1
From January to October 2020. Source: IEA
Global Warming in 2020
According to the Global Carbon Project (GCP), global carbon
dioxide (CO
2
) emissions from fossil fuel and industry are
expected to drop by 7% in 2020, the largest absolute drop ever
recorded, as economies around the world feel the effects of
COVID-19 lockdowns. However, 2020 reduction will not slow the
pace of global warming as emissions continue to accumulate in
the atmosphere propelling the world closer to crossing the 1.5°C
warming threshold. Indeed, the NASA reported in January 2021
that 2020 had been the hottest year ever on record. The climate
crisis materialized in soaring temperatures, enormous storms,
unprecedented wildfires and climate-related floods that killed at
least 8.200 people and cost the world USD 210 billion in insured
losses, according to a report published by Munich Re. According
to this study, natural catastrophe losses in 2020 were significantly
higher than the previous year.
39
20%
27%
35%
43%
2010
2019
2030E
Share of renewables in power generation
Share of renewable energy
Most optimistic estimate
According to the International Renewable Energy Agency (IRENA), the Levelised Cost of Electricity (LCOE) of solar PV has
fallen 82% since 2010, followed by onshore wind at 39% and offshore wind at 29%. With these technologies becoming the
least-cost option for new capacity in an increasingly number of countries, their contribution in the energy mix is expected to
take a leading role.
In the next decade, renewables are expected to be the backbone of energy transition. According to consulted experts
2
,
renewables will generate in 2030 between 35-43% of the electricity generation
3
, from around 27% in 2019. However, in the
wake of the COVID-19 recovery, strengthen policies are expected, and therefore, the share of renewables could increase
accordingly.
2.1.2. The evolution of renewables around the world in 2020
Wind
Global wind additions are likely to witness considerable growth in 2020
4
, with analysts
5
forecasting around 60-72 GW of new
capacity, vs 60.4 GW in 2019. For example, according to the latest market outlook published by the Global Wind Energy
Council (GWEC), wind could increase as much as 71.3 GW in 2020, despite the impact of the COVID-19 pandemic.
However, as China announced in January 2021 the staggering figure of nearly 72 GW of wind additions in 2020 (nearly
tripling the amount of capacity in 2019), wordwide wind additions are now expected to be much higher, probably around
100-112 GW.
6
All forecasts highlight wind industry resilience during the pandemic crisis. Despite that national lockdowns led to a slowdown
of construction activity (essentially caused by supply chain disruptions and logistical challenges) in the first half of the year,
deployment accelerated in the second half.
The offshore wind sector has also proved to be resilient. According to preliminary data, around 6.9 GW could have been
connected, around 4 GW in China, and 2.9 GW in Europe.
In Europe, the wind industry experienced disruptions in the first semester but total additions were nevertheless comparable
to previous years. According to Wind Europe, 3.9 GW of onshore wind facilities were connected in the first six months of the
year, slightly over the average of the previous three years (3.7 GW) while offshore installations were slightly below the
three-year average (1.2 GW in 2020 vs 1.5 GW in 2017-2019). Overall, preliminary results are particularly encouraging
2
Consulted experts and analysts include: IRENA, IEA, IHS, Wood MacKenzie and BNEF, among others.
3
Central scenarios (or scenarios taking into account existing policies and enacted targets) have been used to elaborate this range.
4
At the time of preparation of this report, data from the global wind energy council (GWEC), the american wind energy association (AWEA) or wind
europe, have not been released
5
Experts consulted include: GWEC, IHS markit, bloomberg new energy finance, international energy agency, wood mackenzie, IEA, wind europe and
US energy information administration, among others.
6
Most of the experts consulted had forecast that China would install around 30 GW of wind in 2020, therefore, 40 GW below the final figure.
40
ANNUAL REPORT EDPR 2020
considering that wind installations are typically higher in the second half of the year, mainly due to the strongest activity in
summer months, suggesting that total 2020 additions could easily surpass the 10 GW threshold (probably around 12 GW).
In 2020, wind power contributed to 15% of Europe’s total electricity generation, its highest
-ever share, according to a report
released by Enappsys Ltd.
In the United States, developpers commissioned 16.9 GW of new onshore wind capacity, far more than the previous record
of 13.2 GW achieved in 2012, according to the American Clean Power Association. These impressive results are partly
explained by the rush of wind developers to connect their projects before the phase-out of the full value of the US
production tax credit (PTC) at the end of 2020.
China remained the undisputed world’s
wind power leader, adding 71.6 GW of wind energy, more than doble the previous
record (29.4 GW in 20
1
5) according to the National Energy Administration (NEA). Despite challenges posed by COVID-19
pandemic, developers in China were rushing to complete projects before the phase-out of the current remuneration scheme.
It has been a particularly good year for offshore wind installations as it is estimated that around 3.5-4 GW of offshore wind
facilities have been added. However, given astonishing total figure of 71.6 GW (that includes both onshore and offshore
facilities), offshore additions could be much higher. After this surge of new installations, China may become the largest
offshore wind operator worldwide in 2020 or 2021 the latest.
Solar PV
Solar PV grew robustly around the world in 2020 despite the turmoil caused by the COVID-19 crisis. Although final data are
still being collected, experts points out that around 106-132 GW of new facilities could have been connected in 2020
7
.
Therefore, 2020 final figure is expected to be in line with 2019 data (108 GW) or, more likely, above.
In Europe, 18.2 GW of solar PV capacity was added, up 11% from the 16.2 GW installed in 2019, according to Solar Power
Europe. With this surge in new installations, the European solar PV industry proved its resilience during the coronavirus
pandemic as 2020 was the second-best year for installations, only behind 2011 when 21.4 GW were installed. Over the past
12 months, Germany led the way with 4.8 GW of new installations, followed by 2.8 GW in the Netherlands and 2.6 GW in
Spain. Poland more than doubled its additions to 2.2 GW, and France installed 0.9 GW.
In the US, utility-scale solar additions more than doubled from 2019 levels, as 11.158 MW were connected in 2020,
according to the Energy Information Administration (EIA). With those additions, there are now more than 47 GW of solar PV
operating in the US, enough to power 11 million American homes.
China remains the largest market. According to the National Energy Administration, the country added 48 GW of solar PV
additions, exceeding all expectations. This figure largely surpasses the 30.1 GW added in 2019, although it remains below
the 2017 record of 52.8 GW.
7
Experts consulted included: BNEF, IHS, Wood Mackenzie, IEA, The Solar Energy Industries associations (SEIA) among others
41
2.1.3. Regulatory Framework
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ANNUAL REPORT EDPR 2020
EDPR NA Regulatory and Market Environment:
EDP
R
operates in most of the electricity markets in the US, Canada, and Mexico. The nature of regulations and market rules
vary from market to market with different degrees of influence from Federal and State/Provincial regulators in each market.
The opportunities and constraints for EDPR assets and prospects are significantly defined by these regulations and market
rules.
Regional Transmission Organizations (“RTO”), Independent System Operators (“ISO”) exist throughout much of North
America to operate a region's electricity grid, administer the region's wholesale electricity markets, and provide reliability
planning for the region's bulk electricity system. RTOs carry additiona
l responsibility for the region’s transmission network.
US markets with RTOs and ISOs fall under greater Federal influence through the Federal Energy Regulatory Commission
(“FERC”) which results in more transparent tariff and market rules. Regulation and
market rules for regions not in RTO/ISO
footprints tend to be influenced by various combinations of entities including State regulators, vertically integrated utilities,
municipal governments, and Federal Agencies.
In general, EDPR seeks to build assets in North American markets where long-term contracts are available for the bulk of
the output of its generation facilities. In addition to electrical power,
EDPR's
facilities can produce capacity and ancillary
services in regions with demand for these products.
Many states have enacted Renewable Portfolio Standards (“RPS”)
require
obligated entities to provide a certain percentage of their energy supply from qualifying renewable sources, similar to
the Renewable Energy Directive in the EU. Over the last few years, North American states have expanded these targets
such that renewable portfolio standards in over ten states require 50% or more of their energy supply to be delivered via
renewable resources in the next ten to twenty years. Certain facilities within the EDPR wind and solar portfolio, given their
location, produce renewable energy credits (“REC”), certificates of clean energy (“CEL”) and other environmental attributes
which are typically sold, along with the energy, capacity, and ancillary services, from the plants under long-term contracts.
These RECs generated via renewable production may also be sold separately from the wind and solar generation, if not
already included in the long-term contracts. The party owning the RECs is solely entitled to the benefits of the environmental
attributes.
43
US federal, state and local governments have established various incentives to support the development of renewable
energy projects. Included in these incentives are the Investment Tax Credit (“ITC”), Production Tax
Credit (“PTC”), cash
grants, and tax equity financing. Pursuant to the US federal Modified Accelerated Cost Recovery System, wind and solar
projects are fully depreciated for tax purposes over a five-year period even though the useful life of such projects is
generally much longer than five years.
Owners of utility-scale wind facilities are eligible to claim the ITC upon initially achieving commercial operation or PTCs for
generation from qualifying facilities. The PTC is awarded based on the volume of electricity produced by the wind facility
during the first ten years of commercial operation. This incentive was established by the US Congress as part of the 1992
Energy Policy Act and has been extended several times through the American Recovery and Reinvestment Act of 2009, the
American Taxpayer Relief Act of 2013, the Tax Increase Prevention Act of 2014, the Consolidated Appropriation Act of
2016, and most recently as part of the $1.4 trillion omnibus and COVID-19 relief package. The ITC and PTC levels for a
given facility depend on that facility’s start of construction date and commissioning date and remain fixed at this level for
the
first ten years of operation.
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ANNUAL REPORT EDPR 2020
2.2. Strategy
Since its inception, EDPR has been performing a strategy focused on selective growth, by investing in quality projects with
predictable future cash-flows and seamless execution, supported by core competences that yield superior profitability, all
embedded within a distinctive and self-funding model designed to accelerate value creation. As a result of undertaking such
strategy, at the same time flexible enough to accommodate changing business and economic environments, EDPR remains
today a leading company in the renewable energy industry.
EDPR’s strategy is supported by its three main pillars:
EDPR Business model to deliver solid and ambitious growth targets through 2022 positioning to successfully lead a sector
with increased worldwide relevance.
45
2.2.1. Selective Growth
Selective growth
is the key principle behind EDPR’s investment selection process, with new projects having long
-term PPAs
secured or being awarded long-term contracts under stable regulatory frameworks, as well as exhibiting above portfolio
average load factor. As presented in March 2019, EDPR plans to add c.7.0 GW for the 2019-2022 period, of which 87% is
already secured. EDPR will diversify geographically and technologically growing on wind onshore, offshore and solar along
with the entrance in new markets.
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ANNUAL REPORT EDPR 2020
2.2.2. Self-funding business
EDPR self-
funding model has been a cornerstone of EDPR’s strategy and its success has
been crucial for funding and
propel growth.
The self-
funding model relies on a combination of the cash generated from operating assets and EDPR’s strategy of selling
stakes in projects in operation or under development, along with the US Tax Equity structures to finance the profitable
growth of the business. This model allows the company to create value while recycling capital.
Sell-down strategy
Proceeds from selling majority stakes in operational or under development assets are also important sources of funds for
the self-funding model of EDPR in financing its profitable growth. Under this strategy, EDPR sells majority stakes in projects
in operation or in late stage of development, allowing the company to recycle capital, with up-front cash flow crystallization,
and create value by reinvesting proceeds in accretive growth, with the option to provide operating and maintenance
services. On the top of these, the Sell Down strategy makes visible the value creation on reported financial statements, with
capital gains being booked in the income statement.
As of 2020, EDPR already announced more than
€
2
.3 billion out of the >€4.0 billion of sell down proceeds for 2022,
representing around 57.5% of such target.
47
2.2.3. Operational Excellence
One of the strategic pillars that has always been a keystone of the Company, setting it apart in the industry, is the drive to
maximis
e the operational performance of its wind and solar plants. In this area, EDPR’s teams, namely in operations and
maintenance (O&M), have established a strong track record. EDPR has set targets for three key metrics: Load Factor,
Technical Availability and Core Opex per MW. These metrics provide an overall view of the progress in EDPR wind
assessment, O&M and cost control efforts, and also serve as good indicators for the overall operational efficiency of EDPR.
Maintaining high levels of availability
Availability is the ratio between the energy actually generated and the energy that would have been generated without any
downtime due to internal reasons, namely due to preventive maintenance or repairs. Therefore, it is a clear performance
indicator of the company’s O&M practices as it focuses on reducing to a minimum any malfunctions and performing
maintenance activities in the shortest possible timeframe. With a target of more than 97.5%, EDPR will continue to improve
availability through new predictive maintenance optimisation measures supported by the 24/7 control and dispatch centre,
reducing damages most common during extreme weather and improving the scheduling of planned stops. Also, a new
spare parts warehousing strategy will be key in reducing downtime during unexpected repairs. The company has always
maintained high levels of availability, having registered availability of 97% as of December 2020.
Leveraging quality growth on distinctive wind assessment toward 33% load factor
Load factor (or net capacity factor) is a measure for the renewable resource quality, that reflects the percentage of the
maximum theoretical energy output, in a given period. EDPR 2019-22 Business Plan target a 33% load factor, mainly on the
back of the increase competitiveness of new capacity additions. In 2020, EDPR reached a load factor of 30%.
Increasing efficiency, by reducing Core Opex/Avg. MW
In addition to all company initiatives to boost production, EDPR also focuses on strict cost control efforts to improve
efficiency and profitability. Leveraging on the experience accumulated over time, EDPR plans to reduce Core Opex/ avg.
MW by -1% CAGR 2019-22. Core Opex is defined by Supplies and Services (including O&M activities) and Personnel costs,
which are the costs that EDPR can actively manage. The target of reducing the manageable company costs structure, also
benefits from the economies of scale of a growing company. In 2020, adjusted by Sell-down, offshore costs (cross-charged
to projects’ SPVs), service fees, one offs and forex, Core Opex per avg. MW was +1% YoY, given upfront costs to support
expected growth over the coming years and adjusted Core Opex per MWh was also +1% YoY.
M3 Program and self-performance
Based on EDPR’s expertise, under the M3 program O&M teams will decide on the optimal balance between external
contractors and in- house maintenance. This new program has quickly generated savings in operational expenses and
increased control over quality. The self-
perform program is a step further in EDPR’s integration of maintenance tasks and
activities, which is being implemented in the US, and consequently minimizes third-
parties’ dependency. EDPR targets to
increase the share of its fleet under the M3 and Self-Perform program to c.60% by 2022, from c.30% levels in 2015, while at
the same time keeping flexibility to choose the most competitive sourcing contract.
2.3. Risk management
In line with EDPR’s controlled risk profile, Risk Management process defines the mechanisms for evaluation and
management of risks and opportunities impacting the business, increasing the likelihood of the Company in
achieving its financial, operational and sustainability targets, while minimising fluctuations of results.
Risk management process
EDPR’s Enterprise Risk Management Process is an integrated and transver
sal management model that ensures the
minimisation of the effects of risk on EDPR's capital and earnings, as well as the implementation of best practices of
Corporate Governance and transparency.
EDPR’s Enterprise Risk Management Process is inspired on Basel Committee on Banking Supervision’s principles,
guidelines and recommendations.
The process aligns EDPR’s risk exposure with the Company’s desired risk profile. Risk management policies are aimed to
mitigate risks, without ignoring potential opportunities, thus, optimising return versus risk exposure.
The process is closely followed and supervised by the Audit, Control and Related Party Transactions Committee, an
independent supervisory body composed of non-executive members.
Risk management is endorsed by the Executive Committee, supported by the Risk Committee and implemented in day-to-
day decisions by all managers of the Company.
EDPR created three distinct meetings of the Risk Committee, separating discussions on execution of mitigation strategies
from those on definition of new policies, in order to help decision-making:
•
Restricted Risk Committee:
Held every month, it is mainly focused on development risk and market risk from selling
energy (electricity price, basis, profile, GCs and RECs). It is the forum to discuss the evolution of projects under
development and construction and the execution of mitigation strategies to reduce merchant exposure. It also monitors
the limits of defined risk policies, with regards to counterparty risk, operational risk and country risk.
•
Financial Risk Committee:
Held every quarter, it is held to review main financial risks and discuss the execution of
mitigation strategies. Exchange rate risk, interest rate risk, inflation risk and credit risk arising from financial
counterparties are risks reviewed in this committee.
•
Risk Committee:
Held every quarter, it is the forum where new strategic analysis is discussed and new policies and
procedures are proposed for approval to the Executive Committee. Additionally, EDPR’s overall
risk position is
reviewed, together with EBITDA@Risk and Net Income@Risk.
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ANNUAL REPORT EDPR 2020
Risk map at EDPR
Risk Management at EDPR is focused on covering all risks of the Company. In order to have a holistic view, they are
classified in five Risk Categories. Within each Risk Category, risks are classified in Risk Groups. The full description of the
risks and how they are managed can be found in the Corporate Governance chapter. The graph below summarises the Risk
Categories, the Risk Groups and the Risk Management mitigation strategies at EDPR.
49
50
ANNUAL REPORT EDPR 2020
Risk analyses and impact of COVID-19 in EDPR
The year 2020 was marked by the outburst of the COVID-19 pandemic. In March, EDPR carried out a comprehensive
assessment of the
potential impacts on the company’s operations, followed by recommendations of actions to be put in
place and a process for continuous monitoring of the situation.
The impact of COVID-19 has been transversal across all areas and geographies of the company, but those impacts can be
grouped under several risk categories:
•
Market Risk:
•
Energy price risk:
Energy price significantly dropped during 2020 in most of EDPR geographies due to the reduction
in demand following the lockdown and a lower economic activity. However, impact of low energy prices on EDPR
results was minimal, as EDPR’s marginal merchant exposure was mostly hedged for 2020.
•
FX risk:
Emerging economies suffered a strong depreciation of their currencies. Net Investment hedges at EDPR
mitigated most of the FX fluctuations. On the other hand, a specific plan for hedging FX transactional exposures in
Capex was set out, in order to avoid hedging at particularly unfavorable rates due to the pandemic.
Monitoring of market risk was performed on a monthly basis in the Restricted Risk Committee, adjusting the position when
necessary.
•
Counterparty Risk:
Despite the increase in exposure from counterparties in financial hedges and the temporary
deterioration of the financial situation of some of EDPR’s PPA off
-takers, impact for EDPR was negligible. The existing
collateral in electricity hedges and a diversified portfolio of creditworthy PPA off-takers, some of which improved their
credit metrics during the year, made EDPR resilient to increase in counterparty risk.
Monitoring of counterparty risk was also performed monthly in the Restricted Risk Committee.
•
Operational Risk:
•
Execution Risk:
The impact of the pandemic on the construction and execution of projects lead to some COD
delays, due to construction stoppages and/or supply chain disruptions. To mitigate this risk, EDPR implemented a
strategy of prioritization of projects and set out a review of contractual clauses to prevent or minimize changes in tariff
regimes, PPA penalties or Capex increases. By the end of 2020, incentivized regime contracts or PPAs were all
maintained despite some COD delays.
Monitoring of the evolution of the execution risk at EDPR was performed on a weekly basis, together with the
Engineering & Construction Department.
•
Operation Risk:
No significant impact, as the potential reduction in plant availability due to delayed maintenance or
repairs was residual.
•
Personnel Risk:
EDPR initially implemented travel restrictions and other measures designed to stop the spread of
the coronavirus and guarantee the safety of its personnel. In March, EDPR activated its Contingency Plan for
pandemics, introducing home office in all geographies and restricting access to its facilities, while minimizing
disruptions in its operations, thus ensuring business continuity. EDPR employees have a Reopening Plan for
gradually returning to the facilities according to the development of the pandemic, with geographical specifications,
guaranteeing the highest health & safety standards.
51
During 2020, EDPR updated its view on the sustainability of RES policies in the geographies where the Company is present
and in new potential geographies. This deep-dive analysis was performed within the scope of the Country Risk Policy.
EDPR carried out a review of historical Capex deviations for projects in both Europe & Brazil and North American platforms,
with the aim of improving the accuracy of Capex contingencies to be included in the modelling of future projects.
Finally, an updated methodology for EBITDA@Risk and NI@Risk was approved, through a bottom-up calculation allowing
for a closer and more intuitive monitoring
of the different risks. Considering EDPR’s increase in size, NI@Risk limits were
updated on EDPR’s ERM (Enterprise Risk Management) framework.
EDPR risk matrix by financial impact
EDPR Risk Matrix is a qualitative assessment of likelihood and impact of the different risk categories within the Company. It
is dynamic and it depends on market conditions and future internal expectations.
EDPR sustainability risks
EDPR’s commitment with its stakeholders means that the Company cares about
a responsible and sustainable
development, assuring the best practices in this area. In this context, EDPR has identified five risk factors key to the
sustainability of the Company. The highest standards have been put in place to mitigate these risks:
•
Corruption and Fraud Risk:
EDPR has implemented a Code of Ethics and an Anti-Corruption Policy. The Code of
Ethics has its own regulation that defines a process and channel, open to all stakeholders, to report any potential claim
or doubt on the application of the code. The Ethics Ombudsperson is behind this communication channel, and is
responsible for analysing and presenting to the Ethics Committee any potential ethical problem. The Compliance
Channel is also available to report any questionable practice and wrongdoing. The Integrity and Ethics section of the
report (subchapter 1.3.4.) includes further information on how EDPR addresses and mitigates this risk.
•
Environmental Risk:
EDPR has implemented an Environmental Management System, certified with the ISO
14001:2015, in order to follow best practices in the sector. More information regarding how EDPR addresses and
mitigates this risk is available at the Natural Capital section of the report (subchapter 3.5.).
•
Human Resource Risk:
EDPR forbids any kind of discrimination, violence or behaviour against human dignity, as
stated in its Code of Ethics. Strict compliance is enforced, not only making the Ethics Channel available to all
stakeholders but also through constant awareness for all employees of the Company. The Human Capital section of the
report (subchapter 3.2.) and the Human Rights & Labour Practices section of the report (subchapter 3.4.2.) include
further information on how EDPR addresses and mitigates this risk.
52
ANNUAL REPORT EDPR 2020
•
Health and Safety Risk:
EDPR has deployed a H&S management system, complying with the new ISO 45001:2018
standard
, pursuing the “zero accidents” target.
This year, the Covid-19 pandemic had impact on the H&S risk. The
Health & Safety section of the report (subchapter 3.4.1.) addresses how EDPR has mitigated this risk.
•
Human Rights Risk:
EDPR has committed, through its Code of Ethics, to respect international human rights treaties
and best work practices. All suppliers which sign a contract with EDPR are committed to b
e aligned with EDPR’s Code
of Ethics principles. The Human Rights & Labour Practices section of the report (subchapter 3.4.2.) includes further
information on how EDPR addresses and mitigates this risk.
In addition, quantification of the financial impact
on the Company’s performance of these five sustainability risk factors is
included within the Operational Risk analysis. EDPR frequently evaluates the economic impact of its Operational Risk,
following the guidelines of Basel III. The analysis includes the identification, estimation and mitigation of individual
operational risks belonging to the short, medium and long term in all its geographies. For this purpose, EDPR takes into
account present and future relevance of these risks, as well as historical data of their impact, with the help of department
heads. The final results of the Operational Risk analysis are then communicated to the Executive Committee and shared
with every department involved.
In spite of the impact of the COVID-19 pandemic in Health & Safety, none of the five sustainability risk factors mentioned
above had a material financial impact on the Company’s performance
.
Emerging risks at EDPR
Changes in wind patterns at a global level caused by climate change
Academic papers have been published regarding how wind patterns have changed in recent years due to global warming
and whether these changes may remain in the long run. There has been no clear conclusion, but it might imply that some
regions will have weaker wind in the future, leading to drops in expected wind energy production, while some others will be
experiencing an increase in wind energy production. Moreover, the deployment of a high density of windfarms in a region,
both onshore and offshore, might affect the wind patterns itself.
In order to mitigate this wind energy production risk, when evaluating a new investment, EDPR considers stressed changes
in forecasted wind energy production. In addition, the geographical diversification of EDPR portfolio mitigates this potential
risk.
Increase of distributed generation resources in combination with the massive integration of new trends such as
smart grids, electric vehicles or blockchain
Proliferation of distributed generation with combination of Solar PV and storage or batteries might lead to a possible change
in the market in terms of reduction of demand from centralized generation by consumers due to self-consumption of
distributed generation, decrease in electricity prices set for uncontracted centralized generation, and changing dynamics of
energy flows in the grid, which might change the share of transmission and distribution costs for centralized generators.
Nonetheless, distributed generation could be seen as an opportunity for development of new products and services for
those companies that adapt to this trend.
53
Innovating
to power
the planet
Changing tomorrow now.
03
Financial Capital
58
Operational Performance
58
Financial Performance
60
Human Capital
69
Supply Chain Capital
74
Social Capital
76
Health & Safety
76
Respect Human and Labour Rights
77
Contribute to the Society
78
Promote Access to Energy for All
79
Natural Capital
80
Digital Capital
82
Innovation Capital
86
Sustainable Development Goals
88
EXECUTION
58
ANNUAL REPORT EDPR 2020
Execution
3.1. Financial capital
3.1.1. Operational performance
INSTALLED CAPACITY (MW)
VS. 2019
NCF
GWh
Dec-20
Built
Sold
Decom.
Var.
YoY
Dec-20
Dec-19
Var.
YoY
Dec-20
Dec-19
Var.
YoY
EUROPE
Spain
2,137
+401
(237)
-
+163
25%
28%
-3.1pp
4,346
5,298
(18%)
Portugal
1,228
+64
-
-
+64
26%
29%
-3.4pp
2,624
3,160
(17%)
Rest of Europe
1,403
+140
-
-
+140
27%
26%
+0.6pp
3,054
3,333
(8%)
France
126
+73
-
-
+73
31%
22%
+9.2pp
212
465
(44%)
Belgium
10
+10
-
-
+10
22%
-
2
68
(47%)
Italy
271
-
-
-
-
25%
27%
-1.9pp
595
551
+43%
Poland
476
+58
-
-
+58
29%
30%
-1.3pp
1,059
1,098
+19%
Romania
521
-
-
-
-
26%
25%
+0.9pp
1,186
1,151
+9%
Total
4,769
+605
(237)
-
+367
26%
28%
-2.1pp
10,024
11,791
(15%)
NORTH AMERICA
US
5,828
+587
(465)
(8)
+114
33%
34%
-0.8pp
16,633
15,696
+6%
Canada
68
+38
-
-
+38
30%
27%
+3.0pp
78
70
+12%
Mexico
400
+200
-
-
+200
41%
42%
-1.1pp
710
726
(2%)
Total
6,296
+825
(465)
(8)
+352
33%
34%
-0.8pp
17,421
16,492
+6%
BRAZIL
Total
436
+105
(137)
-
(32)
38%
43%
-4.9pp
1,093
1,757
(38%)
GRAND TOTAL
11,500
+1,535
(839)
(8)
+688
30%
32%
-1.4pp
28,537
30,041
(5%)
Equity Consolidated
668
+45
+73
-
+118
Wind Onshore (SP + PT)
187
+35
-
-
+35
Wind/ Solar Onshore (US)
471
-
+73
-
+73
Wind Offshore
10
+10
-
-
+10
EBITDA MW + EQUITY
CONSOL.
12,168
+1,580
(766)
(8)
+806
59
EDPR continues to deliver solid selective growth
With a top-quality portfolio, EDPR has a strong track record and proven
capability to execute superior projects and deliver on targets. The
installed asset base of 12.2 GW is not only young, on average 9 years,
it is also mostly certified in terms of environmental and health and safety
standards. Since 2008, EDPR has more than doubled its installed
capacity, resulting in a total installed capacity of 12,168 MW (EBITDA +
Equity Consolidated). As of December 2020, EDPR had 4,966 MW
installed in Europe, 6,766 MW in North America and 436 MW in Brazil.
2020 installations concentrated in North America
Since Dec
‐
19, EDPR added a total of 1,580 MW, including the 486 MW from the acquisition of the renewables business of
Viesgo. In 2020, EDPR added 1,370 MW of wind onshore, corresponding to 640 MW in Europe, namely 436 MW in Spain
(15 MW from equity stake), 84 MW in Portugal (20 MW from equity stake), 73 MW in France, 58 MW in Poland and 10 MW
in Belgium, while in North America 625 MW of wind were built, more precisely 587 MW in United States and 38 MW in
Canada, finnally, in Brazil EDPR built 105 MW worth of wind onshore projects. In terms of solar PV, 200 MW were installed
in Mexico, whilst 10 MW of wind offshore were built, corresponding to Windplus floating in Portugal (equity stake).
Pursuing its Sell-down strategy, EDPR successfully concluded the Sell-down of its entire ownership in the 137 MW
Babilonia wind farms in Brazil, 237 MW in a Spanish portfolio, 80% sell-down of a 563 MW portfolio in the US (of which 200
MW will become operational in 2021) and a 102 MW
Build and Transfer
wind farm in US. All in all, in 2020, EDPR YTD
consolidated portfolio net variation was positive by 806 MW.
5% decrease in Year on Year generation
EDPR produced 28.5 TWh of clean energy in 2020, -5% YoY. The YoY evolution
comes in line with a lower average installed capacity YoY following the execution of
EDPR’s Sell
-down strategy (3Q19: 997MW of European Assets (-1.2 TWh YoY);
1Q20: 137 MW in Brazil (-671 GWh YoY) and 4Q20: 237 MW in Spain (-64 GWh
YoY)).
In 2020, EDPR achieved a 30% load factor (vs 32% in 2019) reflecting 92% of P50
(long term average for 12M). In the 4Q20, EDPR reached a 34% load factor (vs 35%
in 4Q19), with QoQ comparison being affected by lower wind resource, mainly in
Brazil.
EDPR achieved a 96.7% availability in 2020, vs 96.8% in 2019. The company
continues to leverage on its competitive advantages to maximise wind farm output
and on its diversified portfolio across different geographies to minimise the wind
volatility risk.
56%
19%
11%
10%
4%
12.2 GW of EBITDA MW
+ Equity Consol. (%)
NA
SP
PT
ROE
BR
61%
55%
11%
11%
9%
11%
15%
18%
4%
6%
2020
2019
Generation breakdown
NA
ROE
PT
SP
BR
60
ANNUAL REPORT EDPR 2020
Solid growth and diversified portfolio delivers balanced output
EDPR’s operations in Europe were a major driver for the electricity production
decrease in 2020, decreasing -15% YoY to 10.0 TWh and representing 35% of the
total output. This is mainly explained by the deconsolidation of 997 MW in Jul-19
and 237 MW deconsolidation in Spain at the end of 2020 following Sell-down
transactions and by lower wind resource. In Europe, EDPR achieved a 26% load
factor (vs 28% in 2019).
EDPR obtained a load factor of 25% in Spain (-3pp YoY), while in Portugal reached
a load factor of 26% (-3pp YoY). In Rest of Europe, EDPR accomplished a 27% load
factor (+1pp YoY), mainly driven by France (+9pp YoY).
EDPR’s production in Brazil decreased to
1.1 TWh vs 1.8 TWh in the 2019,
representing 4
% of total EDPR’s generation, driven by the deconsolidation in the
1Q20 of 137 MW from the Sell-down of Babilonia wind farms. In Brazil, EDPR
reached a 38% load factor (vs 43% in 2019).
In North America, output increased +6% YoY to 17.4 TWh, reflecting the new
capacity in operation partially impacted by a lower wind resource at 33% (-1pp YoY).
North America represents 61
% of EDPR’s total output in the
twelve months of 2020.
Propelled by capacity additions in 2020, EDPR manages a portfolio of 12.2 GW
As of December 2020, EDPR had 2.4 GW of new capacity under construction, of which 1,648 MW related to wind onshore,
404 MW to solar PV and 311 MW from equity participations in offshore projects. In terms of wind onshore, in Europe were
722 MW under construction, with 85 MW in Spain, 135 MW in Portugal, 30 MW in France, 292 MW in Poland, 136 MW in
Italy and 45 MW in Greece. In North America 970 MW were under construction, of which 770 MW corresponding to wind
onshore projects in US and Canada and 200 MW from a solar project in US. In Brazil 155 MW of wind onshore and 204 MW
of solar were under construction. In terms of wind offshore, EDPR had a total of 311 MW of wind offshore in construction
from equity stakes, 269 MW from Moray East in the UK and 43 MW from SeaMade in Belgium. As a result of continuous
growth effort, EDPR also has a young portfolio with an average operating age of 9 years, with an estimate of over 21 years
of useful life remaining to be captured.
3.1.2. Financial performance
Income statement
Revenues reached over €1.
7
billion and EBITDA summed €1.
7 Billion.
Revenues totalled €
1,731 million (-5% decrease year on year) on the back of Sell-down
assets deconsolidation (-
€1
29 million versus 2019), lower wind resource (-
€
89 million year
on year) along with forex translation and others (-
€1
0 million versus 2019) not offset by
additional installed capacity (+€
82 million versus 2019), higher average selling price
excluding Sell-down
(+€
53 million year on year).
Other operating income amounted to €498
million
(+€99
million versus 2019), with year on
year
evolution reflecting the gains (€444
million) related to Sell-down transactions closed
by the end of the year in the US and Spain together with Offshore transactions, namely
the stakes sold to the Offshore JV with Engie (as of Dec-20, all assets were transferred
pursuant to the agreement signed in Jan-20).
12
11
1
4
7
9
8
3
2
4
9
Spain
Portugal
France
Italy
Poland
Romania
US
Canada
Mexico
Brazil
EDPR
Assets' Average Age and
Useful Life (years)
ASSET AVERAGE AGE
AVERAGE USEFUL LIFE
1,731
1,824
2020
2019
Revenue evolution
(€ millions)
61
In the context of EDPR’s continuous growth, Operating Costs (Opex) totalled €
568 million (-1% year on year). In comparable
terms, adjusted by
offshore costs (mainly cross charged to projects’ SPV), Sell
-down assets deconsolidated, one-offs, service
fees and forex, Core Opex (defined as Supplies and Services and Personnel Costs) per average MW was +1% year on year,
given upfront costs to support expected growth over the coming years.
In 2020, EBITDA summed €
1,655
million (vs €
1,651 million in
2019) and EBIT amounted to €
1,054 millio
n (versus €
1,055
million in 2019), with Sell-down transactions having a positive impact of -
€17
million in Depreciation and Amortisation and a -
€28
million write-down of a wind-farm (151 MW in US) approved for repowering in 2021. Net Financial Expenses decreased to
€
285 million (-18% year on year) with year on year comparison impacted by lower average cost of debt in the period (3.5% vs
4.0% in 2019). At the bottom line, Net
Profit summed €
556
million (versus €
475 million in 2019) mainly driven by the successful
execution of the Sell-down startegy. Non-
controlling interests in the period totalled €
127
million, decreasing by €
20 million year
on year, as a result of assets sold.
CONSOLIDATED INCOME STATEMENT (€ MILLIONS)
2020
2019
1
∆ %
REVENUES
1,731
1,824
(5%)
Other Operating Income
498
400
+25%
Operating Costs
(568)
(575)
(1%)
Supplies and Services
(304)
(309)
(1%)
Personnel Costs
(141)
(131)
+8%
Other Operating Costs
(123)
(136)
(10%)
Share of Profit of Associates
(6)
3
(281%)
Total
1,731
1,824
(5%)
EBITDA
1,655
1,651
+0%
EBITDA/Revenues
1
1
+505%
Provisions
(1)
(1)
(43%)
Depreciation and Amortisation
(617)
(609)
+1%
Amortisation Government Grants
17
17
(4%)
Total
1,655
1,651
+0%
EBIT
1,054
1,055
(0%)
Financial Income/ (Expense)
(285)
(349)
(18%)
Total
1,054
1,055
(0%)
PRE-TAX PROFIT
769
709
+8%
Income Taxes
(86)
(86)
(4%)
Profit of the Period
683
623
+10%
Total
769
709
+8%
NET PROFIT (EQUITY HOLDERS OF EDPR)
556
475
+17%
Non-controlling Interests
127
148
(14%)
Total
556
475
+17%
1
From 2020 onwards share of profits of associates will be accounted at EBITDA level. Only for YOY comparision purposes, 2019 data is also adjusted.
62
ANNUAL REPORT EDPR 2020
Balance sheet
In 2020
total equity increased by €2
89 million.
Total Equity of €8.
6
billion increased by €2
89 million in 2020
, of which €1,8
78 million are attributable to reserves and
retained earnings. Equity attributable to EDPR shareholders increased €
375 million year on year, mainly explained by
+€
556 million from Net profit in the
period, +€
82 million from
Acquisition/sale of companies, along with -
€1
87 million of the
exchange rate effects, -
€
8 million from variation in fair value cash flow hedges and -
€
70 million from dividend payments.
Total Liabilities increase
d €
181
million year on year to €9.
5 billion, explained by the increase in financial debt (+
€
530
million), deferred tax liabilites (+
€
72 million),
rents due from lease contracts (+€71 million) and
in
provisions (+€
37 million),
despite the decrease in deferred revenues from Institutional partnerships (-
€213 million), in Institutional partnerships (
-
€143
million), and other liabilities (-
€
173 million).
Debt-to-equity ratio stood at 111% by the end of 2020. Liabilities were mainly composed of financial debt (41%; versus 37%
in 2019), liabilities related to institutional partnerships in the United States (12%; versus 14% in 2019) and accounts payable
(23% versus 26% in 2019).
Liabilities to tax equity partnerships in the United States de
creased by €
356
million to €1,
934 million. Deferred revenues
related to institutional partnerships primarily represent the non-economic liability associated to the tax credits already
realised by the institutional investor, arising from accelerated tax depreciation, and yet to be recognised as income by EDPR
throughout the remaining useful lifetime of the respective assets.
Deferred tax liabilities reflect the liabilities arising from temporary differences between the accounting and the tax basis of
assets and liabilities. Accounts payables include trade suppliers, PP&E suppliers, deferred income related to investment
grants received and derivative financial instruments.
As total assets summed €1
8.2 billion in December 2020, the equity ratio of EDPR reached 47%. Assets were 74%
composed of net PP&E -
property, plant and equipment representing €13.
5 billion (+
€
228 million versus 2019). In detail it
included
+€
2.3 billion of capex investments, -
€0.6 billion
of depreciation charges along with negative exchange differences
of -
€1
.6 billion and -
€1.0 billion coming from sales and acquisitions.
Net intangible assets of €1.5 billion mainly include €1.2 billion from goodwill registered in the books, for the most part re
lated
to acquisition of Viesgo renewable business, while accounts receivable is mainly related to loans to related parties, trade
receivables, guarantees and tax receivables.
63
STATEMENT OF FINANCIAL POSITION (€ MILLIONS)
2020
2019
∆ €
ASSETS
Property, Plant and Equipment, net
13,492
13,264
+228
Intangible Assets and Goodwill, net
1,537
1,490
+47
Financial Investments, net
488
476
+12
Deferred Tax Assets
122
126
(4)
Inventories
55
34
+20
Accounts Receivable - Trade, net
279
303
(24)
Accounts Receivable - Other, net
999
556
+443
Right-of-use asset
674
616
+58
Collateral Deposits
31
32
(1)
Cash and Cash Equivalents
474
582
(107)
Assets Held for Sale
12
214
(202)
Total
18,163
17,693
+470
EQUITY
Share Capital + Share Premium
4,914
4,914
0
Reserves and Retained Earnings
1,878
1,584
+294
Net Profit (Equity Holders of EDPR)
556
475
+81
Non-controlling Interests
1,276
1,362
(86)
Total
8,624
8,335
+289
LIABILITIES
Financial Debt
3,947
3,417
+530
Institutional Partnerships
1,143
1,287
(143)
Provisions
315
278
+37
Deferred Tax Liabilities
427
355
+72
Deferred Revenues from Institutional Partnerships
790
1,003
(213)
Other Liabilities
2,227
2,400
(173)
Rents due from lease contracts
689
618
+71
Total
9,539
9,358
+181
TOTAL EQUITY AND LIABILITIES
18,163
17,693
+470
Cash flow statement and Net debt
Operating cash-flow impacted by top line performance
In 2020, EDPR generated Operating Cash-
flow of €
908 million (-17% YoY), with year on year evolution explained by weaker
top line performance. The key items that explain 2020 cash-flow evolution are the following:
•
Funds
from operations, resulting from EBITDA after net interest’s expenses, share of profits of associates and
current taxes, were €1,
519
million (versus €1,
441 million in 2019)
•
Operating Cash-flow, which is the EBITDA net of income tax and adjusted by non-cash items (namely income from
United States institutional partnerships) and net of changes in working capital, was €
908 million (-17% year on
year). Non-cash items
include €4
32 million from capital gains related to the assets sold to Ocean Winds (EDPR and
Engie's Offshore JV) and other sales in the US and Spain;
•
Capital
expenditures with capacity additions, ongoing construction and development works totalled €
2,099 million
(+89% year on year) mainly from higher capex in North America and Europe;
64
ANNUAL REPORT EDPR 2020
12%
15%
14%
13%
46%
2021
2022
2023
2024
>2024
DEBT MATURITY PROFILE (%)
•
Payments
to institutional partnerships totalled €
56 million, contributing to the reduction of Institutional Partnership
liabilities. Total net dividends and other capital distributions paid to minorities totalled €1
84 milli
on (including €
70
million to EDPR shareholders). In the period, forex & others had a posit
ive impact increasing Net Debt by €
3 million.
CASH-
FLOW (€ MILLIONS)
2020
2019
∆ %
EBITDA
1,655
1,651
0%
Current Income Tax
(35)
(55)
-36%
Net Interest Costs
(101)
(156)
-35%
FFO (FUNDS FROM OPERATIONS)
1,519
1,441
5%
Net Interest Costs
101
156
-35%
Share of Profit of Associates
6
(3)
-281%
Income from Institutional Partnerships
(202)
(173)
17%
Non-cash Items Adjustments
(439)
(290)
51%
Changes in Working Capital
(78)
(41)
88%
OPERATING CASH-FLOW
908
1,089
-17%
Capex
(2,098)
(1,109)
89%
Financial Desinvestments/ (Investments)
(1,093)
(291)
275%
Changes in Working Capital related to PP&E Suppliers
552
(100)
-651%
Government Grants
-
-
n/a
NET OPERATING CASH-FLOW
(1,731)
(412)
320%
Sale of Non-controlling Interests and Sell-down Strategy
950
989
-4%
Proceeds from Institutional Partnerships
305
186
63%
Payments to Institutional Partnerships
(56)
(81)
-31%
Net Interest Costs (Post Capitalisation)
(101)
(138)
-27%
Dividends Net and Other Capital Distributions
(184)
(151)
22%
Forex & Others
178
(138)
-229%
DECREASE/(INCREASE) IN NET DEBT
(640)
257
-349%
As of December 2020
, Net Debt totalled €
3,443m (+
€
640m vs December 2019)
reflecting on the one hand assets’ cash
generated and on the other hand investments in the period including the acquisition of Viesgo renewables and forex
translation.
Institutional Partnership Liabilities summed €1,
143m (-
€1
43m vs December 2019), with benefits captured by the
projects and tax equity partners along with a new institutional tax equity financing in the period (flat vs Dec-19 in USD).
NET
DEBT & TAX EQUITY (€ MILLIONS)
2020
2019
∆ €
Net Debt
3,443
2,803
+640
Institutional Partnerships
1,143
1,287
-143
Total
4,586
4,090
+496
65
Europe
In 2020, Europe de
creased its revenues to €
824 million (-11% versus 2019) due to lower production at 10.0 TWh (-15%
year on year) and despite higher selling prices during the year (+4% versus 2019). Net Operating costs (Operating costs net
of other operating income), decreased to -
€
28 million, primarily explained by the increase in other operating income
explained by the capital gains received from the Spanish portfolio Sell-down in 2020
(€
113 million). Operating costs roughly
remainerd flat in 2020 when comparing with last year.
All in all, EBITDA in Europe totalled €
856 million, a -7% decrease
versus 2019, reflecting an EBITDA margin of 104% (versus 99% in 2019).
North America
In North America, rev
enues increased to €8
71 million in 2020 (+5% year on year) on the back of higher capacity in
operation (+352 MW versus 2019).
Net Operating costs decreased €
124
million to €
94
million, reflecting mainly the €
99
million capital gain accounted from a 80% sale of a 363 MW portfolio in the US and the
€14 million gains in a 102 MW
Build
and Transfer
in the US, that translated into a +
€
145 million increase in other operating income. Operating costs increased
+22 million in 2020
. As a consequence, North America EBITDA totalled €
777
million (versus €6
15 million in 2019), reflecting
an EBITDA margin of 89% (versus 74% in 2019).
Brazil
In Brazil, revenues decreased to €36 million (versus €74 million in 2019) on the back of lower win
d resource that decreased
production -38% year on year and despite higher average selling price during the year (+6% versus 2019). Net Operating
costs increased €75 million to €11 million, due to the decrease in other operating income explained by the €87
million
capital gain from the Sell-
down of Babilonia wind farm accounted in 2019. All in all, EBITDA in Brazil totalled €26 million,
versus €139 million in 2019 reflecting an EBITDA margin of 71% (versus 188% in 2019).
STATEMENT (€ MILLIONS)
2020
2019
2
∆ %
2020
2019
2
∆ %
2020
2019
2
∆ %
Europe
North America
Brazil
REVENUES
824
925
-11%
871
832
5%
36
74
-51%
Other Operating Income
287
246
17%
195
50
290%
3
88
-96%
Operating Costs
-259
-258
0%
-290
-268
8%
-14
-24
-42%
Supplies and Services
-158
-158
0%
-163
-148
10%
-9
-15
-39%
Personnel Costs
-32
-29
11%
-76
-63
21%
-1
-3
-50%
Other Operating Costs
-68
-71
-4%
-50
-57
-12%
-3
-5
-35%
Share of Profit of Associates
4
4
14%
0
0
-37%
0
0
-
EBITDA
856
917
-7%
777
615
26%
26
139
-81%
EBITDA/Revenues
104%
99%
5%
89%
74%
21%
71%
188%
-62%
Provisions
-1
-1
-42%
-
-
-
-
-
-
Depreciation and Amortisation
-223
-255
-13%
-375
-333
13%
-9
-16
-45%
Amortisation of Government Grants
1
1
-39%
16
16
-2%
0
0
-100%
EBIT
633
658
-4%
418
298
40%
17
123
-86%
2
From 2020 onwards share of profits of associates will be accounted at EBITDA level. Only for YOY comparision purposes, 2019 data is also adjusted.
66
ANNUAL REPORT EDPR 2020
COVID-19 impacts
EDPR was able to manage the COVID-19 crisis with high efficiency, maintaining normal levels of availability and posted
lower costs in terms of travelling and marketing. Due to COVID-19, the company has suffered some construction and supply
chain disruptions leading to a total of c.0.5 GW COD delays, however without impact in projects
’
fundamentals. These
delays have been compensated by the +0.5 GW acquisition from Viesgo renewables business and the anticipation of some
projects in Brazil.
Other reporting topics
Subsequent events
The following are the most relevant subsequent events from the first months of 2021 until the publication of this report:
EDPR informs about PPA contracts secured for two solar projects in the US
Madrid, January 4
th
2021: EDP Renováveis, SA (“EDPR”), through its fully owned subsidiary EDP Renewables North
America LLC, has closed two 15-
year Power Purchase Agreement (“PPA”) to sell the energy produced by two solar PV
plants totalling 275 MW. In detail, the projects located in the US states of Mississippi and Indiana are expected to
commence operations in 2023.
With this new agreement, EDPR reached globally 2.0 GW of total solar PV capacity secured for the 2020-2023 period.
EDPR informs about agreement to acquire 85% of a distributed solar platform in the US
Madrid, January 18
th
2021: EDP Renováveis, SA (“EDPR”), through its fully owned subsidiary EDP Renewables North
America, LLC ("EDPR NA"), has entered into an agreement to acquire a majority interest in C2 Omega LLC ("C2 Omega"),
the distributed solar platform of C2 Energy Capital LLC (“C2”).
In detail, EDPR will acquire an 85% equity stake in a solar generation portfolio that includes 89 MW of operating and
imminent completion capacity and a near-term pipeline of around 120 MW, across nearly 200 sites in 16 states.
EDPR’s
investment in C2’s distributed solar platform business corresponds to an enterprise value of approximately $119m for the
acquisition of the operating capacity (89 MW). The transaction will also include certain earn-out payments based on the
growth in future operational capacity. C2's management team will continue to be engaged in the day-to-day operations of
the business.
The transaction will establish EDPR’s presence in the fast
-growing distributed generation segments as an owner-operator of
one of the largest commercial and industrial distributed generation portfolios in the US, and will enable EDPR to serve a
rapidly growing market and offer to its customers a range of new services and solutions to meet their renewable energy
needs. The completion of this transaction is subject to customary conditions precedent, and closing is expected to occur in
the first quarter of 2021.
EDP Renováveis informs about changes in Corporate Bodies
Madrid, January 19
th
2021: EDP Renováveis, S.A. ("EDPR") informs about a resolution approved by EDPR´s Board of
Directors: After the public communication of António Mexia and João Manso Neto about their no availability to be re-elected
for their positions in EDP and following
the appointment by EDP’s shareholders of a new Executive Board of Directors team
at EDP, and taking in consideration that both informed that they will put their positions at the disposal of the Board, the
Board of EDPR has agreed to cease António Mexia as Chairman of EDPR´s Board, and João Manso as Vice-Chairman of
EDPR´s Board and CEO of EDPR. EDPR would like to thank António Mexia and João Manso Neto for their enormous
dedication and contribution to the company, for the definition and implementation of a sustainable growth strategy, that
brought EDPR to be a leader in the renewables’ sector, clearly and greatly valued by the company’s stakeholders.
67
In addition, EDPR informs that has received the following resignations as members of EDPR’s Board of Direct
ors: Francisca
Oliveira, with effect from December 30
th
2020 (was also member of EDPR’s Audit, Control and Related Party Transactions
Committee); Duarte Bello, with effect from January 19
th
2021 (was also member of the Executive Committee); Spyridon
Martinis, with effect from January 19
th
2021 (was also member of the Executive Committee); Miguel Ángel Prado, with effect
from the next General Shareholders Meeting (was also member of the Executive Committee).
To fulfil the vacant positions, EDPR’s Board has c
o-opted: Miguel Stilwell de Andrade, as Executive Director; Ana Paula
Marques, as Non-executive Director; Joan Avalin Dempsey, as Non-executive and Independent Director.
F
urthermore, EDPR’s Board has appointed Miguel Stilwell de Andrade as Chairman of EDPR´s Board and CEO of EDPR
and Rui Teixeira, currently EDPR’s Executive Director and
Consejero Delegado
, as CFO of the Company.
To better maximis
e EDPR’s Board participatio
n in the management of the Company, the Board has decided to eliminate the
Executive Committee body, which included up to now Executive Board members of the company, whose executive staff will
now be integrated in a Management Team composed by: Miguel Stilwell de Andrade, CEO; Rui Teixeira, CFO; Duarte
Bello, COO Europe and Brazil; Miguel Ángel Prado, COO North America; Spyridon Martinis, CDO & COO Offshore.
T
o cover the vacant position in the EDPR’s Audit, Control and Related
-Party Transactions Committee, following the
resignation from Francisca Oliveira, EDPR´s Board of Directors has agreed to name Francisco Seixas da Costa as member
of such Committee. Follo
wing this appointment, EDPR’s Audit, Control and Related
-Party Transactions Committee is
composed by: Acácio Jaime Liberado Mota Piloto (Chairman); António do Pranto Nogueira Leite; Francisco Seixas da
Costa. W
ith this resolution, EDPR’s Audit, Control and
Related-Party Transactions Committee continues to be composed
only by independent members.
Lastly, the Board of Directors has agreed that a General Shareholders’ Meeting will be summoned for the February 22
nd
with
the following agenda: Ratification of co-opted Directors; Deliberate on the termination of members of the Board of Directors;
Establishment of the number of Board Members in 12; Amendment to the By-Laws to eliminate the role of the Chairman of
the Shareholders’ Meeting, and allow the Shareholde
rs Meeting to be chaired by the Board of Directors Chairman;
Delegation of powers.
EDP Renováveis, S.A. informs about Spanish and Italian renewable energy auctions
Madrid, January 27
th
2021: EDP Renováveis, S.A. (“EDPR”) was awarded long
-term Contract-for-
Differences (“CfDs”) at the
Spanish & Italian renewable energy auctions to sell electricity. In detail, at the Spanish auction, a portfolio of 6 projects of
wind and solar, including hybrid projects, with a total capacity of 143 MW have been awarded. The projects are expected to
become operational in 2022 and 2023. These new long-
term contracts reinforce EDPR’s footprint in Spain with 2.3 GW in
operation and close to 0.4 GW already secured in the country for the following years. At the Italian auction, a wind project of
44 MW and expected to become operational in 2022 has also been awarded. In Italy, EDPR has 271 MW already
operational and more than 0.2 GW secured for the coming years.
As of today, EDPR has globally secured 6.7 GW for projects expected to become operational from 2021 onwards.
EDPR enters Hungarian market with a 50 MW solar PV project
Madrid, February 12
th
2021: EDP Renováveis, SA (“EDPR”) secured a 15
-year Contract-for-Difference ("CfD") to sell energy
produced by a solar PV project in Hungary totalling 50 MW and with expected commercial operation in 2022. With this
project, EDPR increases its worldwide footprint by entering in a new market with a sustainable development of its
Renewable Energy Source.
Hungary expects to increase its solar PV capacity to 6.5 GW by 2030, mostly through an auction-based regulatory
framework.
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ANNUAL REPORT EDPR 2020
As part of its growth strategy, EDPR continues to study worldwide opportunities while developing profitable projects focused
in countries with low risk profile and regulatory stability. EDPR's success in securing new long-term contracts reinforces its
low-risk profile and growth strategy based on the development of competitive projects with long-term visibility.
EDPR approved its new Strategic Plan for the 2021-2025 period
At the end of February, EDPR approved its new Strategic Plan for the 2021-2025 period and the main three pillars are as
follows: Growth: accelerated and selective growth with +20 GW of additions for 2021-2025; Value: ongoing asset rotation
with €8bn of
proceeds for the period; Excellence: high quality teams and efficient operations targeting a Core Opex/MW
CARG 2021-2025 of -2%.
The strategy is set to deliver superior growth through 2025 promoting clean energy while operating in a sustainable way
across the three ESG dimensions.
By 2025, EDPR targets to have 25 GW of installed capacity, €2.3bn of EBITDA and €0.8bn of net income
.
EDPR Extraordinary General Shareholders' Meeting
Madrid, February 22
nd
2021: EDP Renováveis, S.A. (“EDPR”) informs that at the
Extraordinary General Shareholders'
Meeting, Shareholders have adopted the following resolutions:
•
Board of Directors: ratification of appointments of Directors by co-optation.
•
Ratification of the appointment by co-option as Executive Director of Mr. Miguel Stilwell de Andrade.
•
Ratification of the appointment by co-option as Dominical Director Mrs. Ana Paula Garrido de Pina Marques.
•
Ratification of the appointment by co-option as Independent Director of Mrs. Joan Avalyn Dempsey.
•
Board of Directors: dismissal (
separación
) of Directors.
•
Dismiss (
separar
) Mr. António Luis Guerra Nunes Mexia of his position as Dominical Director.
•
Dismiss (
separar
) Mr. João Manuel Manso Neto of his position as Executive Director.
•
Adjustment of the number of Members of the Board in twelve (12).
•
Amendment of articles 12 (“Notice of General Meetings”) and 16 (“Chai
rman of
the General Meetings”) of Articles of
Association.
•
Delegation of powers to the formalisation and implementation of all resolutions adopted at the Extraordinary General
Shareholders’ Meeting, for the execution of any
relevant public deed and for its interpretation, correction, addition or
development in order to obtain the appropriate registrations.
All information and documentation of the Extraordinary General Shareholders’ Meeting
is also available in the Company´s
website (
).
Information on average payment terms to suppliers
In 2020, total payments made from Spa
nish companies to suppliers amounted to €
102,986 thousand with an average
payment period of 51 days, below the payment period stipulated by law of 60 days.
Own shares
As of December 2020, EDPR did not hold own shares and no transactions were made during the year.
3.2. Human capital
2020 was a year undeniably characterised by the COVID-19 pandemic. Despite 2020's challenges, EDPR team's
commitment and capacity to adapt by working together while apart allowed the Company to keep achieving and surpassing
its 2020 ambitious goals while always putting health and wellbeing first.
Following the outbreak of the COVID-19 pandemic, EDPR implemented a Response Plan focused on protecting employees,
helping local communities and minimizing the impacts on the business continuity and the Business Plan. As a responsible
company, EDPR quickly took measures to minimis
e the conditions for the virus to spread, focusing on people’s healt
h and
keeping essential services in operation. In February, EDPR implemented travel restrictions, adopted measures for those
who had recently been in affected areas and distributed hand sanitizers in its facilities. In early March, EDPR activated the
Contingency Plan and implemented home office in all geographies, which had the support of two pilot projects to implement
home office a day per week recently put in place, and restricted visits to its facilities while continuously communicating with
employees regarding any updates on the situation and providing instructions in case of a positive or possible infection. At
the end of the year, employees continued to have the option to work from home or to gradually return to facilities according
to a Reopening Plan with geographical specifications, guaranteeing the highest health and safety standards for all and
complying with legal and space limitations.
Even during the global crisis, EDPR was able to continue hiring and maintain the promotions, mobilities and training
sessions, adapting the processes to the current situation.
Employee journey
A customised value proposition is offered to employees throughout their journey in EDPR, which allows them to join a
multinational team and grow along with it. EDPR believes that motivated workforce aligned with the company’s strategy is one
of the key drivers behind the ability to deliver positive results. In this sense, EDPR bases its Human Resources policies on the
Business Plan Achievements and implements its actions considering an active listening of the employees.
During 2020, the Company launched the Climate Survey as every two years, in which 95% of the employees participated.
The results of general employees
’
satisfaction showed improvement comparing to the previous survey, as the levels of
EDPR employees’ enablement
were of 76% of favourability (comparing to 71% in last survey) and 83% of favourability
regarding engagement (73% in the previous survey).
In addition, EDPR launched two surveys to evaluate the home office implementation. Firstly, a survey was launched for
employees who were working remotely, which formed the majority. Then, a second survey was launched for those who
69
continued in their usual positions, to understand the details of their situation while working on the premises. Both surveys
were very well received and had high percentages of employee participation, and employees stressed that the strategy and
resources provided by EDPR to address the pandemic were appropriate and successful.
Even so, EDPR continuously works to provide excellent conditions for its employees, to grow and develop talent at all levels,
and to optimise its employment policies and labour practices. As a result, EDPR has been recognised by the Top Employers
Institute as one of the best companies to work for in Europe in 2020 and, at a local level, in Spain, France, Italy, Portugal,
Poland and the UK. This certification endorses EDPR as one of the best companies to work at thanks to the journey it offers
its employees. The main actions implemented by EDPR in 2020 in this regard are detailed in this chapter.
Joining & Integrating
Attracting talent
EDPR aims to be a long-term market leader in the renewable energy sector and is aware that its team is key to achieve this.
Therefore, the Company is continuously striving to attract talent, bringing in the right skills and profiles to address current
and future business challenges, and retain professionals who seek to excel in their work in order to position the company as
"the first choice for employees" in the labour market.
In EDPR, non-discrimination and equal opportunities are guaranteed during all the selection processes. This is reflected in
its Code of Ethics, which contains specific clauses on non-discrimination and equal opportunities, in line with the company's
culture of diversity and inclusion and the respect for human and labour rights.
During 2020, EDPR implemented different talent and attraction initiatives with the goal of strengthening its image as a
leading employer:
•
Pool of Engineers Program:
5 exceptional junior engineers for Tech profiles and different academic backgrounds were
selected to join EDPR and be an active part of one of the most compelling junior engineer programs in the market.
Through the program, EDPR gives new talents the tools to develop themselves professionally and personally, having
the chance to get to know and influence different technical areas, including a tailor-made training program. During this
twenty-four-month program, junior engineers will have the opportunity to complete two rotations in EDPR in different
technical areas.
•
Job Fairs:
In 2020, EDPR attended 8 job fairs from the most relevant Universities and Business Schools from Spain
and Portugal with an assistance of almost 7,836 students. Throughout the year, the job fair events were adapted to the
COVID-19 pandemic and done online. EDPR also held an on-site Open Day at its offices at the beginning of the year.
•
LinkedIn:
The platform is used as the main source of Recruitment, covering up to 67% of the Corporate positions hired
during 2020.
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ANNUAL REPORT EDPR 2020
Integrating the team
Onboarding plays a critical role in a new hire's success and happiness, and builds relationships that are important to job
satisfaction and performance. Aware of this, EDPR has an Onboarding Policy for new hires which details the process and
measures to follow when integrating a new employee in the Company.
The integration process is more important than ever now, as most companies have transitioned to remote work in response
to the COVID-19 pandemic, making completely virtual onboarding of new hires a necessity. A good onboarding process is
especially important for remote employees since they don't have as many opportunities to organically integrate into the
company processes and culture. With this in mind, EDPR adapted its initiatives to integrate employees whenever possible,
striving to make virtual onboarding seamless, dynamic and informative.
One of t
he measures detailed in EDPR’s Policy
is to prepare
a meeting with an HR buddy in the employee’s first day
. In
addition, some new hires have the opportunity to have breakfast with the CEO, a meeting where employees get to introduce
themselves personally and ask the
Company’s
CEO some questions, while also giving the leader some insight from the
team. This year, both these meetings were done through interactive video sessions.
Also as a part of its Onboarding Policy, EDPR holds an annual Welcome Day event, which is exclusively for new
employees. Welcome Day is focused on improving the integration and networking of the new members of the team and
includes some short presentations from different business areas of the Company for an introduction on the C
ompany’s
functioning. In addition, the CEO usually gives a welcome speech to the new employees and participates in a Q&A session,
which helps the participants to know and better understand the Company’s strategy
. In 2020, there were two editions of this
event. One was held in person in January with an attendance of 107 new hires, and another with an attendance of 116 new
hires was done online in July, adapting the event to the global pandemic. In addition, EDPR shares a monthly newsletter to
its employees where all the new hires
’ names,
occupation and country of work are included, fostering their integration.
During 2020, despite the global pandemic and economic crisis, EDPR welcomed 441 team members (+20%
vs
2019), of
whom 29% are women. The new hires represented 16 different nationalities, and their average age was 34 years old. 95%
of the new employees correspond to levels of Specialists and Technicians, of which 80% have University degree or above.
99% of the hires were allocated in permanent positions and, furthermore, 113 internships were carried out during 2020.
Being EDPR
EDPR works daily to create a climate of trust and professionalism among its team to incentivise responsibility and excellent
performance. That is why the Company regularly implements activities, measures and campaigns that are important for the
employees professional and personal development such as providing an individualised value proposition, creating working
conditions that allow employees to grow and bloom, supporting their wellbeing and their families, supporting volunteer
activities and promoting diversity and inclusion. All in all, the Company continuously works so that being part of EDPR
means to feel fulfilled, treasured and supported.
Individualisation
Part of EDPR value proposition is a competitive remuneration package aligned with the best practices in the market.
EDPR Compensation Package includes (i) an Annual Base Salary and (ii) a Variable Pay depending on the achievements
of Area, Company KPIs and an Individual Global Assessment of the employee, and also an (iii) above market practice
benefits package such as Health Insurance or Pension Plan. The remuneration package is not static, which means that it
evolves at the same pace of employees’ needs and concerns as well as the business.
In recent years, EDPR focused on analysing the life-cycle status of EDPR employees including topics such as their
generation or if they have children or not in order to offer a tailor-made Benefits Package with an individualised approach
from a communication perspective, so that it is adapted to the employees’ needs.
This translates into unique professional
and personal experiences and development opportunities.
71
Work Life Balance
2020 was a year of uncertainty, change and adaptation in which both physical and mental health were a priority. Now more
than ever, promoting a balance between work and personal life is crucial to be a more competitive company and to build a
fairer society based on flexibility, respect and equal opportunities. EDPR thus implements various initiatives focused mainly
on family, time and health, offering its team a wide range of benefits that strengthen the Company’s position as flexible and
family-friendly, and fostering
time efficiency of employees’ daily tasks to
balance their professional and personal life while
still delivering excellent results. Accordingly, EDPR
’s
Work Life Balance (WLB) practices have been awarded for nine years
through the Responsible Family Employer Certification (EFR
–
Empresa Familiarmente Responsable) by Spain’s F
undación
MásFamilia. In 2020, EDPR was awarded with the level of excellence in this certification, recognising
the Company’s
efforts
to balance professional and personal life, excellence and flexibility. To achieve this continuously, EDPR is dedicated to
constant improve the initiatives implemented in order to provide the most suitable and updated benefits to its employees.
During the year,
EDPR launched the “Flex
-
Movement”, a
n initiative to streamline flexibility measures and to improve the
conditions necessary to make EDPR a dynamic, innovative and growth-based company. The movement included actions
such as facilitating the approval workflow of requests to work from home in exceptional circumstances, and the opportunity
to work in any EDPR office in the world up to 15 days a year. In addition, among the novelties announced, EDPR started in
February two pilot projects in Spain and Poland to implement home office a day per week. The pilot then worked as a
foundation for implementing remote work in a global scale due to the COVID-19 crisis. Later in the year, as a result of the
successful implementation of home office globally, EDPR approved a remote work strategy, which will be fully implemented
post-pandemic. The Company believes remote work is key to improve flexibility, work life balance and overall wellbeing of
its team, whilst still being productive. Therefore, employees will be able to work remotely 2 days per week, where feasible.
In addition, the Company created a wellness platform to further development a wellness culture and promote healthy habits.
The programs promoted by the platform aim to generate a culture in which employees choose to adopt healthy habits
voluntarily, sharing their experiences, forming support networks to facilitate the process and motivating each other. EDPR
also shared several health, wellbeing and home office tips in its intranet throughout the year. To raise awareness regarding
mental health specifically, EDPR launched the
Mind Your Mind
campaign in October, which promoted educational talks with
specialists, employees and other key speakers on how to approach the topic especially during the current social context.
Furthermore, EDPR has a volunteer program addressed to its employees in order to promote social responsibility, giving
them the opportunity to grow not only at work but also personally while also contributing to the society. As a result, EDPR
employees are given 4 hours a month to dedicate to volunteering initiatives. During the COVID-19 pandemic, EDPR
reinforced the volunteering activities proposed, adding initiatives that run on an online model and adding the possibility to
make donations to support the health and wellbeing of the society during this global crisis.
Diversity & Inclusion
EDPR incorporates the principles of Diversity and Inclusion in its values and practices as it is aware that a diverse team
helps bring together different perspectives and know-how, and represent different sources of talent. Specifically, EDPR aims
to contribute to improving the quality of life of its employees, eliminate career barriers and promote gender equality, seeking
to ensure an environment of openness in a workplace where mutual respect and equal opportunity prevail.
In 2020, EDPR created a Diversity & Inclusion Committee to promote its commitment to these crucial principles. The main
goals of the Committee are to reflect the
Company’s
strategy on D&I, which integrates the definition and development of
initiatives that contribute to a global action plan and local action plans, and to foster sharing knowledge and best practices.
Even so, as a responsible company, EDPR aims to actively promote these values among its team. Thus, during 2020,
EDPR launched
SHE
,
an interactive game-based learning to mitigate unconscious biases, and launched a Diversity, Equity,
and Inclusion online training session. As a recognition of its great commitment to gender equality, the Company entered the
Bloomberg Gender Equality Index for the first time in 2020. EDPR is therefore included in the list of 325 companies making
the largest strides in the transparency of gender-related information and in promoting
women’s equality around the world.
EDPR is dedicated to continuously fostering a culture founded on human equality and the strength in diversity and will
continue to lead by example. The Company upholds its commitment to Diversity & Inclusion not only through words, but
through actions that truly make a positive impact on people.
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ANNUAL REPORT EDPR 2020
Growing with the company
People are
EDPR’s
most important asset, and that is why the Company invests in intergenerational knowledge sharing and
in the ongoing training of its team. In this sense, EDPR is committed to the development of its employees, offering them an
attractive professional career and aligning their capabilities and skills with the current and future needs of the company. The
growth and development of the Company's business leads EDPR to invest in the employees by discovering, improving and
emphasising the potential of each mainly through internal mobility, training and development actions.
Mobility
EDPR considers both functional and geographical mobility as a tool that contributes to the organisational development by
stimulating employees’ motivation, skills, productivity
, personal fulfilment and fostering the share of best practices. The
mobility processes within EDPR aim to respond to the different challenges and needs of the Company, considering the
characteristics of the different geographies. In 2020, despite the global pandemic, there were 85 mobility processes (2 more
than in 2019), 62 of which functional, 12 geographical and 11 both functional and geographical mobility processes.
Training
EDPR offers job-specific ongoing training opportunities to contribute to the improvement of knowledge and skills, as well as
specific development programs aligned with the Company's strategy. The 360 potential appraisal process is created for all
e
mployees with the goal of defining each person’s training needs along with their manager, which is then used to define a
customised Training Plan. The annual Training Plan is based on a catalogue of programs that is constantly evolving and is
aligned with
the Company’s challenges and new markets. The key aspect about
the courses offered is that they usually
contain subjects to promote the development of skills needed to ensure the sustainability of EDPR’s business. Moreover,
the networking and the share of best practices foster innovation and improve performance
During 2020, EDPR delivered a total of 49,505 training hours throughout 2,627 sessions that included 28,588 participants.
This translates into an average of 30 hours of training per employee and results in 96% of EDPR
’s team
receiving training.
The challenges that the COVID-19 pandemic brought to the training activities were successfully overcome by redesigning
and adapting training contents and sessions to virtual, e-learning or remote formats. This effort allowed to maintain the main
training ratios aligned with previous years, increasing the training courses delivered in e-learning, live webinars or other non-
synchronous including game-based training (a total of 76% of training hours or 93% of the attendances were delivered in
online methodology). Therefore, EDPR highlights Digitalisation as one of the main training drivers that accelerated during
2020 as a result of the methodologies and by contents increasingly delivered on Collaborative Tools (Microsoft 365 suite),
Agile methodologies, Data Analyse tools, Cybersecurity, use of Drones, SMART business or Artificial Intelligence.
Knowledge management
EDPR is aware of the importance of Knowledge as a valuable asset within the business and
in employees’ development.
Thus, EDPR is boosting LINK as a knowledge platform increasing the number of areas, domains and curated documents
with valuable content captured and shared across the organisation, to help its employees learn from the past to face future
challenges and move the company forward. During 2020, EDPR launched
40fiveminutes
, an online initiative to easily share
main business insights in a friendly and informal way to those employees who sign up to the sessions. Becoming a Learning
Organisation implies a strong knowledge sharing mind-set, so EDPR strives to improve the use of knowledge by regularly
distributing customised relevant documents or events, working to overcome additional challenges brought by COVID-19.
Development
In order to support the company’s growth, aligning current and future organisational demands with employees’ capabilities
as well as to enhance their professional development, EDPR has designed development programs for middle management,
providing them with proper tools to take on new responsibilities as well as to adapt to the new challenges leading teams
remotely. In 2020, one of the most important development programs was the Lead Now Program, which aims to support
middle managers in the role they are assuming as team leaders. Participants have the possibility to self-assess their
management style, go deeper into the skills needed and get to know the role they are performing in the different HR
processes of EDPR. Through short online sessions, 3 editions took place in 2020 and reached 42 employees. Despite the
pandemic, EDPR worked to adapt the development sessions to a new online format and maintained the internal promotions.
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ANNUAL REPORT EDPR 2020
+4,300
suppliers contribute
to EDPR’s success
Total invoiced volume
Suppliers in EU&BR:
37%
1
Suppliers in NA:
63%
1
97%
2
local purchases at
country level
3.3. Supply chain capital
EDPR’s market leadership, based in value creation capacity, innovation and relationship with its stakeholders, is much
influenced by the performance of its suppliers.
Technical excellence together with sustainability is the basis of EDPR relationship with suppliers. This results in close
collaboration, joint capacity to innovate, strengthen the sustainability practices and improve the quality of the Company’s
operations.
Key data
EDPR
’s
supply chain
EDPR has a strong and permanent interaction with its supply chain, in particular with the strategic suppliers understood as
WTG (Wind Turbine Generator) manufacturers and suppliers, Balance of Plant (BOP) and Operation and Maintenance
(O&M) contractors. Those suppliers contribute in a meaningful and visible way to the value of EDPR core activities
–
construction and operation of wind farms and solar plants. This close relationship allows EDPR to benefit from all the new
technical solutions and innovations available on the market to maximise the value creation in the projects worldwide.
High quality and sustainable procurement
EDPR’s procurement process is developed within the framework of the Procurement Policy,
which extends to EDPR’s
both
direct and indirect suppliers, and
from which the most relevant aspects for EDPR regarding the supply chain’s high quality
and sustainability are established: development of activities that promote the sharing of the best sustainability practices in
EDPR purchases; contribution to the growth and profitability of the business through the promotion of initiatives for the
progress
and continuous improvement of the supply chain; systematic monitoring of suppliers’ performance and risk profile;
dissemination and implementation
of EDPR’s sustainability policies (Environmental
and H&S policies and Code of Ethics) in
the acquisition of goods and services and involvement and empowerment of all actors in the supply chain.
Implementation of the Procurement Policy leads to a better con
trol in the suppliers’ management process, assuring EDPR
values are respected, product quality is high and risks are minimised.
EDPR has in place requirements related to Sustainability, Quality and Risk management that have to be met by its suppliers
throughout the main procurement phases: registration process, contracting and, lastly, the monitoring and evaluation of the
suppliers.
1
Weight of each platform on the total invoiced volume in 2020.
2
EDPR defines spending in local suppliers at a country level as purchases to suppliers in countries where EDPR is present divided by the total invoiced
volume in 2020.
75
Registration
The registration process is an indispensable requirement for any company who intends to become a supplier or apply for a
qualification process issued by EDPR. The Corporate System of Supplier Registration of the Company works as the support
to search and select suppliers by providing detailed information, validated and updated by credible sources in order to
guarantee their accreditation through financial, technical quality and sustainability criteria.
In 2020, EDPR implemented a Supplier Qualification Process. The main goal of this process is to provide a more thorough
analysis on critical topics such as technical capabilities, health and safety, environment and ethics, and to establish highly
standardised minimum requirements to ensure that the suppliers with whom EDPR conducts business are qualified. The
qualified suppliers are included in a Suppliers Qualification List and are able to participate in the EDPR bidding and
contracting processes.
Contracting
The incorporation of adequate criteria in the bidding and contracting processes of the company is essential to ensure the
management and mitigation of operational risks in the supply chain. In Europe & Brazil, EDPR has a Suppliers Sustainability
Guide in place for both construction and O&M operations, providing an overview of the sustainability requirements EDPR
expects its suppliers to meet. The guide includes H&S, environmental and ethical requirements such as compliance with
applicable regulations, policies, internal norms, procedures and systems in place. In addition, EDPR has implemented a
process that classifies suppliers according to their H&S and environmental risks. The classification serves as an input in the
selection of suppliers during the bidding phase. Based on the individual values obtained in this classification, suppliers may
be excluded from the bidding process. If the supplier wants to be re-considered or participate in new processes, an action
plan to solve the identified issues has to be presented and EDPR shall approve the action plan proposal.
Adequate compliance by all EDPR suppliers with applicable H&S and environmental requirement is essential to guarantee
the correct performance of the contracted services and works. Aiming to ensure that suppliers comply with these
requirements, the Company has established a disciplinary and sanctioning regime, which is included in all requests for
proposal, contracts and purchase orders so any provider will be always informed about the consequences of not complying
with EDPR H&S and environmental requirements.
In parallel, financial capacity of the suppliers and their insurance policy are e
valuated according to the EDPR’s Credit
-in
procedure that defines the requirements
to ensure the compliance with EDPR’s
Counterparty Risk Policy and the proper
follow-up of active guarantees. EDPR Counterparty Risk Policy sets the methodology and process to measure counterparty
risk of new contracts, monitor counterparty risk of existing contracts, define in which moments and situations it should be
used and establish guidelines and mitigation instruments to reduce counterparty risk when they exceed established limits.
Monitoring and evaluation
In order to guarantee that the suppliers comply with the previously mentioned requirements, EDPR monitors strategic
suppliers during their services delivery.
EDPR performs internal inspections during the construction and operation phases to monitor the suppliers performance
regarding environmental and H&S aspects and to identify potential risks. In 2020, EDPR performed 1,262 inspections to 156
suppliers regarding EHS procedures. As a result, the Company identifies corrective actions needed and establishes an
action plan for continuous improvement. Furthermore, EDPR hires an external party for additional supervision in these
areas. These processes are reinforced by the integrated Health and Safety and Environmental Management System, which
was developed and externally certified in 2020 according to international standards ISO 45001 and ISO 14001.
Moreover, EDPR has Compliance questionnaires related to the anti-corruption practices of the suppliers to ensure that they
are all aligned with EDPR’s Anti
-Corruption Policy. In addition, EDPR approved of a Third Party Integrity Due Diligence
procedure in 2020, reinforcing the mechanisms for identifying and preventing possible integrity risks for EDPR in the
relationship with third parties.
All parameters of the Qualification system are periodically reviewed and reassessed by EDPR to guarantee that supply
chain performance remains on the high quality level required.
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ANNUAL REPORT EDPR 2020
3.4. Social capital
EDPR believes it is indispensable to contribute to the development of the society respecting both human and labour rights
and creating value in different ways, for different people. With this in mind, the Company is guided by four key social
responsibility principles: guarantee the highest health and safety standards, respect human and labour rights in the whole
value chain, contribute to the society and promote access to energy for all.
3.4.1. Guarantee the highest health & safety standards
The health and safety of those who contribute to EDPR’s activities is a key value and a priority for its success.
Therefore,
the Group aims to promote and build on a positive safety culture in which every employee, service provider and supplier is
engaged.
According to its Code of Ethics, EDPR undertakes to give priority to the employees and suppliers’ safety, health
and wellbeing and to ensure the development of appropriate occupational health and safety management systems.
The
commitment to guarantee the welfare of employees and contractors is supported by EDPR’s Occupational Health and
Safety Policy. In 2020, EDPR updated this policy after carrying out its in-depth and detailed review, mainly to ensure it is line
with the new demands and trends of work motivated by the evolution of the business and the digitalisation of processes.
In 2020, the COVID-19 pandemic resulted in a new way of living and working through strengthened H&S measures,
adaption of work arrangements, and management of stress and other psychosocial risks. Following the initial outbreak of
the pandemic, EDPR implemented a Response Plan focused on protecting employees, local communities and the business
continuity, quickly taking
measures to minimise the conditions for the virus to spread, focusing on people’s health and
keeping essential services in operation.
In February, EDPR implemented travel restrictions, adopted measures for those who had recently been in affected areas
and distributed hand sanitizers in its facilities. In early March, EDPR activated the Contingency Plan and implemented home
office in all geographies and restricted visits to its facilities, while continuously communicating with employees regarding any
updates on the situation and providing instructions in case of a positive or possible infection. At the end of July, AENOR
granted an external certification to
EDPR’s
protocols and action guidelines that had been implemented during the COVID-19
pandemic. The certification, which was renewed through a new audit in October, highlights and recognises the proper
application of good practices throughout the management process of the pandemic, and also verifies that the implemented
protocols are in accordance with the regulations and best practices set out in order to deal with the risks associated with
COVID-19 in
the Company’s
facilities. The certification covers all of EDPR's activities: project development, construction
and operation, and all the associated activities developed by EDPR.
At the end of the year, employees continued to have the option to work from home or to gradually return to facilities
according to a Reopening Plan with geographical specifications, guaranteeing the highest health and safety standards for all
and complying with legal and space limitations.
In addition, the Company created a wellness platform to further develop a wellness culture and promote healthy habits. The
programs promoted by the platform aim to generate a culture in which employees choose to adopt healthy habits voluntarily,
sharing their experiences, forming support networks and motivating each other. EDPR also shared several health, wellbeing
and home office tips in its intranet throughout the year. To raise awareness regarding mental health specifically, EDPR
launched the
Mind Your Mind
campaign in October, which promoted educational talks with specialists, employees and other
key speakers on how to approach the topic especially during the current social context.
Even though 2020 was an atypical year, the Company gave its best effort to adapt to the current pandemic focusing mainly
on preventing infections, arranging its work activities to implement a global home office regime, preparing an adequate plan
to return to the physical facilities and raising awareness for mental health and wellbeing, while always putting the health and
safety of its employees first.
77
EDPR team's commitment and capacity to adapt by working together while apart allowed the Company to keep achieving
and surpassing its 2020 ambitious goals. In line with its Business Plan, the Company built 1,580 MW during the year,
comparing to 888 MW in 2019. This growth is consistent with the increase of worked hours (+57% YoY) which, in turn, is
reflected on the number of work-related injuries. During 2020, EDPR registered 24 work-related accidents with absence for
employees and contractors, compared to 10 in 2019. The injury and the lost day rate were 1.9 work accidents per million
hours worked and 68 days lost due to work accident per million hours worked, respectively.
Nonetheless, EDPR continuously works to improve these ratios and to bring awareness to the best H&S practices.
Following the reference provided by the international standards ISO 14001:2015 and ISO 45001:2018, EDPR merged the
Environmental Management System with the H&S Management Systems for a more global and efficient approach,
simplifying processes and managing the potential risks of its activity. In 2020, the new Health, Safety and Environment
Management System (HSEMS), where synergies play a fundamental role, was implemented and jointly certified by an
independent certifying organisation.
The implementation of this integrated system allows for better management and prevention of future accidents, with the
objective of zero accidents overall. The commitment to health & safety is further supported through the ISO 45001
certification. By the end of 2020, this certification covers 100%
1
of EDPR’s installed capacity.
3.4.2. Respect human and labour rights
At EDPR, it is top priority to promote human rights and fair labour practices across the entire value chain. The Company is
committed to integrate the social aspects in planning and decision-making and to guarantee responsible operations
throughout the whole lifecycle of its business.
As a result, EDPR undertakes to respect and foster due respect for these practices within the Company and in its supply
chain, as well as to provide dignified working conditions for all. This is reflected in the Code of Ethics, which contains
specific clauses regarding non-discrimination and equal opportunitie
s, in line with the Company’s culture of diversity and
respect for human and labour rights. The Code is not an isolated feature
–
it belongs to an Ethics Framework that includes
functional units, specific regulations, monitoring and accountability for our ethical performance, along with training,
awareness-raising and capacity building for employees, service providers and suppliers.
EDPR requires its suppliers and service providers to comply with their ethical standards. In this way, the alignment with the
spirit of EDPR’s Code of Ethics is required. Moreover, the Sustainable Procurement Policy references the promotion of
respect for dignity and human rights, and the rejection of any form of forced labour or child labour, harassment,
discrimination, abuse or other types of physical or psychological violence.
A Code of Ethics channel is available for the communication of any breach of the Code related to the matters of human
rights or labour practices, including those in the context of the supply chain. The Ethics Ombudsman receives ethical-related
complaints, investigates and documents the procedure for each of them. A preliminary report is then submitted to the Ethics
Committee, whose main goal is to ensure compliance with the Code of Ethics within EDPR.
As a responsible company, EDPR incorporates the principles of Diversity and Inclusion in its values and practices as it is
aware that a diverse team helps bring together different perspectives and know-how, and represent different sources of
talent. Specifically, EDPR aims to contribute to improving the quality of life of its employees, eliminate career barriers and
promote gender equality, seeking to ensure an environment of openness in a workplace where mutual respect and equal
opportunity prevail.
In 2020, EDPR created a Diversity & Inclusion Committee to promote its commitment to these crucial principles. The main
goals of the Committee are to reflect the Company’s strategy on D&I, which integrates the definition and development of
initiatives that contribute to a global action plan and local action plans, and to foster sharing knowledge and best practices.
1
Calculation based on 2019YE installed capacity. EDPR certifies the facilities the year after the COD (commercial operating date). Thus, the facilities
that have entered into operation in 2020 will be certified in 2021.
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ANNUAL REPORT EDPR 2020
3.4.3. Contribute to the society
The Company believes that besides excelling in the way it performs, there must be a main factor weighing in every action or
activity EDPR does
–
people. The Company considers that in order to have a positive impact on society, it is vital to work for
the common good by promoting and supporting social investment activities.
EDPR’s Social Investment is developed within the fra
mework of its Social Investment Policy, which establishes the
corporate objectives and strategies related to this area. As a result, EDPR invests in activities that will positively impact the
promotion and development of the following four main priorities:
•
Lift Up Our Heritage:
Protect and promote cultural heritage, local traditions and access to culture and art, contributing
to a more vibrant and creative society;
•
Build Up Community:
Build thriving and inclusive communities by improving the living conditions of those in need and
supporting the wellbeing of people near our projects, and focus on enhancing energy inclusion and access to energy;
•
Enhance Our Environment:
Promote and protect biodiversity and natural heritage for the benefit of society members;
•
Brighten Up Our Future:
Promote energy efficiency, renewable energy and decarbonization through increased
awareness, supporting education on renewable energy for all.
As an integral part of the communities where it operates and as stated in its Code of Ethics, EDPR undertakes to maintain a
relationship of proximity with the local communities engaging in regular and open dialogue, seeking to know their needs,
respecting their cultural integrity and looking to contribute to improve the living conditions of local population, taking
measures to consider and respect the community interests. Therefore, in line with its Social Investment Policy and the
communities’ needs and expectations, EDPR has defined a Catalogue of Activities that works as a tool for defining the
social investment made in local communities. In addition to the development of social activities, EDPR provides long-lasting
economic benefits to the surrounding areas that include, but are not limited to, infrastructure investments, tax payments,
landowners’ royalty payment
s and job creation.
EDPR’s social investment in local communities
during 2020 was much influenced by the COVID-19 pandemic. Faced with
this unprecedented situation, EDPR carried out a solidarity campaign distributing over €1 million in aid and setting up
initiatives in all its markets to help local communities overcome the pandemic and recover from the socioeconomic crisis.
EDPR helped people in need mostly through donations to food banks, purchases of healthcare equipment, medical devices
and rapid testing kits, and the facilitation of online learning and digital educational materials. The Company has provided
support in all 15 countries where it is present: Spain, Portugal, France, Belgium, Italy, Poland, Romania, Greece, Brazil,
Colombia, USA, Canada and
Mexico, as well as Mozambique and Nigeria through the A2E program. EDPR’s response to
the global crisis is aligned with its commitment to preserve a relationship of proximity with the local communities and support
its development.
However, as a responsible company, EDPR works to promote the well-being and development of not only the communities
where it operates but also of society in general, focusing on the people who contribute to the success of the
Company’s
business and how society may benefit from it. In addition, EDPR has a volunteer program addressed to its employees in
order to promote social responsibility, giving them the opportunity to grow personally while also contributing to the society.
During the COVID-19 pandemic, EDPR reinforced the volunteering activities proposed, adding initiatives that run on an
online model and adding the possibility to make donations to support the health and wellbeing of the society during this
global crisis.
In 2020, EDPR invested in the development of the society mainly through internally developed and collaborative initiatives,
donations to charitable organisations and volunteering activities.
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Key data
3.4.4. Promote access to energy for all
As a global leader in the renewable energy sector, EDPR defined a clear strategy for promoting Access to Energy (A2E): to
provide clean energy in developing countries based on energy efficiency and decentralised renewable energy solutions, that
promote the sustainable development of the communities involved.
Access to renewable energy makes the difference for people not connected to the electricity grid not only by providing
sustainable energy services but also by enabling improvement on health and education conditions, job creation and new
economic activities. Moreover, the use of clean energies and the promotion of energy efficiency has a positive impact on the
environment.
In 2018, EDPR purchased a stake in SolarWorks!, a company engaged in the marketing of decentralised solar energy
solutions for off-
grid domestic and business customers in Mozambique. The acquisition of the €2.2 million minority stake
was an important step in the group's strategy for universal access to sustainable energy. In 2019, EDPR reinforced its
strategy to promote universal access to sustainable energy by investing $2.9 million in Rensource, a company that develops
and manages decentralized solar energy systems, to support its expansion in Nigeria. The investment, which was the result
of a financing initiative completed by EDPR and other international investors, allowed EDPR to participate in Africa's largest
market and to bring sustainable, low-cost energy solutions to more communities.
These investments confirm the progress of the A2E strategy, which in
cludes the commitment to invest €20 million
until 2022 with the goal of impacting 550,000 people in developing countries.
The A2E initiative powerfully contributes to make EDPR’s vision of a sustainable, safe and healthy world a reality
.
3.5. Natural capital
Wind and solar power are two of the most environmentally friendly ways of producing energy and actively contribute to the
decarbonization of the economy. Even though EDPR's business inherently implies a positive impact on the environment, the
company continues to work on a daily basis to hold itself to a higher standard.
The Company’s sustainable future depends on solid
performance efforts during the development phase.
Therfore, EDPR implements relevant measures during
this stage to identify and prevent the impacts of its
activities on the environment.
After identifying sites with top-class resource conditions,
EDPR carries out environmental viability studies to
detect the environmental constraints to take into
consideration throughout the remaining phases of the
value chain.
The potential environmental impacts of each project are
assessed in detail in the Environmental Impact Studies
and other specific studies, and are always performed by
professional external experts. These studies evaluate
the potential impacts that a project may have on
environmental aspects such as fauna, flora, soil, air and
water bodies, among others.
This process ensures the location of projects in the best
sites, guaranteeing respect for the environment.
During 2020, EDPR invested more than 4.4 million
euros in Environmental Impact Studies of its
projects in the development phase.
The construction process is closely followed by EDPR
teams, who work to minimise potential impacts or
disturbances and to ensure proper restoration of the land
once the works finish.
Even so, since the success of the construction phase
highly depends on suppliers, EDPR requires that they
adopt all necessary measures to ensure strict
compliance with all applicable environmental regulations
as well as EDPR's Environmental Policy and internal
norms, procedures and systems in place as regards to
environmental management.
In order to guarantee that the suppliers comply with the
environmental requirements during constructions, EDPR
has an environmental monitoring plan in coordination
with the Construction Manager and the suppliers, which
is implemented by an external party and includes the
environmental surveillance during the construction
works. Within this framework, the Company performs
internal inspections to monitor the suppliers
environmental performance during construction.
In 2020, EDPR performed
about 450
inspections to
more than
50
suppliers regarding their
environmental and H&S procedures during the
construction of
the Company’s
projects.
Beyond the emissions related to the operation phase, from a life cycle point of view, others shall be
considered (manufacture of components, transport, construction...).
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ANNUAL REPORT EDPR 2020
1
According to the life cycle assessments of our main turbine suppliers.
EDPR's Environmental Policy assumes specific commitments with the protection of the climate, the engagement with
biodiversity and the preservation of natural resources. This policy allows EDPR to control, manage, communicate and to
ensure the continuous improvement of its environmental performance along the entire value chain.
EDPR produces renewable energy, which inherently
implies the reduction of GHG emissions. Wind and solar
energy have zero carbon emissions and do not produce
harmful SOx, NOx or mercury emissions, protecting
valuable air and water resources and contributing to the
world's fight against climate change. Also, generation
from wind and solar energy does not consume water in
its operational processes. Even so, as stated in its
Environmental Policy, EDPR seeks to prevent, correct or
compensate the potential impact of its activities on the
environment through a set of commitments that ensure
the implementation and maintenance of an effective
Environmental Management System (EMS).
Following the reference provided by the international
standards ISO 14001:2015 and ISO 45001:2018, EDPR
merged the Environmental with the H&S management
systems for a more global and efficient approach,
simplifying processes and managing the potential risks
of its activity. In 2020, the new Health, Safety and
Environment Management System (HSEMS), where
synergies play a fundamental role, was implemented and
certified by an independent certifying organization.
In 2020, EDPR's operations avoided the emission of
18.5 million tons of CO
2
. The CO
2
emissions related
to EDPR's activities represent 0.2% of the total
amount of emissions avoided.
As a responsible company, EDPR has two main aspects
in consideration when dismantling a wind farm at the end
of its useful life: land restoration and proper treatment of
the wastes generated.
Even though EDPR works to minimise any impact on the
land surrounding its facilities, the Company commits to
clean up and rehabilitate the sites to return the area to its
initial state. In 2020, EDPR developed a guide for
environmental management during the dismantlement
phase to serve as a framework of best practices to follow
and environmental aspects to keep in mind when
dismantling a project.
The main waste generated during this phase are
dismantled turbines. EDPR prioritises their reuse by
keeping some pieces for future repairments, selling
some of the material to third parties and recycling it.The
wind turbine is around 80%-90%
1
made of recyclable
material, as the missing percentage is related to the
turbine's blades that are composed and manufactured by
complex materials chat make it hard to recycle. In this
regard, EDPR is working to support processes to recover
the blades and encourage circular economy.
In 2020, EDPR finished the morphological and
vegetal restoration of the Zas wind farm in Spain,
which was dismantled for repowering in 2019,
restoring 100% of the hectares impacted.
EDPR wind farms with a projected life span of 30 years will pay back its life cycle energy consumption
in less than a year', meaning, more than 29 years of a wind farm's life will be producing clean energy.
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ANNUAL REPORT EDPR 2020
3.6. Digital Capital
The digital journey is a never-ending transformation given the rapid evolution of Technology and its big impact on the
Business and the People.
The digital journey is a never-ending transformation given the rapid evolution of Technology and its big impact on the
Business and the People.
“Digitali
s
e” is one of the action verbs of EDPR, that includes a very significant number of innovative projects with the same
purpo
se: “Business transformation” and “Business culture”.
In the end, the focus is continuously improving user experience and operation to maximise operative efficiency and
revenues, ensuring the best practices supported by technology and new trends: Robotics & Automation, Analytics, Big Data
& AI, AR/ VR, Blockchain, Digital Platforms, Drones, Internet of Things (IoT) and “Mobile e Social Media”.
During 2020, EDPR invested €12
million during in Digital projects and obtained a score of 3.48 on a scale of 1 to 5 in the
“IDC Digital Maturity Index” (compared with 3
.02 of score in 2019).
The “Digital Maturity Index” is an internal evaluation that fosters the continuous improvement mindset in EDPR. In 2020, the
followed model was stablished by IDC, “The Future Enterprise”, based in five pillars: 1) Leadership at scale; 2) Empathy at
scale; 3) Work model at scale; 4) Resilience at scale; 5) Insight at scale.
Digital transformation is one of EDPR's strategic pillars for the coming years, as we must continue to improve our digital
capabilities to stay competitive with our peers as we continue to grow. EDPR’s digital strategy involves not just the use of
new technologies, but also upskilling and reskilling people to use these technologies, along with a clear definition of the
processes that will change from physical to digital.
83
Technology
The focus of digitalisation is seen as the way to achieve the necessary capacity to adapt in new contexts and to maximise
efficiency in the operation (characterised by high-level performance, in a global geography).
EDPR participated in different typologies of IT/OT projects adapting it to the different business challenges specific needs
and level of maturity, to ensure that initiatives are accordingly followed with the best practices of architecture and security:
•
“
Quick-
wins” (small proof of concept; until 2months)
•
“mVP” (“minimum Viable Products; from 3 months and until 6 months)
•
“Core IT projects” (projects or products to support of business units operation and
is included all operation,
maintenance and technological evolution of applications and infrastructure such as Big Data)
In 2020, EDPR participated in 15 mVP’s and 7 “quick
-
wins” and the “Core IT” projects were marked by the commitment to
use Cloud applications, with more than 70,000 hours spent in development and maintenance. Big Data technologies
continue to be strongly explored by EDPR and it is considered the most appropriate way to respond to the organisation's
operational data management needs and as a great solution to support the decision-making of market strategies.
Additionally, within the scope of EDPR Core IT projects, stands out the transformation of the management model to the
“Agile methodology”. EDP Group has been changing management of its
projects, transforming them from a Waterfall to
Agile methodology in order to achieve a greatest flexibility and alignment of all stakeholders (from the developer to the final
client), improving team communication and the success delivery of requirements reducing the time to market.
Moreover, Cybersecurity is increasing and it is one of the main points for the operational Business and strategic information
definition of the Company. For these reasons, the Security Department has been taking a series of actions to improve its
indexes. The BitSight rating is focused on the organisation's cybersecurity risk, with less elasticity. It should be noted that by
the end of 2020, EDPR obtained the rating of "Advanced", with 790 points.
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ANNUAL REPORT EDPR 2020
Processes
EDPR is focused on ensuring that business processes are clear, efficient, aligned with business needs, and known to all
stakeholders. As such, EDPR’s Process Map is based on EDPR Value Chain and critical processes are aligned towards
meeting business objectives. In 2020, the efforts were focused on automating and digitalising processes to achieve
business requirements with greater efficiency and to help employees spend less time on repetitive tasks. Several programs
have been launched to fast-track digital transformation at EDPR:
•
The Plan for Optimisation of Administrative Processes has been launched to identify business needs in terms of process
digitalisation and automation for every Department in the company. More than 273 initiatives have been identified that
would enhance process automation along the different stages of the value chain.
•
The use of digital process technology was a priority and an important step to provide digitalisation in support of
knowledge work. Moreover, this technology is key to accelerate digitalisation of processes.
•
The increasing evolution of Robotic Process Automation (RPA) technology represents an important milestone at EDPR.
This technology is performing many of the repetitive and mundane tasks that would have previously fallen on multiple
employees across a variety of departments. Currently, 201 different automations are in place throughout EDPR, saving
89,000 hours of employee time and enabling employees to focus on activities that are more valuable.
The challenge in process optimisation is t
hat there’s no one
-size-fits-all formula: every process needs to be assessed
individually. The future is to work smarter, not harder!
vs 150 in 2019
vs 40,000 in 2019
vs 70 in 2019
85
People
Every change in culture must start with people and when talking about Digital Transformation it means a change in our
mindset to become more digital. Digital transformation only takes place if the people with the necessary skills are involved in
the process.
Following the training roadmap initiated in 2019 on Digital Upskills, in 2020 different initiatives have been launched towards
empowering people in this Digital Transformation Process. "Digital Upskills" is an initiative implemented in 2020, based on
the monitoring of digital skills and know-how of employees. The intention is to reinforce an increasingly digital culture and to
give new capacities in this phenomenon that are in constant changing. These initiatives are based on the 70-20-10
development methodology, so the roadmap includes not only training moments (10), but also learning initiatives through
knowledge sharing and relationship development (20), as well as through on-the-job experiences (70).
During 2020, EDPR delivered 9,496 training hours (19.2% of the total) with 10,753 attendances (37.6%), highlighting
ongoing digitalisation initiatives on Cybersecurity, collaborative tools of the O365 suite, exclusive TECH SERIES for the
Digital Champions Community (about IA, Being SMART and other cutting-edge topics). In addition, digital contents were
another important pillar of the digital skills transformation: new resources coming from eLearning solutions, recorded
webinars conducted internally by employees or the recent addition of the UDEMY for Business portfolio with +5,000 online
courses added to the learning offer at EDPR.
At the end of 2020, 81% of the employees received training in digitalisation during the year, reaching a cumulative total of
86% of the headcount in the period 2019-2020.
EDPR maintains the discussion during regular meetings in our Digital Skills Committees composed by the main
stakeholders in this field and lead by the CEO whose main objective is to foster digital skills or mindset as part of the Digital
culture and promote collaborative skills to work more efficiently, the automation or robotisation of tasks and processes as
part of the digital transformation path.
Employee involvement is considered key in this process and therefore the Digital Champions community remained active
during 2020. Employees with special digital capabilities, ability to work with collaborative tools and specific knowledge and
concerns on digital technologies are part of this program to extend the Digital Mindset throughout the Organisation.
New initiatives are expected to be launched regularly in order to reinforce and ensure that a digital culture is spreading all
over the Company and that everyone is on board with the changes that will happen across the business.
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ANNUAL REPORT EDPR 2020
3.7. Innovation Capital
Technical innovation is one of the hallmarks of EDPR. The Company
’
s history is built on the continuous searching of new
trends and solutions in energy production to meet its stakeholders expectations. Accordingly, EDPR develops projects
within the framework of its two main strategic pillars for Innovation: Cleaner Energy focused on sustainable power
generation, and Energy Storage & Flexibility to ensure a smoother transition to an energy mix system.
WIND
Repowering
When approaching the end of its lifespan, wind turbines
need to be assessed. One of the solutions implemented
by EDPR is repowering the wind farm, which means
reducing the overall number of wind turbines and
replacing them with more efficient ones. This results in a
net increase of power generated, reduced O&M costs,
reduced land area per MW and, due to the use of more
modern wind turbines, a better integration with the grid
and reduced noise pollution.
Last year, EDPR successfully repowered its first wind
farm, located in Spain. During 2020, EDPR had another
wind farm in Spain going through this repowering
process, and will continue to implement this solution
throughout its portfolio.
Predictive Diagnostics & Performance Improvement
Through advanced analytical technics, EDPR detects
failures in early stage or high degradation levels in
components/systems to avoid unplanned maintenance.
EDPR’s m
ain focus has been in detections in major
components (Gearbox, Generator, Main bearing, etc.),
repairing uptower instead of replacing the components
or saving offline time, but also includes other detections
with lower impact in other systems.
After investigating the most important technical issues
which impact production losses or costs, EDPR installs
retrofits to reduce/mitigate that impact and foster
performance improvement. These include simple
retrofits like changing the position of a sensor, or major
SOLAR
Bifacial panel
EDPR is participating in some innovative projects to
collect more data and know-how on new technologies of
solar energy with the objective to anticipate trends and
to improve return of investment (ROI) in this technology.
An example of one of these projects, which started in
2020, is a photovoltaic system with innovative bifacial
panel and 1 axis tracker, in Évora, proven to be more
efficient than a traditional alternative.
Controlling, monitoring and optimising software
In 2020, EDPR installed the TrueCapture technology
software in two of its solar sites in North America to
increase annual energy production (IAEP). In this
initiative, TrueCapture technology allows each row to be
tracked independently, providing a greater energy output
of the PV plant based on two algorithms: Row-to-Row
(R2R) and diffuse.
CLEANER ENERGY
87
EDPR’s
commitment to innovation and new technologies has made it a leader in the renewable energy sector. Currently,
the Company continues to take advantage of all expertise obtained since the start of its inception to ensure more efficient
solutions, more attractive returns and a more sustainable future. As a result, EDPR engages in projects that englobe wind
energy, solar energy, energy storage plants, floating offshore wind farms, green hydrogen and hybrid power plants.
BATTERY STORAGE
Energy battery storage
EDPR has been working in different projects of energy
battery storage. Energy storage reserves renewable
energy supply for periods of high energy demand.
Increased energy storage capacity can lead to cost
savings on both sides of the meter and can improve the
overall efficiency of the grid through reduced cycling and
changes in output, resulting in lower emissions.
In this context, EDPR developed a combination of solar
and storage which was designed to increase efficiency
and provide greater balance in energy supply. This
r
epresented the Company’s
first Power Purchase
Agreement (PPA) with operative storage system (200
MW of solar energy and 40 MW of energy storage).
EDPR also is testing the use of energy storage system
integrated at a PV Station (DC-coupling level) to validate
relevant functionalities in this type of solutions (namely
clipping recapture, low voltage and cloud-cover energy
harvesting, among others).
In addition, EDPR is also present in strategic projects in
order continuously develop knowledge in the storage
area. A great example of these types of pilot projects is
“STOCARE”,
a power plant where EDPR is studying the
application of energy storage combined with wind
energy generation.
HYDROGEN
Green hydrogen
Green hydrogen is gaining relevance on the European
scene and the European Commission has announced its
strategy in 2020, which sets more ambitious targets for
this energy and, in parallel, alliances are being
established to lead the implementation. Portugal and
Spain have a prominent position and believe that
hydrogen business can help achieve:
•
Decarbonization
•
Renewables empowering (to establish renewables
revenue)
•
Storage & Flexibility improvement
EDPR participated in some initiatives and projects of
green hydrogen in 2020, including onshore and offshore
systems to evaluate its potential, and it will continue
studying what is the best approach of the organization
and the right time to consolidate to bet on this promising
solution of green energy production.
ENERGY STORAGE & FLEXIBILITY
CLEANER ENERGY
…ensuring decent work, gender equality
& preservation of the environment.
EDPR continuously works to provide excellent conditions for its employees, grow and develop talent
at all levels and optimise its employment policies and labour practices. As a result, EDPR has been
recognised by the Top Employers Institute as one of the best companies to work for in Europe in 2020.
EDPR’s Code of Ethics contains specific clauses of non-discrimination and equal
opportunities, fostering respect for all employees. The commitment of the company
to equality and advancing women in the workplace was further recognised when EDPR
entered the Bloomberg Gender-Equality Index for the first time in 2020.
EDPR’s business is its best contribution to reduce biodiversity loss. Nevertheless, the Company’s commitment
to contribute to the protection of biodiversity leads to an active role in the conservation of wildlife surrounding
its facilities.
In 2020, EDPR finished the morphological and vegetal restoration of the Zas wind farm in Spain
which was dismantled the previous year, restoring 100% of the hectares affected by the project.
…impacting positively on communities & fostering
innovative infrastructures & circular economy…
EDPR works to promote the wellbeing and development of the communities where it operates and
of society in general. In 2020, due to COVID-19 pandemic, EDPR carried out a
€1 million
solidarity
campaign to help local communities overcome the global crisis and adapted its volunteering
activities to an online model.
Nonetheless,
EDPR
maintained its social investment strategy,
investing a
total of
€2.5 million in the development of social activities during the year.
Innovation is part of EDPR’s day-to-day reality. The Company is focused on the more disruptive
technologies of the industry and is committed to foster innovative solutions throughout its
entire value chain. In 2020, EDPR centred on promoting digital skills and 81% of its employees
participated in digitalisation trainings.
Even though EDPR is in the renewable energy business, it goes beyond its commitment with
sustainability by fostering a culture of responsible operations and circular economy.
In 2020, EDPR
recovered a total of 76% of the waste it generated, and 94% of the hazardous waste generated.
EDPR supplies affordable & clean energy
while mitigating the climate change…
EDPR is a global leader in the sector of renewable energy and one of the world’s largest wind
energy producer, ending the year with 12.2 GW of installed capacity. In 2020, the Company
generated 29 TWh of clean energy, a cost-effective way to fight climate change.
Wind and solar power are two of the most environmentally friendly ways of producing energy.
EDPR’s business inherently implies the reduction of GHG emissions and therefore has a positive
impact on the environment. In 2020, EDPR’s activities avoided the emission of 18.5 million tons of CO
2
.
SUSTAINABLE DEVELOPMENT
GOALS
3.8.
88
ANNUAL REPORT EDPR 2020
Changing
the world is
a team effort
Changing tomorrow now.
04
Materiality assessment
93
Climate change
95
Economic business sustainability
100
Health & Safety
101
People management
106
Corporate governance
121
Suppliers management
122
Community engagement
125
Innovation
127
Environmental management
128
Ethics and Compliance
132
Communication and transparency
134
Digital transformation
137
Reporting principles
138
Annex I: State of consolidated non-financial
information
139
Annex II: GRI Content Index
143
Annex III: Independent Assurance Report
147
SUSTAINABILITY
93
Sustainability
4.1. Materiality assessment
The macro-economic context, where the challenges of sustainability are increasing, summing up with the diversity of
EDPR
’s stakeholders,
results in a large and complex list of important issues, which must be prioritised according to its
relevance and significance. An issue is considered material when it influences the decision, the action and the performance
of an organisation and its stakeholders.
4.1.1. Background and objectives
EDPR
’s material issues were identified and the results achieved supported the preparation of this Annual Report, as
reflected in the Company’s management strategy and, in particular, in its agenda for sustainabilit
y.
4.1.2. Methodology
The methodology adopted is based on the Accountability Standards and the information is collected corporately and within
each business units as well.
Materiality is acquired by the interception of the issues identified by stakeholders with the importance given internally by the
business. The topics identified by the Company are prioritised according to the frequency with which they appear in the
different categories analysed.
94
ANNUAL REPORT EDPR 2020
Relevance for society
The relevance for society is determined by the importance/impact of a specific theme from an external perspective to the
Company, designated as society perspective. Therefore, the society vision reflects the vision idea/concept of the several
stakeholder groups that have influence on or are influenced by EDPR
’s activities. This vision must be achieved through
sources that ensure independence from the Company to collect, on most cases, external data. In parallel, the establishment
of a society perspective is also supported by documents, analysis and international/national specific studies that allow a
broad outlook on the emerging trends in the sustainability area. Consequently, the Company considers that the vision of the
several stakeholders reflects the vision of society, thus allowing the assessment of the expectations outside EDPR.
Relevance for business
The vision of the business is obtained through the evaluation of the importance/impact of a specific theme from an internal
perspective to the Company. This vision is originated from the analysis of the defined business strategic goals as these
depict the current positioning and concerns of EDPR and reflect the future vision of the business. In 2019, EDPR defined a
new strategic plan until 2022 and, thus, the material issues for the Company in which this assessment was based were
updated accordingly.
Results
The materiality matrix describes visually and promptly the most sensitive and impacting themes by comparing the relevance
to society with the relevance to the business. The critical and sensitive themes for EDPR, obtained from the analysis of the
materiality matrix, allows the Company to drive the strategy and support the decision-making process as well as to focus the
report of information based on shared interests between EDPR and stakeholders, facilitating the relationship between them.
Materiality matrix
Note: Environmental management includes biodiversity, waste management and spills.
EDPR did not identify the following topics as material:
•
Water: Generation from wind energy does not consume water in its operational processes. The water is consumed mainly for human use.
•
Light pollution: EDPR activities do not have a material impact in light pollution.
•
Raw materials: EDPR core business does not consume raw materials.
•
Food waste: EDPR activities do not have a material impact in food waste.
95
4.2. Climate change
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Selective Growth
of the chapter Strategy and sections Operational Performance and Natural Capital of the chapter Execution.
GRI EU1
–
Installed capacity, broken down by primary energy source and by
regulatory regime
INSTALLED CAPACITY (MW)
2020
2019
∆ YoY
EUROPE
Spain
2,304
2,126
+178
Portugal
1,258
1,164
+94
Rest of Europe
1,403
1,263
+140
Total
4,966
4,553
+413
BRAZIL
Total
436
467
(31)
NORTH AMERICA
US
6,299
6,112
+187
Canada
68
30
+38
Mexico
400
200
+200
Total
6,766
6,342
+424
GRAND TOTAL
12,168
11,362
+806
Note: The reported data includes EBITDA and Equity MWs.
By December 2020, EDPR operational portfolio totalled 12.2 GW, of which 5 GW in Europe, including 2.3 GW in Spain, 1.3
GW in Portugal, 1.4 GW in Rest of Europe, 6.8 GW in North America and the remaining 0.4 GW in Brazil. From the 12.2
GW, 484 MW are related to solar PV and 11,674 MW to wind onshore technology and 10 MW to offshore wind technology
(equity stake).
Pursuing its Sell-down strategy, in 2020, EDPR concluded the sale of its entire ownership in the 137 MW Babilonia wind
farms in Brazil, 237 MW in a Spanish portfolio, 80% sell-down of a 563 MW portfolio in the US (of which 200 MW will
become operational in 2021) and a 102 MW Build and Transfer wind farm in the US. All in all, YTD portfolio net variation
was +806 MW.
In 2020, EDPR built 1,370 MW of wind onshore, corresponding to 640 MW in Europe, 625 MW in North America and 105
MW in Brazil, 200 MW of solar PV in Mexico, and 10 MW of wind offshore corresponding to Windplus floating in Portugal
(equity stake), totalling 1,580 MW built in the year.
96
ANNUAL REPORT EDPR 2020
GRI EU2
–
Net energy output broken down by primary energy source and by
regulatory regime
ELECTRICITY GENERATED (GWh)
2020
2019
∆% YoY
EUROPE
Spain
4,346
5,298
(18%)
Portugal
2,624
3,160
(17%)
Rest of Europe
3,054
3,333
(8%)
Total
10,024
11,791
(15%)
BRAZIL
Total
1,093
1,757
(38%)
NORTH AMERICA
US
16,633
15,696
+6%
Canada
78
70
+12%
Mexico
710
726
(2%)
Total
17,421
16,492
+6%
GRAND TOTAL
28,537
30,041
(5%)
EDPR produced 29 TWh of clean energy in 2020, -5% YoY. The YoY evolution comes in line with a lower average installed
capacity YoY following the execution of EDPR’s Sell
-down strategy: 3Q19
–
997 MW of European Assets (-1.2 TWh YoY);
1Q20
–
137 MW in Brazil (-671 GWh YoY); and 4Q20
–
237 MW in Spain (-64 GWh YoY).
In 2020, operations in Europe, North America and Brazil generated 35%, 61% and 4% of the total output, respectively. In
Europe, generation decreased 15% YoY, mainly impacted by the deconsolidation of 997 MW in Jul-19 from a Sell-down
transaction and by a lower wind resource. In North America, output increased +6% YoY to 17.4 TWh, reflecting the new
capacity in operation partially impacted by a lower wind resource. In Brazil, production decreased to 1,093 GWh, driven by
the deconsolidation in the 1Q20 of 137 MW from the Sell-down of Babilonia wind farms.
GRI 201-2
–
Financial implications and other risks and opportunities for the
organisation's activities due to climate change
The Earth's climate has changed throughout history. Scientists attribute the current global warming trend observed since the
mid-20th century to the human expansion of the "greenhouse effect"
1
–
warming that results when the atmosphere traps
heat radiating from Earth toward space. Over the last century, the burning of fossil fuels like coal and oil has increased the
concentration of atmospheric carbon dioxide (CO
2
).
EDPR
is a clear example of how fighting against climate change creates business opportunities. The Company’s core
business, to deliver clean energy by developing, building and operating top quality wind farms and solar plants, inherently
implies the reduction of greenhouse gas
emissions, contributing to the world’s fight against climate change and its impacts.
Since its inception, EDPR has been performing a strategy focused on selective growth, by investing in quality projects with
predictable future cash-flows, and seamless execution, supported by core competences that yield superior profitability, all
embedded within a distinctive and self-funding model designed to accelerate value creation. As a result of undertaking such
strategy, at the same time flexible enough to accommodate changing business and economic environments, EDPR remains
today a leading company in the renewable energy industry. As presented in the Strategic Update, EDPR plans to add c.7.0
GW in 2019-2022 period, of which, in December 2020, 87% is already secured, investing more than 8 billion euros financed
1 IPCC Fifth assessment report, summary for policymakers.
97
by sell-
down and assets’ cash flows.
EDPR will diversify geographically and technologically growing on wind onshore,
offshore and solar along with the entrance in new markets.
During 2020, EDPR built 1,580 MW and finished the year managing a global portfolio of 12.2 GW. Benefiting from a
diversified portfolio, the Company generated 28.5 TWh of renewable energy, avoiding the emissions of 18.5 million tons of
CO
2
. Capital expenditures and financial investments with capacity additions, ongoing construction and development works
during the year totalled €
3,193 million.
However, EDPR faces climate change not only as a business opportunity, but also as an opportunity to innovate.
EDPR’s
commitment to innovation and new technologies has made it a leader in the renewable energy sector. Currently, the
Company continues to take advantage of all expertise obtained since the start of its inception to ensure more efficient
solutions, more attractive returns and a more sustainable future. As a result, EDPR engages in projects that englobe wind
energy, solar energy, energy storage plants, floating offshore wind farms, green hydrogen and hybrid power plants.
Nevertheless, on the risk side, meteorological changes may pose a risk for EDPR
’s activities and results since they are
carried out in areas of the planet that are being affected by climate change. In addition, future estimations of wind and solar
production are based on analysis of historical measurements for more than 20 years and they are considered representative
of the future. However, relevant unexpected meteorological changes could lead to a lower production than the one expected
from historical data. Thus, when evaluating a new investment, EDPR considers potential changes in the production
forecasted but, even so, the size of the potential deviation in the case of relevant meteorological changes is uncertain.
Moreover, renewable plants in construction and in operation are exposed to weather hazards, natural disasters, etc. These
risks depend on the location of assets. At EDPR, all plants are insured from the physical damage during construction and
operation. During operation, any natural disaster, weather hazard or accident will also be partially insured to revenue losses
due to the event. Thus, no material impacts are identified in the EDPR´s consolidated financial statements as a
consequence of climate-related matters.
As a sector leader, EDPR is aware of the urgency to fight climate change and even though its business inherently implies a
positive impact on the environment, the Company continues to work on a daily basis to hold itself to a higher standard and
to incorporate innovation in its value chain in order to further contribute to the protection of the climate.
GRI 302-1 - Energy consumption within the organisation
Wind turbines and solar panels require a small amount of electricity to operate. This energy consumption is generally self-
consumed. Given the intermittency of wind generation, sometimes it is needed to consume electricity from the grid.
ENERGY CONSUMPTION (GJ)
2020
2019
∆% YoY
WIND FARMS
Electricity consumption
296,457
269,758
+10%
OFFICES
Electricity consumption
8,920
16,658
(46%)
Gas
3,947
6,478
(39%)
FLEET
Petrol consumption
25,109
23,541
+7%
Diesel consumption
5,144
6,698
(23%)
Total
339,578
323,133
+5%
Note 1: Gas conversion factor according to Agência Portuguesa de Ambiente.
Note 2: EDPR reports EBITDA wind farms
’
energy consumption the year after the COD (commercial operating date), when the trial period is over and
the consumption is significant. Thus, the energy consumption of wind farms that have entered into operation in 2020 will be included in the 2021 report.
Note 3: Fleet energy consumption refers to O&M fleet.
Note 4: Energy consumption from offices refers to 1Q20 data (due to the home office implemented the rest of the year), except for O&M offices in NA.
Note 5: Data regarding gas consumption from offices in 2019 was restated.
98
ANNUAL REPORT EDPR 2020
GRI 302-4 - Reduction of energy consumption
EDPR
’s activity is based on clean energy generation, and it produces about
298 times the energy consumed by itself.
Nonetheless, the Company is conscious about promoting a culture of rational use of resources and promotes many internal
campaigns to encourage sustainable behaviours. For example, EDPR has included the objective to promote the transition of
its fleet to electric vehicles in its Sustainability Roadmap 2019-2022.
GRI 305-1 - Direct (scope 1) GHG emissions
EDPR
’s Scope 1 emissions represent
2,405 tons of CO
2
equivalent, -6% vs 2019. 1,928 tons are emitted by transportation
related to the windfarms operation, 207
tons by gas consumption in the Company’s offices and the rest of it is related to
SF
6
.
Part of the equipment used for electricity generation purposes contains SF
6
gasses and during 2020, EDPR registered
emissions of 11 kg of this gas, which is equivalent to 270 tons of CO
2
eq.
Note 1: Emissions were estimated according to GHG protocol (including official sources such as IPCC or the U.S department of energy).
Note 2: Gas consumption from offices refers to 1Q20 data (due to the home office implemented the rest of the year), except for O&M offices in NA.
Note 3: Data regarding gas consumption from offices in 2019 was restated.
GRI 305-2 - Energy indirect (scope 2) greenhouse gas (GHG) emissions
EDPR
’s
CO
2
indirect emissions represent 28,425 tons, +8% vs 2019. Of the 2020 scope 2 emissions, 27,595 tons are
driven by electricity consumption by the wind farms and solar plants and 829 tons by electricity consumption in the offices.
In 2020, 100% of the emissions related to electricity consumption in windfarms and offices in all EDPR countries have been
compensated by Certifications of Origin in Spain and Renewable Energy Certifications (RECs) in the US, obtained from the
renewable energy generation.
Note 1: The emission factors used are based on the following sources: Portugal - EDP, Turbogás, Tejo energia, Rede Eléctrica Nacional (REN), and
Entidade reguladora dos serviços energéticos (ERSE); Spain - Red Eléctrica de España (REE); Brazil - ministry of science and technology
–
SIN
(national interconnected system); Other European countries and Canada - IHS Cera.
Note 2: Electricity consumption emissions were calculated with the global emission factors of each country.
Note 3: Electricity consumption from offices refers to 1Q20 data (due to the home office implemented the rest of the year), except for O&M offices in NA.
GRI 305-3
–
Other indirect (scope 3) greenhouse gas (GHG) emissions
EDPR
’s work requires employees to
travel and commute. Based on the estimates, the transportation used by employees
accounted for a total of 1,289 tons of CO
2
emissions, -77% vs 2019 mainly due to the travel restrictions and home office
regime implemented after the outbreak of the COVID-19 pandemic.
Note 1: Emissions were estimated according to GHG protocol, by following the Defra standard.
Note 2: Employee commuting emissions were calculated from data collected in a survey to all employees, and corresponds to 1Q20 data (due to the
home office implemented the rest of the year).
Note 3: Employees transportation by air and train in Portugal is not included.
Note 4: When calculating employees transportation by air, the radioactive factor is not considered.
Note 5: Fleet energy consumption refers to O&M fleet.
99
Total CO
2
emissions
GRI 305-5 - Reduction of greenhouse gas (GHG emissions)
Even though EDPR activity inherently implies the reduction GHG emissions, the Company goes one-step forward by
compensating 100% of the scope 2 emissions.
EDPR
’s
core business activity inherently implies the reduction GHG emissions. Wind and solar energy has zero carbon
emissions, contributing to the world’s fight against climate change and does not produce harmful SOx, NOx, or mercury
emissions, protecting valuable air and water resources. In 2020
, it was estimated that the Company’s activities avoided the
emission of 18.5 million tons of CO
2
.
The Company’s emissions
represent 0.2% of the
total amount of emissions avoided and 86% of the total emissions are from
the necessary electricity consumption by the wind farms. Even though EDPR
’s activity is based on the clean energ
y
generation, it is conscious about promoting a culture of rational use of resources and therefore the Company has included in
its Sustainability Roadmap 2019-2022 the objective to promote the transition of its fleet to electric vehicles.
In 2020, 100% of the emissions related to electricity consumption in windfarms and offices in all EDPR countries have been
compensated by Certifications of Origin in Spain and Renewable Energy Certifications (RECs) in US, obtained from the
renewable energy generation.
Note 1: To calculate the emissions avoidance, the energy generation has been multiplied by the CO
2
eq. emission factors of each country and state
within the us. EDPR considers the emission factor of just fossil fuel energy, as it is considered that by increasing the generation of renewable energy,
there is a displacing of these technologies, while other renewable technologies and nuclear plants will continue with its quota of generation.
Note 2: The emission factors used are based on the following sources: Portugal - EDP, turbogás, tejo energia, rede eléctrica nacional (REN), and
entidade reguladora dos serviços energéticos (ERSE); Spain - red eléctrica de españa (REE); brazil - ministry of science and technology
–
sin (national
interconnected system); USA - emissions & generation resource integrated database (EGRID) for each state emission factor; other european countries,
Mexico and Canada - IHS cera.
27.6
1.0
3.2
0.3
CO
2
Eq. Emitted in 2020
(k tons)
Wind Farms Energy Consumption
Offices Energy Consumption
Employees transportation
SF6
24.7
2.0
7.5
0.2
CO
2
Eq. Emitted in 2019
(k tons)
Wind Farms Energy Consumption
Offices Energy Consumption
Employees transportation
SF6
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ANNUAL REPORT EDPR 2020
4.3. Economic business sustainability
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Financial
Performance of the chapter Execution.
GRI 201-1
–
Direct economic value generated and distributed
ECONOMIC VALUE GENERATED AND DISTRIBUTED (€M)
2020
2019
ECONOMIC VALUE GENERATED
Revenues
1,529
1,642
Other Income
700
581
Share of Profit in Associates
6
3
Financial Income
77
38
Total
2,312
2,264
ECONOMIC VALUE DISTRIBUTED
Supplies and Services
304
309
Other Costs
123
136
Personnel Costs
141
131
Financial Expenses
362
387
Current Tax
32
55
Dividends
107
99
Total
1,069
1,117
ECONOMIC VALUE ACCUMULATED
1,243
1,147
PROFIT BEFORE INCOME TAX (€M)
2020
2019
Spain
306
52
Portugal
104
300
France & Belgium
-3
31
Poland
21
13
Romania
30
28
Italy
14
14
UK
0
-1
Brazil
15
102
US
276
157
Canada
-1
2
Mexico
13
13
Others
-5
-2
GRAND TOTAL
769
709
101
4.4. Health & Safety
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Health & Safety
of the chapter Execution.
GRI 403-1
–
Occupational health and safety management system
The management of all issues related to health and safety is collected and described in the integrated Health & Safety and
Environment Management System (HSEMS), which covers all employees and operationd of the Company. The processes
and procedures are regulated in the management system are developed to comply with the legal requirements of each
country, the ISO 45001 standard, and the requirements that have been considered appropriate by EDPR to carry out a
correct management of the related issues with the H&S of all workers.
GRI 403-2
–
Hazard identification, risk assessment and incident investigation
The process to identify hazards and assess the H&S risks arising from the C
ompany’s activity and facilities is developed
according to the Hazards Identification and Risks Assessment procedure of the HSEMS, in which responsibilities and
methodologies are defined to ensure risks are reduced and, if possible, avoided. The Risk Assessment of each job position
is reviewed and updated as applicable, pursuant to the C
ompany’s commitment to continuous improvement
. The
preparation of these risk assessments is carried out by senior H&S technicians. The risk assessments, as well as the risk
assessment procedure itself, are audited every year with an internal audit and the external audit of ISO 45001 certification.
All the topics that emerge from the audits are managed according to the Findings Management procedure of the HSEMS,
and an action plan is drawn. The results of this action plan are reviewed in subsequent audits.
In addition, the Communication, Consultation & Participation procedure of the HSEMS includes information on hazards
communication management. The process of risks communication is an effective tool to establish an active information
channel, fast and effective among employees, managers and the top management, to act in the fastest way possible and
avoid risks that may arise. To promote the participation and commitment of the entire Company, any employee may report
anomalies or detected risks on H&S and environmental issues. When an unsafe act or condition is detected, the employee
may report it in an internal tool, specifying whether an immediate action is required.
EDPR’s
commitment not to retaliate
against any worker who expresses a concern about safety issues or who has intervened in any incident is included in the
Company's H&S policy, which was updated in 2020. The Policy also indicates that workers should remove themselves from
work situations that they believe could cause injury or ill health, as no situation can justify endangering someone’s life.
To know how to report, investigate and follow-up on an incident, there is an Incidents Management procedure available in
the HSEMS. The purpose of this procedure is to define the process to identify, respond, report, analyse and investigate
incidents and respond to emergency situations, as well as to take the necessary actions to prevent and/or mitigate them.
GRI 403-3
–
Occupational health services
EDPR ensures that medical examinations are provided to the employees according to the legal requirements of each
country, to determine whether a potential or current employee is medically fit to carry out their specific duties. EDPR has
external medical services for all employees
2
for the medical follow-up, whose management is carried out directly by the
medical service of the joint prevention service of the EDP Spain company. The detailed results of the medical examinations
are confidential but shared with the employee, as EDPR receives only the conclusion of the examination: apt, not apt or apt
with restrictions, indicating the restrictions.
GRI 403-4
–
Worker participation, consultation, and communication on occupational
health and safety
A significant part of the organisation plays a fundamental role in the implementation of its health and safety policy. The
Company created health and safety committees that collect information from different operational levels.
2
Except for employees working from the Oviedo office.
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ANNUAL REPORT EDPR 2020
GRI 403-5
–
Worker training on occupational health and safety
The Company’s
commitment to ensure high safety standards for employees and contractors make EDPR an increasingly
safe place to work, prioritizing the safety and wellbeing of all stakeholders with the objective of zero accidents overall. In
order to achieve this goal, EDPR provides training to both its employees and its contractors regarding both generic
occupational health & safety aspects as well as training on specific work-related hazards.
GRI 403-6
–
Promotion of worker health
2020 was a year of uncertainty, change and adaptation in which both physical and mental health were a priority. As a result,
the Company created a wellness platform to further development a wellness culture and promote healthy habits. EDPR also
shared several health, wellbeing and home office tips in its intranet throughout the year. To raise awareness regarding
mental health specifically, EDPR launched the
Mind Your Mind
campaign, which promoted educational talks with specialists,
employees and other key speakers on how to approach the topic especially during the current social context.
GRI 403-7
–
Prevention and mitigation of occupational health and safety impacts
directly linked by business relationships
In order to guarantee that the suppliers comply with
EDPR’s
requirements regarding sustainability in the supply chain,
EDPR monitors strategic suppliers during their services delivery. EDPR performs internal inspections during the
construction and operation phases to monitor the suppliers performance regarding environmental and H&S aspects and to
identify potential risks. In 2020, EDPR performed 1,262 inspections to 156 suppliers regarding EHS procedures. As a result,
the Company identifies corrective actions needed and establishes an action plan for continuous improvement.
Moreover, to prevent possible H&S risks to workers from other companies, EDPR provides a risk guide for the facility to all
contractors before starting their work on the facility. In addition, the Company requires that the contractors participate in
drills that are carried out at the facilities, so that everyone knows how to act in the event of an emergency. EDPR also has
established, through the HSEMS’s Safety Alerts Management technical instruction, the communication to contractors of any
safety alert that may be applicable to the facility or the contractor.
GRI 403-9
–
Work-related injuries
Note: The information reported in the tables below does not include data related to EDPR UK from July 2019 to March 2020.
LOST WORKDAYS DUE TO
WORK-RELATED INJURIES (#)
2020
2019
EMPLOYEES
CONTRACTORS
TOTAL
EMPLOYEES
CONTRACTORS
TOTAL
LOST WORKDAYS DUE TO
WORK-RELATED INJURIES
Europe
0
199
199
0
152
152
South America
0
287
287
0
2
2
North America
84
297
381
146
71
217
Total
84
783
867
146
225
371
WORKED HOURS (#)
2020
2019
EMPLOYEES
CONTRACTORS
TOTAL
EMPLOYEES
CONTRACTORS
TOTAL
WORKED HOURS
Europe
1,495,066
1,789,806
3,284,872
1,359,030
2,165,326
3,524,356
South America
178,608
2,559,350
2,737,958
128,552
244,225
372,777
North America
1,494,544
5,164,448
6,658,992
1,285,576
2,884,550
4,170,126
Total
3,168,218
9,513,604
12,681,822
2,773,158
5,294,101
8,067,259
103
WORK-RELATED INJURIES (#)
2020
2019
EMPLOYEES
CONTRACTORS
TOTAL
EMPLOYEES
CONTRACTORS
TOTAL
Fatal work-related injuries
0
0
0
0
0
0
Europe
0
0
0
0
0
0
South America
0
0
0
0
0
0
North America
0
0
0
0
0
0
High-consequence work-related
injuries
1
0
0
0
0
0
0
Europe
0
0
0
0
0
0
South America
0
0
0
0
0
0
North America
0
0
0
0
0
0
Work-related injuries with lost
workdays
2
1
23
24
1
9
10
Europe
0
6
6
0
4
4
South America
0
10
10
0
1
1
North America
1
7
8
1
4
5
Total work-related injuries that
result in fatalities and lost
workdays
1
23
24
1
9
10
Europe
0
6
6
0
4
4
South America
0
10
10
0
1
1
North America
1
7
8
1
4
5
Recordable work-related
injuries without lost workday
s
3
5
22
27
9
19
28
Europe
0
8
8
0
5
5
South America
0
3
3
0
0
0
North America
5
11
16
9
14
23
TOTAL RECORDABLE
WORK-RELATED INJURIES
4
6
45
51
10
28
38
Europe
0
14
14
0
9
9
South America
0
13
13
0
1
1
North America
6
18
24
10
18
28
1
Excludes fatalities. According to GRI, refers to work-related injuries that result in an injury from which the worker cannot, does not, or is not expected to
recover fully to pre-injury health status within 6 months. Currently, EDPR's best approach to determine the recovery time of an injury is to assume it is
the same as the lost workdays.
2
Excludes high-consequence injuries.
3
Includes injuries that result in restricted work or transfer to another job, medical treatment beyond first aid, or loss of consciousness; or significant injury
or ill health diagnosed by a physician or other licensed healthcare professional.
4
Includes work-related injuries that arise from exposure to hazards at work and that occur at the workplace, travelling for work and working from home.
Corresponds to the sum of work-related injuries without absence, with absence and fatal. Commuting incidents are not included (there was 1 commuting
accident in 2020 related to an EDPR employee that did not result in lost days).
Note 1: Recordable work-related injuries without lost workdays includes minor first aid injuries. The number of lost days is calculated as the number of
calendar days starting the day after the accident.
Note 2: The employee impacted by the accident with absence is male. EDPR does not register H&S indicators by gender for contractors. notwithstanding
this, based on EDPR experience, the majority of the contractors working on EDPR sites are men.
104
ANNUAL REPORT EDPR 2020
FREQUENCY RATE OF
WORK-RELATED INJURIES (x)
2020
2019
EMPLOYEES
CONTRACTORS
TOTAL
EMPLOYEES
CONTRACTORS
TOTAL
Rate of fatal work-related
injuries
0.0
0.0
0.0
0.0
0.0
0.0
Europe
0.0
0.0
0.0
0.0
0.0
0.0
South America
0.0
0.0
0.0
0.0
0.0
0.0
North America
0.0
0.0
0.0
0.0
0.0
0.0
Rate of high-consequence
work-related injuries
1
0.0
0.0
0.0
0.0
0.0
0.0
Europe
0.0
0.0
0.0
0.0
0.0
0.0
South America
0.0
0.0
0.0
0.0
0.0
0.0
North America
0.0
0.0
0.0
0.0
0.0
0.0
Rate of work-related injuries
with lost workdays
2
0.3
2.4
1.9
0.4
1.7
1.2
Europe
0.0
3.4
1.8
0.0
1.8
1.1
South America
0.0
3.9
3.7
0.0
4.1
2.7
North America
0.7
1.4
1.2
0.8
1.4
1.2
Rate of work-related injuries
that result in fatalities and
lost workdays
0.3
2.4
1.9
0.4
1.7
1.2
Europe
0.0
3.4
1.8
0.0
1.8
1.1
South America
0.0
3.9
3.7
0.0
4.1
2.7
North America
0.7
1.4
1.2
0.8
1.4
1.2
Rate of recordable work-
related injuries without lost
workdays
3
1.6
2.3
2.1
3.2
3.6
3.5
Europe
0.0
4.5
2.4
0.0
2.3
1.4
South America
0.0
1.2
1.1
0.0
0.0
0.0
North America
3.3
2.1
2.4
7.0
4.9
5.5
RATE OF TOTAL
RECORDABLE WORK-
RELATED INJURIES
4
1.9
4.7
4.0
3.6
5.3
4.7
Europe
0.0
7.8
4.3
0.0
4.2
2.6
South America
0.0
5.1
4.7
0.0
4.1
2.7
North America
4.0
3.5
3.6
7.8
6.2
6.7
SEVERITY RATE OF
WORK-RELATED INJURIES (x)
2020
2019
EMPLOYEES
CONTRACTORS
TOTAL
EMPLOYEES
CONTRACTORS
TOTAL
RATE OF LOST WORKDAYS
DUE TO WORK-RELATED
INJURIES
Europe
0
111
61
0
70
43
South America
0
112
105
0
8
5
North America
56
58
57
114
25
52
Total
27
82
68
53
43
46
In 2020, EDPR registered 24 work-related accidents of employees and contractors that resulted in lost workdays, comparing
to 10 accidents in 2019.
This difference is mainly due to the 57% increase in worked hours, following the Company’s
Business Plan and ambitious goals of growth in renewable energy installed capacity. EDPR built 1,580 MW during 2020,
105
comparing to 888 MW in the previous year. The injury and the lost work day rate were 1.9 work accidents per million hours
worked and 68 workdays lost due to occupational accidents per million hours worked, respectively.
Following the reference provided by the international standards ISO 14001:2015 and ISO 45001:2018, EDPR merged the
Environmental Management System with the H&S Management Systems for a more global and efficient approach,
simplifying processes and managing the potential risks of its activity. In 2020, the new Health, Safety and Environment
Management System (HSEMS), where synergies play a fundamental role, was implemented and jointly certified by an
independent certifying organisation. The implementation of this integrated system allows for better management and
prevention of future accidents, with the objective of zero accidents overall. The commitment to H&S is further supported
through the ISO 45001 certification. By the end of 2020, this certification covers 100%
2
of EDPR’s installed capacity.
GRI 403-10
–
Work-related ill-health
EDPR has no knowledge of any cases of occupational diseases in the company. EDPR is working to systematise the
registration of this type of diseases, if detected.
Absenteeism
In the table below, the hours and rate of absenteeism in 2020 and 2019 are disclosed by country.
ABSENTEEISM BY COUNTRY
2020
2019
HOURS (#)
RATE (%)
HOURS (#)
RATE (%)
EUROPE
Spain
8,566
0.8%
7,050
0.8%
Portugal
3,681
2.3%
1,675
1.2%
France & Belgium
933
0.7%
768
0.5%
Italy
290
0.4%
1,502
2.4%
Poland
1,591
1.9%
1,089
1.7%
Romania
808
1.2%
1,496
2.5%
SOUTH AMERICA
Brazil
247
0.2%
119
0.1%
Colombia
168
0.7%
-
-
NORTH AMERICA
North America
672
0.04%
1,168
0.1%
Note 1: EDPR defines absenteeism as total of non-worked hours in workable periods. including absence hours due to accidents, absence hours due to
diseases and absence hours due to other not justified motives.
Note 2: Absenteeism for North America considers only lost worked hours caused by accidents.
GRI EU17 - Days worked by contractor and subcontractor employees involved in
construction, operation and maintenance activities
Contractors involved in construction, operation and maintenance activities worked an average of 1,189,201 days during
2020, which represents an increase of 80% when compared to the previous year.
Note: Does not include information related to EDPR UK from January to March.
GRI EU25 - Number of injuries and fatalities to the public involving company assets,
including legal judgments, settlements and pending legal cases of diseases
EDPR has no knowledge of any legal judgments, settlements and pending legal cases of diseases in 2020, neither in 2019.
Note: for the information reported in this indicator, EDPR considers passive contingencies associated with litigation qualified as probable in 2020
recorded in the contingencies reporting system.
2
Calculation based on 2019YE installed capacity. EDPR certifies the facilities the year after the COD (commercial operating date). Thus, the facilities
that have entered into operation in 2020 will be certified in 2021.
106
ANNUAL REPORT EDPR 2020
4.5. People management
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Human Capital of
the chapter Execution. Moreover, please find other people management related topics at the end of this section.
Note:
The consolidation perimeter available in Annex I of the Consolidated Financial Statements includes the companies of the acquisition transaction
reported at the end
of December 2020. The tables presented do not include 45 employees of the companies whose shares were acquired, since their
integration is currently under analysis.
GRI 102-8
–
Information on employees and other workers
In the table below, the number of full-time / part-time employees in 2020 is disclosed by age group, gender and professional
category.
FULL-TIME/PART TIME EMPLOYEES (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
FULL-TIME
Directors
0
2
45
123
7
54
231
Managers
3
5
37
105
5
14
169
Specialists
115
166
199
486
29
72
1,067
Technicians
6
78
34
90
17
10
235
Total
124
251
315
804
58
150
1,702
PART-TIME
Directors
0
0
1
0
2
0
3
Managers
0
0
2
0
0
0
2
Specialists
0
0
21
1
3
0
25
Technicians
0
0
3
0
0
0
3
Total
0
0
27
1
5
0
33
GRAND TOTAL
124
251
342
805
63
150
1,735
Note: The number of part-time employees includes employees with reduced working day due to maternity/paternity (91% of the part-time employees).
In the table below, the number of full-time / part-time employees in 2019 is disclosed by age group, gender and professional
category.
FULL-TIME/PART TIME EMPLOYEES (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
FULL-TIME
Directors
0
1
43
118
8
42
212
Managers
4
5
30
95
3
14
151
Specialists
96
152
178
443
24
65
958
Technicians
5
60
34
84
18
9
210
Total
105
218
285
740
53
130
1,531
PART-TIME
Directors
0
0
0
0
2
0
2
Managers
0
0
1
0
0
0
1
Specialists
0
0
23
2
3
0
28
Technicians
0
0
4
0
0
0
4
Total
0
0
28
2
5
0
35
GRAND TOTAL
105
218
313
742
58
130
1,566
107
EDPR fosters quality employment with c.99% of permanent contracts throughout the year (based on the proportion of
permanent and temporary contracts at the end of each month). Temporary employees do not represent more than 1% along
the year, and therefore EDPR does not report the average contracts.
In the table below, the number of permanent / temporary employees in 2020 is disclosed by age group, gender and
professional category.
PERMANENT/ TEMPORARY EMPLOYEES (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
PERMANENT
Directors
0
2
46
123
9
54
234
Managers
3
5
39
105
5
14
171
Specialists
113
164
220
484
32
71
1,084
Technicians
6
77
36
90
17
10
236
Total
122
248
341
802
63
149
1,725
TEMPORARY
Directors
0
0
0
0
0
0
0
Managers
0
0
0
0
0
0
0
Specialists
2
2
0
3
0
1
8
Technicians
0
1
1
0
0
0
2
Total
2
3
1
3
0
1
10
GRAND TOTAL
124
251
342
805
63
150
1,735
Note 1: EDPR keeps a constant number of employees throughout the year that makes the difference between the final number of employees and the
average not significant (6%).
Note 2: All temporary employees are located in Europe.
In the table below, the number of permanent / temporary employees in 2019 is disclosed by age group, gender and
professional category.
PERMANENT/ TEMPORARY EMPLOYEES (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
PERMANENT
Directors
0
1
43
118
10
42
214
Managers
4
5
31
95
3
14
152
Specialists
92
145
201
441
27
64
970
Technicians
5
60
38
84
18
9
214
Total
101
211
313
738
58
129
1,550
TEMPORARY
Directors
0
0
0
0
0
0
0
Managers
0
0
0
0
0
0
0
Specialists
4
7
0
4
0
1
16
Technicians
0
0
0
0
0
0
0
Total
4
7
0
4
0
1
16
GRAND TOTAL
105
218
313
742
58
130
1,566
Note 1: EDPR keeps a constant number of employees throughout the year that makes the difference between the final number of employees and the
average not significant (5%).
Note 2: 15 temporary employees are located in Europe and 1 in brazil.
108
ANNUAL REPORT EDPR 2020
The average number of contractors during 2020 was 919 in Europe, 822 in South America and 2,614 in North America.
In the table below, the number of employees in 2020 is disclosed by age group, gender, country and professional category.
EMPLOYEES BY COUNTRY (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
SPAIN
Directors
0
0
23
37
4
23
87
Managers
2
2
15
36
0
4
59
Specialists
40
59
87
155
14
23
378
Technicians
2
0
7
1
2
1
13
Total
44
61
132
229
20
51
537
PORTUGAL
Directors
0
0
1
5
0
6
12
Managers
0
0
0
5
0
2
7
Specialists
4
4
10
46
1
12
77
Technicians
0
0
1
0
0
0
1
Total
4
4
12
56
1
20
97
REST OF EUROPE
Directors
0
1
4
21
0
4
30
Managers
0
0
5
11
2
1
19
Specialists
20
23
41
86
0
9
179
Technicians
1
1
2
0
0
0
4
Total
21
25
52
118
2
14
232
SOUTH AMERICA
Directors
0
0
1
7
0
0
8
Managers
0
0
3
7
1
0
11
Specialists
8
12
18
37
1
2
78
Technicians
0
0
0
0
0
0
0
Total
8
12
22
51
2
2
97
USA
Directors
0
1
17
51
5
21
95
Managers
1
3
16
44
2
7
73
Specialists
43
67
64
156
16
26
372
Technicians
3
77
25
89
15
9
218
Total
47
148
122
340
38
63
758
REST OF NORTH AMERICA
Directors
0
0
0
2
0
0
2
Managers
0
0
0
2
0
0
2
Specialists
0
1
0
7
0
0
8
Technicians
0
0
2
0
0
0
2
Total
0
1
2
11
0
0
14
GRAND TOTAL
124
251
342
805
63
150
1,735
109
In the table below, the number of employees in 2019 is disclosed by age group, gender, country and professional category.
EMPLOYEES BY COUNTRY (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
SPAIN
Directors
0
0
25
34
4
22
85
Managers
3
2
6
38
0
3
52
Specialists
35
50
87
133
11
22
338
Technicians
1
0
9
4
3
1
18
Total
39
52
127
209
18
48
493
PORTUGAL
Directors
0
0
1
5
0
5
11
Managers
0
0
0
4
0
2
6
Specialists
1
2
7
43
1
11
65
Technicians
0
0
1
1
0
1
3
Total
1
2
9
53
1
19
85
REST OF EUROPE
Directors
0
0
4
23
0
4
31
Managers
0
1
9
13
2
2
27
Specialists
19
32
44
93
0
8
196
Technicians
0
0
4
1
0
0
5
Total
19
33
61
130
2
14
259
SOUTH AMERICA
Directors
0
0
0
7
0
0
7
Managers
0
0
2
4
0
0
6
Specialists
5
11
13
20
0
1
50
Technicians
0
0
0
0
0
0
0
Total
5
11
15
31
0
1
63
USA
Directors
0
1
12
47
6
11
77
Managers
1
2
14
33
1
7
58
Specialists
36
55
50
149
15
23
328
Technicians
4
60
22
78
15
7
186
Total
41
118
98
307
37
48
649
REST OF NORTH AMERICA
Directors
0
0
0
2
0
0
2
Managers
0
0
0
3
0
0
3
Specialists
0
2
0
5
0
0
7
Technicians
0
0
2
0
0
0
2
Total
0
2
2
10
0
0
14
REST OF THE WORLD
Directors
0
0
1
0
0
0
1
Managers
0
0
0
0
0
0
0
Specialists
0
0
0
2
0
0
2
Technicians
0
0
0
0
0
0
0
Total
0
0
1
2
0
0
3
GRAND TOTAL
105
218
313
742
58
130
1,566
110
ANNUAL REPORT EDPR 2020
GRI 102-41 - Collective bargaining agreements
According to its Code of Ethics, EDPR undertakes to respect freedom of trade union association and recognise the right to
collective bargaining.
At EDPR, from 1,735 employees, 20% were covered by collective bargaining agreements in 2020. Collective bargaining
agreements include different topics such as career development, mobility, salaries, health & safety etc. and apply to all
employees working under an employment relationship with some companies of EDPR group, regardless of the type of
contract, the professional group into which they are classified, their occupation or job. However, matters relating to the
corporate organisation itself, the laws of each country or even usage and custom in each country result in certain groups
being expressly excluded from the scope of collective bargaining agreements.
The collective bargaining agreements that are applied at EDPR are usually negotiated at state level or regional level, and
EDPR
may be just one of the players among other leading sectorial companies in the negotiation with employees’
representatives, and in some cases, governmental representatives. In Portugal and Brazil, EDP negotiates its own
agreements with employees, and those apply to all employee working for companies of the group, including EDPR.
During the last years, EDPR has performed different benchmark analysis of the benefits stated at the different collective
bargaining agreements that apply to our employees, comparing them against the benefits offered by the Company and, in
general terms, the Company offers a more competitive benefits package compared to what is stated in the collective
bargaining agreement.
EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS
UN
2020
2019
UN
2020
2019
EUROPE
Spain
#
49
45
%
9%
9%
Portugal
#
93
85
%
96%
100%
Rest of Europe
#
124
112
%
53%
43%
Total
#
266
242
%
31%
29%
SOUTH AMERICA
Brazil
#
82
63
%
99%
100%
Colombia
#
0
-
%
0%
-
Total
#
82
63
%
85%
100%
NORTH AMERICA
US
#
0
0
%
0%
0%
Rest of North America
#
0
0
%
0%
0%
Total
#
0
0
%
0%
0%
GRAND TOTAL
#
348
305
%
20%
19%
111
GRI 401-1 - New employee hires and employee turnover
Throughout the year, EDPR hired 441 employees.
NEW HIRES (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
Europe
32
47
31
74
0
7
191
South America
4
3
7
20
2
1
37
North America
19
75
29
73
2
15
213
Rest of the world
0
0
0
0
0
0
0
Total
55
125
67
167
4
23
441
In 2019, EDPR hired 368 employees.
NEW HIRES (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
Europe
33
44
30
63
1
3
174
South America
3
4
3
5
0
0
15
North America
19
51
15
74
6
11
176
Rest of the world
0
0
1
2
0
0
3
Total
55
99
49
144
7
14
368
During 2020, 149 employees left the Company, resulting in a turnover ratio of 9%.
TURNOVER (%)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
Europe
7%
8%
7%
4%
4%
0%
5%
South America
0%
8%
9%
4%
0%
0%
5%
North America
13%
17%
9%
14%
5%
11%
13%
Total
9%
14%
8%
8%
5%
5%
9%
Note 1: 2020 departures exclude transfers to OW, the offshore JV with ENGIE.
Note 2: Turnover calculated as departures / 2020YE headcount.
In 2019, 190 employees left the Company, resulting in a turnover ratio of 12%.
TURNOVER (%)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
Europe
22%
5%
11%
8%
0%
4%
9%
Brazil
20%
0%
7%
3%
0%
100%
6%
North America
20%
23%
15%
15%
14%
17%
17%
Total
21%
15%
12%
11%
9%
9%
12%
Note: Turnover calculated as departures / 2019YE headcount.
112
ANNUAL REPORT EDPR 2020
Of the 149 departures registered in 2020, 15% were dismissals.
DISMISSALS (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
Directors
0
1
0
2
0
0
3
Managers
0
0
0
1
0
0
1
Specialists
0
1
5
4
0
1
11
Technicians
1
2
1
3
0
0
7
Total
1
4
6
10
0
1
22
Note: 2020 departures exclude transfers to OW, the offshore JV with ENGIE.
Of the 190 departures registered in 2019, 11% were dismissals.
DISMISSALS (#)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
Directors
0
0
0
2
0
0
2
Managers
0
0
1
1
0
0
2
Specialists
1
0
6
7
0
0
14
Technicians
0
7
1
0
1
2
11
Total
1
7
8
10
1
2
29
GRI 401-2 - Benefits provided to full-time employees that are not provided to
temporary or part-time employees
As a responsible employer, a quality employment that can be balanced with personal life is a priority for the Company. The
package of benefits provided to full-time employees does not differ from that offered to part-time employees. This benefits
package, depending on the country, includes medical insurance, life insurance, pension plan and conciliation measures.
GRI 402-1- Minimum notice periods regarding operational changes
Per country case law, EDPR may have a minimum period which it must comply with for giving formal notice of
organisational changes at the companies in the Group with an impact on employees. However, it is customary to
communicate significant events to the affected groups in advance.
As an employer in the United States, EDPR complies with the Worker Adjustment and Retraining Notification (WARN) Act
Guide to Advance Notice of Closings and Layoffs.
113
GRI 404-1
–
Average & total hours of training per year per employee
In 2020, EDPR
invested €1.
4 million in training, The number of training hours decreased -6% vs 2019, -23% for women
employees and +0.4% for male employees.
AVERAGE TRAINING HOURS (#)
2020
TOTAL
2019
TOTAL
FEMALE
MALE
FEMALE
MALE
Directors
27
19
21
29
26
27
Managers
24
35
32
49
48
48
Specialists
25
29
27
35
33
34
Technicians
15
67
53
27
56
47
Total
24
33
30
34
37
36
Note: Average training hours are calculated as total training hours / YE average headcount.
TOTAL TRAINING HOURS (#)
2020
TOTAL
2019
TOTAL
FEMALE
MALE
FEMALE
MALE
EUROPE
Directors
1,290
2,603
3,893
1,315
3,271
4,586
Managers
520
2,508
3,027
1,285
3,510
4,794
Specialists
6,127
13,775
19,903
7,115
14,082
21,198
Technicians
272
27
299
946
392
1,337
Total
8,209
18,913
27,122
10,661
21,255
31,915
SOUTH AMERICA
Directors
23
176
200
0
162
162
Managers
94
291
385
90
224
314
Specialists
871
1,647
2,517
526
1,227
1,753
Technicians
-
-
-
-
-
-
Total
988
2,115
3,102
616
1,613
2,229
NORTH AMERICA
Directors
174
515
689
189
631
819
Managers
375
1,237
1,612
391
1,250
1,641
Specialists
1,645
4,091
5,736
2,974
5,000
7,974
Technicians
612
10,633
11,245
737
7,593
8,330
Total
2,806
16,476
19,282
4,291
14,474
18,765
GRAND TOTAL
12,003
37,503
49,505
15,567
37,342
52,909
GRI 404-2 - Programs for upgrading employee skills and transition assistance
programs
People are EDPR’s most important asset, and that is why the Company invests in intergenerational knowledge sharing and
in the ongoing training of its team. In this sense, EDPR is committed to the development of its employees, offering them an
attractive professional career and aligning their capabilities and skills with the current and future needs of the company. The
growth and development of the Company's business leads EDPR to invest in the employees by discovering, improving and
emphasising the potential of each mainly through internal mobility, training and development actions.
114
ANNUAL REPORT EDPR 2020
Mobility
EDPR considers both functional and geographical mobility as a tool that contributes to the organisational development by
stimulating employees’ motivation, skills, productivity, personal fulfilment and fostering the share of best practices. The
mobility processes within EDPR aim to respond to the different challenges and needs of the Company, considering the
characteristics of the different geographies. In 2020, despite the global pandemic, there were 85 mobility processes (2 more
than in 2019), 62 of which functional, 12 geographical and 11 both functional and geographical mobility processes.
Training
EDPR offers job-specific ongoing training opportunities to contribute to the improvement of knowledge and skills, as well as
specific development programs aligned with the Company's strategy. The 360 potential appraisal process is created for all
employees with the goal of defining each person’s training needs along with their manager, which is then used to define a
customised Training Plan. The annual Training Plan is based on a catalogue of programs that is constantly evolving and is
aligned with the Company’s challenges and new markets. The key aspect about the courses offered is that they usually
contain subjects to promote the development of skills needed to ensure the sustainability of EDPR’s business. Moreover,
the networking and the share of best practices foster innovation and improve performance
During 2020, EDPR delivered a total of 49,505 training hours throughout 2,627 sessions that included 28,588 participants.
This translates into an average of 30 hours of training p
er employee and results in 96% of EDPR’s team receiving training.
The challenges that the COVID-19 pandemic brought to the training activities were successfully overcome by redesigning
and adapting training contents and sessions to virtual, e-learning or remote formats. This effort allowed to maintain the main
training ratios aligned with previous years, increasing the training courses delivered in e-learning, live webinars or other non-
synchronous including game-based training (a total of 76% of training hours or 93% of the attendances were delivered in
online methodology). Therefore, EDPR highlights Digitalisation as one of the main training drivers that accelerated during
2020 as a result of the methodologies and by contents increasingly delivered on Collaborative Tools (Microsoft 365 suite),
Agile methodologies, Data Analyse tools, Cybersecurity, use of Drones, SMART business or Artificial Intelligence.
Development
In order to support the company’s growth, aligning current and future organisational demands with employees’ capabilities
as well as to enhance their professional development, EDPR has designed development programs for middle management,
providing them with proper tools to take on new responsibilities as well as to adapt to the new challenges leading teams
remotely. In 2020, one of the most important development programs was the Lead Now Program, which aims to support
middle managers in the role they are assuming as team leaders. Participants have the possibility to self-assess their
management style, go deeper into the skills needed and get to know the role they are performing in the different HR
processes of EDPR. Through short online sessions, 3 editions took place in 2020 and reached 42 employees. Despite the
pandemic, EDPR worked to adapt the development sessions to a new online format and maintained the internal promotions.
Knowledge management
EDPR is aware of the importance of Knowledge as a valuable asset within the business and in employees’ development.
Thus, EDPR is boosting LINK as a knowledge platform increasing the number of areas, domains and curated documents
with valuable content captured and shared across the organisation, to help its employees learn from the past to face future
challenges and move the company forward. During 2020, EDPR launched
40fiveminutes
, an online initiative to easily share
main business insights in a friendly and informal way to those employees who sign up to the sessions. Becoming a Learning
Organisation implies a strong knowledge sharing mind-set, so EDPR strives to improve the use of knowledge by regularly
distributing customised relevant documents or events, working to overcome additional challenges brought by COVID-19.
115
GRI 404-3 - Percentage of employees receiving regular performance and career
development reviews
EDPR defines two assessment processes for its employees. The annual performance assessment, which covers all
employees entitled to variable remuneration, and the potential assessment.
All EDPR
’s employees, regardless of their professional category, are evaluated every two years to determine their
development potential by providing the most suitable training. EDPR creates tailored development plan to address specific
needs.
Moreover, EDPR offers the possibility to all employees to define an Individual Development Plan. This plan is a very
effective tool that enable the Company to structure training actions for the employee aimed at widening their abilities and
expertise since it requires a reflection upon the results of their skills assessment and identify the individual's strong points
and improvement areas, taking into consideration the employee's development level, as well as the teamwork and
organisational strategy.
The potential assessment process is independent from performance appraisal and is based on a 360 degree evaluation
model which considers feedback from oneself, peers, subordinates and the manager.
GRI 405-1 - Diversity of governance bodies and employees
In the table below, the proportion of members of the Board of Directors in 2020 is disclosed by age group and gender.
BOARD OF DIRECTORS (%)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
Female
0%
7%
7%
14%
Male
0%
29%
57%
86%
Total
0%
36%
64%
100%
In the table below, the proportion of members of the Board of Directors in 2019 is disclosed by age group and gender.
BOARD OF DIRECTORS (%)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
Female
0%
13%
7%
20%
Male
0%
27%
53%
80%
Total
0%
40%
60%
100%
Following the best Corporate Governance practices, EDPR has analysed and discussed about the possible criteria
applicable in the selection of the new members of its Governing Bodies. As a conclusion, the Nominations and
Remunerations Committee and the Board of Directors resolved at their meetings held on November 2
nd
, 2016, and
December 14
th
, 2016 respectively, to take into account among others the following: the education, experience in the energy
sector, integrity and independence, having a proven expertise, and the diversity that such candidate may provide to the
related body. Likewise, on the Shareholder’s Meeting held on March 20
th
, 2020, the Board of Directors made public its
particular interest in supporting the gender diversity in accordance with the
Lei nº 62/2017 of August 1
st
, and specifically
committed at the seventh
resolution of the agenda, to promote that at the first Elective Shareholders’ Meeting to be held
after termination of the current term of office of the Board Members, the percentage of Board Members corresponding to the
less represented gender is increased to a 33.3%.
Based on the above criteria, after the previous advice of the Nominations and Remunerations Committee, the Board of
Directors would submit a proposal to the General Shareholders’ Meeting (including for sake of clarity, the
curriculum vitae
of
the candidates, which will be publicly disclosed with the other supporting documents of the meeting). The appointment
proposals should be approved by majority.
116
ANNUAL REPORT EDPR 2020
In the table below, the proportion of employees in 2020 is disclosed by age group, gender and professional category.
EMPLOYEES (%)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
Directors
0%
0%
3%
7%
1%
3%
13%
Managers
0%
0%
2%
6%
0%
1%
10%
Specialists
7%
10%
13%
28%
2%
4%
63%
Technicians
0%
4%
2%
5%
1%
1%
14%
Total
7%
14%
20%
46%
4%
9%
100%
In the table below, the proportion of employees in 2019 is disclosed by age group, gender and professional category.
EMPLOYEES (%)
UNDER 30
YEARS OLD
BETWEEN 30 AND 50
YEARS OLD
OVER 50
YEARS OLD
TOTAL
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
Directors
0%
0%
3%
8%
1%
3%
14%
Managers
0%
0%
2%
6%
0%
1%
10%
Specialists
6%
10%
13%
28%
2%
4%
63%
Technicians
0%
4%
2%
5%
1%
1%
14%
Total
7%
14%
20%
47%
4%
8%
100%
Note: EDPR does not register the number of employees with disabilities.
GRI 405-2 - Ratio of basic salary and remuneration of women to men
Note 1: 2020 figures do not include expats, 2020 mobilities, long term absences, new hires from December and Executive Committee members, totalling
34 employees. 2019 figures do not include expats, employees from new geographies, new hires from December and November except for Spain and
Executive Committee members, totalling 62 employees.
Note 2: The calculations are based on the December headcount. The base salaries of the new hires are annualised but the rest of the monetary and
non-monetary benefits are not annualised, which may cause deviations. For 2019 figures, the base salary for the employees promoted during that year
are annualised based on the new salary.
Note 3: The wage gap is calculated female/male remuneration based on GRI methodology. The cal
culation considers the employee’s working hours
.
REMUNERATION (€)
2020
2019
∆% YoY
FEMALE
MALE
FEMALE
MALE
FEMALE
MALE
UNDER 30 YEARS OLD
Directors
-
108,598
-
169,193
-
(36%)
Managers
76,782
85,282
59,563
77,790
+29%
+10%
Specialists
51,842
56,754
54,037
53,435
(4%)
+6%
Technicians
39,956
64,702
45,556
63,772
(12%)
+1%
BETWEEN 30 AND 50 YEARS OLD
Directors
169,553
182,250
164,806
177,395
+3%
+3%
Managers
91,152
92,833
93,922
93,202
(3%)
(0.4%)
Specialists
65,743
73,118
64,869
74,695
+1%
(2%)
Technicians
56,744
72,482
53,101
65,719
+7%
+10%
OVER 50 YEARS OLD
Directors
172,520
191,570
205,682
195,296
(16%)
(2%)
Managers
103,016
109,042
94,820
110,040
+9%
(1%)
Specialists
87,004
96,545
94,429
96,597
(8%)
(0%)
Technicians
71,538
77,410
68,640
70,515
+4%
+10%
117
WAGE GAP -
AVERAGE REMUNERATION (€)
2020
F/M
2019
F/M
FEMALE
MALE
FEMALE
MALE
EUROPE
Directors
120,462
133,936
90%
123,810
138,167
90%
Managers
68,215
72,104
95%
68,123
70,330
97%
Specialists
48,720
52,813
92%
50,744
52,809
96%
Technicians
32,439
39,667
82%
35,214
34,620
102%
SOUTH AMERICA
Directors
131,173
100,229
131%
-
117,008
-
Managers
45,894
46,112
100%
56,023
59,214
95%
Specialists
31,403
34,846
90%
40,084
40,305
99%
Technicians
-
-
-
-
-
-
NORTH AMERICA
Directors
245,121
256,996
95%
262,674
257,669
102%
Managers
129,728
126,619
102%
122,487
133,687
92%
Specialists
96,219
110,500
87%
94,628
107,951
88%
Technicians
67,116
69,712
96%
65,362
67,029
98%
WAGE GAP -
AVERAGE BASE SALARY (€)
2020
F/M
2019
F/M
FEMALE
MALE
FEMALE
MALE
EUROPE
Directors
83,698
94,836
88%
88,592
99,047
89%
Managers
51,530
55,581
93%
54,335
55,876
97%
Specialists
40,383
43,206
93%
42,727
42,929
100%
Technicians
27,087
31,956
85%
29,040
28,480
102%
SOUTH AMERICA
Directors
110,160
71,179
155%
-
90,571
-
Managers
36,577
34,830
105%
42,872
43,038
100%
Specialists
23,492
25,638
92%
30,149
28,347
106%
Technicians
-
-
-
-
-
-
NORTH AMERICA
Directors
168,591
173,662
97%
179,670
176,772
102%
Managers
91,993
88,426
104%
90,904
94,550
96%
Specialists
76,523
81,263
94%
75,655
81,931
92%
Technicians
48,806
46,549
105%
48,528
44,940
108%
GRI 102-38
–
Annual total compensation ratio
The ratio presented below represents of the annual total compensation for the organisation’s highest
-paid individual in each
country of significant operations to the median annual total compensation for all employees.
ANNUAL TOTAL COMPENSATION RATIO (x)
2020
2019
∆% YoY
Spain
5.6
5.3
6%
Portugal
4.2
4.9
-13%
US
6.1
6.3
-4%
Note 1: João Manso Neto and Rui Teixeira did not receive any remuneration from EDPR. EDPR and EDP signed an executive management services
agreement according to which EDPR paid to EDP a fee for the services rendered by these officers.
Note 2: X as unit means times.
118
ANNUAL REPORT EDPR 2020
GRI EU15 - Percentage of employees eligible to retire in the next 5 and 10 years
broken down by job category and by region
EMPLOYEES ELIGIBLE TO RETIRE (%)
2020
2019
IN 10 YEARS
IN 5 YEARS
IN 10 YEARS
IN 5 YEARS
BY EMPLOYMENT CATEGORY
Directors
10%
6%
10%
7%
Managers
2%
1%
0%
0%
Specialists
5%
3%
4%
2%
Technicians
6%
5%
7%
4%
BY COUNTRY
Europe
Spain
4%
2%
4%
2%
Portugal
20%
16%
20%
15%
Rest of Europe
3%
2%
2%
1%
Total
6%
4%
5%
3%
South America
Brazil
0%
0%
0%
0%
Colombia
0%
0%
0%
0%
Total
0%
0%
0%
0%
North America
US
6%
4%
6%
3%
Rest of North America
0%
0%
0%
0%
Total
6%
4%
6%
3%
GRAND TOTAL
5%
4%
5%
3%
Note: The employees eligible to retire in the next 5 years is with 60 years reference and in the next 10 years with 57 years reference.
Other people management related topics:
Communication with employees
EDPR
’s global presence with employees from different nationalities and generations requires the Company to listen and
provide feedback on the different ambitions and expectations. Thus, EDPR launches a Climate Survey every two years,
which allows the Company to better understand and act in accordance with the employees’ opinion. In addition,
EDPR
works to keep its employees well informed and therefore continues to improve the internal communications channels, which
also helps to keep employees motivated and committed to the Company’s strategy.
In 2020, remote working during the COVID-19 pandemic resulted in internal communications to play a critical role. As many
organisations across the world, EDPR had to introduce new practices to ensure effective cross-departmental collaboration,
fluid communications and employee engagement. EDPR implemented several initiatives in this regard, such as the
continuous communication with employees regarding updates of the pandemic through multiple channels, a several Home
Office campaigns encouraging employees to follow a series of tips to help them successfully work from home.
EDPR has an Internal Communication Committee (ICC), which seeks to improve the way EDPR
’s different channels are
used and perceived across the organization, while enhancing intra-platform and bidirectional communication and alignment
with the
Company’s vision and objectives. It also facilitates top
-
down communication of the company’s strategy.
EDPR and EDP Group have strategically invested in this area with innovative communication channels that have
consistently been recognised internationally for their mix of dynamism and creativity.
119
These are EDPR
’s internal communication channels that keep emplo
yees informed and connected every day:
•
Intranet:
The platform takes online interaction among employees to a new level, by including social media-style
features and advanced customisation options. It’s a place to share information, work together, and learn
about the
projects and news from EDPR and EDP.
•
Workplace:
EDPR introduced this new internal communication tool in 2020. The social network aims to revolutionize
internal communication by customizing content according to the audience, by bringing it closer to the company
hierarchy, by fostering top-down and bidirectional communication and improving teamwork. With this initiative, EDPR
reinforced its commitment with digitalization.
•
EDP On Renew magazine:
The print magazine has been a mainstay of EDP Group’s i
nternal communications since
1988. The OnRenew edition, specific to EDPR, shows the Company and its people through stories, opinion articles and
editorials.
•
EDP On TV:
The TV Channel has been broadcasting on EDPR and EDP offices and online. Includes dynamic news
reports and interviews on news and events. It is the medium that truly puts a face on projects and initiatives.
•
HR phone app:
EDPR has in place a phone app to provide employees with news, access to selection processes or
measures in a practical and simple way. This tool proves to be particularly useful to keep connected to often-travelling
and geographically dispersed employees.
•
Internal newsletters:
Monthly newsletters give a broader reach to news and info
rmation regarding the Company’s
projects, teams, successes, and strategies.
In addition to these communication channels, EDPR holds Companywide Annual Meetings that allow employees to
streamline their long-distance communication to improve their day-to-day work, share their concerns, and get to know the
business goals set by EDPR
’s top management. The Company also holds meetings and team building events; conference
calls regarding results, and a robust website that informs both internal and external stakeholders. All of these
communication efforts work to motivate employees, promote knowledge sharing and bring people together.
Employees with disabilities
In the companies in Spain where there is a legal obligation to have people with disabilities in the workforce to comply with
the LISMI due to the number of employees, EDPR has opted for the exceptionality measures provided by the Law. The
Company is able to comply with the quota that legally applies to it through contracts of goods or services with companies
that promote the hiring of disabled people and also through donations. EDPR
’s companies under this obligation are covered
with the exceptionality measures since February 2018 and for a period of three years. For the rest of EDPR countries, the
approach is the same. Recently, as part of EDPR's global strategy, a Diversity and Equality Committee has been set up with
the participation of the Executive Committee, whose objective is to integrate the commitment to this issue within the
company. One of the objectives of this Committee is focused on the group of people with disabilities as one of the most
important topics to be developed.
W
ork organisation & implementation of “right to disconnect” policies
With the aim of delivering excellent results and meeting deadlines, EDPR employees need to be flexible and highly
responsible on their daily routine. Keeping that in mind, in 2017 EDPR designed Work Smarter, a Code that includes a set
of guidelines to work efficiently by maximising the time efficiency of each daily task, mainly regarding work organisation,
email & phone and meetings. Additionally, different initiatives took place during 2017 in order to involve employees around
this different way of working. Some of the initiatives were placing inspiring sentences and clocks in the meeting rooms to
remind the employees that their time is gold. Within Work Smarter, some of the initiatives were focused on the right to
disconnect. For the moment, EDPR does not have policies regarding the right of people to disconnect from work during non-
work hours but messages of disconnection and good practice will continue to be conveyed. In 2020, due to the COVID-19
and subsequent home office regime implemented, EPDR shared several tips in its intranet on how to better work from
home, which included the separation between professional and personal life, setting a work schedule and taking breaks.
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ANNUAL REPORT EDPR 2020
Work life balance
2020 was a year of uncertainty, change and adaptation in which both physical and mental health were a priority. Now more
than ever, promoting a balance between work and personal life is crucial to be a more competitive company and to build a
fairer society based on flexibility, respect and equal opportunities. EDPR thus implements various initiatives focused mainly
on family, time and health, offering its team a wide range of benefits that strengthen the Company’s position as flexible and
family-
friendly, and fostering time efficiency of employees’ daily tasks to balance their professional and personal life whil
e
still delivering excellent results. Accordingly, EDPR’s Work Life Balance (WLB) practices have been awarded for nine years
through the Responsible Family Employer Certification (EFR
–
Empresa Familiarmente Responsable) by Spain’s Fundación
MásFamilia. In
2020, EDPR was awarded with the level of excellence in this certification, recognising the Company’s efforts
to balance professional and personal life, excellence and flexibility. To achieve this continuously, EDPR is dedicated to
constant improve the initiatives implemented in order to provide the most suitable and updated benefits to its employees.
During the year, EDPR launched the “Flex
-
Movement”, an initiative to streamline flexibility measures and to improve the
conditions necessary to make EDPR a dynamic, innovative and growth-based company. The movement included actions
such as facilitating the approval workflow of requests to work from home in exceptional circumstances, and the opportunity
to work in any EDPR office in the world up to 15 days a year. In addition, among the novelties announced, EDPR started in
February two pilot projects in Spain and Poland to implement home office a day per week. The pilot then worked as a
foundation for implementing remote work in a global scale due to the COVID-19 crisis. Later in the year, as a result of the
successful implementation of home office globally, EDPR approved a remote work strategy, which will be fully implemented
post-pandemic. The Company believes remote work is key to improve flexibility, work life balance and overall wellbeing of
its team, whilst still being productive. Therefore, employees will be able to work remotely 2 days per week, where feasible.
In addition, the Company created a wellness platform to further development a wellness culture and promote healthy habits.
The programs promoted by the platform aim to generate a culture in which employees choose to adopt healthy habits
voluntarily, sharing their experiences, forming support networks to facilitate the process and motivating each other. EDPR
also shared several health, wellbeing and home office tips in its intranet throughout the year. To raise awareness regarding
mental health specifically, EDPR launched the
Mind Your Mind
campaign in October, which promoted educational talks with
specialists, employees and other key speakers on how to approach the topic especially during the current social context.
Furthermore, EDPR has a volunteer program addressed to its employees in order to promote social responsibility, giving
them the opportunity to grow not only at work but also personally while also contributing to the society. As a result, EDPR
employees are given 4 hours a month to dedicate to volunteering initiatives. During the COVID-19 pandemic, EDPR
reinforced the volunteering activities proposed, adding initiatives that run on an online model and adding the possibility to
make donations to support the health and wellbeing of the society during this global crisis.
Equality plans
EDP Renováveis S.A. has an Equality Plan for the period 2020-2022 in accordance with the Spanish Organic Law 3/2007
which has already achieved 41%
compliance at a global level and has taken the appropriate steps to comply with local
legislation on equality as required.
Adopted measures to promote employment related to equality
EDPR incorporates the principles of Diversity and Inclusion in its values and practices as it is aware that a diverse team
helps bring together different perspectives and know-how, and represent different sources of talent. Specifically, EDPR aims
to contribute to improving the quality of life of its employees, eliminate career barriers and promote gender equality, seeking
to ensure an environment of openness in a workplace where mutual respect and equal opportunity prevail.
In 2020, EDPR created a Diversity & Inclusion Committee to promote its commitment to these crucial principles. The main
goals of the Committee are to reflect the Company’s strategy on D&I, which integrates the definition and development of
initiatives that contribute to a global action plan and local action plans, and to foster sharing knowledge and best practices.
Even so, as a responsible company, EDPR aims to actively promote these values among its team. Thus, during 2020,
EDPR launched
SHE
,
an interactive game-based learning to mitigate unconscious biases, and launched a Diversity, Equity,
and Inclusion online training session. As a recognition of its great commitment to gender equality, the Company entered the
121
Bloomberg Gender Equality Index for the first time in 2020. EDPR is therefore included in the list of 325 companies making
the largest strides in the transparency of gender-
related information and in promoting women’s equality around the world.
EDPR is dedicated to continuously fostering a culture founded on human equality and the strength in diversity, and will
continue to lead by example. The Company upholds its commitment to Diversity & Inclusion not only through words, but
through actions that truly make a positive impact on people.
Sexual harassment protocol
As stated in its Code of Ethics, EDPR commits to respect and foster due respect for employees and fulfil their right to
dignified working conditions. In particular, EDPR seeks to protect its employees and will not tolerate acts of psychological
aggression or moral coercion, such as insults, threats, isolation, invasion of privacy or professional limitation aimed at
constraining the person, affecting their dignity or creating an intimidating, hostile, degrading, humiliating or disruptive
environment. The Code of Ethics has its own regulation that defines a process and channel, open to all stakeholders, to
report any potential claim or doubt on the application of the Code. For the moment, EDPR does not have a specific sexual
harassment protocol.
Universal accessibility
Most of the offices in which EDPR has its operations are not owned by the company. Therefore, EDPR is limited in the
implementation of accessibility measures in its offices. However, in other topics in which EDPR has decision-making power,
such as the creation of its website, the company took measures to comply with the accessibility specifications that help blind
people to use it.
4.6. Corporate governance
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Organisation of
the chapter The Company. For further information on the topic please see chapter Corporate Governance.
Average remuneration of EDPR board members and officers
Board members remuneration
In 2020, the average salary for EDPR Board male members has been €56,701 (+9% vs. 2019) and €57,500 (no variation
vs. 2019) for female members.
Note 1: António Mexia, João Manso Neto, Vera Pinto and Rui Teixeira did not receive any remuneration from EDPR. EDPR and EDP signed an
Executive Management Services Agreement according to which
EDPR paid to EDP a fee for the services rendered by these Board Members.
Note 2: Miguel Ángel Prado receives both the remuneration as officer and board member from EDPR North America LPP and is not considered in this
average.
Note 3: The calculations include all board members that belonged to EDPR BoD in 2020.
Officers remuneration
In 2020, the average salary for ED
PR executive officers, all male, has been €527,724 (+23% vs. 2019 impacted by multi
-
annual remuneration), including fixed salary, variable salary, retirement savings plan, company car and health insurance.
EDPR’s executive officers are the members of the E
xecutive Committee.
Likewise, in application of the deferral policy, in 2020 an amount of 84.443€ was paid to Miguel Amaro (former Executive
CFO of the company), for the services rendered in 2016-2017.
Note 1: João Manso Neto and Rui Teixeira did not receive any remuneration from EDPR. EDPR and EDP signed an executive management services
agreement according to which EDPR paid to EDP a fee for the services rendered by these officers.
Note 2: The calculations include officers that belonged to EDPR Executive Committee in 2020 except for João Manso Neto and Rui Teixeira.
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ANNUAL REPORT EDPR 2020
4.7. Suppliers management
GRI 204-1 - Proportion of spending on local suppliers
At EDPR, there is no specific policy or in-house procedure for preferring locally based suppliers. Nevertheless, under equal
commercial terms, EDPR chooses local suppliers in order to enhance the socio-economic sustainability of the 14 countries
across Europe and the Americas where it is present.
In this way, 97% of vendor spending in 2020 was sourced from local suppliers at a country level.
Moreover, during the construction of the Company’s projects, the local community can see an influx of temporary local
construction workers and suppliers that provide a positive impact on the local economy.
Note 1: EDPR defines spending in local suppliers at a country level as purchases to suppliers in countries where EDPR is present divided by the total
invoiced volume in 2020.
GRI 308-2 - Negative environmental impacts in the supply chain and actions taken
EDPR’s procurement process is developed within the framework of the Procurement Policy, which extends to EDPR’s both
direct and indirect suppliers, and from which the most relevant aspects for EDPR regarding the supply chain’s high quality
and sustainability are established. Accordingly, EDPR has in place requirements related to Sustainability, Quality and Risk
management that have to be met by its suppliers throughout the main procurement phases: registration process, contracting
and, lastly, the monitoring and evaluation of the suppliers.
EDPR has a Corporate System of Supplier Registration in place which works as the support to search and select suppliers
by providing detailed information, validated and updated by credible sources in order to guarantee their accreditation
through financial, technical quality and sustainability criteria. This includes environmental topics such as the existence of an
environmental management system and its certification, the existence of environmental requirements in the suppliers
procurement conditions or the availability of procedures and resources to assure the prevention/minimisation of
environmental impacts.
In 2020, EDPR implemented a Supplier Qualification Process. The main goal of this process is to provide a more thorough
analysis on critical topics such as technical capabilities, health and safety, environment and ethics, and to establish highly
standardised minimum requirements to ensure that the suppliers with whom EDPR conducts business are qualified. The
qualified suppliers are included in a Suppliers Qualification List and are able to participate in the EDPR bidding and
contracting processes.
The incorporation of adequate criteria in the bidding and contracting processes of the company is essential to ensure the
management and mitigation of operational risks in the supply chain. In Europe & Brazil, EDPR has a Suppliers Sustainability
Guide in place for both construction and O&M operations, providing an overview of the sustainability requirements EDPR
expects its suppliers to meet. The guide includes H&S, environmental and ethical requirements such as compliance with
applicable regulations, policies, internal norms, procedures and systems in place. In addition, EDPR has implemented a
process that classifies suppliers according to their H&S and environmental risks. The classification serves as an input in the
selection of suppliers during the bidding phase. Based on the individual values obtained in this classification, suppliers may
be excluded from the bidding process. If the supplier wants to be re-considered or participate in new processes, an action
plan to solve the identified issues has to be presented and EDPR shall approve the action plan proposal.
Adequate compliance by all EDPR suppliers with applicable H&S and environmental requirement is essential to guarantee
the correct performance of the contracted services and works. Aiming to ensure that suppliers comply with these
requirements, the Company has established a disciplinary and sanctioning regime, which is included in all requests for
proposal, contracts and purchase orders so any provider will be always informed about the consequences of not complying
with EDPR H&S and environmental requirements.
123
In order to guarantee that the suppliers comply with the previously mentioned requirements, EDPR monitors strategic
suppliers during their services delivery, which are mainly during the construction and operation phases of EDPR’s projects.
EDPR requires that suppliers adopt all necessary measures to ensure strict compliance with all applicable environmental
regulations as well as EDPR's Environmental Policy and internal norms, procedures and systems in place as regards to
environmental management. In order to guarantee that the suppliers comply with the environmental requirements during
constructions, EDPR has established an environmental monitoring plan in coordination with the Construction Manager and
the suppliers, which is implemented by an external party. In addition, EDPR performs internal inspections during the
construction and operation phases to monitor the suppliers performance regarding environmental and H&S aspects and to
identify potential risks. In 2020, EDPR performed 996 inspections to 131 suppliers regarding EHS procedures in EU&BR,
and 72 inspections to 10 suppliers in NA regarding their environmental performance. As a result, the Company identifies
corrective actions needed and establishes an action plan for continuous improvement. Furthermore, EDPR hires an external
party for additional supervision in these areas. These processes are reinforced by the
integrated Health and Safety and
Environmental Management System, which was developed and externally certified in 2020 according to international
standards ISO 45001 and ISO 14001.
All parameters of the Qualification system are periodically reviewed and reassessed by EDPR to guarantee that supply
chain performance remains on the high quality level required.
In a previous study to characterise EDPR’s supply chain, performed in 2015, including the analysis of the exposure
to
economic, social and environmental risks, performed using the ESCHER (Efficient Supply Chain Economic and
Environmental Reporting) methodology developed by PwC, it was determined that 300 thousand-ton GHG emissions were
associated to EDPR’s direct and
indirect purchases, only 5% of which related to direct purchases. Through this study,
EDPR aims to identify areas where should focus its improvement activities in order to significantly reduce its exposure to
risk and optimise impacts.
GRI 414-2 - Negative social impacts in the supply chain and actions taken
EDPR’s procurement process is developed within the framework of the Procurement Policy, which extends to EDPR’s both
direct and indirect suppliers, and from which the most relevant aspects for EDPR rega
rding the supply chain’s high quality
and sustainability are established. Accordingly, EDPR has in place requirements related to Sustainability, Quality and Risk
management that have to be met by its suppliers throughout the main procurement phases: registration process, contracting
and, lastly, the monitoring and evaluation of the suppliers.
EDPR has a Corporate System of Supplier Registration in place which works as the support to search and select suppliers
by providing detailed information, validated and updated by credible sources in order to guarantee their accreditation
through financial, technical quality and sustainability criteria. This includes environmental topics such as the existence of an
environmental management system and its certification, the existence of environmental requirements in the suppliers
procurement conditions or the availability of procedures and resources to assure the prevention/minimisation of
environmental impacts.
In 2020, EDPR implemented a Supplier Qualification Process. The main goal of this process is to provide a more thorough
analysis on critical topics such as technical capabilities, health and safety, environment and ethics, and to establish highly
standardised minimum requirements to ensure that the suppliers with whom EDPR conducts business are qualified. The
qualified suppliers are included in a Suppliers Qualification List and are able to participate in the EDPR bidding and
contracting processes.
The incorporation of adequate criteria in the bidding and contracting processes of the company is essential to ensure the
management and mitigation of operational risks in the supply chain. In Europe & Brazil, EDPR has a Suppliers Sustainability
Guide in place for both construction and O&M operations, providing an overview of the sustainability requirements EDPR
expects its suppliers to meet. The guide includes H&S, environmental and ethical requirements such as compliance with
applicable regulations, policies, internal norms, procedures and systems in place. In addition, EDPR has implemented a
process that classifies suppliers according to their H&S and environmental risks. The classification serves as an input in the
selection of suppliers during the bidding phase. Based on the individual values obtained in this classification, suppliers may
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ANNUAL REPORT EDPR 2020
be excluded from the bidding process. If the supplier wants to be re-considered or participate in new processes, an action
plan to solve the identified issues has to be presented and EDPR shall approve the action plan proposal.
Adequate compliance by all EDPR suppliers with applicable H&S and environmental requirement is essential to guarantee
the correct performance of the contracted services and works. Aiming to ensure that suppliers comply with these
requirements, the Company has established a disciplinary and sanctioning regime, which is included in all requests for
proposal, contracts and purchase orders so any provider will be always informed about the consequences of not complying
with EDPR H&S and environmental requirements.
In order to guarantee that the suppliers comply with the previously mentioned requirements, EDPR monitors strategic
suppliers during their services delivery, which are mainly during the construction and operation phases of EDPR’s projects.
To prevent possible H&S risks to workers from other companies, EDPR provides a risk guide for the facility to all contractors
before starting their work on the facility. In addition, the Company requires that the contractors participate in drills that are
carried out at the facilities, so that everyone knows how to act in the event of an emergency. In addition, EDPR performs
internal inspections during the construction and operation phases to monitor the suppliers performance regarding
environmental and H&S aspects and to identify potential risks. In 2020, EDPR performed 996 inspections to 131 suppliers
regarding EHS procedures in EU&BR, and 194 inspections to 20 suppliers in NA regarding their H&S performance. As a
result, the Company identifies corrective actions needed and establishes an action plan for continuous improvement.
Furthermore, EDPR hires an external party for additional supervision in these areas. These processes are reinforced by the
integrated Health and Safety and Environmental Management System, which was developed and externally certified in
2020 according to international standards ISO 45001 and ISO 14001.
Moreover, EDPR has Compliance questionnaires related to the anti-corruption practices of the suppliers to ensure that they
are all aligned with EDPR’s A
nti-Corruption Policy. In addition, EDPR approved of a Third Party Integrity Due Diligence
procedure in 2020, reinforcing the mechanisms for identifying and preventing possible integrity risks for EDPR in the
relationship with third parties. In 2020, 157 Compliance analysis to third parties were performed, of which just 2 presented a
special risk of corruption. They were complemented with a deep external investigation, recommending the inclusion of
robust clauses related to corruption in the corresponding agreements.
All parameters of the Qualification system are periodically reviewed and reassessed by EDPR to guarantee that supply
chain performance remains on the high quality level required.
In a previous study to characterise EDPR’s supply chain, performed
in 2015, including the analysis of the exposure to
economic, social and environmental risks, performed using the ESCHER (Efficient Supply Chain Economic and
Environmental Reporting) methodology developed by PwC, it was determined that more than 20,000 job
s related to EDPR’s
direct purchases were created, more than €735 million gross value added was associated to EDPR’s purchases, and that
~0% of EDPR’s direct purchases were identified as having significant risk for incidents of child labour, forced or comp
ulsory
labour or freedom of association. Through this study, EDPR aims to identify areas where should focus its improvement
activities in order to significantly reduce its exposure to risk and optimise impacts.
125
4.8. Community engagement
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Contribute to the
Society of the chapter Execution
GRI 202-2 - Proportion of senior management hired from the local community
The Code of Ethics contains specific clauses of non-
discrimination and equal opportunities in line with the Company’s
culture of diversity. This is reflected in the procedures for hiring people via a non-discriminatory selection processes. A
potential employee’s race, gender, sexual orientati
on, religion, marital status, disability, political orientation or opinions of
any other nature, ethnic or social origin, place of birth or trade union membership are not considered.
There are no specific procedures explicitly requiring local recruitment. However, a high percentage of EDPR
employees’ are
hired from the same country in which the Company operates.
LOCAL RECRUITMENT (%)
2020
2019
DIRECTORS
Europe
84%
83%
South America
50%
43%
North America
79%
78%
Rest of the world
-
100%
GRI 203-1 - Infrastructure investments and services supported
Wind and solar energy require infrastructure investments which benefit surrounding communities. This includes the
reinforcement of existing electricity networks and the rehabilitation of existing roads or the construction of new roads.
The investment in roads is necessary in order to transport heavy equipment (wind turbine components, power transformers,
etc.) to the site during construction. The improved road system facilitates future maintenance activities after construction
works, as well as improves access to remote locations for the surrounding communities. During the operation of the wind
farms, these roads are maintained. The integration of the generation capacity may also require upgrades in the distribution
and transmission grids that belong to the system operators. Those upgrades indirectly benefit the quality of service offered
in the surrounding areas by minimising electricity supply interruptions. In 2020, EDPR invested
€
18 million in the
development of community roads surrounding its projects.
GRI 203-2 - Significant indirect economic impacts
Renewable energy technologies are viewed not only as tools for mitigating climate change, but are also increasingly
recognised as investments that can provide direct and indirect economic advantages by reducing dependence on imported
fuels (and hence, improving trade balances), enhancing local air quality and safety, advancing energy access and security,
propelling economic development and creating jobs. In 2020, EDPR implemented several economic development projects,
which foster job creation and profit generation.
GRI 411-1 - Incidents of violations involving rights of indigenous peoples
EDPR has no knowledge of any incident of violations involving rights of indigenous people in 2020, neither in 2019.
Note: For the information reported in this indicator, EDPR considers passive contingencies associated with litigation qualified as probable in 2020
recorded in the contingencies reporting system, and claims/doubts reported in the Ethics Channel and considered a violation of the Code of Ethics by the
Ethics Ombudsperson and the Ethics Committee.
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ANNUAL REPORT EDPR 2020
GRI 413-1
–
Operations with local community engagement, impact assessments,
and development programs
EDPR
’s main goal
regarding their relationship with communities near its facilities is to preserve a close and long-term
connection with them in order to guarantee a good coexistence. This concern presents itself as a valuable instrument in the
entire life cycle of EDPR
’s o
perations that goes from the development, construction and operation of wind farms and solar
plants to their dismantlement.
During the development phase, EDPR performs an environmental impact assessment for all the projects. This assessment
includes the most significant issues for the affected areas both from an environmental and social perspective.
During the entire life cycle of its operations, EDPR promotes the well-being and development of the communities throughout
the countries where it operates. EDPR considers that in order to make a positive impact on local communities, it is vital to
work for the common good by promoting and supporting social and environmental activities.
EDPR’s Social Investment is developed within the framework of its Social Investment Policy, which establishes the
corporate objectives and strategies related to this area. As a result, EDPR invests in activities that will positively impact the
promotion and development of the following four main priorities:
•
Lift Up Our Heritage:
Protect and promote cultural heritage, local traditions and access to culture and art, contributing
to a more vibrant and creative society;
•
Build Up Community:
Build thriving and inclusive communities by improving the living conditions of those in need and
supporting the wellbeing of people near our operations, also focusing on enhancing energy inclusion and access to
energy;
•
Enhance Our Environment:
Promote and protect biodiversity and natural heritage for the benefit of the members of the
society;
•
Brighten Up Our Future:
Promote energy efficiency, renewable energy and decarbonization through increased
awareness, supporting education on renewable energy for all.
Moreover, EDPR has implemented a catalogue of activities focused on the previous four priorities, which is dynamic and
updated according to the expectations and needs of the communities surrounding the facilities. The catalogue includes key
performance indicators that should be used to monitor each activity.
As a result, EDPR
invested €2.
5 million in the development of society.
This investment includes over €1 million distributed
among the 15 countries where the Company is present as a solidarity campaign in response to the COVID-19 pandemic to
help local communities overcome the pandemic and recover from the socioeconomic crisis. EDPR helped people in need
mostly through donations to food banks, purchases of healthcare equipment, medical devices and rapid testing kits, and the
facilitation of online learning and digital educational materials. EDPR’s response to the global crisis is aligned with its
commitment to preserve a relationship of proximity with the local communities and support its development.
127
GRI 413-2
–
Operations with significant actual and potential negative impacts on
local communities
EDPR does not have individual consumers, according to the concept this term has associated in the Spanish regulation
(Law 11/2018). Regarding the complaint systems, given the core business of the Company, EDPR does not deal directly
with individual consumers. However, EDPR considers the local communities near its operations as its clients and makes
different complaint channels available to them, among which is the Ethics Channel.
Noise, visual impact, TV interferences and ice thrown from wind turbines are identified as EDPR
’s business environmental
impacts within the category of disturbance to the local communities. EDPR implements the necessary measures to make
these impacts as minor as possible. Moreover, during the operation phase, EDPR has grievance mechanisms in place
available to the local communities to ensure that suggestions or complaints are properly recorded and addressed. This
allows EDPR not only to solve the complaints but also to introduce improvements in all processes.
In 2020, EDPR registered 45 complaints regarding impact on the local communities -61% comparing to 2019. There were
41 complaints in the US, of which 30 are already solved. 14 claims were related to noise, 18 related to road drainage, 5
related to impact on the view or creation of shadows, and 4 related to possible interferences with the TV signal. In addition,
there were 4 complaints in France, 1 related to noise, 1 related to impact on the view or creation of shadows and 2 related
to possible interferences with the TV signal.
4.9. Innovation
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Innovation Capital
of the chapter Execution.
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ANNUAL REPORT EDPR 2020
4.10. Environmental management
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Natural Capital of
the chapter Execution.
GRI 304-2 - Significant impacts of activities, products, and services on biodiversity
As a responsible company, EDPR is aware of the sensitivity of natural ecosystems and the pressures affecting biodiversity.
Thus, EDPR assumes its commitment to contribute to the prevention or reduction of loss in biodiversity, as stated in its
Environmental Policy. EDPR's commitment towards biodiversity protection is focused on the main impacts of its activities:
migrating birds, bats and habitat fragmentation. As a result, the Company particularly commits to protect the wildlife
surrounding its wind farms.
The Company has implemented relevant measures to identify the impacts of its operations on biodiversity, including:
•
Environmental impact assessments and/or risk mapping:
During the development phase of any project of the
Company, the potential environmental impacts are analysed in detail in the environmental impact studies of the projects
and other specific environmental studies, always performed by professional external experts. These studies evaluate
the possible impacts of the projects in factors such as fauna, flora, soil, air and water bodies, among others.
•
Monitoring of biodiversity indicators:
EDPR has established an environmental monitoring which is implemented by
an external party. Even so, efforts are intensified with specific monitoring procedures in the small number of sites
located inside or close to protected areas.
In addition, the Company has defined general procedures in its Environmental Management System to prevent, correct or
compensate impacts in the environment. The environmental strategy of the Company complements this approach, with the
ambition for a globally positive balance through projects focused on the conservation of wildlife.
Moreover, as a sustainable company, it is EDPR’s duty to contribute to the development of research and conservation
programs, as well as to broaden scientific knowledge on biodiversity matters by supporting institutions and strengthening
dialogue and partnerships.
GRI 304-3 - Habitats protected or restored
EDPR’s business is its best contribution to reduce biodiversity loss. Nevertheless, the Company’s commitment to contribu
te
to the protection of biodiversity leads to an active role in the conservation of wildlife surrounding its facilities.
Even though EDPR works to minimise any impact on the land surrounding its facilities, the construction and dismantlement
processes of wind farms and solar plants are closely followed by EDPR teams, who work to reduce potential impacts or
disturbances and to ensure proper restoration of the land once the works finish, cleaning up and rehabilitating the sites to
return the area to its initial state.
In 2020, EDPR finished the morphological (22 hectares) and vegetal (28 hectares) restoration of the Zas wind farm in Spain
which was dismantled the previous year, restoring 100% of the hectares affected by the project. In addition, EDPR strongly
participated in the protection of biodiversity mainly through collaborations with several organisations to further protect wildlife
surrounding its facilities.
129
GRI 304-1 - Operational sites owned, leased, managed in, or adjacent to, protected
areas and areas of high biodiversity value outside protected areas
Note 1: EDPR reports EBITDA wind farms’ energy consumption the year after the COD (commercial operating date), when the trial
period is over and
the consumption is significant. Thus, the energy consumption of wind farms that have entered into operation in 2020 will be included in the 2021 report.
Note 2: This table contains information regarding every EDPR operational sites in or adjacent to protected areas. EDPR does not own sites in or
adjacent to protected areas in France, Italy, Brazil, the United States, Canada or Mexico.
COUNTRY
FACILITY NAME
TYPE OF OPERATION
POSITION IN RELATION
WITH PROTECTED AREA
FACILITY AREA IN
PROTECTED NATURAL
AREA (ha)
% FACILITY AREA IN
PROTECTED NATURAL
AREA (%)
ATRIBUTE OF THE
PROTECTED AREA
STATUS OF THE
PROTECTED AREA
Ilza
Wind farm
Partially Within
6.6
81%
Terrestrial
Regional Park
Tomaszow
Wind farm
Adjacent
0.0
0%
Terrestrial-Fresh w ater
Natura 2000
Pena Suar
Wind farm
Inside
6.3
100%
Terrestrial
Natura 2000
Açor
Wind farm
Partially Within
0.1
1%
Terrestrial
Natura 2000
Açor II
Wind farm
Partially Within
6.0
88%
Terrestrial
Natura 2000
Cinfaes
Wind farm
Inside
4.9
100%
Terrestrial
Natura 2000
Bustelo
Wind farm
Inside
8.9
100%
Terrestrial
Natura 2000
Falperra-Rechãzinha
Wind farm
Partially Within
29.2
88%
Terrestrial
Natura 2000
Fonte da Quelha
Wind farm
Inside
8.1
100%
Terrestrial
Natura 2000
Alto do Talefe
Wind farm
Inside
9.2
100%
Terrestrial
Natura 2000
Fonte da Mesa
Wind farm
Partially Within
8.2
83%
Terrestrial
Natura 2000
Madrinha
Wind farm
Inside
4.1
100%
Terrestrial
Natura 2000
Safra-Coentral
Wind farm
Inside
19.7
100%
Terrestrial
Natura 2000
Negrelo e Guilhado
Wind farm
Partially Within
9.6
98%
Terrestrial
Natura 2000
Testos
Wind farm
Partially Within
2.9
22%
Terrestrial
Natura 2000
Natura 2000
National protected area
Tocha
Wind farm
Inside
6.8
100%
Terrestrial
Natura 2000
Padrela/Soutelo
Wind farm
Partially Within
1.0
41%
Terrestrial
Natura 2000
Guerreiros
Wind farm
Partially Within
0.1
0.2%
Terrestrial
Natura 2000
Vila Nova
Wind farm
Partially Within
7.1
42%
Terrestrial
Natura 2000
Vila Nova II
Wind farm
Partially Within
9.1
34%
Terrestrial
Natura 2000
Balocas
Wind farm
Partially Within
0.4
1%
Terrestrial
Natura 2000
Ortiga
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
S. João
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
Alto Arganil
Wind farm
Partially Within
0.8
5%
Terrestrial
Natura 2000
Salgueiros-Guilhado
Wind farm
Partially Within
0.3
3%
Terrestrial
Natura 2000
Serra do Mú
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
Albesti
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
Pestera
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
Sarichioi
Wind farm
Partially Within
0.1
0.1%
Terrestrial
Natura 2000
Burila Mica
Solar plant
Inside
22.7
100%
Terrestrial-Fresh w ater
Natura 2000
Sierra de Boquerón
Wind farm
Inside
10.4
100%
Terrestrial
Natura 2000
La Cabaña
Wind farm
Partially Within
8.2
53%
Terrestrial
Natura 2000
Corme
Wind farm
Partially Within
6.0
40%
Terrestrial-Marine
Natura 2000
Natura 2000
National protected area
Coll de la Garganta
Wind farm
Partially Within
0.06
1%
Terrestrial-Fresh w ater
Natura 2000
Avila
Wind farm
Adjacent
0.0
0%
Terrestrial-Fresh w ater
Natura 2000
Buenavista
Wind farm
Adjacent
0.0
0%
Terrestrial-Marine
Natura 2000
Serra Voltorera
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
Villoruebo
Wind farm
Partially Within
2.1
43%
Terrestrial-Fresh w ater
Natura 2000
Villamiel
Wind farm
Partially Within
1.9
29%
Terrestrial-Fresh w ater
Natura 2000
La Mallada
Wind farm
Partially Within
1.4
8%
Terrestrial-Fresh w ater
Natura 2000
Las Monjas
Wind farm
Partially Within
0.01
0%
Terrestrial-Fresh w ater
Natura 2000
Coll de la Garganta
Wind farm
Partially Within
0.06
1%
Terrestrial-Fresh w ater
Natura 2000
Tejonero
Wind farm
Partially Within
0.2
1%
Terrestrial
Natura 2000
Ávila
Wind farm
Adjacent
0.0
0%
Terrestrial-Fresh w ater
Natura 2000
Sierra de los Lagos
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
Mostaza
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
Los Almeriques
Wind farm
Adjacent
0.0
0%
Terrestrial-Fresh w ater
Natura 2000
Suyal
Wind farm
Adjacent
0.01
0.1%
Terrestrial
Natura 2000
Serra Voltorera
Wind farm
Adjacent
0.0
0%
Terrestrial
Natura 2000
Monseivane
Wind farm
Partially Within
17.2
97%
Terrestrial-Fresh w ater
Natura 2000
La Celaya
Wind farm
Partially Within
9.0
70%
Terrestrial-Fresh w ater
Natura 2000
La Peña
Wind farm
Inside
12.4
100%
Terrestrial
IBA
Partially Within
0.01
0.3%
Terrestrial
Natura 2000
Adjacent
0.0
0%
Terrestrial
Natura 2000
Romania
Poland
Portugal
Serra Alvoaça
Wind farm
Terrestrial
Cerro del Conilete
Wind farm
Partially Within
7.8
61%
Terrestrial
0.0
Spain
Tahivilla
Wind farm
Adjacent
0%
130
ANNUAL REPORT EDPR 2020
GRI 306-2 - Waste by type and disposal method
The main contribution to the hazardous waste produced by wind farms is related to oil and oil-related wastes such as oil
filters or oil containers, used mainly for lubrication of the turbines. The consumption of this oil is based on certain pre-
defined replacement time frequencies (between 2 and 5 years, based on the component, oil type and manufacturer).
Annual fluctuations in hazardous waste generated are heavily dependent on the multiannual oil replacement programs
above mentioned. During 2020, the recovery rate of hazardous waste was 94%, which is above EDPR’s 90% recovery
target. Non-hazardous wastes generated by the Company include metals, plastics, paper or domestic garbage which are
recycled in their vast majority.
The following table summarises the amount of wastes generated in EDPR’s facilities and the rate of their recovery:
WASTE GENERATED
UN
2020
2019
∆% YoY
HAZARDOUS WASTE
Total hazardous waste disposed
t
30
44
(32%)
Total hazardous waste recovered
t
436
527
(17%)
Total
t
466
571
(18%)
NON-HAZARDOUS WASTE
Total non-hazardous waste disposed
t
224
312
(28%)
Total non-hazardous waste recovered
t
364
508
(28%)
Total
t
588
820
(28%)
GRAND TOTAL
t
1,055
1,391
(24%)
RATIOS
Total waste
kg/GWh
37
47
(20%)
Total waste recovered
%
76%
74%
+2%
Hazardous waste recovered
%
94%
92%
+1.4%
Note 1: For the purposes of this report, all wastes have been classified as hazardous or non-hazardous according to European waste catalogue;
however, in each country where EDPR has a geographic presence, each wind farm is required to adhere to national law by following company
procedures for handling, labelling, and storage of wastes to ensure compliance. in cases like
in the united states, when the company’s operations
generate small quantities of substances which fall into additionally-regulated categories such as used oils and universal wastes, EDPR follows strict
standards for handling and disposal of these waste types to ensure and remain compliant with all applicable laws.
Note 2: EDPR reports EBITDA wind farms’ energy consumption the year after the COD (commercial operating date), when the trial
period is over and
the consumption is significant. Thus, the energy consumption of wind farms that have entered into operation in 2020 will be included in the 2021 report.
Note 3: Includes waste both from operational facilities and offices. Waste from offices refers to 1Q20 data (due to the home office implemented the rest
of the year).
Note 4: Data from 2020 excludes 84 tons of waste caused by non-recurrent events. Data from 2019 excludes 948 tons of waste caused by non-recurrent
events, of which 922 correspond to non-hazardous waste caused by a wind turbine that fell in France.
131
GRI 306-3 - Significant spills
Given EDPR’s activity and its locations, oil spills and fires are the major environmental risks the Company faces. The
Environmental Management System is designed and implemented to prevent emergency situations from happening. But,
just to be cautionary, the system covers the identification and management of these, including the near miss situations.
As of 2019, EDPR defines significant spills and fires as any spill affecting water bodies/courses, protected soils or soils of
interest because of its natural value, or fire affecting protected areas and/or species (according to local protection laws),
derived from the O&M activities in the facilities. EDPR continues to register near miss situations, when a registered incident
does not reach the category of significant spill. In 2020, there were no significant spills and 83 near miss situations were
registered, -26% vs 2019.
EDPR performs regular environmental drills to guarantee that all employees and suppliers are familiar with the risks and
have received the appropriate training to prevent and act, if necessary.
Note: EDPR reports EBITDA wind farms’ energy consumption the year after the COD (commercial operating date), when the trial p
eriod is over and the
consumption is significant. Thus, the energy consumption of wind farms that have entered into operation in 2020 will be included in the 2021 report.
Other environmental management related topics:
Despite EDPR's core activities do not pose any threats of serious or irreversible damage to the environment, the Company,
in compliance with the Precautionary Principle, applies cost-effective measures to prevent environmental degradation such
as provisions for dismantling and decommissioning of property, plant and equipment to dismantle and decommission those
assets at the end of their useful lives. Consequently, EDPR has booked provisions for property, plant and equipment related
to electricity wind and solar generation for the responsibilities of restoring sites and land to its original condition, in the
amount of € 305,628 thousands as at 31 December 2020 (+13% vs. 2019).
132
ANNUAL REPORT EDPR 2020
4.11. Ethics and Compliance
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Integrity and
ethics of the chapter The Company.
GRI 205-1 - Operations assessed for risks related to corruption
EDPR analyses all the new markets where it operates through a Market overview including Sustainability topics such as
human rights, labour and environment. This study also evaluates the corruption risk. In addition, EDPR has Compliance
questionnaires in place related to the anti-corruption practices of the suppliers and the counterparts in the M&A processes in
order to ensure that they are all aligned with EDP
R’s Anti
-Corruption Policy and Code of Ethics.
This year, a new procedure regarding Third Party Integrity Due Diligence was approved, reinforcing the mechanisms for
identifying and preventing possible integrity risks for EDPR in the relationship with third parties. In this sense, during 2020,
157 Compliance analysis to third parties were performed. Of these 157, just two of them presented a special risk of
corruption and were completed with a deeply external investigation. In these cases, it was recommended the inclusion of
robust clauses related to corruption in the corresponding agreements.
GRI 205-2 - Communication and training on anti-corruption policies and procedures
EDPR Anti-Corruption Policy implies a series of procedures regarding the relationships of EDPR employees with external
parties, namely the approval of certain actions regarding hospitality to and from external parties, donations, and
sponsorships. Company Personnel and Transaction Partners are encouraged to raise concerns about any issue or
suspicion of bribery or corruption at the earliest possible stage through the Compliance Channel. The Anti-Corruption Policy
is available at the Company’s website and intranet, and it is also attached to the labour agreements of the new hires to thei
r
written acknowledgement when they join the Company.
GRI 205-3 - Confirmed incidents of corruption and actions taken
EDPR has no knowledge of any confirmed incident of corruption in 2020, neither in 2019.
Note: For the information reported in this indicator, EDPR considers passive contingencies associated with litigation qualified as probable in 2020
recorded in the contingencies reporting system and claims/doubts reported in the Compliance Channel.
GRI 406-1 - Incidents of discrimination and corrective actions taken
In 2020, EDPR had knowledge of a complaint for discrimination at the Equal Employment Opportunity Commission (EEOC).
The issue was analysed by the responsible area and finally, resolved and withdrawn by the complainant.
In 2019, EDPR also had knowledge of a complaint for discrimination at the Equal Employment Opportunity Commission
(EEOC). Likewise, the issue was analysed by the responsible area and finally, resolved and withdrawn by the complainant.
Note: For the information reported in this indicator, EDPR considers passive contingencies associated with litigation qualified as probable in 2020
recorded in the contingencies reporting system, and claims/doubts reported in the Ethics Channel and considered a violation of the Code of Ethics by the
Ethics Ombudsperson and the Ethics Committee.
GRI 407-1 - Operations and suppliers in which the right to freedom of association
and collective bargaining may be at risk
Throughout EDPR’s operations, both employees and suppliers must comply with the EDPR’s Cod
e of Ethics, which has
specific clauses to respect freedom of trade union association and recognise the right to collective bargaining. During 2020,
neither in 2019, EDPR did not register any claims/doubts in the Ethics Channel regarding operations with significant risk
where the right to freedom of association and collective bargaining may be at risk.
133
In a previous study to characterise EDPR’s supply chain, performed in 2015, including the analysis of the exposure to
economic, social and environmental risks, performed using the ESCHER (Efficient Supply Chain Economic and
Environmental Reporting) methodology developed by PwC, it was determined that ~0
of EDPR’s direct purchases were
identified in which the right to exercise freedom of association and collective bargaining may be at significant risk. Through
this study, EDPR aims to identify areas where should focus its improvement activities in order to significantly reduce its
exposure to risk and optimise impacts.
GRI 408-1 - Operations and suppliers at significant risk for incidents of child labour
Throughout EDPR’s operations, both employees and suppliers must comply with the EDPR’s Code of Ethics, which has
specific clauses against child labour. During 2020, neither in 2019, EDPR did not register any claims/doubts in the Ethics
Channel regarding operations with significant risk for incidents of child labour.
In a previous study to characterise EDPR’s supply chain, performed in 2015, including the analysis of the exposure to
economic, social and environmental risks, performed using the ESCHER (Efficient Supply Chain Economic and
Environmental Reporting) methodology developed by PwC, it was determined that ~0
of EDPR’s direct purchases were as
having significant risk for incidents of child labour. Through this study, EDPR aims to identify areas where should focus its
improvement activities in order to significantly reduce its exposure to risk and optimise impacts.
GRI 409-1 - Operations and suppliers at significant risk for incidents of forced or
compulsory labour
Throughout EDPR’s operations, both employees and suppliers must comply with the EDPR’s Code of Ethics, which has
specific clauses against forced labour. During 2020, neither in 2019, EDPR did not register any claims/doubts in the Ethics
Channel regarding operations with significant risk for incidents of forced and compulsory labour.
In a previous study to characterise EDPR’s supply chain, performed in 2015, including the analysis of the exposure to
economic, social and environmental risks, performed using the ESCHER (Efficient Supply Chain Economic and
Environmental Reporting) methodology developed by PwC, it was determined that ~0
of EDPR’s direct purchases were as
having significant risk for incidents of forced or compulsory labour. Through this study, EDPR aims to identify areas where
should focus its improvement activities in order to significantly reduce its exposure to risk and optimise impacts.
Other corporate ethics topics:
Money laundering
The money laundering risk involves to acquire, possess, use, convert or transmit goods knowing that they have their origin
in a criminal activity, or perform any other act that seeks to cover their illicit origin. EDPR has identified in its Compliance
Model the money laundering risk and has, developed several controls and measures to minimize the probability of
occurrence. Currently, the money laundering risk is categorized as low.
134
ANNUAL REPORT EDPR 2020
4.12. Communication and transparency
Contributions to foundations and non-profit entities
EDPR contributed with more than 682 thousand euros to Foundations (97% related to Fundación EDP España and Instituto
EDP in Brazil), -9% vs 2019. In addition, EDPR contributed more than 534 thousand euros to non-profit organisations and
NGOs, +76% YoY most
ly due to EDPR’s solidarity campaign in response to the COVID
-19 pandemic.
GRI 102-13
–
Membership of associations
The EDP Group raises awareness to policy makers and legislators about the interests of the business sector and/or its own.
Globally, EDP Grou
p’s activities include participation in industry associations (“Industry Institutions”) comprising multiple
industry participants that work to advance shared policy objectives.
EDPR
’s approach and involvement with Industry Institutions is in accordance with EDP Group’s internal regulations, policies
and procedures, including the principles of integrity and transparency expressed in the Code of Ethics.
In Europe, activities are monitored by means of voluntary registration on a platform created for that purpose by the
European Commission
–
"Transparency Register". EDP has been registered since the creation of this platform in 2011. In
North America, relevant Industry Institutions are required to disclose and/or register campaign finance and lobbying
activities in accordance with applicable local, state, or federal law.
In the following table are presented the contributions concerning the activities of representation of interests of EDPR:
ACTIVITIES OF REPRESENTATION OF INTEREST (€k)
2020
2019
Trade associations or tax-exempt groups
1,874
1,414
Lobbying, interest representation or similar
586
771
Other
22
29
Local, regional or national political campaigns / organizations / candidates
0
0
Total
2,482
2,214
The table below contains the most relevant contributions for associations in 2020:
MOST RELEVANT CONTRIBUTIONS (€k)
2020
American Energy Action
350
American Wind Energy Association
333
American Wind Wildlife Institute
79
Wind Europe
73
FUNSEAM (Fundación para la Sostenibilidad Energética y Ambiental)
60
GRI 201-4 - Financial assistance received from government
EDPR has not received any financial assistance from the government in 2020, neither in 2019.
Note: The American legislation foresees - and has foreseen in the past - several tax incentives for the production of renewable energy in the united
states. Some examples are the production tax credits, the research and development tax credits, the former cash grant, the so-called macrs (a way of
accelerated depreciation), etc. these tax credits are in most cases are part of the renewable energy remuneration scheme.
135
GRI 206-1
–
Legal actions for anti-competitive behaviour, anti-trust, and monopoly
practices
EDPR has no knowledge of any legal actions for anti-competitive behaviour, anti-trust or monopoly practices in 2020,
neither in 2019.
Note: for the information reported in this indicator, EDPR considers passive contingencies associated with litigation qualified as probable in 2020
recorded in the contingencies reporting system.
GRI 307-1 - Non-compliance with environmental laws and regulations
EDPR has no knowledge of any non-compliance with environmental laws and regulations in 2020, neither in 2019. In
addition, during 2020 and 2019, the company did not receive any significant penalty for non-compliance with environmental
laws and regulations.
Note 1: For the information reported in this indicator, EDPR considers passive contingencies associated with litigation qualified as probable in 2020
recorded in the contingencies reporting system and that have obtained an unappealable judgement.
Note 2: EDPR
defines as significant penalty the ones above €10k.
GRI 415-1 - Political contributions
The Anti-Corruption Policy, in line with the principles defined in the Code of Ethics, prohibits any contribution or association
of the EDPR brand to political parties, candidates, campaign structures / political candidacy or to related persons or entities,
namely through the delivery of goods or the provision of services, directly or indirectly, on behalf or representation of EDP,
since it may jeopardize the integrity of the EDPR Group entities, unless otherwise required by law. Still under these
principles, EDPR should make available the necessary arrangements for employees to take part, in their strictly personal
capacity, in political processes, under applicable law.
In North America, EDPR retains political consultants for lobbying activities. However, these political consultants are
prohibited from making contributions to political candidates, campaigns or parties on behalf of or in the name of EDPR.
Additionally, EDPR has provided financial support for the activities of America Energy Action, a welfare organization
organized under Section 501(c)(4) of the US Internal Revenue Code. Such social welfare organizations may participate
legally in some political activity on behalf of or in opposition to candidates for public office. However, any such political
activity must be completely independent of any political candidate or political campaign.
Finally, in accordance with U.S. law, and at the request of US employees, EDPR provides properly regulated mechanisms
for employees participation in political processes and has enabled the establishment of a political action committee (PAC)
called the EDPR NA PAC. The EDPR PAC is funded entirely by voluntary personal monetary contributions made by
members of the PAC, who are eligible employees in accordance with US law, and decisions on which political campaigns to
support are made with the approval of the PAC governing board, which is made up of elected members of the PAC, also in
accordance with US law.
These activities are then aligned with the above mentioned principles of the Integrity Policy and the Code of Ethics.
GRI 419-1 - Non-compliance with laws and regulations in the social and economic
area
EDPR has no knowledge of any non-compliance with social and economic laws and regulations in 2020, neither in 2019.
During 2020, the company received a significant penalty
of €
21.8k tax related. During 2019, the company did not receive
any significant penalty for non-compliance with social and economic laws and regulations.
Note 1: For the information reported in this indicator, EDPR considers passive contingencies associated with litigation qualified as probable in 2020
recorded in the contingencies reporting system and that have obtained an unappealable judgement.
Note 2: EDPR
defines as significant penalty the ones above €10k.
136
ANNUAL REPORT EDPR 2020
GRI 207-1
–
Approach to tax
EDPR’s
fiscal strategy is based on five main pillars:
1)
EDPR has an ethical and civic duty to contribute to the financing of the general functions of the States in which it
operates, by paying the taxes, levies and other contributions that are due, contributing to the well-being of citizens and to
the development of the Group's local business. In this context, it carries out its fiscal function with rigor and professionalism,
in line with the "EDPR Fiscal Mission", in accordance with the following principles:
•
Implements the options which are most appropriate to the business and to the shareholders, in faithful compliance with
the spirit and letter of the Law;
•
Pays the taxes that are due in all the geographical areas where it carries out its activity;
•
Adopts the arm’s length principle in intra
-group transactions, in the context of the applicable international transfer pricing
rules, guidelines and best practices, by transversally implementing an internal transfer pricing policy based on three
main principles:
•
All intra-group transactions of a commercial or financial nature have a pre-defined pricing, with terms and conditions
that are in line with what would normally have been practised between independent entities, in comparable
operations;
•
The definition of the transfer price is based on the economic rationale of the intra-group transaction and, in
accordance with the internal rules of the EDPR, not constituting an instrument for tax planning and / or tax evasion;
•
The documentation of intra-group transactions is fully compliant with the Guidelines of the Organisation for Economic
Co-operation and Development (OECD), without prejudice to the specific aspects of the internal legislation of each
geographical area.
•
Adopts tax practices based on principles of economic relevance and commonly accepted business practices;
•
Discloses true and complete information concerning relevant transactions; and,
•
Seeks to defend its legitimate interests by administrative means and, when appropriate, judicially, when the payment of
any taxes, contributions and levies reasonably raises doubts regarding its legality.
2)
EDPR reconciles the responsible compliance with tax obligations, with the commitment to create value for its
shareholders, efficiently managing its tax burden and using the available tax benefits and incentives applicable in each
region, taking into account the Group's global interest and foreseeing significant tax risks.
3)
EDPR is committed to maintain a relationship with the Tax Authorities of the countries where it operates based on
principles of trust, good faith, transparency, cooperation and reciprocity, aiming to facilitate the application of the Law and to
minimize litigation.
4)
EDPR applies responsible policies, striving to maintain a low-risk tax profile in order to avoid conducts that could
generate significant tax risks. To this end, EDPR implemented a global risk management policy with the objective of
identifying, quantifying, managing, monitoring and minimizing the tax risks, in close connection with the highest levels of
control and decision.
5)
EDPR considers transparency a core principle of its fiscal function, particularly through:
•
Not resorting to opaque structures or operating in jurisdictions for reasons that do not have a close connection with the
economic activity developed within them. EDPR does not have subsidiaries in territories considered to be
noncooperating in accordance with Spanish and Portuguese legislations and / or with the OECD benchmarks; and,
137
•
Disclosure of tax information in accordance with the best international practices and recommendations, to facilitate the
understanding of the global contribution for the economies and the principles governing its fiscal policies and practices.
GRI 207-2
–
Tax governance, control and risk management
The process of management and control of the tax risk begins with the identification and mapping of the risks to which the
EDPR is subject. In this sense, EDPR continuously assesses the tax risks and uncertainties, conducting regular exercises in
order to identify, quantify and monitor risks that arise from external events with potential material impact.
Accordingly, the Group implemented a risk management policy for identifying, quantifying, managing, monitoring and
mitigating, among others, the tax risks, particularly the risk of materialization of the tax contingencies. Indeed, EDPR,
through a specialised team, continuously monitors the processes associated with tax risks and contingencies (related and
not related to ongoing litigation), in close cooperation with the respective Business Units, corporate legal services and
external lawyers and consultants. In addition, the EDPR’s Executive Committee is involved in the decision
-making process
of the relevant operations, being its tax impact, if any, analysed, documented and included in the documentation submitted
for approval, in particular when it may constitute an important element for the final decision, in order to ensure long-term
value creation for shareholders. EDPR also has an Audit, Control and Related-Party Transactions Committee, whose main
mission, upon delegation of the BoD, includes the permanent monitoring and supervision of any matters related to the
internal control system over financial information and the risk management process, particularly in its fiscal aspects.
207-4
–
Country-by-country reporting
CORPORATE INCOME TAX PAID (€M)
2020
2019
Spain
18
9
Portugal
34
34
France / Belgium
1
8
Poland
4
4
Romania
0
0
Italy
3
4
Greece
0
-
UK
0
0
Brazil
15
5
Colombia
0
-
US
0
0
Canada
0
0
Mexico
0
0
Others
0
0
Total
76
65
Note 1: The American legislation foresees - and has foreseen in the past - several tax incentives for the production of renewable energy in the United
States. Some examples are the production tax credits, the research and development tax credits, the former cash grant, the so-called macrs (a way of
accelerated depreciation), etc. these tax credits, that in most cases are part of the renewable energy remuneration scheme, have accumulated during
the last years, allowing the minimization of CIT cash-out in this geography.
Note 2: As a general rule, the corporate income tax cash-out detailed above considers both the down payments corresponding to the fiscal year in
course (where applicable) and the balance of the corporate income tax corresponding to the previous year.
Note 3: For information regarding Profit before income tax, please refer to 4.3 Economic Business Sustainability, page 100. For the number of
employees by country, please refer to 4.5 People Management, pages 108-109.
4.13. Digital transformation
For information regarding GRI 103
–
Management Approach for this material topic, please refer to section Digital Capital of
the chapter Execution.
138
ANNUAL REPORT EDPR 2020
4.14. Reporting principles
This is the twelfth year EDPR
publishes an integrated report describing the Company’s performance, with respect to the
three pillars of sustainability: economic, environmental and social.
Information is presented according Global Reporting Initiative (GRI) Standard 101 Foundation guidelines for Sustainability
Reporting and also provides information on the additional electricity sector supplement indicators directly related to the
Company business, which is the power generation from renewable sources, basically wind.
A full GRI standards content index for the report can be found in the website
United Nations Global Compact
Global Compact is an initiative of the United Nations launched in 2000 that defines guideline directives for businesses that
opt to contribute to sustainable development. EDPR has become signatory of this initiative and is committed to put these
principles into practice, informing society of the progress it has achieved.
Additionally, in 2015, in the United Nations General Assembly, the world leaders decided to assume a set of global goals to
change the world until 2030. The agenda that must guide the joint work of governments, citizens, companies and
organisations, consists of 17 Sustainable Development Goals (SDGs) with the ambition of ending poverty, fighting against
inequality and stopping climate change. EDPR will direct its contributions to eight of the 17 Sustainable Development Goals.
To learn more about the un global compact, please visit
WWW.UNGLOBALCOMPACT.ORG
Global Reporting Initiative
The GRI Standards are the first global standards for sustainability reporting, representing the global best practice for
reporting on a range of economic, environmental and social impacts. A Company’s adherence to this initiative means that it
concurs with the concept and practices of sustainability. This Annual Report has been prepared in accordance with the GRI
Standards in its Core option, and these Standards have been independently assured according to ISAE 3000 by PwC.
To learn more about the GRI guidelines, please visit
WWW.GLOBALREPORTING.ORG
139
Annex I: Non-financial information statement
NON-FINANCIAL INFORMATION STATEMENT (SPANISH LAW 11/2018)
AREA
CONTENT
SCOPE/
PERIMETER
RELATED GRI
STANDARDS
PAGE/CHAPTER
BUSINESS MODEL
Brief description of the Group's business model,
which includes:
•
Its business environment;
•
Its organisation and structure;
•
The markets in which it operates;
•
Its goals and strategies;
•
The main factors and trends that may affect its
future evolution.
Global
EU1; EU2; 102-2;
102-4; 102-6;
102-7; 102-18;
103
1.1.2 EDPR in the world
3
, pages 11-12;
1.1.3 Business description, page 13;
1.1.6 Sustainability Roadmap, pages 18-19;
1.3 Organisation, pages 24-32;
2.1 Business Environment, pages 37-43;
2.2 Strategy, pages 44-47;
3.1.2 Financial Performance pages 60-68;
4.2 Climate Change, pages 95-97.
POLICIES
A description of the policies that the Group applies
regarding these issues, which includes:
•
Due diligence procedures implemented for the
identification, evaluation, prevention and
mitigation of significant risks and impacts;
•
verification and control procedures, including
adopted measures.
Global
103; 102-16
1.1.1 Vision, Values & Commitments, page 10;
1.3.4 Integrity and Ethics, pages 31-32;
3.2 Human Capital, pages 69-73;
3.3 Supply Chain Capital, pages 74-75;
3.4 Social Capital, pages 76-79;
3.5 Natural Capital, pages 80-81.
SHORT, MEDIUM
AND LONG-TERM
RISKS
The main risks regarding these issues related to
the activities of the Group, including, where
relevant and proportionate, its business
relationships, products or services that may have
negative effects in these areas, and
•
how the group manages these risks,
•
explaining the procedures used to detect and
evaluate them according to national, European or
international reference frameworks for each
subject.
•
Information on the impacts that have been
detected must be included, offering a breakdown
of them, in particular on the main risks in the
short, medium and long term.
Global
201-2; 205-1;
304-2; 306-3;
308-2; 407-1;
408-1; 409-1;
413-2; 414-2
2.3 Risk Management, pages 48-53;
4.3 Climate Change, pages 96-97;
4.7 Suppliers Management, pages 122-124;
4.8 Community Engagement, page 127;
4.10 Environmental Management, pages 128 and 131;
4.11 Ethics and Compliance, pages 132-133.
KPI
S
Key indicators of non-financial results that are
relevant to the specific business activity, and that
meet the criteria of comparability, materiality,
relevance and reliability.
Global
Please refer to Annex II: GRI Content Index
ENVIRONMENTAL
TOPICS
Global Environment:
103
3.5 Natural Capital, pages 80-81;
4.2 Climate Change, pages 96 and 98-99;
4.7 Suppliers Management, page 122;
4.10 Environmental Management, pages 128 and 131;
4.12 Communication and Transparency, page 135.
•
Detailed information on current and foreseeable
effects of company's
activities
on
the environment
and where applicable, H&S, environmental
assessment or certification procedures;
•
Resources dedicated to the prevention
of environmental risks;
•
The application of the Precautionary Principle,
the amount of provisions and guarantees for
environmental risks (e.g. derived from the law of
environmental responsibility).
Global
102-11; 201-2;
304-2; 305-1;
305-2; 305-3;
305-5; 307-1;
308-2
Pollution
Measures to prevent, reduce or repair carbon
emissions that seriously affect the environment,
taking into account any form of air pollution specific
to an activity, including:
Global
302-4; 305-5
4.2 Climate Change, pages 98 and 99.
Noise
Global
413-2
4.8 Community Engagement, page 127.
Light pollution
-
-
4.1 Materiality Assessment, page 94.
Circular economy and waste prevention
and management
Circular economy.
Global
306-2
3.5 Natural Capital, pages 80-81;
4.10 Environmental Management, page 130.
Waste prevention, recycling, reuse, other forms
of recovery and disposal.
Global
306-2; 306-3
4.10 Environmental Management, pages 130-131.
Actions to combat food waste.
-
-
4.1 Materiality Assessment, page 94.
3
Secured MWs are not verified by PwC.
140
ANNUAL REPORT EDPR 2020
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CONTENT
SCOPE/
PERIMETER
RELATED GRI
STANDARDS
PAGE/CHAPTER
ENVIRONMENTAL
TOPICS
Sustainable use of resources
Water consumption and water supply according to
local constraints.
Global
-
4.1 Materiality Assessment, page 94.
Consumption of raw materials and the measures
adopted to improve the efficiency of their use.
Global
-
4.1 Materiality Assessment, page 94.
Direct and indirect consumption of energy,
measures taken to improve energy efficiency and
the use of renewable energies.
Global
302-1; 302-4
4.2 Climate Change, pages 97-98;
3.5 Natural Capital, page 81.
Climate Change
103
2.1.1 Renewables are the backbone of decarbonization,
pages 37-39; 2.1.2 The evolution of Renewables around
the world in 2020, pages 39-40;
3.5 Natural Capital, pages 80-81.
The important elements of greenhouse gas
emissions generated as a result of the company's
activities, including the use of the goods and
services it produces.
Global
305-1; 305-2;
305-3
4.2 Climate Change, pages 98-99.
The measures adopted to adapt to the
consequences of climate change.
Global
201-2; 302-4;
305-5
4.2 Climate Change, pages 96-97, 98 and 99.
The reduction goals established voluntarily in the
medium and long-term to reduce greenhouse gas
emissions and the means implemented for that
purpose.
Global
305-5
4.2 Climate Change, page 99.
Protection of biodiversity
Measures taken to preserve or restore biodiversity.
Global
304-2; 304-3
4.10 Environmental Management, page 128.
Impacts caused by activities or operations in
protected areas.
Global
304-1
4.10 Environmental Management, page 129.
SOCIAL AND
EMPLOYEES
TOPICS
Employment
Global
103
3.2 Human Capital, pages 69-73.
Total number and distribution of employees by
gender, age, country and professional category.
Global
102-8; 405-1
4.5 People Management, pages 106-109 and 115-116.
Total number and distribution of work contract
modalities.
Global
102-8
4.5 People Management, pages 106-109.
Annual average of permanent contracts, temporary
contracts and part-time contracts by gender, age
and professional category.
Global
102-8; 405-1
4.5 People Management, pages 106-109 and 115-116.
Number of dismissals by gender, age and
professional category.
Global
401-1
4.5 People Management, page 112.
Average remunerations and their evolution
disaggregated by gender, age and professional
category or equal value. Wage gap, the
remuneration of equal or average positions in the
company.
Global
405-2
4.5 People Management, pages 116-117.
Avg. remuneration of directors and executives, incl.
variable remuneration, allowances, compensation,
payment to l/t savings forecast systems and any
other perception disaggregated by gender.
Global
-
4.6 Corporate Governance, page 121.
Implementation of labour disconnection policies.
Global
-
4.5 People Management, page 119.
Employees with disabilities.
Global
-
4.5 People Management, page 119.
Work organisation
Working hours organisation.
Global
EU17
4.4 Health & Safety, page 105;
4.5 People Management pages 119-120
Number of hours of absenteeism.
Global
-
4.4 Health & Safety, page 105.
Measures designed to facilitate the enjoyment of
conciliation and encourage joint responsibility of
these by both parents.
Global
-
4.5 People Management, page 120.
Health & Safety
Global
Conditions of health and safety at work.
Global
103
;
403-1
;
403-2;
403-3; 403-5;
403-6; 403-7
3.4.1 Guarantee the highest health & safety standards,
pages 76-77;
4.4 Health & Safety, pages 101-102.
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CONTENT
SCOPE/
PERIMETER
RELATED GRI
STANDARDS
PAGE/CHAPTER
SOCIAL AND
EMPLOYEES
TOPICS
Work-related accidents, in particular their
frequency and severity, occupational diseases,
disaggregated by gender.
Global
403-9; 403-10
4.4 Health & Safety, pages 102-105.
Social Relations
Organisation of social dialogue, including
procedures for informing and consulting employees
and negotiating with them.
Global
402-1
4.5 People Management, page 112 and 118-119.
Percentage of employees covered by collective
bargaining agreements by country.
Global
102-41
4.5 People Management, page 110.
The result of collective bargaining agreements,
particularly in the health & safety at work area.
Global
102-41
4.5 People Management, page 110.
Training
Policies implemented in the training area.
Global
404-2; 404-3
4.5 People Management, pages 113-115.
Total amount of training hours by professional
categories.
Global
404-1
4.5 People Management, page 113.
Universal accessibility for people with
disabilities
-
4.5 People Management, page 121.
Equality
Measures taken to promote equal treatment and
opportunities between women and men.
Global
405-1
4.5 People Management, pages 115-116 and 120-121.
Equality plans (Chapter III of Organic Law 3/2007,
of the 22nd of March, for effective equality of
women and men), measures adopted to promote
employment, protocols against sexual and gender-
based harassment, integration and the universal
accessibility of people with disabilities.
Global
-
4.5 People Management, page 120.
Policy against all types of discrimination and,
where appropriate, management of diversity.
Global
-
1.3.4 Integrity and Ethics, pages 31-32;
3.4.2 Respect human and labour rights, page 77;
4.5 People Management, pages 120-121.
HUMAN RIGHTS
Application of due diligence procedures in the field
of human rights; Prevention of the risks of violation
of human rights and, where appropriate, measures
to mitigate, manage and repair possible abuses.
Global
-
1.3.4 Integrity and Ethics, pages 31-32;
3.4.2 Respect human and labour rights, page 77.
Complaints regarding cases of violation
of human rights.
Global
411-1
1.3.4 Integrity and Ethics, page 31;
4.8 Community Engagement, page 125.
Promotion and compliance with the provisions of
the fundamental Conventions of the International
Labour Organization related to respect for freedom
of association and the right to collective bargaining.
Global
102-41; 407-1
4.5 People Management, 110;
4.11 Ethics and Compliance, pages 132-133.
The elimination of discrimination in employment
and occupation.
Global
406-1
3.4.2 Respect human and labour rights, page 77;
4.11 Ethics and Compliance, page 132.
The elimination of forced or compulsory labour.
Global
409-1
3.4.2 Respect human and labour rights, page 77;
4.11 Ethics and Compliance, page 133.
The effective abolition of child labour.
Global
408-1
3.4.2 Respect human and labour rights, page 77;
4.11 Ethics and Compliance, page 133.
CORRUPTION AND
BRIBERY
Adopted measures to prevent corruption
and bribery.
Global
205-1; 205-2;
205-3; 415-1
4.11 Ethics and Compliance, page 132;
4.12 Communication and Transparency, page 135.
Measures to combat money laundering.
Global
-
4.11 Ethics and Compliance, page 133.
Contributions to foundations and non-profit entities.
Global
413-1
4.8 Community Engagement, page 126;
4.12 Communication and Transparency, page 134.
SOCIETY
Company's commitments to the sustainable
development
The impact of the society's activity on employment
and local development.
Global
202-2; 203-1;
203-2; 413-1
4.8 Community Engagement, pages 125 and 126.
The impact of society's activity on local populations
and in the territory.
Global
103; 413-1; 413-2
3.4.3 Contribute to the society, pages 78-79;
4.8 Community Engagement, pages 125-126.
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AREA
CONTENT
SCOPE/
PERIMETER
RELATED GRI
STANDARDS
PAGE/CHAPTER
SOCIETY
The relationships maintained with the local
communities and the modalities of dialogue
with them.
Global
413-1; 413-2
4.8 Community Engagement, pages 126-127.
The association or sponsorship actions.
Global
102-13; 413-1
4.12 Communication and Transparency, page 134;
4.8 Community Engagement, page 126.
Subcontracting and suppliers
The inclusion of social issues, gender equality
and environmental issues in the Procurement
Policy. Consideration of the suppliers and
subcontractors'
social and environmental
responsibility when interacting with them.
Global
102-9; 103;
204-1; 308-2;
414-2
3.3 Supply Chain Capital, pages 74-75.
4.7 Suppliers Management, pages 122-124.
Supervision systems and audits and their results.
Global
308-2; 414-2
3.3 Supply Chain Capital, page 75;
4.7 Suppliers Management, pages 122-124.
Customers
Measures for the health and safety of consumers.
Global
EU25; 413-2
4.4 Health & Safety, page 105;
4.8 Community Engagement, page 127.
Complaining system, complaints received
and their resolution.
Global
205-3; 406-1;
407-1; 408-1;
409-1; 413-2;
1.3.4 Integrity and Ethics, pages 31-32;
4.8 Community Engagement, page 127;
4.11 Ethics and Compliance, pages 132-133.
Tax information
Profit before income tax, by country. Corporate
income tax paid.
Global
201-1; 207-4
4.3 Economic Business Sustainability, page 100;
4.12 Communication and Transparency, page 137.
Financial assistance received from the
government.
Global
201-4
4.12 Communication and Transparency, page 134.
OTHERS
Annual total compensation ratio.
Global
102-38
4.5 People Management, page 117.
Legal actions for anti-competitive behaviour, anti-
trust and monopoly practices.
Global
206-1
4.12 Communication and Transparency, page 135.
Non-compliance with environmental laws and
regulations.
Global
307-1
4.12 Communication and Transparency, page 135.
Non-compliance with laws and regulations in the
social and economic area.
Global
419-1
4.12 Communication and Transparency, page 135.
Statement from senior decision-maker.
Global
102-14
Message from the CEO, pages 3-5.
Identifying and selecting stakeholders; Approach to
stakeholder engagement.
Global
102-40; 102-42;
103
1.1.5 Stakeholder focus, pages 16-17.
Key topics and concerns raised; List of material
topics.
Global
102-44; 102-47
4.1 Materiality Assessment, page 94.
Innovation
Global
103
3.7 Innovation Capital, page 86-87.
Note: In addition to the indicators included in this table, non-financial information can be found in the following indicators: 102-1, 102-3, 102-5, 102-10,
102-12, 102-43, 102-45, 102-46, 102-48, 102-49, 102-50, 102-51, 102-52, 102-53, 102-54, 102-55, 102-56.
143
Annex II: GRI Content Index
External assurance: The GRI indicators included in the following table have been verified by PwC. See the correspondent
Independent Verification Report in pages 147-149. Additionally, some GRI indicators refer to Notes in EDPR's 2020
Consolidated Annual Accounts, which have been audited by PwC. See the correspondent Independent Auditor's Report on
the Consolidated Annual Accounts at the beginning of the document.
GRI STANDARD
DISCLOSURES
PAGE/CHAPTER
GENERAL DISCLOSURES
GRI 102: General Disclosures 2016
102-1
Name of the organisation
5. Corporate Governance (A. Shareholder Structure), page 154.
102-2
Activities, brands, products and services
1.1.3 Business Description, page 13.
102-3
Location of headquarters
EDPR head offices are located in Madrid (Spain).
102-4
Location of operations
1.1.2 EDPR in the world, pages 11-12.
102-5
Ownership and legal form
5. Corporate Governance (A. Shareholders Structure), pages 154-158;
2020 Consolidated Annual Accounts - Note 1, pages 12-28.
102-6
Markets served
1.1.2 EDPR in the world, pages 11-12.
102-7
Scale of the organisation
1.1.2 EDPR in the world, pages 11-12;
3.1.2 Financial Performance: pages 61-68.
102-8
Information on employees and other workers
4.5 People Management, pages 106-109;
102-9
Supply chain
3.3 Supply Chain Capital, pages 74-75.
102-10
Significant changes to the organisation
and its supply chain
5. Corporate Governance (A. Shareholders Structure), pages 154-158;
2020 Consolidated Annual Accounts - Note 6 & 41, pages 54-60 and
pages 114-116.
102-11
Precautionary Principle or approach
2.3 Risk Management, pages 48-53;
4.10 Environmental Management, page 131;
5. Corporate Governance (C. Internal Organization), pages 180-201.
102-12
External Initiatives
4.14 Reporting Principles, page 138.
102-13
Membership of associations
4.12 Communication and Transparency, page 134.
102-14
Statement from senior decision-maker
Message from the CEO, pages 3-5.
102-16
Values, principles, standards, and norms of behaviour
1.3.4 Integrity and Ethics, pages 31-32;
5. Corporate Governance (C. Internal Organization), pages 180-201.
102-18
Governance structure
1.3 Organisation, pages 24-32;
5. Corporate Governance, pages 154-244.
102-38
Annual total compensation ratio
4.5 People Management, page 117.
102-40
List of stakeholder groups
1.1.5 Stakeholders Focus, page 17.
102-41
Collective bargaining agreements
4.5 People Management, page 110.
102-42
Identifying and selecting stakeholders
1.1.5 Stakeholders Focus, pages 16-17;
4.14 Reporting Principles, page 138.
102-43
Approach to stakeholder engagement
1.1.5 Stakeholders Focus, pages 16-17;
4.1 Materiality Assessment, pages 93-94;
4.14 Reporting Principles, page 138;
Please visit our stakeholders’ information on the sustainability section in
our website,
102-44
Key topics and concerns raised
4.1 Materiality Assessment, pages 93-94;
4.14 Reporting Principles, page 138.
102-45
Entities included in the consolidated financial statements
2020 Consolidated Annual Accounts - Note 6, pages 54-60.
102-46
Defining report content and topic boundaries
4.1 Materiality Assessment, pages 93-94;
4.14 Reporting Principles, page 138.
102-47
List of material topics
4.1 Materiality Assessment, pages 93-94.
102-48
Restatements of information
2020 Consolidated Annual Accounts - Note 6, pages 54-60;
4.2 Climate Change, pages 97-99.
102-49
Changes in reporting
2020 Consolidated Annual Accounts - Note 6, pages 54-60.
102-50
Reporting period
4.14 Reporting Principles, page 138.
102-51
Date of most recent report
4.14 Reporting Principles, page 138.
102-52
Reporting cycle
4.14 Reporting Principles, page 138.
102-53
Contact point for questions regarding the report
“Contact us” at
102-54
Claims of reporting in accordance with the GRI Standards
4.14 Reporting Principles, page 138.
102-55
GRI content index
Annex II - GRI Content Index, pages 143-146.
102-56
External assurance
4.14 Reporting Principles, page 138.
144
ANNUAL REPORT EDPR 2020
GRI STANDARD
DISCLOSURES
PAGE/CHAPTER
MATERIAL TOPICS
Climate Change
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
2.1 Business Environment, pages 37-43.
103-2
The management approach and its components
3.1.1 Operational Performance, pages 58-60; 3.5 Natural Capital, 80-81.
103-3
Evaluation of the management approach
3.5 Natural Capital, pages 80-81.
GRI 201: Economic
Performance 2016
201-2
Financial implications and other risks and opportunities
due to climate change
4.2 Climate Change, pages 96-97.
GRI 302: Energy 2016
302-1
Energy consumption within the organisation
4.2 Climate Change, page 97.
302-4
Reduction of energy consumption
4.2 Climate Change, page 98.
GRI 305: Emissions 2016
305-1
Direct (Scope 1) GHG emissions
4.2 Climate Change, page 98.
305-2
Energy indirect (Scope 2) GHG emissions
4.2 Climate Change, page 98.
305-3
Other indirect (Scope 3) GHG emissions
4.2 Climate Change, page 98.
305-5
Reduction of GHG emissions
4.2 Climate Change, page 99.
GRI EU
EU1
Installed capacity, broken down by primary energy source
and by regulatory regime
4.2 Climate Change, page 95.
EU2
Net energy output broken down by primary energy source
and by regulatory regime
4.2 Climate Change, page 96.
Economic Business Sustainability
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
2.2 Strategy, page 44.
103-2
The management approach and its components
2.2.2 Self-funding business, page 47;
2.2.3 Operational excellence, page 47.
103-3
Evaluation of the management approach
3.1.2 Financial Performance, pages 60-68.
GRI 201: Economic
Performance 2016
201-1
Direct economic value generated and distributed
4.3 Economic Business Sustainability, page 100.
Health & Safety
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
3.4.1 Health & Safety, pages 76-77.
103-2
The management approach and its components
3.4.1 Health & Safety, pages 76-77.
103-3
Evaluation of the management approach
3.4.1 Health & Safety, pages 76-77.
GRI 403: Occupational
Health and Safety 2018
403-1
Occupational health and safety management system
4.4 Health & Safety, page 101.
403-2
Hazard identification, risk assessment, and incident
investigation
4.4 Health & Safety, page 101.
403-3
403-4
Occupational health services
Worker participation, consultation, and communication on
occupational health and safety
4.4 Health & Safety, page 101.
4.4 Health & Safety, page 101.
403-5
Worker training on occupational health and safety
4.4 Health & Safety, page 102.
403-6
Promotion of worker health
4.4 Health & Safety, page 102.
403-7
Prevention and mitigation of occupational health and
safety impacts directly linked by business relationships
4.4 Health & Safety, page 102.
403-9
Work-related injuries
4.4 Health & Safety, pages 102-105.
403-10
Work-related ill health
4.4 Health & Safety, page 105.
GRI EU
EU17
Days worked by contractor and subcontractor employees
involved in construction and O&M activities
4.4 Health & Safety, page 105.
EU25
Number of injuries and fatalities to the public involving
company assets, including legal judgements, settlements
and pending legal cases of diseases
4.4 Health & Safety, page 105.
People Management
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
3.2 Human Capital, pages 69-73.
103-2
The management approach and its components
3.2 Human Capital, pages 69-73.
103-3
Evaluation of the management approach
3.2 Human Capital, pages 69-73.
GRI 401: Employment 2016
401-1
New employee hires and employee turnover
4.5 People Management, pages 111-112.
401-2
Benefits provided to full-time employees that are not
provided to temporary or part-time employees
4.5 People Management, page 112.
GRI 402: Labour /
Management Relations 2016
402-1
Minimum notice periods regarding operational changes
4.5 People Management, page 112.
GRI 404: Training and
Education 2016
404-1
Average hours of training per year per employee
4.5 People Management, page 113.
404-2
Programs for upgrading employee skills and transition
assistance programs
4.5 People Management, pages 113-114.
404-3
Percentage of employees receiving regular performance
and career development reviews
4.5 People Management, page 115.
GRI 405: Diversity and Equal
Opportunity 2016
405-1
Diversity of governance bodies and employees
4.5 People Management, pages 115-116.
405-2
Ratio of basic salary and remuneration of women to men
4.5 People Management, pages 116-117.
GRI EU
EU15
Percentage of employees eligible to retire in the next 5
and 10 years broken down by job category and by region
4.5 People Management, page 118.
145
GRI STANDARD
DISCLOSURES
PAGE/CHAPTER
Corporate Governance
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
1.3 Organisation, pages 24-32.
103-2
The management approach and its components
1.3 Organisation, pages 24-32.
103-3
Evaluation of the management approach
1.3 Organisation, pages 24-32.
Suppliers Management
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
3.3 Supply Chain Capital, pages 74-75.
103-2
The management approach and its components
3.3 Supply Chain Capital, pages 74-75.
103-3
Evaluation of the management approach
3.3 Supply Chain Capital, pages 74-75.
GRI 204: Procurement
Practices 2016
204-1
Proportion of spending on local suppliers
4.7 Suppliers Management, page 122.
GRI 308: Supplier
Environmental Assessment
2016
308-2
Negative environmental impacts in the supply chain and
actions taken
4.7 Suppliers Management, pages 122-123.
GRI 414: Supplier Social
Assessment 2016
414-2
Negative social impacts in the supply chain and actions
taken
4.7 Suppliers Management, pages 123-124.
Community Engagement
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
3.4.3 Contribute to the society, pages 78-79.
103-2
The management approach and its components
3.4.3 Contribute to the society, pages 78-79.
103-3
Evaluation of the management approach
3.4.3 Contribute to the society, pages 78-79.
GRI 202: Market Presence
2016
202-2
Proportion of senior management hired from the local
community
4.8 Community Engagement, page 125.
GRI 203: Indirect Economic
Impacts 2016
203-1
Infrastructure investments and services supported
4.8 Community Engagement, page 125.
203-2
Significant indirect economic impacts
4.8 Community Engagement, page 125.
GRI 411: Rights of
Indigenous People 2016
411-1
Incidents of violations involving rights of indigenous
peoples
4.8 Community Engagement, page 125.
GRI 413: Local Communities
2016
413-1
Operations with local community engagement, impact
assessments, and development programs
4.8 Community Engagement, page 126.
413-2
Operations with significant actual and potential negative
impacts on local communities
4.8 Community Engagement, page 127.
Innovation
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
3.7 Innovation Capital, pages 86-87.
103-2
The management approach and its components
3.7 Innovation Capital, pages 86-87.
103-3
Evaluation of the management approach
3.7 Innovation Capital, pages 86-87.
Environmental Management
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
3.5 Natural Capital, pages 80-81.
103-2
The management approach and its components
3.5 Natural Capital, pages 80-81.
103-3
Evaluation of the management approach
3.5 Natural Capital, pages 80-81.
GRI 304: Biodiversity 2016
304-1
Operational sites owned, leased, managed in, or adjacent
to, protected areas and areas of high biodiversity value
outside protected areas
4.10 Environmental Management, page 129.
304-2
Significant impacts of activities, products, and services on
biodiversity
4.10 Environmental Management, page 128.
304-3
Habitats protected or restored
4.10 Environmental Management, page 128.
GRI 306: Effluents and
Waste 2016
306-2
Waste by type and disposal method
4.10 Environmental Management, page 130.
306-3
Significant spills
4.10 Environmental Management, page 131.
Ethics and Compliance
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
1.3.4 Integrity and Ethics, pages 31-32.
103-2
The management approach and its components
1.3.4 Integrity and Ethics, pages 31-32.
103-3
Evaluation of the management approach
1.3.4 Integrity and Ethics, pages 31-32.
GRI 205: Anti-corruption
2016
205-1
Operations assessed for risks related to corruption
4.11 Ethics and Compliance, page 132.
205-2
Communication and training on anti-corruption policies
and procedures
4.11 Ethics and Compliance, page 132.
205-3
Confirmed incidents of corruption and actions taken
4.11 Ethics and Compliance, page 132.
GRI 406: Non-discrimination
2016
406-1
Incidents of discrimination and corrective actions taken
4.11 Ethics and Compliance, page 132.
GRI 407: Freedom of
Association and Collective
Bargaining 2016
407-1
Operations and suppliers in which the right to freedom of
association and collective bargaining may be at risk
4.11 Ethics and Compliance, pages 132-133.
GRI 408: Child Labour 2016
408-1
Operations and suppliers at significant risk for incidents of
child labour
4.11 Ethics and Compliance, page 133.
GRI 409: Forced or
Compulsory Labour 2016
409-1
Operations and suppliers at significant risk for incidents of
forced or compulsory labour
4.11 Ethics and Compliance, page 133.
146
ANNUAL REPORT EDPR 2020
GRI STANDARD
DISCLOSURES
PAGE/CHAPTER
Communication and transparency
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
1.1.5 Stakeholders Focus, pages 16-17.
103-2
The management approach and its components
1.1.5 Stakeholders Focus, pages 16-17.
103-3
Evaluation of the management approach
1.1.5 Stakeholders Focus, pages 16-17.
GRI 201: Economic
Performance 2016
201-4
Financial assistance received from government
4.12 Communication and Transparency, page 134.
GRI 206: Anti-competitive
Behaviour 2016
206-1
Legal actions for anti-competitive behaviour, anti-trust,
and monopoly practices
4.12 Communication and Transparency, page 135.
GRI 307: Environmental
Compliance 2016
307-1
Non-compliance with environmental laws and regulations
4.12 Communication and Transparency, page 135.
GRI 415: Public Policy 2016
415-1
Political contributions
4.12 Communication and Transparency, page 135.
GRI 419: Socioeconomic
Compliance 2016
419-1
Non-compliance with laws and regulations in the social
and economic area
4.12 Communication and Transparency, page 135.
GRI 207: Tax 2019
207-1
Approach to tax
4.12 Communication and Transparency, pages 136-137.
207-2
207-3
Tax governance, control, and risk management
Stakeholder engagement and management of concerns
related to tax
4.12 Communication and Transparency, page 137.
Omitted as it is not available. EDPR will work on including tax related
topics in the approach and management of stakeholders
in 2021’s report.
207-4
Country-by-country reporting
4.3 Economic Business Sustainability, page 100;
4.5 People Management, pages 108-109;
4.12 Communication and Transparency, page 137;
2020 Consolidated Annual Accounts - Note 1, pages 12-28;
2020 Consolidated Annual Accounts - Annex I, pages 121-139;
Reporting requirements iv, v, vii, ix and x of GRI 207-4 are omitted as the
information is not available with the requested detail by tax jurisdiction.
EDPR will work on obtaining the required details in a near future.
Digital Transformation
GRI 103: Management
Approach 2016
103-1
Explanation of the material topic and its boundary
3.6 Digital Capital, pages 82-85.
103-2
The management approach and its components
3.6 Digital Capital, pages 82-85.
103-3
Evaluation of the management approach
3.6 Digital Capital, pages 82-85.
PricewaterhouseCoopers Auditores, S.L., Torre PwC, Pº de la Castellana 259 B, 28046 Madrid, España
Tel.: +34 915 684 400 / +34 902 021 111, Fax: +34 915 685 400,
1
R. M. Madrid, hoja 87.250-1, folio 75, tomo 9.267, libro 8.054, sección 3ª
Inscrita en el R.O.A.C. con el número S0242 - CIF: B-79 031290
Independent verification report
To the shareholders of EDP Renováveis, S.A.:
Pursuant to Article 49 of the Code of Commerce, we have verified, under a limited assurance scope,
the accompanying Non-financial information statement
(“NF
S
”) for the year ended 31 December
2020
of EDP Renováveis, S.A. and subsidiaries (hereinafter
“
EDPR
”) which forms part of
EDPR´s
consolidated management report.
The content of the consolidated management report includes additional information to that required by
the current mercantile legislation related to non-financial information reporting which has not been
covered by our verification work. In this respect, our work has been restricted solely to verifying the
information identified in the tables: Annex I: “Non
-
financial information statement” and Annex II: “GRI
content index” incl
uded in the consolidated management report.
Responsibility of the Board of Directors
The preparation of the NFS included in EDPR's consolidated management report and the content
thereof are the responsibility of the Board of Directors of EDP Renováveis, S.A. The NFS has been
drawn up in accordance with the provisions of current mercantile legislation and with the Sustainability
Reporting Standards of the Glob
al Reporting Initiative (“GRI Standards”)
described in accordance with
the Essential Option and the Sectorial Supplement
Electric Utilities
, in line with the details provided for
each matter in the
tables: Annex I: “Non
-
financial information statement” and
Annex II: “GRI content
index” included in the consolidated management report.
This responsibility also includes the design, implementation and maintenance of the internal control
considered necessary to allow the NFS to be free of any immaterial misstatement due to fraud or
error.
The directors of EDP Renováveis, S.A. are also responsible for defining, implementing, adapting and
maintaining the management systems from which the information required to prepare the NFS is
obtained.
Our independence and quality control
We have complied with the independence requirements and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the International Ethics Standards Board for
Accountants (“IESBA”) which is
based on the fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behaviour.
2
Our firm applies the International Standard on Quality Control 1 (ISQC 1) and therefore has in place a
global quality control system, which includes documented policies and procedures related to
compliance with ethical requirements, professional standards and applicable legal and regulatory
provisions.
The engagement team has been formed by professionals specialising in non-financial information
reviews and specifically in information on economic, social and environmental performance.
Our responsibility
Our responsibility is to express our conclusions in an independent limited verification report based on
the work carried out. Our work has been carried out in accordance with the requirements laid down in
the current International Standard on Assurance Engagements (ISAE) 3000 Revised, Assurance
Engagements Other than Audits or Reviews of Historical Financial Information (ISAE 3000 Revised)
issued by the International Auditing and Assurance Standards Board (IAASB) of the International
Federation of Accountants (IFAC) and with the Guidelines for verification engagements on non-
financial statements issued by the Spanish Institute of Auditors (“Instituto de Censores Jurados de
Cuentas de España”).
In a limited assurance engagement, the procedures performed vary in terms of their nature and timing
of execution, and are less extensive than those carried out in a reasonable assurance engagement.
Accordingly, the assurance obtained is substantially lower.
Our work has consisted of posing questions to Management and several EDPR units that were
involved in the preparation of the NFS, in the review of the processes for compiling and validating the
information presented in the NFS, and in the application of certain analytical procedures and review
sampling tests, as described below:
x
Meetings with EDPR personnel to ascertain the business model, policies and management
approaches applied, the main risks related to these matters and to obtain the information
required for the external review.
x
Analysis of the scope, relevance and integrity of the contents included in the NFS for 2020,
based on the materiality analysis carried by EDPR
and described in section 4.1. “Materiality
assessment” of the
consolidated management report, considering the content required under
current mercantile legislation.
x
Analysis of the procedures used to compile and validate the information presented in NFS for
2020.
x
Review of information concerning risks, policies and management approaches applied in
relation to material issues presented in the NFS for 2020.
x
Verification, through sample testing, of the information relating to the content of the NFS for
2020 and its adequate compilation using data supplied by the EDPR´s sources of information.
x
Obtainment of a management representation letter from the Directors and Management of EDP
Renováveis, S.A.
3
Conclusions
Based on the procedures performed and the evidence we have obtained, nothing has come to our
attention that causes us to believe that EDPR's NFS, for the year ended 31 December 2020 has not
been prepared, in all its significant aspects, in accordance with the provisions of current mercantile
legislation and the Sustainability Reporting Standards of the Global Reporting Initiative (“GRI
Standards”) following the Essential Option and the Sectorial Supplement “Electric Utilities”,
in
accordance with the details provided for each matter in
tables: Annex I: “Non
-financial information
statement” and Annex II: “GRI content index” included in the consolidated management report.
Use and distribution
This report has been drawn up in response to the requirement laid down in current Spanish mercantile
legislation and therefore might not be suitable for other purposes or jurisdictions.
PricewaterhouseCoopers Auditores, S.L.
Pablo Bascones Ilundain
24 February 2021
2021-02-24 11:59:38 ( UTC +01:00 )
51075979V PABLO JESUS BASCONES
G
FROM DISRUPTION
TO EVOLUTION
Fostering
excellence
to meet the
world's needs
Changing tomorrow now.
05
Part I - Information on shareholder structure,
organisation and corporate governance
154
Shareholder structure
154
Corporate Board and Committees
159
Internal organisation
180
Remuneration
202
Related-party transactions
209
Part II - Corporate Governance assessment
214
Annex I -
Curriculum Vitae
of the members
of the Board of Directors
229
CORPORATE GOVERNANCE
154
ANNUAL REPORT EDPR 2020
Corporate
Governance
PART I - Information on shareholder structure, organisation
and corporate governance
A. Shareholder structure
I. Capital structure
1. Capital structure
EDP
Renováveis, S.A. (hereinafter referred to as “EDP
Renováveis”, “EDPR” or the “Company”) total share capital is, since its
initial public offering (IPO) in June 2008, EUR 4,361,540,810 consisting of issued and fully paid 872,308,162 shares with
nominal value of EUR 5.00 each. All the shares are part of a single class and series and are admitted to trading on the Euronext
Lisbon regulated market.
Codes and tickers of EDP Renováveis SA share:
ISIN:ES0127797019
LEI:529900MUFAH07Q1TAX06
Bloomberg Ticker (Euronext Lisbon): EDPR PL
Reuters RIC:EDPR.LS
155
EDPR main shareholder is EDP
–
Energias de Portugal, S.A., through EDP
–
Energias de Portugal, S.A. Sucursal en España
(hereinafter referred as “EDP”), with 82.6% of share capital and voting rights. Excluding EDP,
EDPR shareholders comprise
more than 30,000 institutional and private investors spread across 30 countries with main focus in the United States and United
Kingdom.
Institutional Investors represent about 94% of Company shareholders (ex-EDP Group), mainly investment funds and socially
responsible investors (“SRI”), while Private
Investors, mostly Portuguese, stand for the remaining.
For further information about EDPR shareholder structure please see chapter 1.3 of the Annual Report (“Organisation”).
2. Restrictions to the transferability of shares
EDPR’s Articles of Association have no restrictions on the transferability
of shares.
3. Own shares
EDPR does not hold own shares.
4. Change of control
EDPR has not adopted any measures designed to prevent successful takeover bids, nor defensive measures for cases of a
change in control in its shareholder structure or agreements subject to the condition of a change in control of the Company,
other than in accordance with normal practice, and therefore, has not adopted any mechanisms that imply payments or
assumption of fees in the case of the transfer of control or the change in the composition of the managing body, or that could be
likely to harm the free transferability of shares or shareholder assessment of the performance of the members of the managing
body.
Notwithstanding the above, the following are normal market practice related to a potential change of control:
•
In the case of financing of certain wind farm projects, lenders have the right to approve change in control at the borro
wer if the later ceased to be controlled, directly or indirectly by EDPR.
•
In the case of guarantees provided by EDP Group companies, if EDP directly or indirectly ceases to have the majority
of EDPR then EDP is no longer obliged to provide such services or guarantees. The relevant subsidiaries will be
obliged to provide for the cancellation or replacement of all outstanding guarantees within approximately sixty (60)
days of the change of control event.
•
In the cases of intra-group services agreements and according to the Framework Agreement signed between EDP
Renováveis S.A.and EDP Energias de Portugal S.A., the contracts will maintain their full force as long as (i) EDP
maintains its share capital above 50% or the right to exercise directly or indirectly more than 50% of voting rights on
EDPR’s share capital, or (ii) even if the share capital of EDP or its voting rights are below 50%, but more than half of
the Members of the Board or of EDPR’s Executive Committee are ele
cted through an EDP proposal.
5. Special agreements regime
EDPR does not have a special system for the renewal or withdrawal of counter measures for the restriction on the number of
votes capable of being held or exercised by only one shareholder individually or together with other shareholders.
6. Shareholders
’
agreements
The Company is not aware of any shareholders’ agreement that may result in restrictions on the transfer of securities or voti
ng
rights.
156
ANNUAL REPORT EDPR 2020
II. Shareholdings and bonds held
7. Qualified holdings
Qualifying holdings in EDPR are subject to the Spanish Law, which regulates the criteria and thresholds of the shareholder’s
ownerships. The table below includes the information about the qualifying holdings of EDPR and their voting rights as of
December 31
st
, 2020:
SHAREHOLDER
SHARES
%CAPITAL
%VOTING
RIGHTS
EDP
–
ENERGIAS DE PORTUGAL, S.A.
–
SUCURSAL EN
ESPAÑA
EDP
–
ENERGIAS DE PORTUGAL, S.A.
–
SUCURSAL EN
ESPAÑA
720,191,372
82.6%
82.6%
Total qualified holdings
720,191,372
82.6%
82.6%
EDP detains 82.6% of EDPR capital and voting rights, through EDP
–
Energias de Portugal, S.A.
–
Sucursal en España.
As of December 31
st
, 2020
, EDPR’s shareholder structure consisted in a total qualified sha
reholding of 82.6%, corresponding to
EDP Group.
8. Shares held by the Members of the Management and Supervisory Boards
The table below reflects the Members of the Board of Directors/Delegated Committees of the Company that, as of December
31
st
2020, directly or indirectly own EDPR shares:
BOARD MEMBER
DIRECT SHARES
INDIRECT SHARES
Spyridon Martinis
10,413*
-
(*)
These shares were bought before the appointment as Director of the Company (being the first acquisition in 2011 and the last one in 2018).
9. Powers of the Board of Directors
The Board of Directors is vested with the broad-ranging powers of administration, management, and governance of the
Company, with no other limitations besides the powers which are expressly assigned to the
General Shareholders’ Meetings
in
the
Company’s
Articles of Association (specifically in article 13) or in the applicable law. In this regard, the powers of the Board
include, without limitation
1
to:
•
Acquire on lucrative or onerous title basis personal and real property, rights, shares and interests that may suit the
Company;
•
Sell and mortgage or charge personal and real property, rights, shares and interests of the Company and cancel mortgages
and other rights
in rem
;
•
Negotiate and conclude as many loans and credit operations that it may deem appropriate;
•
Enter and formalize all sort of acts and contracts with public entities or private persons;
•
Exercise any civil and criminal actions and all further actions to be undertaken by the Company, representing it before
governmental officers, authorities, corporations, governing, administrative, administrative-economic, administrative-litigation
and judicial courts, labor courts and the labor sections of the Supreme Courts and of the High Courts of the Autonomous
Communities, with no limitations whatsoever, including before the European Court of Justice, and in general, before the
Government, in all its levels and hierarchies, to intervene or promote, follow or terminate through all procedures and
instances, the processes, court sections or proceedings; to accept decisions, to file any kind of appeal, including the
cassation one and other extraordinary appeals, to discontinue or confess, to agree an early termination of a proceeding, to
submit litigious questions to arbitration judges, and to carry out all sort of notices and requirements and to grant power of
1
This list has a merely indicative nature, as the Board of Directors may perform all further powers expressly granted to the Board in the Articles or in the applicable law.
157
attorney to Court Representatives and other representatives, with case-related powers and the powers which are usually
granted to litigation cases and all the special powers applicable, and to revoke such powers;
•
Agree the allotment of interim dividends;
•
Call and convene the General Meetings and submit to them the proposals that it deem appropriate;
•
Direct the Company and the organize its operations and exploitations by acknowledging the course of the Company
businesses and operations, managing the investment of funds, making extraordinary depreciations of bonds in circulation
and realizing anything that it is considered appropriate to obtain maximum gains towards the object of the Company;
•
Freely appoint and dismiss Directors and all the Company’s technical and administrative personnel, defining their office and
retribution;
•
Agree any changes of the registered office’s address within the same
borough;
•
Incorporate under the law all sorts of legal persons; contribute and assign all sorts of assets and rights, as well as entering
merger and cooperation agreements, association, grouping and temporary union agreements between companies or
business and joint property agreements, and agreeing their alteration, transformation and termination;
Likewise, the
General Shareholders’ Meeting
held in March 26
th
, 2020, approved the delegation to the Board of Directors of the
power to issue in one or more occasions both:
•
Fixed income securities or other debt instruments of analogous nature;
•
Fixed income securities or other type of securities (warrants included) convertible or exchangeable into EDP
Renováveis, S.A. shares, or that recognize at the Board of
Directors’ discretion the right of subscription or acquisition
of shares of EDP Renováveis, S.A. or of other companies, up to a maximum amount of three hundred million Euros
(EUR 300,000,000) or its equivalent in other currency.
As part of such delegation, the
General Shareholder’s Meeting delegated
into the Board of Directors the power to increase the
share capital up to the necessary amount to execute the related tasks above. Additionally, it was also approved to authorize the
Board of Directors for the acquisition of own shares by the Company and/or the affiliate companies up to the maximum limit of
10% of the subscribed share capital. These delegations may be exercised by the Board of Directors within a period of five (5)
years since the proposal was approved, and within the limits provided under the law and the By-Laws.
The
General Shareholders’ Meeting may
also delegate to the Board of Directors the power to implement an adopted decision to
increase the share capital, indicating the date or dates of its implementation and establishing any other conditions that were not
specified by the
General Shareholders’ Meeting.
The Board of Directors may use this delegation wholly or partially, and may
also decide not to perform it in accordance with the situation and conditions of the Company, the market, or any particularly
relevant events or circumstances that justify such decision - of which the
General Shareholders’ Meeting must
be informed at
the end of the time limit or limits for adopting and performing the decision.
Additionally, in compliance with its personal law and
Company’s internal regulations
, some functions of the Board of Directors
are non- delegable and, as such, have to be performed at this level, which are the following:
•
Election of the Chairperson of the Board of Directors;
•
Appointment of Directors by co-option;
•
Request to convene or convening of General
Shareholders’
Meetings and the preparation of the agenda and
proposals of resolutions;
•
Preparation of the Annual Reports and Management Reports and their presentation to the General
Shareholders’
Meeting;
•
Change of Headquarters;
158
ANNUAL REPORT EDPR 2020
•
Preparation and approval of mergers, spin-off, or transformation projects of the Company;
•
Monitoring the effective functioning of the Board of Directors committees and the performance of delegated bodies
and appointed directors;
•
Definition of the Company’s general policies and strategies. In any case, the following transactions individually
considered, shall be subject to the prior approval of the Board of Directors, or its ratification in cases of justified
urgency:
-
Acquisition or sale of assets, rights or participations with an economic value higher than seventy-five million
Euros (EUR 75,000,000) and not included in the budget approved by the Board of Directors;
-
Opening or closing of establishments/branches or relevant parts of establishments /branches, as well as the
extension or reduction of its activity;
-
Other business activity or transactions, including expansion investments, with a significant strategic relevance or
with an economic value higher than seventy-five million Euros (EUR 75,000,000) and not included in the budget
approved by the Board of Directors; or
-
Creation or termination of strategic alliances or partnerships or other forms of long-term cooperation;
•
Authorization or waiver of the obligations arising from duty of loyalty;
•
Its own organisation and functioning;
•
Preparation of any report required by the law to the management body, provided that the operation referred in the
report cannot be delegated;
•
Appointment and dismissal of Chief Executive Officer, top management directly depending from the Board of
Directors or any of its members, and their general contractual conditions including remuneration;
•
Decisions concerning
director’s
remuneration within the Articles of
Association’s
frame and, if any, the remuneration
policy approved by the General Meeting;
•
Policy concerning own shares;
•
The faculties that the General Meeting may have delegated on the Board of Directors, except for the cases expressly
authorized by the first to sub delegate them
Should be noted that as exposed in topic 15 of this Chapter 5 of the Annual Report, as of 31
st
December 2020, EDPR does not
have a Supervisory Board, but its Board of Directors has set up three Delegated Committees entirely composed by Members of
the Board of Directors, and all these directors are necessarily involved in the definition of the strategy and policies of the
Company as per the non - delegable basis of these functions under its personal law. Therefore, in compliance with its personal
law, all the members of the delegated committees will assess and give its opinion on the strategic lines and the risk policy of the
Company at the Board level prior to its final approval. Likewise, should be noted that the corresponding monitorization of the
accomplishment of these actions, as detailed in topic 29 this Chapter 5 of the Annual Report, is performed by the Audit, Control
and Related Party Transactions Committee and the Nominations and Remunerations Committee, both of which are integrally
formed by non-executive and independent directors.
10. Significant business relationships between the holders of qualifying holdings and the Company
Information on any significant business relationships between the holders of qualifying holdings and the Company is described
on topic 90 of this Chapter 5 of the Annual Report.
159
B. Corporate Boards and Committees
I. General
Shareholders’ Meeting
A) Composition of the Board of the General Meeting
11.
Board of the General Shareholders’ Meeting
The Members of the Board of the General Shareholders’ Meeting are its Chairman, the Chairman of the Board of Directors (or
his substitute), the other Directors and the Secretary of the Board of Directors. In accordance with article 180 of the Spanish
Compa
nies’ Law, all the Board Members are obliged to attend the General Meetings.
The Chairman of the
General Shareholders’ Meeting
is José António de Melo Pinto Ribeiro, who was elected on the General
Meeting of April 8
th
, 2014, for a three-year (3) term; and re-elected on the
General Shareholders’ Meeting
held on April
6
th
,2017 for a last mandate of three-year (3) term. Mr. Pinto Ribeiro office was extended until the first General Shareholders
’
Meeting following of the end of this office term.
The Chairman of the Board of Directors is António Mexia, who was re-elected as member of the Board for a three-year (3) term
by the
General Shareholders’ Meeting
held in June 27
th
, 2018, and for the position of Chairman of the Board of Directors on its
meeting subsequently held on the same date.
The Secretary of the Board of Directors is Emilio García-Conde Noriega who is also the Secretary of the
General Shareholders’
Meeting, and was appointed as Secretary of the Board of Directors on December 4
th
, 2007. The Secretary of the Board of
Directors’ mandate
does not have an end of term date according to the Spanish Companies Law since is not a Board Director.
The Chairman of the General Shareholders’ Meeting of EDPR has at his disposal, the necessary human and logistical
resources required for the performance of his duties.
Therefore, in addition to the resources provided by the Company’s General
Secretary, in 2020 the Company hired a specialized entity to give support to the meeting and to collect, process and count the
votes submitted by the shareholders on the
General Shareholders’ Meeting
held on March 26
th
.
B) Exercising the right to vote
12. Voting rights restrictions
Each EDPR share entitles its holder to one vote. EDPR’s Articles of Association have no restrictions regarding voting rights.
13. Voting rights
EDPR’s
Articles of Association have no reference to a maximum percentage of voting rights that may be exercised by a single
shareholder or by shareholders that are in any relationship. All shareholders, regardless the number of shares owned, may
attend to the
General Shareholders’ Meeting
and request the information or explanations that they consider relevant regarding
the matters included in the Agenda of the convened meeting, and are entitled as shareholders of the Company, to take part in
its deliberations and to participate in its voting process.
The Board of Directors approves a
Shareholder’s Guide
for each
General Shareholders’ Meeting,
detailing among other
matters, the procedure and requirements for the submission through mail and electronic communication of voting forms. This
Guide is available at the
Company’s webs
ite (
). As informed in the related Notice and in the corresponding
Shareholders’ Guide,
in order to exercise their right to attend, the shareholders must have the ownership of their shares duly
registered in the Book Entry Account at least five (5) days prior to the date of the General
Shareholders’
Meeting.
Any shareholder may be represented at the General Shareholders’ Meeting by a third party by means of a revocable Power of
Attorney (even if such
representative is not a shareholder). The Board of Directors may require shareholders’ Power of Attorney
to be in the Company’s possession at least two (2) days in advance, indicating the name of the representative.
These Powers of Attorney shall be grant
ed specifically for each General Shareholders’ Meeting and can be evidenced in writing
or by remote means of communication such as email or post.
160
ANNUAL REPORT EDPR 2020
According to the applicable law and the
Company’s
Articles of Association, the notice of
EDPR’s General Shareholders’
Meetings is published in the Official Gazette of the Commercial Registry and on the
Company’s
website at least thirty (30) days
prior to the meeting date. Likewise, the Notice of the
General Shareholder’s Meeting
is published at the website of
Sociedade
Gestora de Sistemas de Liquidação e de Sistemas Centralizados de Valores Mobiliários, S.A
(“Interbolsa”)
and on the website
of the
Comissão do Mercado de Valores Mobiliários
(“CMVM”)
–
at
www.cmvm.pt - and of the Comisión Nacional del Mercado
de Valores
(“CNMV”)
–
at
www.cnmv.es - as the case may be. Simultaneously with the publication of the meeting Notice, the
supporting documentation in relation to the General
Shareholders’
Meeting is published on the CMVM website. Likewise, as
soon as the notice of the meeting is formally published, the following information and documentation related to the General
Shareholders’
Meeting is made available at the
Company’s
•
the notice of the General Shareholders’
Meeting;
•
the total number of shares and voting rights at the date of the Meeting notice;
•
the template letter expressing the intention to attend the Meeting, the template of the letter of representation and the
template of the ballot to be sent by mail, and also, the links to the electronic platforms that the Company provides for
the telematic submission of the intention to attend and the voting on the topics included in the Agenda;
•
the full texts of the proposed resolutions (included when received if such were the case, those proposed by
shareholders) and
related supporting documentation, that will be submitted to the General Shareholders’ Meeting for
approval;
•
The
Shareholders’
Guide;
•
The consolidated texts in force (Articles of Association and the other applicable regulations).
In 2020, the Company included the English and Portuguese versions of the information and documents related to the General
Shareholders´ Meeting on its website (
www.edpr.com) with the notice of the meeting, being the Spanish version of the
documents the one that prevailed.
Shareholders may vote on the topics included on the
Shareholders’ Meeting Agenda,
in person (including by means of the
corresponding representative) at the meeting, by ordinary mail, or by electronic communication (in this latest case, through a
telematic vote platform made available at the
Company’s website
or sending the related filled and signed templates by email),
and in any case providing the documentation indicated in the
Shareholder’s Guide. Pursuant
to the terms of article 15 of the
Articles of Association, both electronic and mail-in votes must be received by the Company before midnight (24.00 hours) of the
day before the scheduled meeting date of first call. Remote votes can be revoked subsequently by the same means used to
cast them, always within the deadlines established for that purpose, or by personal attendance to the
General Shareholders’
Meeting of the shareholder who casted the vote to his/her representative.
14. Decisions that can only be adopted by a qualified quorum
According to
EDPR’s
Articles of Association and as established in the law, both ordinary and extraordinary General
Shareholders’
Meetings are validly constituted when first called if the shareholders, either present or represented, jointly reach
at least twenty-five percent (25%) of the subscribed voting capital. On second call, the
General Shareholders’ Meeting
will be
validly constituted regardless of the amount of the capital present or represented.
Notwithstanding the above percentages, to validly approve the issuance of bonds, the increase or reduction of capital, the
transformation, global assignment of assets and liabilities, merger or spin-off of the Company, the transfer of the Registered
Office abroad, the elimination or limitation of pre-emptive rights of new shares and in general, any necessary amendment to the
Articles of Association, in the Ordinary or Extraordinary Sha
reholders’ Meeting,
it is required that on first call, the Shareholders,
either present or represented, reach at least fifty percent (50%) of the subscribed voting capital and, on second call, at least
twenty-five percent (25%) of the subscribed voting capital.
In relation to the quorum required to validly approve these matters, in accordance with the Law and the Articles of Association,
when the shareholders attending represent more than fifty percent (50%) of the subscribed voting capital, the above mentioned
resolutions will be validly adopted by absolute majority, and in the case the shareholders attending represent between the
161
twenty-five percent (25%) and the fifty percent (50%)
–
but without reaching it - the favorable vote of the two-thirds (2/3) of the
present or represented capital in the General
Shareholders’
Meeting will be required to approve these resolutions.
EDPR has not established any mechanism that may intend to cause mismatching between the rights to receive dividends or the
subscription of new securities and the voting right of each common share, and has not adopted mechanisms that hinder the
passing of resolutions by shareholders, including fixing a quorum for resolutions greater than that provided by the law.
II. Management and supervision
A) Composition
15. Corporate Governance model
EDPR is a Spanish Company listed in a regulated stock exchange in Portugal. The corporate organisation of EDPR is subject to
its personal law and to the extent possible, to the recommendations contained in the Corporate Governance Code of the
Instituto Português de
Corporate Governance (“IPCG”),
resulted as of the Protocol signed on October 13
th
, 2017 between the
Comissão do Mercado de Valores Mobiliários
(“CMVM”
–
Portuguese Securities Market Commission) and the IPCG, which was
last reviewed in July 2020. This governance code is available at the IPCG website (
https://cam.cgov.pt/). As such, the Company
intends to comply with both legal systems but always taking into account that its personal law is the Spanish one, and that in
case of discrepancy, the aim is to adopt the law that entails more protectionism for its shareholders.
The governance structure of EDPR is the one applicable under its personal law, that comprises a
General Shareholders’
Meeting and a Board of Directors that represents and manages the Company. Additionally, with the purpose of adapting this
structure to the extent possible to the Portuguese legislation, parallelly seeks to correspond it to the so-called
“Anglo
-
Saxon”
model set forth in the Portuguese Commercial Companies Code, in which the management body is a Board of Directors, and
the supervision and control duties are of the responsibility of an Audit and Control Committee.
The organisation and functioning of EDPR corporate governance model aims to achieve the highest standards of corporate
governance, business conduct and ethics referenced on the best national and international practices.
In line with its governance model above referred, and as detailed along topics 15 - 29 of this Chapter 5 of the Annual Report and
contemplated in the law and Articles of Association of the Company, as of December 31
st
, 2020, EDPR does not have a
Supervisory Board, but its Board of Directors has set up three Delegated Committees entirely composed by Members of the
Board of Directors: the Executive Committee, the Audit, Control and Related-Party Transactions Committee and the
Nominations and Remunerations Committee. This structure and its functioning, enables a fluent workflow between all levels of
the governance model, as: i) each of the Delegated Committees shall report the decisions taken to the Board of Directors
(drafting the minutes of each of the meetings and also providing whatever further clarification is required by the Board), and ii)
as the committees Members are also members of the Board, all of them will also receive the complete information at Board of
Directors level (as convening of the meetings, supporting documents and related minutes) in order to take the corresponding
decisions; and all in all, thus ensuring in time and manner the access to all the information to the whole Board of Directors in
order to appraise the performance, current situation and perspectives for the further development of the Company.
The General Secretary constitutes the focal point in charge of the centralization of the reception and management of all the
information and documents to be provided to the different Governing Bodies. This information is prepared by the different
departments of EDPR, with the support when necessary of external experts, and always managed in a strictly confidential basis.
Additionally, the corresponding duties and functioning procedures for the Governing Bodies (including but without limitation, the
performance of their functions, their Chairmanship, periodicity of meetings, their functioning and the duties of their members)
have been defined at the Articles of Association and Board of Directors and Delegated Committees Regulations (which are
published at the website of the Company
), with the aim of ensuring the adequacy in terms of time and manner of
the elaboration, management and access to the information in order to procced at each level with the corresponding
acknowledgements and decisions. In line with the above, the General Secretary sends the notices and supporting documents of
the topics to be discussed in each meeting of the Board and of each of its committees to their proper discussion during the
meeting. Additionally, the minutes of all meetings are drawn and also circulated.
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ANNUAL REPORT EDPR 2020
The governance model of EDPR was designed to ensure the transparent and meticulous separation of duties, management and
the specialization of supervision, through the following governing bodies:
•
General Shareholders’
Meeting
•
Board of Directors
•
Executive Committee
•
Audit, Control and Related Party Transactions Committee
The experience gained operating the Company through this structure indicates that the governance model approved by EDPR
shareholders, and adopted in EDPR, is the most appropriate in line with the corporate organisation of its activity, especially
because it affords transparency and a healthy balance between the management and the supervisory functions.
The links of the Company Website that refers to the information of the Governing Bodies and its regulations are indicated in
topics 59-65 of this Chapter 5 of the Annual Report.
16.
Rules for the nomination and replacement of directors
According to Article 29.5 of the
Company’s
Articles of Association, the Nominations and Remunerations Committee is
empowered by the Board of Directors to propose, advise and inform the Board regarding the appointments (including by co-
option), re-elections, removals and remuneration of the Board Members, as well as the composition of the committees of the
Board. This committee also advises on the appointment, remuneration and dismissal of top management officers.
As also referred in the Company Articles of Association (Article 21) the term of office of the Board Members shall be of three (3)
years, and may be re-elected once or more times for equal periods.
Following the best Corporate Governance practices, EDPR has analyzed and discussed about the possible criteria applicable in
the selection of the new members of its Governing Bodies. As a conclusion, the Nominations and Remunerations Committee
and the Board of Directors resolved at their meetings held on November 2
nd
, 2016, and December 14
th
, 2016 respectively, to
take into account among others the following: the education, experience in the energy sector, integrity and independence,
having a proven expertise, and the diversity that such candidate may provide to the related body. Likewise, on the Sh
areholder’s
Meeting held on March 2
6
th
, 2020, the Board of Directors’s made public its particular interest in supporting the
gender diversity
in accordance with the
Lei n
º
62/2017 of August 1
st
, and specifically committed at the seve
n
th resolution of the agenda,
to
promote that at the first Elective Shareholders’ Meeting to be held after termination of the current term of office of the
Board
Members, the percentage of Board Members corresponding to the less represented gender is increased to a 33
.
3%.
Based on the above criteria, after the previous advice of the Nominations and Remunerations Committee, the Board of Directors
would submit a proposal to the
General Shareholders’ Meeting
(including for sake of clarity, the curriculum vitae of the
candidates, which will be publicly disclosed with the other supporting documents of the meeting in the terms referred in topic 13
above). The appointment proposals should be approved by majority. For more information about the composition of the Board
of Directors please check the Sustainability Chapter of the Annual Report at its topic GRI 405-1,and the Annex I of this Chapter
5 of the Annual Report, which includes the curricular details of its Members.
Additionally, in case of a vacancy, pursuant to the Articles of Association and the Spanish Companies Law, the Board of
Directors may co-
opt a new Board Member, who will occupy the position until the next General Shareholders’ Meeting, to which
a proposal will be submitted for the ratification of such appointment by co-option. Pursuant to the Spanish Companies Law, the
co-option of Directors must be approved by absolute majority of the Directors at the Board meeting.
Finally, pursuant to Article 23 of the Articles of Association and 243 of the Spanish Companies Law, shareholders may group
their shares until constituting an amount of capital equal or higher than the result of dividing the
company’s
capital by the
number of Members of the Board, to be entitled to appoint a number of Directors equal to the result of the fraction using only
whole amounts. Those shareholders making use of this power, cannot intervene in the nomination of the other members of the
Board of Directors.
163
17. Composition of the Board of Directors
Pursuant to Article 20 of the
Company’s
Articles of Association, the Board of Directors shall consist of no less than five (5) and
no more than seventeen (17) Directors. Considering the size of EDPR and the complexity of the risks intrinsic to its activity, a
Board with a total of fifteen (15) members has been considered as adequate, being ten (10) of them non-executive.
The Secretary of the Board of Directors is Emilio García-Conde Noriega. Likewise, according to the proposal submitted by the
Nominations and Remunerations Committee, the Board of Directors approved on its meeting held on May 7
th
, 2019 the
appointment of María Gonzalez Rodríguez as Vice-Secretary of the Board of Directors of EDPR.
By the end of 2019, Gilles August presented his resignation to the position as Board Member, and in order to fill the vacancy
left, and in accordance with the proposal submitted by the Nominations and Remunerations Committee, the Board of Directors
approved on its meeting held on October 29
th
, 2019 the appointment by cooption of Rui Teixeira based on his extensive
professional career as executive member of the managing bodies of EDP and EDPR, and the material know-how about
renewable energy acquired during his nearly seven (7) years as executive director of EDPR few years ago. This appointment
was duly ratified
by the Shareholders’ Meeting held on
March 26
th
, 2020.
Few months later, in the context of a judicial procedure undergoing related to the activity of EDP
–
Energias de Portugal,
António Mexia and João Manso Neto, were suspended from their executive functions in all EDP Group companies - the process
continues in the inquiry phase and they have not been formally accused - and following this, the Board of Directors of EDPR met
on July 6
th
, 2020 and identified Rui Teixera as the best candidate to reinforce the executive line of the Company, mainly
considering his deep knowledge of the business (in particular with regards of renewables), and he had been CFO of EDP
Renováveis during several years, and therefore, his involment woud imply a continuity and support in the completion of the
Bussiness Plan in these special circumstances. Based on that, the Board resolved to appoint him
as a new member of EDPR’s
Executive Committee and Joint CEO, designated as the responsible person to coordinate the Executive Committee activities
and to liaise with EDP
–
EDPR’s principal shareholder
.
At the en of 2020, with effects 30
th
December, Francisca Guedes de Oliveira resigned to her position as Member of the Board.
As of December 31
st
, 2020, the Board of Directors is composed by the following fourteen (14) Directors:
BOARD MEMBER
POSITION
DATE OF FIRST
APPOINTMENT
DATE OF RE-
ELECTION
END OF TERM
António Mexia
Chairman
18/03/2008
27/06/2018
27/06/2021
João Manso Neto
Vice-Chairman CEO
4/12/2007
27/06/2018
27/06/2021
Rui Teixeira
Joint CEO and Executive
Committee Coordinator
29/10/2019
-
27/06/2021
Duarte Bello
Director
26/09/2017
27/06/2018
27/06/2021
Miguel Ángel Prado
Director
26/09/2017
27/06/2018
27/06/2021
Spyridon Martinis
Director
26/02/2019
-
27/06/2021
Vera Pinto
Director
26/02/2019
-
27/06/2021
Manuel Menéndez
Director
04/06/2008
27/06/2018
27/06/2021
António Nogueira Leite
Director
26/02/2013
27/06/2018
27/06/2021
Acácio Piloto
Director
26/02/2013
27/06/2018
27/06/2021
Allan J. Katz
Director
09/04/2015
27/06/2018
27/06/2021
Francisca Guedes De
Oliveira*
Director
09/04/2015
27/06/2018
N/A
Francisco Seixas da Costa
Director
14/04/2016
27/06/2018
27/06/2021
Conceição Lucas
Director
27/06/2018
-
27/06/2021
Alejandro Fernandez de
Araoz
Director
27/06/2018
-
27/06/2021
*Francisca Guedes de Oliveira presented her resignationto her position as Member of the Board with effects 30
th
December 2020.
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ANNUAL REPORT EDPR 2020
18. Executive, Non-Executive and Independent Members of the Board
The independence of the Directors is evaluated according to the Company’s personal law, and annually confirmed by each of
the corresponding Directors through the signature of an independence declaration. Likewise, EDPR Board of Directors
Regulations, and Article 20.2 its Articles of Association, defines independent Directors as those who are able to perform their
duties without being limited by relations with the Company, its significant Shareholders, or its management officers and comply
with the other legal requirements.
Corporate Governance recommendations of the IPCG Code state that the number of non-executive directors should be higher
than the number of executive directors, and that at least one third over the total members shall be non-executive members that
also comply with the independence criteria. To this extent, and provided that the independence criteria applicable to EDPR
Directors are the ones established under its personal law, from a total of fifteen (15) positions that composed of
EDPR’s
Board
of Directors as of December 31
st
, 2020, there was one (1) vacant and fourteen (14) Directors out of which nine (9) were non-
executive, being five (5) of them also independent. In accordance with the law and pursuant the last amendment of Articles of
Association, it has been established that Non- Executive Directors can only be represented in the Board meetings by other Non-
Executive Director.
As such, it has been concluded that the composition of the Board and its Delegated Committees is suitable for the size of the
company and the complexity of the risks intrinsic to its activity mainly considering that enables a separation of duties,
management and specialization of supervision at the same time that the non-executive and independent directors take part in all
the decisions also at the Board of Directors level. Should be noted to this extend that the Board of Directors is composed by a
majority of non-executive members, and being balanced the number of executive and independent; and that the Audit, Control
and Related Party Transactions Committee and the Nominations and Remunerations Committee, are entirely composed by non-
executive and independent members.
Spanish law, Regulations of the Board of Directors and Company Articles of Association regulate the criteria for the
incompatibilities with the position of Director. Specifically, Article 23 of the Articles of Association, establish that the following can
not be Directors:
•
Those who are directors of or are associated with any competitor of EDPR, or have family relations with them. In this
respect a Company shall be considered as a competitor of EDPR, whenever it is engaged, if it is directly or indirectly
involved in the production, storage, transport, distribution, marketing or supply of electricity or fuel gas; or also if has
interests opposed to those of EDPR, or to the ones of any competitor or any of the companies in its group, and the
Board members, employees, lawyers, consultants, or representatives of any of them. Under no circumstances shall
companies belonging to the same group as EDPR, including abroad, be considered competitors;
•
Those who are in any other situation of incompatibility or prohibition under the law or
EDPR’s
Articles of Association.
Under Spanish law, among others, are not allowed to be Directors those who are underage
–
under eighteen (18)
years - and were not emancipated, disqualified, competitors, convicted of certain offences, or that hold certain
management positions.
The prevention and avoidance of the conflict of interest in the performance of the duties of the Directors of EDPR is regulated in
line with the terms contained in article 229 of the Spanish Companies Law and implemented in article 28.3 of the Board of
Directors Regulations, which is also applicable to the committees under article 12 of their respective regulations. This article
states that in case any direct or indirect conflict of interest arose, it shall be communicated to the Board of Directors, being
the Director involved obliged to abstain from intervening in the corresponding operation. Additionally, all the Board Members
(and hence those of its Delegated Committees, as they are entirely composed by Members of the Board) shall annually sign
an statement declaring their compliance with the terms of the requirements stated under article 229 of the Spanish Companies
Law, and their commitment to notify any variation in the information declared under the statement as soon as it may occur,
in order to fully comply with the loyalty duty and avoid any interference or irregularity in any decision-making process.
165
The following table includes the executive, non-executive and independent members of the Board of Directors as of December
31
st
, 2020:
BOARD MEMBER
POSITION
António Mexia
Chairman and Non-Executive Director
João Manso Neto
Vice-Chairman and Executive Director
Rui Teixeira
Joint CEO and Executive Director
Duarte Bello
Executive Director
Miguel Ángel Prado
Executive Director
Spyridon Martinis
Executive Director
Vera Pinto
Non-Executive Director
Manuel Menéndez
Non-Executive Director
António Nogueira Leite *
Non-Executive Director and independent Director
Acácio Piloto
Non-Executive Director and independent Director
Allan J. Katz
Non-Executive Director and independent Director
Francisca Guedes De Oliveira**
Non-Executive Director and independent Director
Francisco Seixas da Costa
Non-Executive Director and independent Director
Conceição Lucas
Non-Executive Director and independent Director
Alejandro Fernandez de Araoz
Non-Executive Director
* Having been appointed as first time in 2008, the present term of office is the last one in which he can be considered as Independent Director.
** Francisca Guedes de Oliveira presented her resignation to her position as Member of the Board with effects 30
th
December 2020.
Following the best corporate governance recommendations, considering that the Chairperson of the Board of Directors of
EDPR, Antonio Mexia, is a non-independent Director, the Nominations and Remunerations Committee approved on its meeting
held on February 18
th
, 2019 to propose to the independent Members of Board the appointment Antonio Nogueira Leite as Lead
Independent Director whose functions would namely be: i) act, when necessary, as an interlocutor between the Chairperson of
the Board of Directors and the other Directors, (ii) ensure the necessary conditions and means so the Directors may carry out
their functions; and (iii) coordinate the independent Directors in the assessment of the performance of the managing body. This
proposal was unanimously approved by all the independent Directors (with the abstention of the candidate proposed) on the
Board meeting held February 26
th
, 2019.
19. Professional qualifications and biographies of the Members of the Board of Directors
The main positions held by the members of the Board of Directors in the last five (5) years, those that they currently hold in
Group and non-Group companies and other relevant curricular information details are available in the Annex I of this Chapter 5
of the Annual Report.
20. Family, professional and business relationships of the Members of the Board of Directors with
qualifying shareholders
Qualifying Shareholders in EDPR are subject to the Spanish Law, which regulates the criteria and thresholds of the
shareholders’ holdings.
As of December 31
st
, 2020, and as far as the Company was informed, there are no family or business
relationships of Members of the Board of Directors with qualifying shareholders but only professional relationships due to the
fact that some of the Members of
EDPR’s
Board of Directors are currently Members of the Board of Directors in other
companies belonging to the same group as EDP Energias de Portugal S.A., which are the following:
•
António Mexia;
•
João Manso Neto;
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ANNUAL REPORT EDPR 2020
•
Manuel Menéndez Menéndez;
•
Vera Pinto;
•
Rui Teixeira.
Or employees in other companies belonging to EDP’s Group, which are the following:
•
Duarte Bello;
•
Miguel Ángel Prado;
•
Spyridon Martinis.
21. Management structure
As exposed in topic 15 above, the governance model of EDPR was designed to ensure the transparent and meticulous
separation of duties and the specialization of supervision through the following structure of its governing bodies:
General Shareholders’ Meeting: which is the body in which the shareholders participate. Represents the Company with the full
authority corresponding to its legal personality and has the power to deliberate, vote and adopt decisions, particularly on matters
that the law and Articles of Association reserve for its decision and that must be submitted for its approval.
Board of Directors: that represents and administrates the Company under the broadest powers of management, supervision and
governance with no limitations other than the responsibilities expressly and exclusively granted to the jurisdiction of the General
Shareholders Meeting in the Company’s Articles of Association or in the applicable
law.
167
Executive Committee: which is the delegated body of the Board of Directors entrusted to perform the daily management of the
business. As of 31
st
December 2020,
EDPR’s Executive Committee
was composed by the following members that were also
Joint Directors:
-
João Manso Neto (CEO and Chairman of the Executive Committee)
-
Rui Teixeira (Joint CEO and Executive Committee Coordinator)
-
Duarte Bello (COO Europe & Brazil and member of the Executive Committee)
-
Miguel Ángel Prado (COO North America and member of the Executive Committee)
-
Spyridon Martinis (COO Offshore and New
Markets
, CDO and member of the Executive Committee)
Other Delegated Committees: as regulated by the applicable Law and pursuant to the best corporate governance
recommendations, EDPR has set up two additional specialized internal committees:
The Audit, Control and Related Party Transactions Committee, whose main duties are the appointment of the company’s
auditors, the monitorization of internal risk management and control systems, the supervision of internal audits and compliance,
and also the ratification of transactions between EDPR and EDP and between its related parties, qualified shareholders,
directors, key employees or their relatives.
The Nominations and Remunerations Committee, whose main duties are the assistance and report to the Board of Directors in
the appointments, re-elections, dismissals, evaluation and remunerations of the members of the Board of Directors.
B) Functioning
22. Board of Directors regulations
EDPR’s
Board of Directors Regulations are available at
Company’s website (
), and at
Company’s headquarters
at Plaza del Fresno, 2, Oviedo, Spain.
23. Number of meetings held by the Board of Directors
According to the Law and its Articles of Association, EDPR’s Board of Directors meetings take place at least once every quart
er.
During the year ended on December 31
st
, 2020, the Board of Directors held eight (8) meetings. The notices and supporting
documents of the topics to be discussed in each meeting are sent to the Board members in advance to their proper discussion
during the meeting. Additionally the minutes of all meetings are drawn and also circulated.
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ANNUAL REPORT EDPR 2020
The table below expresses the attendance percentage of the participation of the Directors to the meetings held during 2020:
BOARD MEMBER
POSITION
ATTENDANCE*
António Mexia
Chairman and Non-Executive Director
33.3%*
João Manso Neto
Vice-Chairman and Executive Director
100%*
Rui Teixeira
Joint CEO and Executive Director
100%
Duarte Bello
Executive Director
100%
Miguel Ángel Prado
Executive Director
100%
Spyridon Martinis
Executive Director
100%
Vera Pinto
Non-Executive Director
100%
Manuel Menéndez
Non-Executive Director
87.5%
António Nogueira Leite
Non-Executive Director
75%
Acácio Piloto
Non-Executive Director
100%
Allan J. Katz
Non-Executive Director
87.5%
Francisca Guedes De Oliveira
Non-Executive Director
100%
Francisco Seixas da Costa
Non-Executive Director
87.5%
Conceição Lucas
Non-Executive Director
100%
Alejandro Fernandez de Araoz
Non-Executive Director
87.5%
(*)
The percentage reflects the meetings attended by the Members of the Board, provided that, on July 6
th
, 2020 António Mexia and João
Manso Neto were suspended from their executive functions in all EDP Group companies and thus the percentage shown in the table
reflects the attendance calculated over the meetings celebrated until such date.
24. Competent body for the performance appraisal of Executive Directors
The key performance indicators for the appraisal of the Executive Directors are set in advance and approved by the General
Shareholder’s Meeting.
Once the corresponding fiscal year is completed, the Nominations and Remunerations Committee performs the first assessment
about the compliance with such key performance indicators, and submits its recommendation to the Board of Directors,
which evaluates the proposal of this committee and makes the final decision. Should be noted that according to the personal
law of EDPR, the definitive assessment of this performance is a non-delegable competence of the Board of Directors.
25. Performance evaluation criteria
The criteria for assessing the Executive Directors’ perfo
rmance are described on topics 70, 71 and 72 of this Chapter 5 of the
Annual Report.
26. Availability of the Members of the Board of Directors
The members of Board of Directors of EDPR are fully available for the performance of their duties having no constraints for the
execution of this function simultaneously with other positions. Additionally, Executive Directors of EDPR, do not perform any
other executive duties outside the Group. The positions held at the same time in other companies within and outside the Group,
and other relevant activities undertaken by members of the Board of Directors throughout the financial year are listed in the
Annex I of this Chapter 5 of the Annual Report.
169
C) Committees within the Board of Directors or Supervisory Board and Managing Directors
27.
Board of Directors’ Committees
As previously exposed, in line with Spanish Law
and as specifically foreseen in Article 10 of the Company’s Articles of
Association, the Board of Directors is entitled to create delegated bodies. The Board of Directors of EDPR has set up three
committees:
•
Executive Committee
•
Audit, Control and Related-Party Transactions Committee
•
Nominations and Remunerations Committee
With the exception of the Executive Committee, the other committees are composed exclusively by independent members.
28. Executive Committee composition
Pursuant to Article 27 of the
Company’s
Articles of Association, the Executive Committee shall consist of no less than four (4)
and no more than seven (7) Directors.
Its constitution, the nomination of its members and the extension of the powers delegated must be approved by two- thirds (2/3)
of the members of the Board of Directors.
As of December 31
st
, 2020, EDPR Executive Committee was composed by the following members, who were also Joint
Directors:
•
João Manso Neto, Chairman and CEO
•
Rui Teixeira, who since July 6
th
is the Executive Committee Coordinator
•
Duarte Bello (COO Europe& Brazil)
•
Miguel Ángel Prado (COO North America)
•
Spyridon Martinis (COO Offshore & New Markets, and CDO)
Additionally, Emilio García-Conde Noriega is the Secretary of the Executive Committee.
29. Committees competencies
Executive Committee
Composition
The composition of the Executive Committee is described on the previous topic.
Competences
The Executive Committee is a permanent body in charge of the daily management of the Company, to which all the
competences of the Board of Directors that are delegable under the law and the Articles of Association can be assigned.
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ANNUAL REPORT EDPR 2020
Functioning
In addition to the Articles of Association, this committee is also governed by its regulations approved on June 4
th
2008 and last
amended on November 2
nd
, 2016. The committee regulations are available at the
Company’s
The Executive Committee shall meet at least once a month and whenever is deemed appropriate by its Chairperson, who may
also suspend or postpone meetings when he sees fit. The Executive Committee shall also meet when requested by at least two
(2) of its members.
The notices and supporting documents of the topics to be discussed in each meeting of this committee are sent to its members
in advance to their proper discussion during the meeting, being the minutes of all meetings drawn and also circulated.
Additionally, this committee informs about of its decisions at the first Board held after each committee meeting.
Meetings of the Executive Committee are valid if half of its members plus one are present or represented. Decisions shall be
adopted by majority. In the event of a tie, the Chairman shall have the casting vote.
Executive Directors shall provide any clarifications needed by the other Directors or corporate bodies whenever requested to do
so.
2020 Activity
The
Executive Committee’s
main activity is the daily management of the Company, and in the execution of such duties,
during 2020 held a total of fifty-one (51) meetings.
Audit, Control and Related Party Transactions Committee
Composition
Pursuant to Article 28 of the
Company’s
Articles of Association and Article 9 of its Regulations, the Audit, Control and Related
Party Transactions Committee consists of no less than three (3) and no more than five (5) members.
According to Article 28.5 of the Articles of Association the term of office of the Chairman of the Audit, Control and Related Party
Transactions Committee is a maximum of six (6) years. Following the proposal submitted by the Nominations and Remuneration
Committee, its Chairman, Acacio Piloto, was first elected for this position on June 27
th
, 2018.
The Audit, Control and Related Party Transactions Committee consists of three (3) non-executive and independent members,
plus the Secretary who until December 30
th
2020
2
, were the following:
•
Acacio Piloto, who is the Chairman
•
Antonio Nogueira Leite
•
Francisca Guedes de Oliveira
Additionally, Mr. Emilio García-Conde Noriega is the Secretary of the Audit, Control and Related Party Transactions
Committee.
The committee members shall maintain their positions for as long as they are Company Directors. Nevertheless, the Board may
decide to discharge members of the committee at any time, and also the members may resign of these positions but still
maintaining their seat as Members of the Board of Directors.
2
Francisca Guedes de Oliveira presented her resignation as Member of the Board with effects 30
th
December 2020, and therefore also as member of the Audit, Control, and Related Party Transactions
Committee. In order to fill this vacancy at the committee level, the Board of Directors resolved at its meeting held on January 19
th
, 2021 to appoint Francisco Seixas as new member of the Audit, Control
a
nd Related Party Transactions Committee.
171
Competences
Notwithstanding the other duties that the Board may assign to this committee, it shall perform supervisory functions of Audit and
Control independently from the Board of Directors, as well as, supervisory functions of the transactions between Related
Parties, as follows:
A)
Audit and Control functions:
•
Reporting through the Chairperson on questions falling under its jurisdiction to the General Shareholders’
Meetings;
•
Proposing the appointment of the Company’s auditors to the Board of Directors for subsequent
approval by the
General Shareholders’ Meeting, as well as the contractual conditions, scope of the work –
specially concerning audit
services, “audit related” and “non
-
audit” –
annual activity evaluation and revocation or renovation of the
auditor appointments;
•
Supervising the finance reporting and the functioning of the internal risk management and control systems, as well as
evaluating those systems and proposing the adequate adjustments according to the Company necessities (including
without limitation, the monitorization of the development of the strategic lines and risk policies defined);
•
Supervising internal audits and compliance;
•
Establishing a permanent contact with the external auditors to assure the conditions, including independence, that
may be adequate for provision of services performed by them acting as the Company speaker for the subjects related
to the auditing process, and receiving and maintaining information on any other questions regarding
accounting subjects;
•
Preparing an annual report on its activities, including eventual constraints, and expressing an opinion on the
Management Report, the accounts and the proposals presented by the Board of Directors;
•
Receiving notices of financial and accounting irregularities presented by the
Company’s
employees, shareholders, or
entities that
have a direct interest and judicially protected, related with the Company’s social
activity;
•
Engaging the services of experts to collaborate with committee members in the performance of their functions (when
engaging the services of such experts and determining their remuneration, it must be taken into account the
importance of the matters entrusted to them and the economic situation of the Company);
•
Drafting reports at the request of the Board and its committees;
B)
Related Party Transactions functions:
•
Periodically reporting to the Board of Directors on the commercial and legal relations between EDP or related entities
and EDP Renováveis or related entities;
•
In connection with the approval of the Company's annual results, reporting on the commercial and legal relations
between the EDP Group and the EDP Renováveis Group, and the transactions between related entities during the
fiscal year in question;
•
Ratifying transactions between EDP and/or related entities with EDP Renováveis and/or related entities by the
stipulated deadline in each case, provided that the value of the transaction exceeds €5.000,000 or represents 0.3% of
the consolidated annual income of the EDP Renováveis Group for the fiscal year before;
•
Ratifying any modification of the Framework Agreement signed by EDP and EDP Renováveis on May 7
th
, 2008;
•
Making recommendations to the Board of Directors of the Company or its Executive Committee regarding the
transactions between EDP Renováveis and related entities with EDP and related entities;
•
Asking EDP for access to the information needed to perform its duties;
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ANNUAL REPORT EDPR 2020
•
Ratifying, in the correspondent term according to the necessities of each specific case, the transactions between
Qualifying Holdings other than EDP with entities from the EDP Renováveis Group whose annual value is superior to
1.000.000€;
•
Ratifying, in the correspondent terms according to the necessities of each specific case, the transactions between
Board Members, “Key
Employess”
and/or Family Members with entities from EDP Renováveis Group whose annual
value is superior to
75.000€.
Functioning
In addition to the Articles of Association and the law, this committee is governed by its regulations approved on June 27
th
2018,
which are available at the
Company’s website
The committee shall meet at least once a quarter and additionally whenever its Chairperson sees fit. The notices and supporting
documents of the topics to be discussed in each meeting of this committee are sent to its members in advance to their proper
discussion during the meeting. Additionally, this committee shall draft minutes of every meeting held and inform the Board of
Directors of its decisions at the first Board held after each committee meeting.
Decisions shall be adopted by majority and the Chairperson shall have the casting vote in the event of a tie.
2020 Activity
In 2020 the Audit, Control and Related Party Transactions c
ommittee’s activities included the following:
A)
Audit and Control Activities:
•
Monitor the closure of quarterly accounts, first half-year and year-end accounts;
•
Information about the proposals of application of results for the fiscal year ended on December 31
st
2020 and the
distribution of dividends;
•
Information about the independence of the External Auditor;
•
Assessment of the external
auditor’s
work, especially concerning the scope of work in 2020, approval of all
“audit
related”
and
“non
-
audit” services and analysis of external auditor’s
remuneration;
•
Analysis the service proposal presented by the external Auditors for 2021-2023;
•
Supervision of the quality and integrity in the preparation and disclosure of the financial information in accordance with
the applicable accounting policies, estimates and judgments;
•
Drafting of an opinion about the individual and consolidated reports (including the Corporate Governance report) and
accounts, in a quarterly, half year and yearly basis;
•
Monitorization of the 2020 Internal Audit Action Plan and pre-approval of the draft prepared for the 2020 Internal Audit
Action Plan;
•
Monitorization of the recommendations issued by Internal Audit and reviewing the Internal Audit Standard;
•
Follow-up and supervision of the quality, integrity and efficiency of the treasury management (finance and debt), the
internal control system, risk management and internal auditing;
•
Evaluation of the strategies and risk policies adopted, and elaborating a report including its assessment about the risk
management during 2020;
•
Information about Whistle-Blowing;
173
•
Information about the contingencies affecting to the Group;
•
Issuance of the report of its activities performed during 2019 and self-assessment about its performance, as well as
an specific anual report regarding the appraisal of the Internal Audit functions and Internal control activities.
•
Analysis of the decision of incorporating a new department
(“CIC”)
in the Company centralizing the Compliance and
Internal Control functions (including SCIRF), as well of the proposal issued by the Nominations and Remunerations
Committee regarding the candidate to perform its direction;
•
Analysis of the new candidate proposed for the Internal Audit direction.
B)
Related Party Transactions Activities:
In 2020, the Audit, Control and Related Party Transactions Committee revised, approved and proposed to the Board of
Directors the approval of agreements and contracts between related parties submitted to its consideration.
Section E
–
I, topic 90 of Chapter 5 this Annual Report includes a description of the fundamental aspects of the agreements and
contracts between related parties.
The Audit, Control and Related Party Transactions Committee found no constraints during its control and supervision activities.
The information regarding the meetings celebrated by this committee and the attendance of its related members during the year
2020 is described at topic 35.
Nominations and Remunerations Committee
Composition
Pursuant to Article 29 of the
Company’s
Articles of Association and Article 9 the Nominations and Remunerations Committee
Regulations, this committee shall consist of no less than three (3) and no more than six (6) members. At least one of its
members must be independent and shall be its Chairman.
In accordance with its personal law (Spanish law), with recommendation V.3.3. of the Corporate Governance Code of IPCG,and
to the extent possible with recommendation V.2.1. of the Corporate Governance Code of IPCG (as considering that in Spain this
committee shall be created by the Board and being entirely comprised by members of its Board of Directors), the Nominations
and Remunerations Committee of EDPR is entirely constituted by Non-Executive Directors and being the majority of them
independent.
As of December 31
st
, 2020, the Nominations and Remunerations Committee consists of three (3) independent members, who
are the following:
•
Antonio Nogueira Leite, who is the Chairman
•
Francisco Seixas da Costa
•
Conceição Lucas
Additionally, Emilio García-Conde Noriega is the Secretary of the Nominations and Remunerations Committee.
None of the committee members are spouses or up to third degree relatives in direct line of the other members of the Board of
Directors.
The committee members shall maintain their positions for as long as they are Company Directors. Nonetheless, the Board may
decide to discharge members of the committee at any time and the members may resign said positions while remaining
Company Directors.
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ANNUAL REPORT EDPR 2020
Competences
The Nominations and Remunerations committee is a permanent body belonging to the Board of Directors with an informative
and consultative nature and its recommendations and reports are not binding.
The Nominations and Remunerations committee has no executive functions. The main functions of the Nominations and
Remunerations committee are to assist and report to the Board of Directors about appointments (including by co-option), re-
elections, removals and remuneration of the Board Members and its Officers, the composition of the Board delegated
committees; as well as the appointment, remuneration, and removal of executive staff.
The Nominations and Remunerations Committee shall also inform the Board of Directors on general remuneration and incentive
policy and incentives for Board members and executive staff. These functions include the following:
•
Defining the standards and principles governing the composition of the Board of Directors and the selection and
appointment of its members;
•
Proposing the appointment and re-election of Directors in cases of appointment (including nominations by co-option)
for the submission to the Gene
ral Shareholders’ Meeting by the Board of
Directors;
•
Proposing to the Board of Directors the candidates for the different committees;
•
Proposing to the Board, within the limits established in the Articles of Association, the remuneration system,
distribution method, and amounts payable to the Directors;
•
Making proposals to the Board of Directors on the conditions of the contracts signed with Directors;
•
Informing
and making proposals to the Board of Directors regarding the appointment and/or removal of executives and the
conditions of their contracts and generally defining the hiring and remuneration policies of executive staff;
•
Reviewing and reporting on incentive plans, pension plans, and compensation packages;
•
Any other functions assigned in the Articles of Association or by the Board of Directors.
On its meeting held on December 14th, 2016, the Board of Directors approved to delegate the functions related to the reflection
on the Corporate Governance structure and on its efficiency in the Nominations and Remunerations Committee. In the
performance of these functions, this committee annually issues a report where the Corporate Governance system adopted by
the Company is analyzed.
In accordance with the personal law of EDPR, all the Board Members shall attend to the
General Shareholder’s Meeting,
and as
exposed in topic 15 of this Chapter 5 of the Annual Report, all the Delegated Committees are composed Directors. As such, the
Chairperson of the Nominations and Remunerations Committee shall attend the
Shareholder’s Meetings,
and in case its agenda
includes any topic related to remuneration of the
company’s governing bodies,
this Director will be most adequate to answer.
During 2020 one
Shareholders’
Meeting was held on March 26
th
, and the Chairperson of the Remuneration Committee, Antonio
Nogueira Leite, attended.
Functioning
In addition to the Articles of Association, the Nominations and Remunerations Committee is governed by its Regulations
approved on June 4
th
2008.
The notices and supporting documents of the topics to be discussed in each meeting of this committee are sent to
its members in advance to their proper discussion during the meeting. Additionally, this committee shall draft minutes of
every meeting held and inform the Board of Directors of its decisions at the first Board held after each committee meeting.
Decisions shall be adopted by majority and the Chairperson shall have the deciding vote in the event of a tie.
175
2020 Activity
In 2020 the Nominations and Remunerations Committee held two (2) meetings, and the main activities performed were:
•
Performance evaluation of the Board of Directors and Delegated Committees;
•
Analysis of the main principles of the new Remunerations Policy proposed for 2020-2022;
•
Drafting of the Declaration of the Board of Directors Remuneration Policy for 2020 to be proposed to the Board
of Directors for its submission to the General Shareholders Meeting;
•
Analysis of the decision of incorporating a new department
(“CIC”)
in the Company centralizing the Compliance and
Internal Control functions (including SCIRF), as well as the proposal regarding the candidate to perform its direction
and the objtectives, functions and reporting lines to be applied;
•
Development of an analysis regarding the gender diversity criteria regulation and recommendations applicable to
EDPR in 2020;
•
Drafting the report of its activities performed during the year 2019;
•
Analysis and issuance of a reflection on the Corporate Governance system adopted by EDPR;
•
Analisis and ackwoledgement of the mesures applied to António Mexia and João Manso Neto in the context of the
judicial procedure undergoing related to the activity of EDP
–
Energias de Portugal, concluding to this extent that the
reinforcement of the executive line with an additional member would be advisible to ensure the agility of its response,
and therefore proposed to the Board of Directors to establish the number of members of the Executive Committee in
five (5) in accordance with Article 27.3 of the Bylaws, and to appoint Rui Teixeira as new member of the Executive
Committee and as Joint CEO, designated as the responsible person to coordinate the Executive Committee activities
and to liaise with EDP
–
EDPR’s principal shareholder
.
III.Supervision
A) Supervision
30. Supervisory Board model adopted
EDPR’s governance model,
as long as it is compatible with its personal law (Spanish law), corresponds to the so -called
“Anglo
-
Saxon” model
set forth in the Portuguese Commercial Companies Code, in which the management body is a Board of Directors,
and the supervision and control duties are of the responsibility of an Audit, Control and Related Party Transactions Committee.
31. Composition of the Audit, Control and Related Party Transactions Committee
The Audit, Control and Related Party Transactions Committee is comprised only by non-executive and independent members,
as follows:
MEMBER
MEMBER
DATE
OF
FIRST
APPOINTMENT
Acacio Piloto
Chairman
27/06/2018
Antonio Nogueira Leite
Vocal
6/11/2018
Francisca Guedes de Oliveira*
Vocal
27/06/2018
*Francisca Guedes de Oliveira presented her resignation as Member of the Board with effects 30
th
December 2020, and therfore also as member of the Audit, Control, and
Related Party Transactions Committee. In order to fill this vacancy at the committee level, the Board of Directors resolved at its meeting held on January 19
th
, 2021 to
appoint Francisco Seixas as new member of the Audit, Control and Related Party Transactions Committee.
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ANNUAL REPORT EDPR 2020
32. Independence of the Members of the Audit, Control and Related Party Transactions Committee
Information concerning the independence of the members of the Audit, Control and Transactions Party Committee is available
on the chart of topic 18 of this Chapter 5 of the Annual Report. As mentioned on the first paragraph of topic 18, the
independence of the members of the Board and of its c
ommittees is evaluated according to the Company’s personal law, the
Spanish law.
33. Professional qualifications and biographies of the Members of the Audit, Control and Related
Party Transactions Committee
Professional qualifications of each member of the Audit, Control and Related Party Transactions Committee and other important
curricular information, are available in the Annex I of this Chapter 5 of the Annual Report.
B) Functioning
34. Audit, Control and Related Party Transactions Committee Regulations
The Audit, Control and Related Party Transactions Committee regulations are available at the
Company’s website
Company’s Headquarters
at Plaza del Fresno, 2, Oviedo, Spain.
35. Number of meetings held by the Audit, Control and Related Party Transactions Committee
The Audit, Control and Related Party Transactions Committee regularly meets representatives of the internal specialized
departments involved in the areas under c
ommittee’s competences
in order to discuss the information periodically reported
about, among others, work plans and resources of the internal auditing service (including Compliance), Company accounts,
detection of potential irregularities (whistleblowing), global risk management and audit and non-audit services provided by
the External Auditor (including the appraisal about its independence). This relationship provides a wider information to the
committee that would be taken into account for the development of its functions and in particular, for the assessments issued
under the elaboration of the Internal Control Report, the SCIRF Report and the Risk Management Report, that this committee
issues for every fiscal year.
During 2020, the Audit, Control and Related Party transactions Committee held a total of nine (9) meetings, and as referred in
paragraph above, in order to better perfom its supervisory functions over the activities reported by the areas within its
competentences, the committee invited the responsible teams of the related areas to several of these meetings as follows:
Internal Audit participated in eight (8), CIC (Compliance and Intercal Control) in four (4), Global Risk in four (4), Planing and
Control in four (4); Finance in five (5) and Administration, Consolidation and Tax in nine (9). Likewise, the committee invited the
External Auditors to four (4) of these meetings.
The following tables reflect the attendance of the members of the Audit, Control and Related Party Transactions Committee to
its meetings held during 2020:
MEMBER
POSITION
ATTENDANCE
Acacio Piloto
Chairman
100%
Antonio Nogueira Leite
Vocal
89%
Francisca Guedes de Oliveira
Vocal
100%
36. Availability of the Members of the Audit, Control and Related Party Transactions Committee
The members of the Audit, Control and Related Party Transactions Committee are fully available for the performance of their
duties having no constraints for the execution of this function simultaneously with positions in other companies. The positions
held simultaneously in other companies inside and outside the Group and other relevant activities undertaken by members of
this committee throughout the financial year are listed in Annex I of this Chapter 5 of the Annual Report.
177
C) Powers and duties
37. Procedures for hiring additional services to the External Auditor
In accordance to the Recommendation VII.2.1. of the IPCG Corporate Governance Code, in EDPR there is a policy of pre-
approval by the Audit, Control and Related Party Transactions Committee of the the provision of non-audit services to be
provided by the External Auditor and any related entity. This policy was strictly followed during 2020.
The non
–
audit services provided by the External Auditor and entities in a holding relationship with or incorporated in the same
network as the External Auditor were previously approved by the Audit, Control and Related Party Transactions Committee
according to Article 8.A), b) of its Regulations, considering the following aspects: (i) such services having no effect on the
independence of the External Auditor and any safeguards used; and (ii) the position of the External Auditor in the provision of
such services - notably the External Auditor
’
s experience and knowledge of the Company.
Furthermore, although hiring services other than auditing services to the External Auditor is admissible, it is envisaged as an
exception. In 2020 such services reached only around 6.5% of the total amount of services provided to the Company.
38. Other duties of the Audit, Control Related Party Transactions Committee
Apart from the competences expressly delegated on the Audit, Control and Related Party Transactions Committee according to
Article 8 of its Regulations, and in order to safeguard the independence of the External Auditor, the following additional
competences of this committee were exercised during the 2020 financial year and should be highlighted:
•
Pre-approval of any services to be hired from the External Auditor and perform its direct and exclusive supervision;
•
Assessment of the qualifications, independence, and performance of the External Auditors, and obtaining, yearly and
directly from the External Auditors, written information on all relations existing between the Company and the Auditors
or associated persons, including all services rendered and all services in progress. In order to evaluate independence,
the Audit Committee, obtained the info
rmation regarding External Auditors’ independence in light of the Spanish Law
no. 22/2015 of July 20th, 2015 (
“
Ley de Auditoría de Cuentas
”
);
•
Review of the transparency report, signed by the Auditor and disclosed at its website. This report covers the matters
provided for under Law no. 22/2015 of July 20th, 2015 (
“
Ley de Auditoría de Cuentas
”
); including those regarding
the quality control internal system of the audit firm and the quality control procedures carried out by the competent
authorities;
•
Review with the External Auditors their scope, planning, and resources to be used in their provision of services;
IV-V. STATUTORY AND EXTERAL AUDITORS
39-41.
According to the Spanish law, the External Auditor (
“
Auditor de Cuentas
”
) is appointed by the General Shareholders
’
Meeting and corresponds to the statutory auditor body (
“
Revisor Oficial de Contas
”
) described on the Portuguese Law.
The information about the External Auditor is available in topics 42 to 47 of Section V of this Chapter 5 of the Annual Report.
42. External Auditor identification
The main criteria considered in the selection of the most suitable and competitive firm to be appointed as External Auditor are
the following:
•
Recognized technical and professional track record as External Auditor;
•
Consolidated
Know-How
about the business developed by the whole Group;
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ANNUAL REPORT EDPR 2020
•
Tailored and highly prepared working team;
•
Competitive contractual conditions and working methodology (including but without limitation, the total estimation of
hours required for the development of the services- both as a total for the complete provision of services, and per
each professional category of the proposed team);
•
Competitive fee proposal, including the final cap and a breakdown referring the price average per hour, and the
remuneration per hour for each professional category of the proposed team.
As a result of a competitive process launched in 2017, during which the above criteria were exhaustively analyzed,
PricewaterhouseCoopers Auditores, S.L. was appointed as
EDPR SA External Auditor by the Shareholder’s Meeting held on
April 3
rd
, 2018. PricewaterhouseCoopers Auditores, S.L., is a Spanish Company registered at the Spanish Official Register of
Auditors under number S0242 with Tax Identification Number B-79031290 and whose audit partner in charge of EDPR is Iñaki
Goiriena.
43. Number of years of the External Auditor
PricewaterhouseCoopers Auditores, S.L. is in charge of the audit of EDPR SA accounts for the years 2018, 2019 and 2020,
being 2018 the first year performing these duties.
44. Rotation Policy
According to the personal Law of EDPR - the Spanish Law- the maximum term for an audit firm as the External Auditor of a
company is established in a 10-year term.
Following the proposal of the Audit, Control and Related Party Transactions Committee presented to the Board of Directors to
its submission to the General Shareholders’ Meeting, on its meeting held on
April 3
rd
,
2018, it was approved to appoint
PricewaterhouseCoopers
Auditores, S.L as EDPR’s External Auditor for the years 2018, 2019 and 2020.
45. External Auditor evaluation
The Audit, Control and Related Party Transactions Committee is responsible for the monitorization and annual evaluation of the
services provided by the External Auditor according to the competences granted by its Regulations. In order to perform this
assessment, this committee periodically includes in the agenda of its meetings a topic regarding the review of the services
provided by the External Auditor (both audit an
non-audit
) and the fees already incurred and those estimated until year
end. Likewise, and as exposed in topic 35 of this Chapter 5 of the Annual Report, the External Auditor attends and participates
in some of the meetings held by this committee, mainly in order to analyze the results of their audit reports. As such, the Audit,
Control and related Party Transactions Committee acts as the company speaker with the External Auditor, with whom
establishes a permanent contact throughout the year to assure the proper conditions for the provision of both the statutory audit
services and non-audit services, and being also the body in charge of monitoring its independence along the year. Likewise, the
External Auditor shall sign an annual statement declaring its independence.
During 2020
, according to the Audit, Control and Related Party Transactions Committee’s competences and in line with
Recommendation VII.2.2, this committee was the first and direct recipient and the corporate body in charge of the permanent
contact with the External Auditor on matters that may pose a risk to their independence as well as any other matters related to
the auditing of accounts.
Additionally, in compliance with the auditing standards in effect, it also receives and maintains the record of information about
other matters as provided in the applicable auditing and accounting legislation. The External Auditor, within the scope of
its duties, verified the implementation of the remuneration policies and systems of the corporate bodies as well as the efficiency
and effectiveness of the internal control mechanisms and report any shortcomings to the Audit, Control and Related
Party Transactions Committee of the Company.
179
46. Non-Audit Services carried out by the External Auditor
On March 3
rd
, 2016, it was approved the regulation on the provision of services by the Statutory Auditor or Statutory Audit Firm,
which defines and promotes criteria and methodologies to safeguard the independence of the audit and non-audit services
(SDA).
In accordance with such regulation, the Audit, Control and Related Party Transactions Committee closely follows the
requests of non- audit services, each of which necessarily require the preapproval of this committee before its provision as
per exposed in topic 29 of this Chapter 5 of the Annual Report and Article 8.A),b) of its Regulations.
The identification of such non- audit services that will eventually be provided by the External Auditors is performed under the
rules issued by the European Union on this matter, in particular under Regulation 537/2014 and the Spanish Auditing Law nº
22/2015, of 20
th
July, as well as when applicable, in line with the particularities of the local regulations where the service is to be
provided.
During 2020 the non-audit services provided by the External Auditor of EDP Renováveis S.A
(PricewaterhouseCoopers Auditores, S.L) consisted mostly on i) limited review as of June 30
th
, 2020 of the EDPR Consolidated
Financial Statements; ii) review of the internal control system on financial reporting for the EDPR Group; and iii) review of the
non-financial information related to sustainability included in the
EDPR Group’s annual report. Ot
her non-audit services provided
by the External Auditor or its network to
EDPR’s
subsidiaries mainly refer to i) quarterly reviews as of March 31
st
,2020 and
September 30
th
, 2020 for
EDP Group’s consolidation purposes;
and ii) agreed-upon procedures, mainly related to the review
of covenants in the context of bank financing agreements, external
auditor’s certifications for share capital transactions
as required by local Laws and IFRS conversion/adoption for some EDPR subsidiaries.
PricewaterhouseCoopers Auditores, was engaged to provide the above-mentioned services due to its in-depth knowledge of the
Group’s
activities and processes. These engagements did not risk their independence as External Auditors and were pre -
approved by the Audit, Control and Related Party Transactions Committee prior to rendering the services.
47. External Auditor remuneration in 2020 for EDP Renováveis S.A. and subsidiaries
TYPE OF SERVICE
PORTUGAL
SPAIN
BRAZIL
US
OTHER
TOTAL
%
Audit and statutory audit
of accounts
161,802
583,370
166,671
1,066,435
684,006
2,662,284
93.5%
Total audit related
services
161,802
583,370
166,671
1,066,435
684,006
2,662,284
93.5%
Other non-audit services
-
151,382
4,000
-
29,007
184,389
6.5%
Total non-audit related
services
-
151,382
4,000
-
29,007
184,389
6.5%
Total
161,802
734,752
170,671
1,066,435
713,013
2,846,673
100,00%
The amount of Other non-audit services in Spain includes, among others, services that refer to the entire Group such as the
review of the internal control system on financial reporting and review of the non-financial information related to sustainability
included in the EDPR Group
’
s annual report, which are invoiced to a Spanish companies. This amount also includes the
limited review as of June 30, 2020 of the EDPR Consolidated Financial Statements and other reviews for Group consolidation
purposes which are considered non-audit services according to the respective local regulation.
Total amount for Spain refers to services provided by PricewaterhouseCoopers Auditores S.L.
The above fees exclude the fees for full consolidated Viesgo companies which are also audited by PricewaterhouseCoopers
Auditores S.L in the amount of 90,471 Euros and the fees for the companies that were sold during 2020 (see note 6 of the
consolidated annual accounts).
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ANNUAL REPORT EDPR 2020
C. Internal organisation
I. Articles of Association
48. Amendmets to the articles of association
The amendments of the Articles of Association of the Company are of the responsibility of the
General Shareholders’ Meeting.
According to Article 17 of the
Company’s
Articles of Association
(“
Constitution of the
General Shareholders’ Meeting,
Adoption of resolutions
”),
to validly approve any amendment to the Articles of Association, the Ordinary or Extraordinary
Shareholders’ Meeting
will need:
•
On first call, that the Shareholders either present or represented by proxy, represent at least fifty percent (50%) of the
subscribed voting capital.
•
On second call, that the Shareholders either present or represented by proxy, represent at least twenty-five percent
(25%) of the subscribed voting capital.
In the event that the shareholders attending represent more than fifty percent (50%) of the subscribed voting capital, the
resolutions referred to in the present paragraph will be validly adopted when reached absolute majority. If the shareholders
attending represent between twenty-five percent (25%) and fifty percent (50%)
–
but without reaching it
–
the favorable vote of
two-
thirds (2/3) of the present or represented capital in the General Shareholders’ Meeting will be required in order to validly
approve these resolutions.
II. Reporting of irregularities
49. Irregularities communication channels
WHISTLEBLOWING
EDPR has always carried out its activity by consistently implementing measures to ensure the good governance of its
companies, including the prevention of incorrect practices, particularly in the areas of accounting and finance.
On this basis, and in compliance with the provisions of IPCG Corporate Governance Code, EDPR provides the Group workers
with a channel enabling them to report directly and confidentially to the Audit, Control and Related Party transactions Committee
any practice presumed illicit or any alleged accounting and/or financial irregularity in their Company.
With this channel for reporting irregular accounting and financial practices, EDPR aims to:
•
Guarantee conditions that allow workers to freely report any concerns they may have in these areas to the Audit, Control,
and Related Party Transactions Committee;
•
Facilitate the early detection of irregular situations, which, if practiced, might cause serious damage to the EDPR Group, its
workers, customers and shareholders.
Contact with the Company’s Audit, Control and Related Party Transactions Committee to this extent is only possible by email
and post, and access to information received is restricted.
Any complaint addressed to the Audit, Control and Related Party Transactions Committee will be kept strictly confidential and
the whistle-blower will remain anonymous, provided that this does not prevent the investigation of the complaint. He/she will be
assured that the Company will not take any retaliatory or disciplinary action as a result of exercising his/her right to blow the
whistle on irregularities, provide information, or assist in an investigation. The process and functioning rules of this channel are
explained in the Welcome Presentation organized every year for the new hires of EDPR and also published on the intranet and
website of the Company. The bylaws of this channel are available at the intranet of the Company, which includes, among other
issues, the regulation of the suitable means and procedure of communication and treatment of irregularities, and the terms of
safeguarding the confidentiality of the information transmitted and the identity of its provider.
181
The Secretary of the Audit, Control and Related Party Transactions Committee receives all the communications and presents a
quarterly report to the members of the Committee. In 2020 there were no communications through this channel regarding any
irregularity at EDPR.
CODE OF ETHICS AND ETHICS CHANNEL
EDPR has astrong commitment in relation to the dissemination and promotion of compliance with ethic guidelines and principles
like transparency, honesty, integrity, non-discrimination, equal opportunity, and sustainability, which is encouraged to all
employees. With this goal, a new Code of Ethics was approved in December 2020 which replaces the Code of Ethics of
February, 2014 as well as the regulation to the Code of Ethics. The commitments of this new Code are equally applicable to
EDPR business partners, representatives and suppliers who are, in any way, entitled to act on behalf of EDPR.
Other suppliers are explicitly required to respect this Code, in accordance with the obligations arising from qualification
procedures or established contracts.
The Code of Ethics is an “action guide” reflecting the way EDPR believes one should work, therefore its enforcement is
inevitably mandatory; and thefore, employees who do not comply with this Code shold be subject to disciplinaty actions under
the terms of the applicable regulations. Suppliers to whom the Code is applicable will also be subject, in the event of non-
compliance, to the measures or sanctions contractually established or arising from the assessment and qualification procedures
in force at EDPR.
The Code is a privileged tool that frames the reflection on Ethics, but it is essentially a means of supporting the resolution of
ethical issues, since it presents standards and norms of behaviour that help sustain our decisions
Both the Code and its regulations are published on its intranet and website and attached to the labour agreements of the new
hires to their written acknowledgement when they join the Company. Likewise, this Code has been widely circulated to the
employees of the Group through internal communications and additionally, with the objective that every employee of
the Company receive an specific training on Ethics at least once, the Company periodically, provides an online
course
(“Ética
EDP”)
to all the employees. In this sense, during 2020 the following Ethic courses were launched: (i)
Ethics is
Value: in me, in society, in EDP
; and (ii)
Ética é valor:15 anos de edifício ético EDP
.
In order to support and achieve its Ethics Code and Ethics commitments and initiatives, and with the aim of minimizing the risk
of unethical practices, generating transparency and trust in relationships, EDPR has also approved and implemented the
following:
•
Ethics Committee:
is a committee enterely composed by independent members , whose objective is to ensure the
Code of Ethics compliance within the Company, processing all information received to this extent and establishing, if
appropriate, corrective actions.
The main functions of the Ethics Committee are the receipt, registration, processing and reporting to the Board of
Directors of information and reports received by the employees regarding infractions of the Code in matters of
legislation and ethics, conduct in the work environment, human rights and equal opportunities, integrity, relations
with customers and suppliers, the environment and sustainability. These functions include the following:
-
Proposing corporate ethics instruments, policies, goals and targets;
-
Monitoring application of the Code of Ethics, laying down guidelines for its regulation and overseeing its
proper application by the Company and its subsidiaries;
-
Analysing reported infractions of the Code of Ethics, deciding on their relevance and admissibility;
-
Deciding if there is any need for a more in-depth investigation to ascertain the implications and persons
involved. The Ethics Committee may, for this purpose, use internal auditors or hire external auditors
or other resources to assist in the investigation;
-
Appointing the Ethics Ombudsperson;
-
Any other functions assigned to it in the Articles of Association or by the Board of Directors.
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ANNUAL REPORT EDPR 2020
The Ethics Committee shall be composed by three members: the Chairman of the Audit, Control and Related Party
Transactions Committee, the Chairman of the Appointments and Remuneration Committee, and the Compliance Officer.
As of December 31
st
, 2020, the members of the Ethics Committee are as follows:
-
Acacio Piloto, Chairman of the Ethics Committee as Chairman of the Audit, Control and Related Party
Transactions Committee;
-
Antonio Nogueira Leite, vocal of the Ethics Committee as Chairman of the Nominations and Remunerations
Committee;
-
Joao Paulo Cruz Bastia Mateus, vocal of the Ethics Committee as Compliance Officer of EDPR;
The Ethics Committee shall meet at least once a year and whenever the Chairman deems it is necessary, and its
meetings shall be validly convened when one-half plus one of its members are present or represented at the meeting.
The resolutions of the Ethics Committee shall be approved by majority vote with the Chairman casting deciding vote in the
event of a tie. This Committee shall also inform the Board of Directors of the resolutions it approves at the first meeting of
the Board following the Committee meeting in which the resolution was agreed.
•
Ethics Ombudsperson:
is an external person from the Company that receives complaints and doubts submitted through
the Ethics Channel and investigates and documents the procedure for each of them, with guaranteed confidentiality in
relation to the identity of the claimant. The appointment for this position is made by the Ethics Committee. Its
main functions are therefore as follows:
-
Receiving the doubts and claims submitted through the Ethics channel and preparing and documenting the cases;
-
Submitting the related reports of the claims received to the Ethics Committee;
-
Monitoring each case analyzed until its conclusion, liaising with the complainant whenever necessary.
Since January 2019, the Ombudsperson of EDPR is Maria Manuela Casimiro da Silva.
•
Ethics Channel:
is an internal and external channel made available for the submission of claims and doubts about the
infringements of the Ethics Code in matters of legislation and ethics, conduct in the work environment, human rights and
equal opportunities, integrity, relations with customers and suppliers, environment and sustainability. This channel is
available on the intranet and Website of the Company and its existence and functioning is also introduced in Welcome
Presentation organized every year for the new hires of EDPR. The procedure and workflow of the claims and queries
submitted through this channel is regulated under the Regulations of the Code of Ethics and the regulations of the Ethics
Committee, and is as follows:
1.
The claimant (internal or external) submits its communication through the Ethics Channel (by email or letter
through the template available at the Website an intranet), which is received by the Ethics Ombudsperson.
2.
The Ethics Ombudsperson starts the investigation and drafts the related report.
3.
The Ethics Ombudsperson submits the summary of the investigation to the Ethics Committee (omitting the
identity of the complainant) for its deliberation about the effective infringement of the Ethics Code or not and,
to analyse if additional information is needed. If the latest were the case, an investigation will be carried out with
the support of internal or external means as appropriate.
4.
The final decision about the query or claim is communicated to the claimant. The Ethics Ombudsperson will
make further contact with the complainant to report the opinion of the Ethics Committee.
In 2020, there were three (3) claims submitted through the Ethics Channel. Two of them were considered unfounded, and the
other one as inconclusive. Thus, the Ethics Committee declared the closing
3
of the processes and filed the claims.
3
One of the claims was concluded in early 2021.
183
ANTI-CORRUPTION POLICY
In order to ensure compliance with the standards of Anti-Corruption Regulation in every geography where EDPR operates, the
Company developed in 2014 an Anti-Bribery Policy of application to all EDPR Group, which was approved by its Board of
Directors on December 19
th
2014, and last updated in 2017. A new revision of the Anti-Corruption Policy was performed in July
2019 and approved by the Executive Committee; and communicated to all EDPR Employees.
This Anti-Corruption Policy implies a series of procedures regarding the relationships of EDPR employees with external parties,
namely the approval of certain actions regarding hospitality to and from external parties, donations, and sponsorships. This
Policy was implemented in the Group in 2015, through the introduction of several approval systems in the corporate’s employee
channels in order to ensure transparency and prevent any corrupt business practice, and since then, has been periodically
communicated EDPR employees. Once this implementation was finished, the corresponding training sessions were organized
for part of our employees, and made available the Policy in the intranet and Website, in order to ensure appropriate knowledge
and understanding of the Policy. It is also attached to the labor agreements of the new hires to their written acknowledgement
when they join the Company, and besides that, in the Welcome Presentation organized every year for the new hires of EDPR,
they are also explained the main contents of this documents and its functioning.
III. Internal Control and Risk Management
50. Internal Audit
EDPR’s
Internal Audit Department is composed by eight (8) members. The function of
EDPR’s
Internal Audit is to carry out an
objective and independent assessment of the
Group’s
activities and of its internal control situation, in order to make
recommendations to improve the internal control mechanisms over systems and management processes in accordance with
the
Group’s
objectives.
The functions of the Internal Audit Department of EDPR were evaluated
by the “
Instituto de Auditores Internos
”
for the first time
in 2020, (as until the date, that was analized jointly with EDP), obtaining the highest calification.
EDPR has a Responsibilities Model and a SCIRF Manual (Internal Control System over Financial Reporting), in which
individuals, governing bodies and committees responsible for implementing and managing the internal control system are
indicated.
The Responsibilities Model includes the functions and main activities in the management and maintenance of the system at all
levels of the organization including monitoring activities related to the annual cycle, the implementation of controls and
documentation of evidence and supervision activities.
The SCIRF Manual incorporates the general principles of the Internal Control System over Financial Reporting as well as
the methodology used, the procedures for ensuring the effectiveness of internal control and design of models,
documentation, evaluation and reporting.
In line with the general principles of the model adopted by EDPR for the management of the SCIRF, the COSO Internal Control
integrated Framework 2013 (Committee of Sponsoring Organisations of the Treadway Commission), the responsibility for
supervising the Internal Control System lies in the Board of Directors and the Audit, Control and Related Party Transactions
Committee. The CEO is accountable before the Board and must ensure the proper functioning and effectiveness the SCIRF,
promoting its design, implementation and maintenance. The Executive Committee must support the CEO in this task, guiding
the development of the Entity Level Controls of the company and the controls in their areas of responsibility, relying when
necessary on other levels of the organisation. Also, the Senior Managers are responsible for evaluating any deficiencies
and implementing appropriate improvement opportunities.
To
fulfil these responsibilities, EDPR’s Internal Control offers support and advice for the management and development of the
SCIRF.
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ANNUAL REPORT EDPR 2020
51. Organisational structure of Internal Audit
The Internal Audit function in EDPR Group is a corporate function carried out by the Internal Audit Department, which reports
both to the Chairman of
EDPR’s
Executive Committee and to
EDPR’s
Audit, Control and Related Party Transactions
Committee.
52. Risk Management
EDPR’s Enterprise
Risk Management Process is an integrated and transversal management model that ensures the
minimization of the effects of risk on EDPR's capital and earnings, as well as the implementation of best practices of Corporate
Governance and transparency. The process aligns
EDPR’s
risk exposure with the
company’s
desired risk profile.
The Enterprise Risk Management Framework was approved in 2016, in accordance with the guidelines agreed at its Board of
Directors level. Based on this risk framework, the Company develops a Risk Management System through individual risk
policies and procedures for most relevant risks, where it is defined the methodology to calculate probability of occurrence
and impacts, as well as mitigation measures and thresholds. In addition, these risk policies and procedures establish the
process for control, periodic evaluation and eventual adjustments. The approvals necessary to proceed with this system are
submitted to the Executive Committee, which will inform the Board of Directors of these progresses. Likewise, the Risk
Management System is closely followed and supervised by the Audit, Control and Related Party Transactions Committee, an
independent supervisory body composed of non executive members that reports to the Board of Directors, in charge, among
others, of the monitorization of the compliance and progresses of the Risk Management Plan and possible improvements to the
measures and controls for mitigating potential risks identified within EDPR.
Market, counterparty, operational, business and strategic risks are identified and assessed and, following the result of
the assessment, Risk Policies are defined and implemented across the company. These policies are aimed to mitigate
risks without compromising potential opportunities, thus, optimizing return versus risk exposure.
In 2020, EDPR updated the Enterprise Risk Management Framework following Risk Committees discussions in order to update
of risk limits for the NI@Risk metric, following the recent growth of the company.
During 2020, EDPR updated its view on the sustainability of RES policies in the geographies where the Company is present and
in new potential geographies. This deep-dive analysis was performed within the scope of the Country Risk Policy.
EDPR carried out a review of historical capex deviations for projects in both Europe & Brazil and North American platforms, with
the aim of improving the accuracy of Capex contingencies to be included in the modelling of future projects.
Finally, an updated methodology for EBITDA@Risk and NI@Risk was approved, through a bottom-up calculation allowing for a
closer and more intuitive monitoring of the different risks.
185
53. Risk Map
Risk Management at EDPR is focused on covering all risks of the company. In order to have a holistic view of risks, they
are grouped in Risk Categories, which are Market, Counterparty, Operational, Business and Strategic. The definition of Risk
Categories at EDPR is as follows:
•
Market Risk
–
It refers to the risk to EDPR resulting from movements in market prices. Due to the relationship
between wind production and energy price, production risk is considered within market risk. In particular, market risk
are changes in energy prices, production, interest rates, foreign exchange rates, inflation and commodity prices (other
than energy);
•
Counterparty Risk (credit and operational)
–
Risk that counterparty to a transaction could default before final
settlement of the
transaction’s
cash flows. A direct economic loss would occur if transactions with the counterparty
had positive economic value at the time of default. Even in the case of not defaulting, it may not comply with its
contract obligations (timing, quality, etc.), implying additional higher costs due to its replacement or to delays in
fulfilling the contract;
•
Operational Risk (other than counterparty)
–
Defined as the risk of loss resulting from inadequate or failed internal
processes, people and systems or from external events (such as an increase in equipment default rates, increasing
O&M, or natural disasters), including the effect of a loss created by not being able to ensure business continuity;
•
Business Risk
–
Potential loss in the company’s earnings due to adverse changes in business margins. Such losses
can result above all from a serious increase in equipment prices or changes in the regulatory environment. Changes
in electricity prices and production are considered market risks;
•
Strategic Risk
–
It refers to risks coming from macroeconomic, political, social or environmental situation in countries
where EDPR is present, as well as those
coming from a change in competitive landscape, from technology disruptions, from changes in energy markets or from
governance decisions (investment decisions criteria, Corporate Governance and Reputational issues).
Within each Risk Category, risks are classified in Risk Groups.
1. Market Risk
1. i) Energy price risk
EDPR faces limited electricity price risk as it pursues a strategy of being present in countries or regions with long -term visibility
on revenues. In most countries where EDPR is present, prices are determined through regulated framework mechanisms. In
those countries with no regulated tariffs, power purchase agreements are negotiated with different off- takers to eliminate
electricity and Green Certificate or Renewable Energy Credit (REC) price risks.
Despite EDPR’s strategy of eliminating market price risk, EDPR still has some plants with merchant exposure.
In Europe, EDPR operates in countries where the selling price is defined by a feed-in-tariff (Portugal, France and Italy) or in
markets where, on top of the electricity price, EDPR receives either a pre-defined regulated premium or a green certificate,
whose price is achieved on a regulated market (Spain, Belgium, Poland and Romania). EDPR is also developing projects in the
UK and in Greece, under contract for differences remuneration schemes.
In countries with a predefined regulated premium or a green certificate scheme, EDPR is exposed to electricity price
fluctuations.
Considering current Power Purchase Agreements (PPAs) in place, EDPR is exposed to electricity price risk in Romania, in
Poland, in Belgium and partially in Spain. Additionally, in European countries with a green certificate scheme
(Romania, Belgium and Poland), EDPR is exposed to fluctuation on the price of green certificates.
The US market does not provide a regulated framework system for the electricity price. Nevertheless, renewable generation is
incentivized through PTCs (Production Tax Credits) and regional Renewable Portfolio Standard (RPS) programs that allow
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ANNUAL REPORT EDPR 2020
receiving RECs for each MWh of renewable generation. REC prices are very volatile and depend on the regional
supply/demand equilibrium in the relevant market.
Most of
EDPR’s
capacity in the US has predefined prices determined by bundled (electricity + REC) long-term contracts with
local utilities in line with the
Company’s
policy of avoiding electricity price risk. Despite existing long term contracts, some
EDPR’s
plants in the US do not have PPA and are selling merchant with exposure to electricity and REC prices. Additionally,
some plants with existing PPAs do not sell their energy where it is produced and are therefore exposed to basis risk (difference
in price between the location where energy is produced and that where energy is sold).
In Ontario (Canada), the selling price is defined by a long-term feed-in-tariff, thus, there is no electricity price exposure.
In Brazilian and Colombian operations, the selling price is defined through a public auction which is later translated into a long -
term contract. Electricity price exposure is almost null, with little exposure for the production above or below the contracted
production.
Under EDPR’s
global approach to minimize the exposure to market electricity prices, the Company evaluates on a permanent
basis, if there are any deviations to the pre-defined limits (measured through EBITDA at risk, Net Income at risk and total
merchant exposure).
EDPR intends to eliminate Green Certificates and REC price risk with the signing of bundled PPAs with private off-takers, which
include the sale of the electricity and the Green Certificate or REC. In some cases, the off-taker may be interested in contracting
only the Green Certificate or the REC, thus a GCPA (Green Certificate Purchase Agreement) or a RECPA (REC Purchase
Agreement) is signed.
In those geographies with remaining merchant exposure, EDPR uses various commodity-hedging instruments in order to
minimize the exposure to fluctuating market prices. In some cases, due to the lack of liquidity of financial derivatives, it may not
be possible to successfully hedge all existing merchant exposure, after considering PPAs in place.
In 2020 EDPR had financially hedged most of its remaining merchant exposure in Poland, Romania, Spain, Brazil and the US,
mitigating any potential impact from COVID-19 pandemic.
As aforementioned, some US plants have exposure to REC price risk and/or basis risk (difference in electricity price between
locations). EDPR hedges REC prices through forward sales and basis exposures through financial swaps or FTR (Financial
Transmission Rights).
1. ii) Energy Production Risk
The amount of electricity generated by
EDPR’s renewable
plants is dependent on weather conditions, which vary
across locations, from season to season and from year to year. Variation on the amount of electricity that is generated affects
EDPR’s operating
results and efficiency.
Not only the total wind or solar production in a specific location is relevant, but also the profile of production. Wind usually blows
more at night than at daytime, when energy prices are lower and the opposite for solar. Generation profile will affect the
discount or add-on in price of a plant versus a baseload generation.
Finally, curtailment of a plant will also affect its production. Curtailment occurs when the production of a plant is stopped by the
TSO (Transmission System Operators) for external reasons to the Company. Examples of cases of curtailment are upgrades in
transmission lines or exceptional congestion (high level of electricity generation for available transmission capacity).
EDPR mitigates wind and solar resource volatility and seasonality through geographical diversification of its asset base in
different countries and regions.
EDPR acknowledges the correlation between different plants in its portfolio that allows for this geographical diversification,
which enables EDPR to partially offset production variations in each region and to keep the total energy generation relatively
steady. Currently, EDPR is present in 14 countries: Spain, Portugal, France, Belgium, Poland, Romania, Italy, UK (no
generation), Greece (no generation), Colombia (no generation), US, Canada, Brazil and Mexico.
187
Nevertheless, 2020 was a year with generation slightly below the one initially forecasted.
EDPR continues to analyze the potential use of financial products to hedge wind risk and might use this product to mitigate risk
in specific cases.
Profile risk and curtailment risk are managed ex-ante. For every new investment, EDPR factors the effect that expected
generation profile and curtailment will have on the output of the plant. Generation profile and curtailment of
EDPR’s
plants are
constantly monitored by
EPDR’s
Risk department to detect potential future changes.
1. iii) Risks related to financial markets
EDPR finances its plants through project finance or corporate debt. In both cases, a variable interest rate might imply significant
fluctuations in interest payments.
On the other hand, due to EDPR’s
presence in several countries, revenues are denominated in different currencies.
Consequently, exchange rate fluctuations may have a material adverse effect on financial results or on the value of the foreign
investment.
1. iii) a) Interest rate risk
Given the policies adopted by EDPR Group, current exposure to variable interest rate is not significant and financial cash flows
are substantially independent from the fluctuation of interest rates.
The purpose of interest rate risk management policies is to reduce the exposure of long-term debt cash flows to market
fluctuations, mainly by contracting long term debt with a fixed rate.
When long-term debt is issued with floating rates, EDPR settles derivative financial instruments to swap from floating to fixed
rate.
EDPR has a portfolio of interest-rate derivatives with maturities of up to 14 years. Sensitivity analyses of the fair value of
financial instruments to interest-rate fluctuations are periodically performed.
With most of interest rate being fixed, main exposure to interest rates arises at refinancing. To protect against this risk, EDPR
intends to maintain a balanced maturity profile for its corporate fixed debt, thus, diversifying the risk of bad
timing when refinancing occurs.
Repricing calendar of debt is continuously monitored together with interest rates in order to detect good timing for restructuring
debt.
Taking into account risk management policy and approved exposure limits, Global Risk
Area supports the Finance team in
interest rate hedging decisions and the Finance team submits the financial strategy appropriate to each project/location for
Executive
Committee’s
approval.
1. iii) b) Exchange rate risk
EDPR has international operations and is exposed to the exchange-rate risk resulting from investments in foreign subsidiaries.
Currency exposure in operating plants is to U.S. dollar, Romanian leu, Polish zloty, Brazilian real, British pound, Canadian dollar
and Colombian pesos. In addition, EDPR has a marginal fiscal exposure to MXN due to Mexican assets.
EDPR hedges risk against currency fluctuations by financing in the same currency as the revenues of the project. When local
financing is not available, EDPR hedges debt cash flows though cross currency interest rate swaps.
EDPR also hedges net investment (investment after deducting local debt) in foreign currency through cross currency interest
rate swaps.
Finally, EDPR contracts foreign exchange forwards to hedge the risk in specific transactions, mainly in payments to suppliers
which may be denominated in different currencies.
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ANNUAL REPORT EDPR 2020
EDPR’s hedging
efforts minimize exchange rate volatility, but do not eliminate completely this risk due to high costs associated
to hedging FX in certain situations.
1. iii) c) Inflation risk
In specific projects, regulated remuneration is linked to inflation. Additionally, O&M costs are considered to be linked to
inflation in most cases.
Exposure to inflation in revenues may be naturally hedged with exposure to interest rates and EDPR regularly analyses inflation
exposure and its relationship with interest rates to adjust level of interest rate coverage in project finance structures.
Exposure to inflation in O&M costs is managed at the moment of the investment decisions, by executing sensitivity analyses.
iii) d) Liquidity risk
Liquidity risk is the risk of EDPR not meeting its financial obligations. Liquidity risk is mainly related to extreme market
movements in electricity prices, interest rates,exchange rates or credit markets,which may change the expected cash flow from
revenues, opex, margin calls or funding (due to credit downgrades).
EDPR tracks liquidity risk in the short term (margin calls, etc.) and in the long term (financing sources) in order to meet
strategic targets previously set (EBITDA, debt ratio and others).
EDPR’s
strategy to manage liquidity risk is to ensure that its liquidity is sufficient to meet financial liabilities when due, under
both normal and stressed conditions, and without incurring unacceptable losses or risking damage to
EDPR’s
reputation.
Different funding sources are used such as Tax Equity investors, commercial banks, multilateral organisations, corporate debt
and asset rotation in order to ensure long-term liquidity to finance planned projects and working capital.
The Directors have estimated cash flows that show that the Group will meet the commitments existing at the close of
the 2020 financial year and those foreseen for 2021.
1.iv) Commodity price risk (other than energy)
In projects in which there is a significant number of years between investment decision and start of construction, EDPR
may be exposed to the price of the materials used in turbine manufacturing, foundations and interconnection through
escalation formulae included in the contracts with suppliers.
In order to manage this risk, EDPR may hedge the market exposure in OTC/future commodity markets, considering the risks
(potential losses) and the cost of the hedge.
2. Counterparty Risk
Counterparty credit risk is the risk that the counterparty to a transaction could default before the final settlement of the
transaction’s cash flows. An
economic loss could occur, either a direct economic loss if the transaction has a positive value at
the moment of default (counterparty credit risk) or a replacement cost due to change of the counterparty (counterparty
operational risk).
2. i) Counterparty Credit Risk
If the transactions or portfolio of transactions with the counterparty has a positive economic value at the time of default, an
economic loss would occur.
To control credit risk at EDPR, thresholds of Expected Loss and Unexpected Loss are established at company level as defined
under Basel Standards and re-evaluated monthly. If the threshold is surpassed by the company as a whole, mitigation measures
are implemented in order to remain within the pre-established limit.
189
Additionally, Expected Loss limits are established for each individual counterparty or Group of counterparties (parent and
subsidiaries).
2.ii) Counterparty Operational Risk
If the transactions or portfolio of transactions with the counterparty do not have a positive economic value at the time of default,
it will impact operations. Despite no direct loss at the time of default, the replacement of the counterparty could imply a cost
to EDPR due to potential delays, higher contract value with a new counterparty (replacement costs), etc.
Construction and O&M subcontractors are counterparties to which EDPR is exposed from an operational point of view.
To minimize the probability of incurring in potential replacement costs with counterparties, EDPR´s policy concerning
counterparty operational risk is managed by an analysis of the technical capacity, competitiveness, credit quality and
replacement cost of the counterparty.
3. Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external
events (such as an increase in equipment default rates, increasing O&M, or natural disasters). Moreover, it includes the risk of
the business being disrupted due to internal or external causes (such as a pandemic, cyberattack or IT systems malfunctioning),
affecting business continuity.
3. i) Development Risk
Renewable plants are subject to strict regulations at different authority levels (international, national, state, regional and local)
relating to the development, construction, grid interconnection and operation of power plants. Among other things, these laws
regulate landscape and environmental aspects, building licenses, land use and land securing and access to the grid issues.
While level of exigency might be different depending on the geographies, EDPR acknowledges a trend for legislations to align
towards concentrating the most restrictive rules and development risks on the consenting (environmental and urban
permissions) and interconnection (electricity connection of the plant to the national grid).
In this
context, EDPR’s experience gathered
in different countries is useful to anticipate and deal with similar situations in other
countries.
During the development and design phase, EDPR focuses on the optimization of its projects. By mastering the variables, such
as choice of locations, layout, etc., the objective is to make our projects more resilient to permitting risks.
Additionally, EDPR mitigates development risk by generating optionality, with development activities in 14 different countries
(Spain, Portugal, France, Belgium, Poland, Romania, UK, Italy, Greece, US, Canada, Colombia, Brazil and Mexico) and a
portfolio of projects in several stages of maturity. EDPR
has a large pipeline of projects that provide a “buffer” to
overcome
potential delays in the development of prioritized projects, ensuring growth targets and being able to compensate permitting
delays in some geographies.
3. ii) Execution Risk
During the construction of the foundations, interconnection and substation of a plant, and the installation of the equipment,
different events (bad weather, accidents, etc.) might occur that could imply an over cost or a delay in the commercial operation
date of the plant:
•
The delay implies a postponement of cash flows, affecting profitability of the investment.
•
When a plant has a PPA, a delay of the commercial operation date might imply the payment of LDs, with the
consequent loss of revenues and the impact on annual financial results.
During the design phase, EDPR engineering teams supervise the engineering and the installation method. Construction is
subcontracted to technically capable construction companies.
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ANNUAL REPORT EDPR 2020
In both cases, a critical path analysis is performed to assess the reliability of construction and installation plan. Also, collaterals
may be required to the counterparty following EDPR’s Counterparty Risk Policy.
3.iii) Operation Risk
Damage to Physical Assets Risk
Renewable plants in construction and in operation are exposed to weather hazards, natural disasters, etc. These risks depend
on the location.
All plants are insured the physical damage during construction and operation. During operation, any natural disaster, weather
hazard or accident will be partially insured to revenue losses due to the event.
Equipment Performance Risk (O&M costs)
Output from renewable plants depends upon the operating availability of the equipment.
EDPR mitigates this risk by using a mix of suppliers which minimizes technological risk, avoiding exposure to a unique
manufacturer.
EDPR also engages suppliers through medium-term full-scope maintenance agreements during the first years of operation to
ensure alignment with supplier in minimizing technology risk.
Finally, for older plants, EDPR has created an Operation and Maintenance (O&M) program with an adequate preventive and
scheduled maintenance program. EDPR externalizes non-core technical O&M activities of its renewable plants, while primary
and value added activities continue to be controlled by EDPR.
3. iv) Information Technology Risk
IT (Information Technologies) risk may occur in the technical network (information network for plants operation) or in the office
network (information network of corporate services: ERP, accounting…)
EDPR mitigates this risk creating redundancy of servers and control centers of renewable plants. Redundancy is created in a
different location to anticipate potential natural disasters, etc.
3. v) Legal claims Risk (compliance, corruption, fraud)
EDPR faces potential claims of third parties, corruption and fraud of its employees.
EDPR has implemented an internal “Code of Ethics” and an
Anticorruption Policy where the company commits to comply with
legal obligations in every community where EDPR is established.
Additionally, the company Ombudsperson receives all the complaints sent through the “Code of Ethics” channel and decides the
appropriate procedure for each one of them. An anticorruption mailbox is also available to report any questionable practice.
1.3. vi) Personnel Risk
EDPR identifies four main risk factors regarding personnel: turnover, health and safety, human rights,
and discrimination, violence or behavior against human dignity.
•
Turnover:
A high turnover implies direct costs of replacement and indirect costs of knowledge loss. EDPR mitigates
turnover through constant reassessment and benchmarking of remuneration schemes in different geographies.
Additionally, EDPR offers flexibility to its employees to improve work life balance. In 20120, EDPR was elected as
“Top
Employer”
in Spain by the Top Employers Institute.
•
Health and safety:
EDPR has deployed an H&S management system, complying with OHSAS 18001, pursuing the
“zero
accidents” targe
t.
191
•
Human rights:
EDPR has committed, through its “Code of Ethics”, to respect international human rights treaties and
best work practices. All counterparties which sign a contract with EDPR are committed to respect
EDPR’s
“Code
of
Ethics
”.
•
Discrimination, violence or behavior against human dignity:
EDPR forbids any kind of discrimination, violence or
behavior against human dignity, as stated in its “Code of Ethics”. Strict compliance is
enforced, not only through the
reporting channel of the Ombudsperson, but also through constant awareness from all employees of the company.
3. vii) Processes Risk
Internal processes are subject to potential human errors that may negatively affect the outcome.
Internal Audit Department regularly reviews internal processes and recommends the establishment of new controls or the
improvement in the implementation of existing procedures.
Moreover, business continuity is ensured by a Global Crisis Plan, which defines the procedure to follow for each level of crisis
and frames individual emergengy plans at activity or asset level.
4. Business Risk
4. i) Regulatory Risk (renewables)
The development and profitability of renewable energy projects are subject to policies and regulatory frameworks. The
jurisdictions in which EDPR operates provide different types of incentives supporting energy generated from renewable
sources.
Remuneration schemes have become less competitive in some countries due to the financial crisis and it cannot be guaranteed
that current support will be maintained in all EDPR’s geographies or that future renewable energy projects will benefit from
current support measures. Regulation promoting green energy has been revised or is under revision in some of the countries
where EDPR is present.
In the US, renewable generation from wind will be incentivized through Production Tax Credits (PTC) at a Federal level for all
projects beginning of construction up to
2021. Level of incentives will be progressively fading out. Additionally, wind and solar
production is also incentivized through State RPS Programs that allow receiving RECs (Renewable Energy Credit) for each
MWh of renewable generation.
EDPR is managing its exposure to regulatory risks through diversification, by being present in several countries and through
participation as an active member in several wind and solar associations.
Regulatory Risk in each of
EDPR’s countries
is monitored continuously, considering current regulation, potential drafts of new
laws, feedback from associations, evolution of installed renewable generation capacity and other inputs. EDPR has developed
an internal quantitative assessment of Regulatory Risk that serves as an indicator for changes in supporting schemes. This
measure is updated annually in all EDPR´s geographies.
Regulatory Risk is also considered ex-ante, at the moment of the investment, through sensitivity analyses
that are performed
to evaluate its impact in project profitability under different scenarios.
4.ii) Equipment Market Risk Equipment Price Risk
Price of equipment is affected, not only by market fluctuations of the materials used, but also by the demand of this equipment
or a possible increase in trade tariffs and levies
For every new project, EDPR secures the demand risk by engaging in advance with manufacturers, elected through a
competitive process.
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ANNUAL REPORT EDPR 2020
Equipment Supply Risk
The demand for new plants may offset the offer of equipment. Currently, the local component requirement in some geographies
(Ex: Brazil) may create this shortfall situation. In the event of a trade war, supply chain of equipment suppliers may be affected,
creating further imbalances in local component requirements.
EDPR currently faces limited risk to the availability and price increase of equipment due to existing framework agreements with
major global suppliers. The Company uses a large mix of suppliers in order to diversify equipment supply risk. For geographies
with specific requirements of local component, EDPR does not engage in a project before securing the supply of the equipment.
This risk is further explained on EDPR’s annual report due to its current relevance in the business.
5.Strategic Risk
5. i) Country Risk
Country Risk is defined as the probability of occurrence of a financial loss in a given country due to
macroeconomics, political
or natural disasters. EDPR has defined a Country Risk Policy that assesses country risk through an internal scoring based on
publicly available data. This internal scoring is compared with external assessments from renowned organisations. Each risk
factor affecting country risk is evaluated independently to decide on potential mitigating actions:
•
Macroeconomic Risk: risks from the country’s economic evolution, affecting re
venue or cost time of the investments
•
Political Risk: all possible damaging actions or factors for the business of foreign companies that emanate from any
political authority, governmental body or social group in the host country
•
Natural disaster risk: natural phenomena (seismicity, weather) that may impact negatively in the business conditions
Before approving a project in a new geography, EDPR analyses the risk of the new country and compares it to our existing
portfolio. Mitigation measures may be decided when this risk is above a certain threshold.
In addition, EDPR uses a Security risk index to rank countries from a security and safety standpoint, establishing mitigation
measures for employees when above a pre-defined threshold.
5. ii) Competitive landscape
In the renewable business, size can be an advantage or disadvantage in specific situations. For example, in development of
renewable plants, small and dynamic companies are usually more competitive than larger companies.
On the other hand, when participating in tender processes for offshore wind farms, the size of the investment benefits larger
companies.
Additionally, the consequences of a change in the competitive landscape due to mergers and acquisitions may also be a risk.
To mitigate the risks, EDPR has a clear knowledge of its competitive advantages and tries to leverage on them. When EDPR
has no advantage versus its competitors, alternatives are considered in order to become competitive. For example, for
offshore wind farms, EDPR has partnered with large companies with previous experience in large electricity generation
projects, in
order to
become a
more competitive consortium.
5. iii) Technology disruptions
Most renewables are relatively recent technologies, which are continuously evolving and improving efficiency. As such, some
initially expensive technologies can become competitive in a relatively short time.
EDPR growth focuses in the most competitive renewable technologies at the moment, which are onshore wind, offshore wind
and PV solar, but also participates in other innovative projects such as floating offshore wind.
193
5. iv) Meteorological changes
Future estimations of wind and solar production are based on analysis of historical measurements for more than 20 years, and
they are considered to be representative of the future. Relevant unexpected meteorological changes could lead to a lower
production than the one expected from historical data.
When evaluating a new investment, EDPR considers potential changes in the production forecasted, however, the size of the
potential deviation in the case of relevant meteorological changes is uncertain.
5. v) Investment decisions criteria
Not all projects have the same risk profile. This will depend on merchant exposure of remuneration, construction risk, etc.
In order to take proper business decisions, EDPR uses Risk Adjusted Metrics for investment decisions, which take into
consideration the different risks inherent of each project.
5. vi) Energy Planning
Assumptions in future evolution of energy markets affect the profitability of the investments for the period after the fixed
remuneration (regulated tariff or PPAs). Structure of electricity markets in most of EDPR geographies (marginal setting price)
were not designed to consider a great share of generation from renewable sources with zero marginal price. Thus, the increase
in renewable generation could lead to lower pool prices in medium term if reforms of electricity markets are not properly
undertaken.
When investing, EDPR performs sensitivity analyses to stress pool price scenarios for the period without fixed remuneration to
understand the robustness of the profitability of the investment.
5. vii) Corporate Organisation and Governance
Corporate governance systems should ensure that a company is managed in the interests of its shareholders and other relevant
stakeholders.
In particular, EDPR has an organisation in place with a special focus on transparency, where the management body (Board of
Directors)
is separated from the supervision and control duties (Audit and Control Committee). Members of the Audit
Committee are invited to the General Risk Committee of EDPR.
5. viii) Reputational risk
Companies are exposed to public opinion and today’s social networks are a rapid mean to expr
ess particular opinions. A bad
reputation could eventually harm financial results of a company in the short and in the long term.
Sustainability makes part of the essence of EDPR. EDPR is not only committed in building a better future, but also in doing it
well, in an ethical and sustainable manner, consequently limiting reputational risk.
6.
Impact of COVID-19
The year 2020 was marked by the outburst of COVID-19 pandemic. Already in March, EDPR carried out a comprehensive
assessment of the potential impacts o
n the company’s operations, followed by recommendations of actions to be put in place
and a process for continuous monitoring of the situation.
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ANNUAL REPORT EDPR 2020
The impact of COVID-19 has been transversal across all areas and geographies of the company, but those impacts can be
grouped under several risk categories:
Market Risk:
•
Energy price risk: Energy price significantly dropped during 2020 in most of EDPR geographies due to the reduction in
demand following the lockdown and a lower economic activity. However, impact of low energy prices on EDPR results
was minimal, as EDPR’s marginal merchant exposure was mostly hedged for 2020.
•
FX risk: Emerging economies suffered a strong depreciation of their currencies. Net Investment hedges at EDPR
mitigated most of the FX fluctuations. On the other hand, a specific plan for hedging FX transactional exposures in
Capex was set out, in order to avoid hedging at particularly unfavorable rates due to the pandemic.
Monitoring of market risk was performed on a monthly basis in the Restricted Risk Committee, adjusting the position when
necessary.
Counterparty Risk:
Despite the increase in exposure from counterparties in financial hedges and the temporary deterioration of
the financial situation of some of EDPR’s PPA off
-takers, impact for EDPR was negligible. The existing collateral in electricity
hedges and a diversified portfolio of creditworthy PPA off-takers, some of which improved their credit metrics during the year (ie:
Pacific Gas and Electric Company), made EDPR resilient to increase in counterparty risk.
Monitoring of counterparty risk was also performed monthly in the Restricted Risk Committee.
Operational Risk and Business Continuity
:
•
Execution Risk: The impact of the pandemic on the construction and execution of projects lead to some COD delays,
due to construction stoppages and/or supply chain disruptions. To mitigate this risk, EDPR implemented a strategy of
prioritization of projects and set out a review of contractual clauses to prevent or minimize changes in tariff regimes,
PPA penalties or Capex increases. By the end of 2020, incentivized regime contracts or PPAs were all maintained
despite some COD delays.
•
Monitoring of the evolution of the execution risk at EDPR was performed on a weekly basis, together with the
Engineering & Construction Department.
•
Operation Risk: No significant impact, as the potential reduction in plant availability due to delayed maintenance or
repairs was residual.
•
Personnel Risk: EDPR initially implemented travel restrictions and other measures designed to stop the spread of the
coronavirus and guarantee the safety of its personnel. In March, EDPR activated its Contingency Plan for pandemics,
introducing home office in all geographies and restricting access to its facilities, while minimizing disruptions in its
operations, thus ensuring business continuity.
•
EDPR employees have a Reopening Plan for gradually returning to the facilities according to the development of the
pandemic, with geographical specifications, guaranteeing the highest health & safety standards.
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54. Risk functions and framework
A corporation can manage risks in two different ways, one risk at a time on a largely and compartmentalized basis, or all risks
together within a coordinated and strategic framework. The latter approach is called “Enterprise Risk Management” and is the
approach used at EDPR. Risk Management at EDPR is supported by three distinct organisational functions, each on a different
role: Strategy (Risk Profiler), Management (Risk Manager) and Controlling (Risk Controller).
RISK FUNCTIONS
DESCRIPTION
Strategy
–
General risk
strategy & policy
Global Risk Department provides analytically supported proposals to general strategic
issues.
Responsible for proposing guidelines and policies for risk management within the company
Management
–
Risk
management & risk
business decisions
Implement defined policies by Global Risk
Responsible for day-to-day operational decisions and for related risk taking and risk
Controlling
–
Risk
monitoring
Responsible for follow-up of the results of risk taking decisions and for contrasting
alignment of operations with general risk policy approved by the board
The Risk Committee is the forum where the different Risk Functions discuss the policies to be implemented and control the risk
exposure of the
company. EDPR’s
Risk Committee integrates and coordinates all Risk Functions and assures the link
between corporate’s
risk appetite and defined strategy and the operations of the company.
EDPR created three distinct meetings of the Risk Committee in order to separate
discussions on
execution of mitigation
strategies from those on the definition of new policies:
•
Restricted Risk Committee:
Held every month, it is mainly focused on development risk and market risk from energy
price (market, basis, profile, GCs and RECs). It is the forum to discuss the evolution of projects under development
and construction and the execution of mitigation strategies to reduce merchant exposure. It also monitors the limits of
defined risk policies, with regards to counterparty risk, operational risk and country risk.
•
Financial Risk Committee:
Held every quarter, its objective is the review of the main financial risks and to discuss
the execution of mitigation strategies. Exchange rate risk, interest rate risk and credit risk from financial counterparties
are most relevant risks reviewed by this committee.
•
Risk Committee:
Held every quarter, it is the forum where new strategic analyses are discussed and new policies are
proposed for approval to the Executive Committee. Additionally, EDPR
’
s overall risk position is reviewed, together
with EBITDA@Risk and Net Income@Risk.
55. Details on the internal control and risk management systems implemented in the company
regarding the procedure for reporting financial information
With the purpose of not only controlling risks, but also managing them ex-ante, EDPR has created Global Risk policies that are
enforceable at a Global Level. These policies are proposed and discussed in the Risk Committee and approved by the
Executive Committee.
EDPR’s Enterprise
Risk Management Process is inspired on Basel Committee on Banking
Supervision’s p
rinciples, guidelines
and recommendations and is similar to other risk management frameworks. In this respect, performance of risk metrics at
EDPR and their compliance with established internal risk limits are assessed on a monthly basis. Additionally, a formal review
and update of each Risk Policy, and the adequacy of its limits, is performed every two years
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ANNUAL REPORT EDPR 2020
INTERNAL CONTROL SYSTEM OVER FINANCIAL REPORTING
EDPR has an Internal Control System over Financial Reporting (SCIRF) updated and monitored in line with international
standards of Internal Control.
This system covers the main aspects of the COSO framework: maintaining a control environment for the preparation of
qualified
financial information, assessment of the risks of financial reporting, existence of control activities to mitigate risks of
error, information and communication and evaluation mechanisms.
SCOPE REVISION AND UPDATE
The SCIRF Manual includes the annual update of the scope that aims to identify companies, areas and processes that must
be included in the scope of SCIRF, according to criteria of materiality and risk, including the risk of error or fraud.
The risk analysis included in the scoping process for SCIRF, includes both the different types of risk (operational, economic,
financial, technological or legal) and the control objectives of financial reporting (existence and occurrence, completeness,
measurement, presentation, disclosure and comparability, and rights and obligations in terms of their potential impact on the
financial statements).
The results of the updated scope with the methodology outlined are communicated at all levels of the organisation involved
in
the SCIRF and supervised by the Audit, Control and Related Party Transactions Committee.
CONTROL ACTIVITIES
In documented SCIRF processes and controls, information capture mechanisms are established (including identification of the
scope of consolidation) and are specified the steps and checks that are carried out for the preparation of the financial
information that will be part of consolidated financial statements.
The procedures for the review and approval of financial information are provided by the areas of Planning and Control, and
Administration, Consolidation and Tax. Financial information is supervised in the scope of its competences by the Audit, Control
and Related Party Transactions Committee, prior to the formulation of the accounts by the Board of Directors.
The SCIRF includes control activities related to these processes, embodied in Entity Level Controls, Process Controls and
General Computer Controls. These processes include review and approval activities of the financial information which are
described in the processes of elaboration of individual accounts, preparation of consolidated accounts and processing of
consolidated financial statements.
EDPR has descriptions of Competency Profiles for the Positions to be carried out in the exercise of the main features of each
position that includes a description of the main responsibilities. These include the descriptions of the key positions of those
involved in the preparation of financial information. These descriptions include responsibilities in the preparation of financial
information and compliance with internal control procedures.
The documentation of processes and associated controls designed include among others, the completion of closure activities
by completing monthly closing checklists by entity, setting time limits for the closures, the identification of the relevance of the
operations in order to be reviewed at the appropriate level, conducting analytical reviews of financial information, the
existence of limitations in systems to prevent erroneous records or access by unauthorized persons, analysis of deviations
from the budget, the analysis in Executive Committees of relevant and significant facts that could cause a significant impact on
the accounts, or the allocation of responsibilities for calculating amounts to be provisioned for them to be carried out by
authorized personnel with the right skills.
In addition to the mentioned processes, major transactional processes resulting from the scope are documented. The
description of the activities and controls are designed with the aim of ensuring the
registration, evaluation, appropriate
presentation and
disclosure of transactions in financial reporting.
197
Control activities of
EDPR’s
SCIRF also include those relating to systems and information technology (Computer General
Controls) following an international reference, the COBIT framework (Control Objectives for Information and related
Technologies). The importance of this area is that information systems are the tools with which financial information is
prepared, and is therefore relevant
for transactions conducted with them.
These control activities include those related to access control to applications and systems, segregation of duties,
management of corrective and preventive maintenance, new projects implementation, administration and management of the
systems, facilities and operations (back-ups, security incidents) and their proper monitoring and planning. These activities are
developed taking into account
the requirements of control and supervision.
Among the activities of SCIRF’s scope update, there is a periodic a
nalysis of the existence of service suppliers that perform
relevant activities in relation to the processes of preparing financial information.
SCIRF SUPERVISION
The Audit, Control and Related Party Transactions Committee supervises the SCIRF in the scope of the exercise of their
activities through the monitoring and supervision of the developed mechanisms
for SCIRF’s
implementation, evolution and
evaluation, and the results of the scope analysis and the extent of the situation in terms of coverage. To this extent, the Internal
Control Area assists the Audit, Control and Related Party Transactions Committee.
EDPR has an Internal Control area, integrated in the Compliance and Internal Control Department, which report to the Chairman
of the Executive Committee. The Audit, Control and Related Party Transactions Committee supervises the Internal Control area
activities.
The main functions of the Internal Control area are set out in the SCIRF Manual, which includes, among others, the evaluation
of the activities of internal control systems, including the internal control system over financial reporting.
Internal Control supports the Audit, Control and Related Party Transactions Committee in supervising the implementation and
maintenance of SCIRF and reports the results of the evaluation, improvement actions identified and their evolution.
The entity has action plans for improvement
actions identified in SCIRF’s
assessment processes, which are accompanied and
supervised
by the Internal Control area, considering their impact on the financial information.
Also in the year 2020, as in previous years, a process of self-certification was made by the heads of the various process and
Entity Level Control owners regarding proper documentation update on SCIRF controls and processes in their area of
responsibility and the implementation of controls with corresponding evidence.
SCIRF EVALUATION
Besides the monitoring and evaluation activities described in the preceding paragraph, in case the auditors identified internal
control weaknesses in the scope of their financial audit work, they are expected to
communicate these circumstances to
the
Audit, Control and Related Party Transactions Committee, which regularly monitors the results of the audit work.
Additionally, in 2020 the EDPR Group decided to have its SCIRF audited by the external auditor. As a result of its evaluation,
the external auditor issued a report with a favorable opinion on the SCIRF of the EDPR Group, according to ISAE 3000
(International Standard on Assurance Engagements 3000), included in Annex II of this Chapter 5 of the Annual Report.
CORPORATE COMPLIANCE
The implementation of a solid corporate culture of integrity and transparency has always been a priority for EDPR, structuring
its supervision and monitoring, through a regulatory compliance conduct basis and through the adoption of ethical values and
principles;
both consolidated as central elements of its business model.In order to lead and manage the necessary measures
and initiatives required to this implementation and its functioning, the Compliance Officer figure was created in 2016 in EDPR .
Since then, EDPR has been working with the support of specialized advisors in the evaluation of the potential corporate
criminal
liability risks of the Company in all its geographies and in the assessment of the compliance structure to be adopted
in order to comply with the requirements of the applicable criminal regulations.
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ANNUAL REPORT EDPR 2020
In this context, the Board of Directors of EDPR approved the Criminal and Legal Risk Prevention Model (Compliance Model)
on December 2017 with the goal of promoting, establishing, developing and maintaining an adequate ethical business culture.
The Compliance Model is constantly updated according to the most demanding national and international standards.
During 2018, the Company completed the first update of the Compliance Model and started working on the definition of a
criminal risk matrix at an international level including an inventory of the potential risks and its controls in each of the
geographies where EDPR operates.
In June 2019, the Compliance Area was created to support and provide assistance to the Compliance Officer. The Compliance
Area
main responsibilities are promoting a culture of prevention
based on the principle of “absolute rejection”
towards the
commission of illegal acts and fraud situations, guaranteeing the dissemination of the principles of the Compliance Model and
managing the cases of complaints from employees or collaborators.
In February 2020, with the commitment of stregnght the Compliance culuture and comply with the international standars in
Corporate Governance, the Departmant of Compliance and Internal Control was created. A new department which reports,
directly, to the CEO. Among the activities performed during 2020, main were:
1)
The review and update of the International Compliance Model. For this review, a third-party consultant was engaged to
identify and evaluate the criminal risks in all geographies of EDPR and review the associated controls in order to ensure
the International Compliance Model was reflecting the most current legal and organisational changes. Additionally, EDPR
has updated the identification and evaluation of the risks in the following geographies: Brazil, Poland, Romania, French
and Belgium.
2)
A new procedure regarding Third Party Integrity Due Diligence has been approval with the aim to deepen the general
principles performance and the duties of the EDPR Group companies and their employees in relation to third parties,
aligning their business operations with the best market practices and with strict compliance with the applicable legislation
and regulations, reinforcing the mechanisms for preventing and combating practice of illegal acts, in particular conduct
associated with the practice of acts of corruption, bribery, money laundering and terrorist financing.
3)
Additionally, concerning the risk of interactions with public officials or politicaly exposed persons, EDPR developed a
procedure to guide employees and representatives when leading with such entities and to monitor this relationships. The
main aims of this procedure are: (i) Reinforce and implement compliance with the principles set out in EDPR's Anti-
Corruption Policy, (ii) establish the rules for guiding the relationship and maintenance of interactions between EDPR
employees and their subsidiaries or third party representatives acting on behalf of EDPR or its subsidiaries, with Public
Officials and PEPs and (iii)
establish the guidelines for the hiring of PEPs and the respective monitoring and risk
management mechanisms.
4)
Training and communication are fundamental tools to strengthen and disseminate the ethic and integrity culture. In that
sense, the following activities have been developed: (i) Training in Brazil
for the head of the different departments and (ii)
online training for the new hires with the main goal to explain the fundamentals of Compliance and the essential aspects
of our Model.
Regarding Personal Data Protection, EDPR has been strengthing its management system. A new governance model was
created, with a multidisciplinary team supporting the Data Protection Officer in the implementation and monitoring of the GDPR
obligations.Adittionally, a global Personal Data protection Policy was approved to support the management of personal data
across all EDPR Group and we have updated our privacy notice for employees. Both documents are published in our intranter
and in our web. Last but not least, a privacy policy for candidates was also approved in order to inform them about the process
of their personal data in the hiring process.
Additionally, the Compliance Channel allows any employee, supplier, contractor, client or any person or entity outside the
Company, who has indications or doubts of behavior contrary to the law and / or that may imply the materialization of a criminal
risk, must immediately inform it, through complianceofficer@edpr.com. The bylaws of this Channel are available at the intranet
and website of the Company and only have access to it the Compliance Officer and the Compliance Area. In 2020, no claims
were submitted through the Compliance Channel.
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IV. Investor Assistance
56. Investor Relations department
EDPR seeks to provide to shareholders, investors, financial analysts and other stakeholders and the market in general, all the
relevant information about the Company and its business environment, on a regular basis and whenever a relevant fact takes
place. The promotion of transparent, consistent, rigorous, easily accessible, and high-quality information is essential to an
accurate perception of the Company’s strategy, financial situation, accounts, assets, prospects, ris
ks, and significant events.
EDPR, therefore, looks to provide the market with accurate information that can support them in making informed, clear and
concrete investment decisions.
The Investor Relations Department was created to ensure a direct and permanent contact with all market related agents and
stakeholders, to guarantee effective communication, equality between shareholders and to prevent imbalances in the
information access.
The EDPR Investor Relations Department (IR) is the intermediary between EDPR and its actual and potential shareholders, the
financial analysts that follow Company’s activity, all investors and other members of the financial community. The main purpo
se
of the department is to guarantee the principle of equality among shareholders, by preventing asymmetries in the access of the
information and reducing the gap between market perception and Company’s strategy and intrinsic value. The Investor
Relations department centralizes all relevant and material information that could impact EDPR share price. This information is
prepared by the different departments of EDPR, with the support when necessary of external experts, and always managed in a
strictly confidential basis. The department responsibility also comprises developing and implem
enting EDPR’s communication
strategy and preserving an appropriate institutional and informative relationship with the financial market, the stock exchange at
which EDPR shares trade and the regulatory and supervisory entities (CMVM
–
Comissão de Mercado de Valores Mobiliários
–
in Portugal and CNMV
–
Comisión Nacional del Mercado de Valores
–
in Spain.
EDPR is clearly aware of the importance of detailed and transparent information, delivered on-time to the market. Consequently,
EDPR publishes Company’s pri
ce sensitive information before the opening or following the closing of the Euronext Lisbon stock
exchange through CMVM’s information system and, simultaneously, make that same information available on the website
investors’ section and through the IR department’s mailing list. In 20
20, EDPR made 26 market notifications, in addition to
quarterly, semi-annual and annual results presentations, handouts and operating data statement elaborated by the IR
Department. In addition, the IR Department also elaborates key data files and interim presentations which are available on the
website investors’ section.
On each earnings announcement, EDPR promotes a conference call and webcast, opened to the market in general, at which
the Company’s management updates the market on EDPR’s activities. On each of these events, shareholders,
investors and
analysts had the opportunity to directly submit their questions and to discuss EDPR’s results as well as the Company’s outloo
k
and strategy.
EDPR IR Department is coordinated by Rui Antunes and is located at the Company’s head offices in Madrid, Spain. The
department structure and contacts are as follows:
IR Contacts:
•
Rui Antunes, Head of Planning & Control, Investor Relations and Sustainability
•
Calle Serrano Galvache, 56; Centro Empresarial Parque Norte; Edificio Olmo
–
7th floor; 28033
–
Madrid
–
España
•
•
E-Mail: ir@edpr.com
•
Phone: +34 902 830 700 / +34 914 238 429
200
ANNUAL REPORT EDPR 2020
EDPR IR Department was in continuous contact with capital markets agents, namely shareholder and investors, along with
financial analysts who evaluate the Company. In 2020, as far as the Company is aware, sell
-
side analysts issued more than 75
reports evaluating EDPR’s business
and performance.
At the end of the 2020, as far as the Company is aware of, there were 19 institutions elaborating research reports and following
actively EDPR activity. As of December 31
st
2020, the average price target of those analysts was of Euro 16.18 per share with
7
“Neutral”
, 11
“Buy”
and 1 “Sell”
recommendations.
COMPANY
ANALYST
PRICE TARGET
DATE
RECOMMENDATION
Bank of
America Merrill
Lynch
Mikel Zabala
€
20.60
02-Dec-20
Buy
Barclays
Jose Ruiz
€ 1
7.80
07-Dec-20
Equalweight
BBVA
Daniel Ortea
€ 1
4.00
08-Jul-20
Outperform
Berenberg
Lawson Steele
€ 1
4.50
06-Jul-20
Buy
Bernstein
Meike Becker
€
22.00
07-Dec-20
Outperform
CaixaBank BPI
Gonzalo Sanchez
€ 1
3.15
06-Jul-20
Neutral
Caixa BI
Helena Barbosa
€ 9.95
06-Jan-20
Neutral
Commerzbank
Tanja Markloff
€ 1
9.00
30-Oct-20
Buy
Exane BNP
Manuel Palomo
€ 16
.20
05-Oct-20
Outperform
Goldman Sachs
Alberto Gandolfi
€ 1
8.00
29-Oct-20
Buy
JB Capital
Jorge Guimarães
€ 1
4.70
07-Sep-20
Neutral
JP Morgan
Javier Garrido
€ 1
4.50
28-Aug-20
Overweight
Kepler
Cheuvreux
Jose Porta
€
22.00
15-Dec-20
Buy
Morgan Stanley
Arthur Sitbon
€ 12.80
25-May-20
Overweight
MedioBanca
Sara Piccinini
€
18.70
14-Oct-20
Outperform
ODDO BHF
Philippe Ourpatian
€
11.00
04-Sep-20
Sell
RBC
Fernando Garcia
€ 1
7.50
23-Nov-20
Equalweight
Santander
Bosco Muguiro
€
14.00
30-Jul-20
Hold
Société
Générale
Jorge Alonso
€ 1
7.00
02-Nov-20
Hold
57. Market Relations Representative
EDPR representative for relations with the market is Rui Antunes, Head of Planning & Control, Investor Relations and
Sustainability Department.
58. Information Requests
During the year, IR Department received more than 150 information requests and interacted more than 80 times with
institutional investors. On average, information requests were replied in less than 24 hours, with complex requests being replied
within one-week time. As of December 31
st
2020 there was no pending information request.
201
IV. Website
–
Online information
59-65.
EDPR considers online information a powerful tool in the dissemination of material information, updating its website with all the
relevant documents. Apart from all the required information by CMVM and CNMV regulations, EDPR website also carries
financial and operational updates of
Company’s
activities ensuring an easy access to the information.
EDPR website:
INFORMATION
LINK
Company information
Corporate by-
laws and bodies/committees’
regulations
Members of the corporate bodies
Market relations representative, IR
department
Information channels
Financial statements documents
Corporate events Agenda
General Shareholders’ Meeting information
202
ANNUAL REPORT EDPR 2020
D. Remuneration
I. Power to establish
66. Competences to determine the Remuneration of the Corporate Bodies
The Nominations and Remunerations Committee is a permanent body belonging to the Board of Directors with an informative
and advisory nature. Its recommendations and reports are non-binding.
The Nominations and Remunerations Committee has no executive functions. The main functions of the Nominations and
Remunerations Committee are to assist and inform the Board of Directors regarding the nominations (including by co-option),
re- elections, dismissals, and the remuneration of the Board Members and its position about the composition of the Board of
Directors, as well as the nominations, remuneration, and removal of senior management personnel.
The Nominations and Remunerations Committee is the body responsible for proposing to the Board of Directors the
determination of the remuneration of the Executive Directors of the Company; the Declaration on Remuneration Policy; the
evaluation and compliance
of the KPI’s
(Key Performance Indicators); the annual and multi annual variable remuneration, if
applicable, and also proposes the remuneration of the Non-Executive Directors and members of the Board Committees.
The Board of Directors is responsible for the approval of the above-mentioned proposals except to the extent it concerns the
Declaration on the Remuneration Policy which is approved by the
General Shareholders’ Meeting.
The Board of Directors also
evaluates with an annual periodicity its own performance and the performance of its delegated Committees. The evaluation of
the performance of the Board of Directors and its Executive Committee, is then additionally submitted for the approval of the
General Shareholder Meeting.
The Declaration on the Remuneration Policy is submitted by the Board of Directors to the approval of the General
Shareholders’ Meeting
as an independent proposal. According to the
Company’s
Articles of Association the Board of Directors
remuneration is
subject to a maximum value that can only be modified by a Shareholders agreement.
II. Nominations and Remunerations Committee
67. Nominations and Remunerations Committee
The Composition of the Nominations and Remunerations Committee is reflected on topic 29 of the report.
The Company has not stablished any restrictions within its Articles of Association, Regulations or internal policies limiting the
competence of the Nominations and Remunerations Committee of hiring any consulting services that may find necessary to
carry out its duties; additionally in case such services would be hired, it should be noted that they should be rendered
independently, ensuring that the service provider do not provide any other services to EDPR or to any company in
controlling or group relationship.
68. Knowledge and experience regarding Remuneration Policy
The Chairman of the Nominations and Remunerations Committee has knowledge and experience regarding Remuneration
Policy.
III. Remuneration structure
69. Remuneration Policy
Pursuant to Article 26.1 of the Company’s Articles of Association the Directors shall be entitled to a remuneration which con
sists
of a fixed amount to be determined annuall
y by the General Shareholders’ Meeting for the whole Board of Directors and of (ii)
attendance fees regarding the Board Meetings.
The above-mentioned article also establishes the possibility of the Directors being remunerated with Company shares, share
options, or other securities granting the right to obtain shares or by means of share-indexed remuneration systems. In any case,
the system chosen must be approved by the General Shareholders’ Meeting and comply with current legal provisions.
203
The total amount of the remunerations that the Company will pay to its Directors under the terms provided in the previous
paragraphs shall not exceed the amount determined by the General Shareholders’ Meeting. The maximum remuneration
approved by the General Shareholders’
Meeting for all the members of the Board of Directors was EUR 2,500,000 per year.
Pursuant to Article 26.4 of the Company’s Articles of Association, the rights and duties of any kind derived from the conditi
on of
Board Member shall be compatible with any other rights and obligations either fixed or variable that could correspond to the
Board Members as a consequence of other employment or professional engagements, if any, carried out in the Company.
Variable remuneration resulting from said contracts or from any other relationship, including being a Board Member, will be
limited
to a maximum annual amount to be established by the General Shareholders’ Meeting.
The maximum annual amount approved by the General Shareholders’ Meeting for the variable remunera
tion for all the
executive members of the Board of Directors was EUR 1,000,000 per year
EDPR, in line with EDP Group corporate governance practices, has signed an Executive Management Services Agreement
with EDP, under which the Company bears the cost for such services to some of the members of the Board of Directors to the
extent their services are devoted to EDPR.
The Non-Executive Directors only receive a fixed remuneration, which is calculated on the basis of their work exclusively as
Directors or with their membership on the Nominations and Remunerations Committee and to the Audit, Control and Related
Party Transactions Committee. Those members who are seated in two different Committees do not accumulate two
remunerations. In these cases, the remuneration to be received is the one that corresponds to the highest value.
EDPR has not incorporated any share remuneration or share purchase options plans as components of the remuneration of
its Directors.
No Director has entered into any contract with the Company or third parties that have the effect of mitigating the risk inherent in
the variability of the remuneration established by the Company.
In EDPR there are not any payments for the dismissal or termination of Director's duties.
The remuneration policy for the Directors of the Company is submitted each year to the General Shareholders’ Meeting for
approval.
70. Remuneration Structure
The remuneration policy applicable for 2020-2022 was proposed by the Nominations and Remuneration Committee and
approved by the General Shareholders’ Meeting held on
March 26
th
, 2020
(the “Remuneration Policy”)
. It defines a structure
with a fixed remuneration for all members of the Board of Directors, whereas for the members of the Executive Committee
defines a fixed and a variable remuneration, with an annual component and a multi-annual component.
Additionally, on its meeting dated October 16
th
, 2019 the Appointments and Remunerations Committee agreed to propose to the
Board of Directors a Complementary Long Term Program homogeneous for the three COOs and for the 2019-2022 term. Such
Complementary Long Term Program was approved at the Board of D
irectors’ meeting dated October 29, 2019. Such plan
substituted the Complementary Long Term Program approved on 2017.
On the topic below can be found the KPIs (“Key Performance Indicators”) stated in the Remuneration Policy for variable annual
and multi-annual variable components.
204
ANNUAL REPORT EDPR 2020
71. Variable Remuneration
Variable annual and multi-annual remuneration applies to the members of the Executive Committee.
The variable annual remuneration may range from 0 to 68% over the annual fixed remuneration and the multi-annual
remuneration from 0 to 102% over the annual fixed remuneration for the CEO, and over
250.000€
for other members of the
Executive Committee.
The key performance indicators (KPIs) used to determine the amounts of the annual and multi -annual variable remuneration
regarding to each year of the term are proposed by the Nominations and Remunerations Committee with the aim of align them
with the strategic grounds of the
Company: growth, risk control and efficiency. These are
the same for all members of the
Executive Committee, although with specific targets for the platforms in the case of COOs . For the year 2020 the KPIs were:
KEY
PERFORMANCE
INDICATOR
CEO
COO’
S NA AND EU
COO
IG
WEIGHT
WEIGHT
EDPR
RESULTS
WEIGHT
EDPR
RESULTS
PLATFORM
RESULTS
WEIGHT
EDPR
RESULTS
PLATFORM
RESULTS
Total
Shareholder
return
15%
100
%
TSR vs. Wind peers
& Psi 20
100%
100%
100%
100%
0%
100%
100%
0%
Shareholders
80%
60%
Operatin Cash Flow
(€ million)
10%
100%
10%
50%
50%
10%
100%
0%
AR/Sell-down + Tax
Equity
(€ million)
10%
100%
10%
100%
0%
10%
100%
0%
EBITDA+ sell down
gains
(€ million)
10%
100%
10%
50%
50%
10%
100%
0%
Net Profit
(€ million)
10%
100%
10%
100%
0%
10%
100%
0%
Core Opex Adjusted
(€ thousand/MW)
10%
100%
10%
50%
50%
10%
100%
0%
Projects with FID
(% of total ’19
-
’22
additions in BP)
10%
100%
10%
50%
50%
10%
50%
50%
Clients
10%
Renewable Capacity
Built
(in MW)
10%
100%
10%
50%
50%
10%
50%
50%
Assets &
Operations
10%
Technical Energy
Availability
(%)
5%
100%
5%
50%
50%
5%
100%
0%
Capex per MW
(€ thousand)
5%
100%
5%
50%
50%
5%
50%
50%
Environment
&
Commnunitie
s
5%
Certified MW
%
5%
100%
5%
50%
50%
5%
100%
0%
Innovation &
partners
5%
H&S frequency rate
(employees +
contractors)
5%
100%
5%
50%
50%
5%
100%
0%
People
Management
10%
People Management
10%
100%
10%
50%
50%
10%
50%
50%
Remuneration
Committee
5%
100
%
Appreciation
remuneration
committee
100%
100%
100%
100%
0%
100%
100%
0%
205
There is also a qualitative evaluation of the CEO about the annual performance of the members of the Executive Committee.
This evaluation will have a weight of 20% for the final calculation in the annual variable remuneration and of 32% in the multi-
annual variable remuneration. The other 80% will be calculated based on the weights indicated in the next paragraph for the
annual variable remuneration and 68% for the multi-annual variable.
According to the Remuneration Policy approved by the General Shareholders’ Meeting, the maximum variable remuneration
(annual and multi-annual) is applicable if all the above mentioned K
PI’s
were achieved and the performance evaluation is
equal or above 110%.
As mentioned above a Complementary Long Term Program homogeneous for the three COOs (COO NA, COO EU & BR and
COO Offshore) and for the 2019-2022 term was approved in 2019.
The conditions of such Complementary Long Term Program are: (i) four year period (2019-2022); (ii) Target Award will be 4 x
50% of base annual remuneration of each COO; (iii) KPIs are consistent through the whole term and specific for each COO;
and (iv) payments will be done in accordance with the percentage of the achieved fulfilment with a limit of 120% of the Target
Award.
72. Multi-Annual Remuneration
In line with corporate governance practices, the Remuneration Policy incorporates the deferral for a period of three years of the
multi-annual variable remuneration, being the relevant payment conditioned to the lack of any willful illicit action, known after
the appraisal and which endangers the sustainable performance of the company.
The amounts paid in application of such deferral policy during 2020 for the multinual accrued in 2017 are reflected in topic
78 of this Chapter 5 of the Annual Report.
73. Variable Remuneration Based On Shares
EDPR has not allocated variable remuneration on shares and does not maintain Company shares that the Executive Directors
have had access to.
74. Variable Remuneration Based On Options
EDPR has not allocated variable remuneration on options.
75. Annual Bonus And Non-Monetary Benefits
The key factors and grounds for any annual bonus scheme are described on topics 71 and 72. Additionally, the Officers, with
the exception of the CEO, received the following non-monetary benefits: retirement savings plan (as described in the following
topic), company car and Health Insurance. In 2020, the non-monetary benefits amounted to 267.733 EUR.
The Non-Executive Directors do not receive any relevant non-monetary benefits as remuneration
76. Retirement Savings Plan
The retirement savings plan for the members of the Executive Committee that are also Officers, acts as an effective retirement
supplement with a range between 3% to 6% of their annual salary. The percentage is defined
according with the retirement
savings
plan applicable in their home country. The retirement savings plan applicable to 2020, which is included within the
Remuneration Policy applicable for the term office 2020-2022, was defined and proposed by the Nominations and
Remunerations Committee to the Board of Directors for its submission to the General
Shareholder’s
Meeting, which
approved it on its meeting held on March 26
th
, 2020.
206
ANNUAL REPORT EDPR 2020
IV. Remuneration disclosure
77. Board of Directors remuneration
The remuneration paid by EDPR to the members of its Board of Directors for the year ended on December 31
st
2020 was as
follows:
REMUNERATION
TOTAL
FIXED
(€)
EXECUTIVE DIRECTORS
João Manso Neto*
0
Rui Teixeira*
0
Duarte Bello**
61,804
Miguel Ángel Prado**
0
Spyridon Martinis**
61,804
NON-EXECUTIVE DIRECTORS
Antonio Mexia*
0
Vera Pinto*
0
Manuel Menéndez Menéndez
45,000
António Nogueira Leite
60,000
Acácio Jaime Liberado Mota Piloto
80,000
Allan J.Katz
45,000
Francisca Guedes de Oliveira
60,000
Francisco Seixas da Costa
55,000
Conceiçao Lucas
55,000
Alejandro Fernández de Araoz Gómez-Acebo
45,000
TOTAL
568,608
*António Mexia, João Manso Neto, Vera Pinto and Rui Teixeira do not receive any remuneration from EDPR. EDPR and EDP signed an Executive
Management Services Agreement according to which
EDPR pays to EDP a fee for the services rendered by these Board Members.
**Duarte Bello, Miguel Ángel Prado and Spyridon Martinis ,as Officers and members of the Executive Committee, and for the relevant period of 2020
corresponding to each of them, received their remuneration as Directors as described on the table above and as other Group co
mpanies’ employees, as
described on the table below.
According to the Executive Management Services Agreement signed with EDP, EDPR is due to pay an amount to EDP, for the
services rendered by the Executive Managers and the Non-Executive Managers. The amount due under said Agreement for the
management services rendered by in 2020 is EUR 1,094,560, of which EUR 959,560 refers to the management services
rendered by the Executive Members and EUR 135,000 to the management services rendered by the Non-Executive Members.
The retirement savings plan for the members of the Executive Committee, excluding the Officers, acts as an effective retirement
supplement and corresponds to 5% of their annual salary.
The Non-Executive Directors may opt between a fixed remuneration or attendance fees per meeting, in a value equivalent to the
fixed remuneration proposed for a Director, taking into consideration the duties carried out.
207
78. Remuneration from other Group Companies
The total remuneration of the Officers during the relevant 2020 period corresponding to each of them, ex-CEO, was the
following:
OFFICER
PAYER
FIXED
VARIABLE
ANNUAL
VARIABLE
MULTI-
ANNUAL
VARIABLE
PLURI-
ANNUAL
TOTAL
Duarte Bello
EDP Energías
de Portugal,
S.A. Sucursal
en España
228
,
196
€
145,000
€
37
,
500
€
410
,
696
€
Miguel Ángel Prado
EDPR North
America LLC
466,897$
162
,
328$
237
,
908$
45
,
725$
912
,
858$
Spyridon Martinis
EDP Energías
de Portugal
S.A. Sucursal
en España
228
,
196
€
145,000
€
0
373
,
196
€
*All the amounts are in EUR, except Miguel Ángel Prado ones, which are in USD.
Likewise, in application of the deferral policy, in 2020 an amount of 84
,
443€ was paid to Miguel
Amaro (former Executive
CFO of the company), for the services rendered in 2016-2017.
79.
Remuneration paid in form of profit sharing and/or bonus payments
In EDPR there is no payment of remuneration in the form of profit sharing and/or bonus payments and the reasons for said
bonuses or profit sharing being awarded.
80.
Compensation For Resigned Board Members
In EDPR there is no compensation paid or owed to former executive Directors concerning contract termination during the
financial year.
81.
Audit, Control And Related Part Transactions Committee Remuneration
POSITION
COMMITEE MEMBER
REMUNERATION
Chairman
Acacio Piloto
80,000
€
Vocal
Antonio Nogueira Leite
60,000
€
Vocal
Francisca Guedes de Oliveira
60,000
€
*The Non-Executive Directors receive only a fixed remuneration, which is calculated based on their work exclusively as Directors or with their membership on
the Nominations and Remunerations Committee, or the Audit, Control and Related Party Transactions Control Committee.
82. Remuneration Of Th
e Chairperson Of The General Shareholders’ Meeting
In 2020, the remuneration of the Chairman of the General Shareholders’ Meeting of
EDPR was EUR 15,000.
V. Agreements with remuneration implication
83-84.
EDPR has no agreements with remuneration implication.
For avoidance of doubt, the Company has not adopted any mechanism that imply payments or assumption of fees in the case of
change in the composition of the managing body (Board of Directors), and which could be likely to harm
the free transferability
of shares and a shareholder assessment of the performance of the members of this managing body.
208
ANNUAL REPORT EDPR 2020
VI. Share-allocation and/or Stock Option Plans
85-88.
EDPR does not have any Share-Allocation and/or Stock Option Plans.
209
E. Related-Party transactions
I. Control Mechanisms and Procedures
89. Related-Party Transactions Controlling Mechanisms
A Framework Agreement was signed in 2008 in order to regulate the Related Party Transactions (understanding as such those
relationships performed between companies of EDP Group and those of EDPR Group), stating that in compliance with the
transparency purposes for future investors, such shall continue to be developed in line with the market prices, in an arm’s l
ength
basis, and following certain predefined principles and rules (considering criteria as parties involved, scope and amount). In order
to supervise the transactions between the Group Companies and its qualified shareholders, the Board of Directors has created
the Audit, Control and Related Party Transactions Committee, a permanent body with delegated functions. Without prejudice to
other duties that the Board may assign to this committee, it shall perform supervisory functions of Audit and Control
independently from the Board of Directors, as well as, supervisory functions of the transactions between Related Parties
including their compliance with the principles of the Framework Agreement. The detail of the duties of this committee is included
in topic 29 of this Chapter 5 of the Annual Report. Under its Audit and Control competences, it also supervises the transactions
with qualified shareholders when requested by the Board of Directors according to Article 8.A), i) of its Regulations. This
information is included on the annual report of the Audit, Control and Related Party Transactions Committee.
In light of all the above, and in accordance to the Governance Model detailed in topic 15 of this Chapter 5 of the Annual Report,
EDPR has implemented an structure for the evaluation of Related Party Transactions, that involves its Executive Committee
(which as the body in charge of the daily activity of Company, will first discuss the commercial and legal viability of the
operations) and the Audit Control and Related Party Transactions Committee which, as referred above, analyzes the
compliance of each Related Part Transaction with the Framework Agreement and reports them to the Board of Directors,
which finally approves the Related Party Transactions.
It should be noted that in accordance with article 13.3 of the Regulations of the Audit, Control and Related Party Transactions
Committee, the resolutions adopted by this committee are reported to the Board of Directors at the first Board meeting held
following the meeting of the committee in which such proposals were discussed. That means that in case there are Related
Party Transactions, they are reported to the Board of Directors at least every quarter (maximum period elapsed between Board
of Directors Meeting in accordance with Article 22 of its Regulations).
90. Transactions subject to control during 2020
During 2020, EDPR has not signed any contracts with the members of its corporate bodies or with holders of qualifying
holdings, excluding EDP, as mentioned below.
The contracts signed between EDPR and its related parties have been analyzed by the Related Party Transactions Committee
according to its competences, as mentioned on the previous topic, and have been concluded according to the market
conditions.
The total amount of supplies and services in 2020 incurred with or charged by the EDP Group was EUR 30.379.196
corresponding to 9.98% of the total value of Supplies & Services for the year (EUR 304,436,934).
The most significant contracts in force during 2020 are the following:
FRAMEWORK AGREEMENT
The framework agreement was signed by EDP and EDPR on May 7
th
2008 and came into effect when the latter was admitted to
trading. The purpose of the framework agreement is to set out the principles and rules governing the legal and business
relations existing when it came into effect and those entered into subsequently.
The framework agreement establishes that neither EDP nor the EDP Group companies other than EDPR and its subsidiaries
can engage in activities in the field of renewable energies without the consent of EDPR. EDPR shall have worldwide exclusivity,
with the exception of Brazil, where it shall engage its activities through a joint venture with EDP Energias do Brasil S.A., for the
development, construction, operation, and maintenance of facilities or activities related to wind, solar, wave and/or tidal power,
210
ANNUAL REPORT EDPR 2020
and other renewable energy generation technologies that may be developed in the future. Nonetheless, the agreement excludes
technologies being developed in hydroelectric power, biomass, cogeneration, and waste in Portugal and Spain.
It lays down the obligation to provide EDP with any information that it may request from EDPR to fulfil its legal obligations and
prepare the EDP Group’s consolidated accounts. The framework agreement shall remain in effect for as long as EDP directly or
indirectly owns more than 50% of the share capital of EDPR or appoints more than 50% of its Directors.
MANAGEMENT SERVICES AGREEMENT
On November 4
th
, 2008 EDP and EDPR signed a Management Services Agreement that has been amended during the last
years in accordance of the variations in the services rendered by EDP to the Company.
Through this contract, EDP provides management services to
EDP Renováveis, including matters related to the day-to- day
running of the Company. As of 31 December 2020, under this agreement EDP renders management services corresponding to
four people from EDP which are
part of EDPR’s Management: (i)
two Executive Managers which are members of the EDPR
Executive Committee and CEO, and (ii) two Non-Executive Managers, for which EDP Renováveis pays EDP an amount defined
by the Related Party Committee, and approved by the Board of Directors and the Shareholders Meeting. Under this contract,
EDPR incurred an amount of EUR 1,094,560 for the management services rendered in 2020.
FINANCE AGREEMENTS AND GUARANTEES
The most significant finance agreements between EDP Group companies and EDPR Group companies were established under
the above-described Framework Agreement and currently include the following:
LOAN AGREEMENTS
EDPR and EDPR Servicios Financieros SA (as the borrower) have loan agreements with EDP Finance BV and EDP Servicios
Financieros España (as the lender), companies 100% owned by EDP Energias de Portugal S.A. Such loan agreements can be
established both in EUR and USD, up to 10-year tenor and are r
emunerated at rates set at an arm’s length basis. As of
December 31
st
2020, such
loan
agreements totalled USD 3,438,967,282.26 and EUR 444,587,000.
CURRENT ACCOUNT AGREEMENT
EDPR Servicios Financieros (EDPR SF) and EDP Servicios Financieros España (EDP SFE) signed an agreement through
which EDP SFE manages EDPR SF’s cash accounts. The agreement also regulates the current account (cc) scheme on arm’s
length basis. As of December 31
st
2020, there are two different current accounts with the following balance and counterparties:
•
in USD, for a total amount of USD 191,094,741.78 in favour of EDPR SF;
•
in EUR, for a total amount of 58,273,603.27 in favour of EDPR SF.
The agreements in place are valid for one year as of date of signing and are automatically renewed for equal periods.
COUNTER-GUARANTEE AGREEMENT
A counter-guarantee agreement was signed, under which EDP or EDP Energias de Portugal S.A., Sucursal en España
(hereinafter guarantor or EDP Sucursal) undertakes on behalf of EDPR, EDP Renewables Europe SLU (hereinafter EDPR EU),
and EDP Renewables North America LLC (hereinafter EDPR NA) to provide corporate guarantees or request the issue of any
guarantees, on the terms and conditions requested by the subsidiaries, which have been approved on a case by case basis by
the EDP’s Executive Board.
EDPR will be jointly liable for compliance by EDPR EU and EDPR NA. The subsidiaries of EDPR undertake to indemnify the
guarantor for any losses or liabilities resulting from
the guarantees provided under the agreement and to pay a fee established
in arm’s length basis.
211
Nonetheless, certain guarantees issued prior to the date of approval of these agreements may have different conditions. As of
December 31
st
2020, such counter-guarantee agreements totalled EUR 269.368.743,30 and USD 356.075.000.
A counter-guarantee agreement was signed between EDPR Group and EDP España, under which, EDPR group can request
the issue of any guarantee, on the terms and conditions requested by the subsidiaries of EDPR. EDPR group undertake to
indemnify the guarantor for any losses or liabilities resulting from the guarantees provided under this agreement and to pay a
fee established in arm’s length basis. As of December 31
st
2020, the amount of guarantees issued under this agreement totalled
EUR 66.013.905,70 .
CROSS CURRENCY INTEREST RATE SWAPS
Due to the net investments in EDPR NA, EDPR Canada, EDPR Brazil, , in United Kingdom, in Poland, and in Colombian
companies, EDPR’s accounts were exposed to the foreign exchange risk. With the
purpose of hedging this foreign exchange
risk, EDPR Group companies settled the following Cross Currency Interest Rate Swap (CIRS). As of December 31
st
2020 the
total amount of CIRS by geography and currency are as following
•
in USD/EUR, with EDP Energias de Portugal SA for a total amount of USD 1,778,815,770.00
•
in CAD/EUR, with EDP Energias de Portugal SA for a total amount of CAD 149,650,000
•
in BRL/EUR, with EDP Energias de Portugal SA for a total amount of BRL 122,500,000
•
in GBP/EUR, with EDP Energias de Portugal SA for a total amount of GBP 43,400,000
•
in PLN/EUR, with EDP Energias de Portugal SA for a total amount of PLN 986,113,009.10
•
in COP/EUR with EDP Energias de Portugal SA for a total amount of COP 37,326,000,000.00
HEDGE AGREEMENTS
–
EXCHANGE RATE
EDPR Group companies entered into several hedge agreements with EDP Energias de Portugal S.A., with the purpose of
managing the transactional exposure related to the short term or transitory positions, in Colombian, Polish and United
Kingdom subsidiaries, fixing
the exchange rate for USD/EUR, EUR/PLN and GBP/EUR in accordance to the prices in the
forward market in each contract date. As of December 31
st
2020, the total amount of Forwards and Non Delivery Forwards
by geography and currency are as following:
•
Colombian operations, for USD/EUR a total amount of EUR 66,808,023.14 (FWDs)
•
Polish operations, for EUR/PLN, a total amount of PLN 1,624,881,824.00(FWDs+NDFs)
•
United Kingdom operations, for GBP/EUR a total amount of EUR 2,537,972.64.00 (FWDs)
HEDGE AGREEMENTS
–
COMMODITIES
EDP and EDPR EU entered into hedge agreements for 2020 for a total volume of of 2.310.192 MWh (sell position) and 566.005
MW (buy position) at the forward market price at the time of execution related with the expected sales of energy in the Spanish
market.
212
ANNUAL REPORT EDPR 2020
CONSULTANCY SERVICE AGREEMENT
On June 4
th
2008, EDP and EDPR signed a consultancy service agreement. Through this agreement, and upon request by
EDPR, EDP (or through EDP Sucursal) shall provide consultancy services in the areas of legal services, internal control
systems, financial reporting, taxation, sustainability, regulation and competition, risk management, human resources,
information technology, brand and communication, energy planning, accounting and consolidation, corporate marketing, and
organisational development.
The price of the agreement is calculated as the cost incurred by EDP plus a margin. For the first year, it was fixed at 8% based
on an independent expert on the basis of market research. For 2020 the estimated cost of these services is EUR 6,545,289.
This was the total cost of services provided for EDPR, EDPR EU, and EDPR NA.
The duration of the agreement is one (1) year tacitly renewable for equal periods.
RESEARCH AND DEVELOPMENT AGREEMENT
On May 13
th
, 2008, EDP Inovação S.A. (hereinafter EDP Inovação), an EDP Group Company, and EDPR signed an agreement
regulating relations between the two companies regarding projects in the field of renewable energies (hereinafter the R&D
Agreement).
The object of the R&D Agreement is to prevent conflicts of interest and foster the exchange of knowledge between companies
and the establishment of legal and business relationships. The agreement forbids EDP Group companies other than EDP
Inovação to undertake or invest in companies that undertake the renewable energy projects described in the agreement.
The R&D Agreement establishes an exclusive right on the part of EDP Inovação to project and develop new renewable energy
technologies that are already in the pilot or economic and/or commercial feasibility study phase, whenever EDPR exercises its
option to undertake them.
The fee corresponding to this agreement in 2020 is EUR 260,567.
The agreement shall remain in effect for as long as EDP directly or indirectly maintains control of more than 50% of both
companies or appoint the majority of the members of the Board and Executive Committee of the parties to the agreement.
MANAGEMENT SUPPORT SERVICES AGREEMENT BETWEEN EDP RENOVÁVEIS PORTUGAL S.A., AND EDP GLOBAL
SOLUTIONS - GESTÃO INTEGRADA DE SERVIÇOS S.A .
On January 1
st
, 2003, EDPR
–
Promoção e Operação S.A., and EDP Global Solutions - Gestão Integrada De Serviços S.A.
(hereinafter EDP Global Solutions), an EDP Group Company, signed a management support service agreement.
The object of the agreement is the provision to EDPR
–
Promoção e Operação S.A. by EDP Global Solutions of services in the
areas of procurement, economic and financial management, fleet management, property management and maintenance,
insurance, occupational health and safety, and human resource management and training.
The remuneration accrued by EDP Global Solutions by EDPR Promoção e Operação S.A. and its subsidiaries for the services
provided in 2020 totalled EUR 1,707,898. The initial duration of the agreement was five (5) years from date of signing on
January 1
st
2008, and tacitly renewable for equal periods of one (1) year. Either party may renounce the contract with one (1)
year’s notice.
INFORMATION TECHONOLOGY MANAGEMENT SERVICES AGREEMENT BETWEEN EDP RENOVÁVEIS S.A. AND EDP
ENERGIAS DE PORTUGAL S.A.
On January 1
st
, 2010 EDPR and EDP signed an IT management services agreement.
The object of the agreement is to provide to EDPR the information technology services described on the contract and its
attachments by EDP.
The amount incurred for the services provided in 2020 totalled EUR 3,723,820.
213
The initial duration of the agreement is one (1) year from date of signing and it is tacitly renewed for a new period of one (1)
year. Either party may renounce the contract with one (1) month notice.
CONSULTANCY AGREEMENT BETWEEN
EDP RENOVÁVEIS BRASIL S.A., AND
EDP ENERGIAS DO
BRASIL S.A.
The object of the agreement is to provide to EDP Renováveis Brasil S.A. (hereinafter EDPR Brasil) the consultancy services
described on the contract and its attachments by EDP
–
Energias do Brasil S.A. (hereinafter EDP Brasil).
Through this agreement, and upon request by EDPR Brasil, EDP Brasil shall provide consultancy services in the areas of legal
services, internal control systems, financial reporting, taxation, sustainability, regulation and competition, risk management,
human resources, information technology, brand and communication, energy planning, accounting and consolidation,
corporate marketing, and organisational development.
The amount incurred by EDP Brasil for the services provided in 2020 totalled BRL 219,237.
The initial duration of the agreement is one (1) year from the date of signing and it is tacitly renewed for a new period of one (1)
year.
91. Description of the procedures applicable to the supervisory body for the assessment of the business
deals
The most significant contracts signed between EDPR and its Qualified Shareholders are analyzed by the Audit, Control and
Related- Party Transactions Committee according to its competences, as mentioned on topic 89 of the Chapter 5 of this
Annual Report.
II. Data on business deals
92. Details of the place where the financial statements including information on business dealings with
related parties are available, in accordance with IAS 24, or alternatively a copy of said data.
The information on business dealings with related parties is available on Note 39 of the Financial Statements.
214
ANNUAL REPORT EDPR 2020
PART II
–
Corporate Governance Assessment
I. Details of the Corporate Governance code implemented
Following the protocol signed between the CMVM and the Portuguese Institute of Corporate Governance (IPCG) on October
13
th
, 2017, the CMVM revoked its Corporate Governance Code (2013), which was replaced by a single applicable code, the
new Corporate Governance Code of the IPCG, which entered into force on January 1
st
, 2018, and that was reviewed in 2020.
For the purposes of the proper preparation of corporate governance reports for the year beginning in 2020, and to be reported in
2021, they should continue to be prepared in accordance with the structure of contents referred the annex to CMVM Regulation
No. 4/2013 available at the CMVM website (
www.cmvm.pt). The report template is divided into two parts:
•
Part I - mandatory information on shareholder structure, organisation and governance of the company. This
information shall be referred within points 1 to 92 of this Corporate Governance Report in accordance with the
structure included in that Annex.
•
Part II - Corporate governance assessment: should include a declaration in which they must: (i) identify the applicable
code, (ii) state whether or not they adhere to each of the recommendations of this code and, (iii) with respect to
recommendations that do not follow, explain reasonably why.
The agreement between CMVM and IPCG on the new Corporate Governance Code may be found on the Protocol signed on
October 13
th
, 2017, which is available at the website of CMVM (
. Likewise, the reviewed version Corporate
Governance Code of the IPCG is published on the website of IPCG and of the Monitoring Committees (
)
II. Analysis of Compliance with the Corporate Governance code implemented
The following table shows the recommendations set forth in the Corporate Governance Code of the IPCG and indicates EDPR’s
compliance with it and the place in this report in which they are described in more detail.
Also in order to comply with the best Corporate Governance recommendations, and according to the results of the reflection
made by the Nominations and Remunerations Committee, the governance model that was adopted has been ensuring an
effective performance and articulation of EDPR Governing Bodies and proved to be adequate to the
Company’s governance
structure without any constraints to the performance of its checks and balances system
adopted to justify the changes made
in the governance practices of EDPR.
The explanation of the Corporate Governance Code of the IPCG recommendations that EDPR does not adopt or that the
Company deems not applicable, reasoning and other relevant comments as well as reference to the part of the report where
the description may be found, are in the table below.
In this context, EDPR states that it has adopted the Corporate Governance recommendations on the governance of listed
companies provided in the Corporate Governance Code of the IPCG, with the exceptions indicated in the following table.
215
CORPORATE GOVERNANCE RECOMMENDATIONS - STATEMENT OF COMPLIANCE
CHAPTER I - GENERAL PROVISIONS
1.1. COMPANY’S RELAT
IONSHIP WITH INVESTORS AND DISCLOSURE
I.1.1
The Company should
establish mechanisms to
ensure the timely disclosure
of information to its
governing bodies,
shareholders, investors and
other stakeholders,
financial analysts, and to
the markets in general.
ADOPTED
Section B - II, a)
Topic 15 (Page
161); Section C-IV
Topic 56, Section
C-V, 59
–
65
(Pages 200 - 202)
1.2.
DIVERSITY IN THE COMPOSITION AND FUNCTIONING OF THE COMPANY’S GOVERNING
BODIES
I.2.1
Companies should
establish standards and
requirements regarding the
profile of new members of
their governing bodies,
which are suitable
according to the roles to be
carried out. Besides
individual attributes (such
as competence,
independence, integrity,
availability, and
experience), these profiles
should take into
consideration general
diversity requirements, with
particular attention to
gender diversity, which may
contribute to a better
performance of the
governing body and to the
balance of its composition.
ADOPTED
Section B-II, a)
Topics 16 and 17
(Pages 162, 163)
I.2.2
The company’s managing
and supervisory boards, as
well as their committees,
should have internal
regulations
—
namely
regulating the performance
of their duties, their
Chairmanship, periodicity of
meetings, their functioning
and the duties of their
members
—
, disclosed in
full on the company’s
website. Minutes of the
meetings of each of these
bodies should be drawn
out.
ADOPTED
Section B-II, a)
Topic 15 (Page
161);
216
ANNUAL REPORT EDPR 2020
I.2.3
The composition and the
number of annual meetings
of the managing and
supervisory bodies, as well
as of their committees,
should be disclosed on the
company’s website
ADOPTED
Section B-II, a)
Topic 15 (Page
161, 162); Section
C-V, Topics 59
–
65 (Page 201)
I.2.4
A policy for the
communication of
irregularities
(whistleblowing) should be
adopted that guarantees
the suitable means of
communication and
treatment of those
irregularities, with the
safeguarding of the
confidentiality of the
information transmitted and
the identity of its provider,
whenever such
confidentiality is requested.
ADOPTED
Section C-II, Topic
49 (Page 180)
1.3. RELATIONSHIPS BETWEEN THE COMPANY BODIES
I.3.1
The bylaws, or other
equivalent means adopted
by the company, should
establish mechanisms that,
within the limits of
applicable laws,
permanently ensure the
members of the managing
and supervisory boards are
provided with access to all
the information and
company’s collaborators, in
order to appraise the
performance, current
situation and perspectives
for further developments of
the company, namely
including minutes,
documents supporting
decisions that have been
taken, calls for meetings,
and the archive of the
meetings of the managing
board, without impairing the
access to any other
documents or people that
may be requested for
information.
ADOPTED
Section B-II, a)
Topic 15 (Page
161)
I.3.2
Each of the company’s
boards and committees
should ensure the timely
and suitable flow of
information, especially
regarding the respective
calls for meetings and
minutes, necessary for the
exercise of the
competences, determined
by law and the bylaws, of
each of the remaining
boards and committees.
ADOPTED
Section B-II, a)
Topic 15 (Page
161); Section B-II,
c) Topic 29
(Pages 170, 172
and 174)
217
1.4 CONFLICTS OF INTEREST
I.4.1
The members of the
managing and supervisory
boards and the internal
committees are bounded,
by internal regulation or
equivalent, to inform the
respective board or
committee whenever there
are facts that may
constitute or give rise to a
conflict between their
interests and the
company’s interest.
ADOPTED
Section B-II, a)
Topic 18 (Page
164)
I.4.2
Procedures should be
adopted to guarantee that
the member in conflict does
not interfere in the decision-
making process, without
prejudice to the duty to
provide information and
other clarifications that the
board, the committee or
their respective members
may request.
ADOPTED
Section B-II, a)
Topic 18 (Page
164)
1.5. RELATED PARTY TRANSACTIONS
I.5.1
The managing body should
disclose in the corporate
governance report or by
other means publicly
available the internal
procedure for verifying
transactions with related
parties.
ADOPTED
Section E-I, Topic
89 (Page 209)
I.5.2
The managing body should
report to the supervisory
body the results of the
internal procedure for
verifying transactions with
related parties, including
the transactions under
analysis, at least every six
months.
ADOPTED
Section E-I, Topic
89 (Page 209)
218
ANNUAL REPORT EDPR 2020
CHAPTER II
–
SHAREHOLDERS AND GENERAL MEETINGS
II.1
The company should not
set an excessively high
number of shares to confer
voting rights, and it should
make its choice clear in the
corporate governance
report every time its choice
entails a diversion from the
general rule: that each
share has a corresponding
vote.
NOT
APPLICABLE
Section B-I, b)
Topics 12 and 13
(Page 159)
II.2
The company should not
adopt mechanisms that
make decision making by
its shareholders
(resolutions) more difficult,
specifically, by setting a
quorum higher than that
established by law.
ADOPTED
Please note EDPR’s personal law is the Spanish one,
and as such, the majorities and quorums applicable for
the Shareholders’ Meeting resolutions are not the ones
set under Portuguese Law, but those established under
the Spanish one, with which is completely aligned.
Section B-I, b)
Topic 14 (Pages
160, 161)
II.3.
The company should
implement adequate
means for the remote
participation by
shareholders in the general
meeting, which should be
proportionate to its size.
NOT ADOPTED
EDPR has deeply analyzed the needs and priorities of its
shareholders worldwide, and therefore, since 2009, it is
provided the possibility of fulfilling all the requirements
necessary to validly exercise their right to vote by
distance means (registry of intention to attend,
submission of the certificate of titularity of shares,
granting of representation proxies, and properly voting).
The efficiency and interest of our shareholders in these
initiatives has been clearly proved, as nearly almost all of
the participation is exercised by these means.
In the same way, EDPR has also reviewed the track
record of participation in the Sh
areholders’ Meeting the
day of its celebration (when generally all the votes are
submitted beforehand by distance voting), the
shareholding structure of the Company, and its
shareholders’ profiles; concluding that the implementation
of a streaming system to digitally participate will imply a
material cost where the demonstrated preferences of
almost all EDPR shareholders is to submit their votes by
distance means. Hence, EDPR considers for the time
being not so recommendable to follow his initiative.
Section B-I, b)
Topic 13 (Pages
159, 160)
II.4.
The company should also
implement adequate
means for the exercise of
remote voting, including by
correspondence and
electronic means.
ADOPTED
Section B-I, b)
Topic 13 (Pages
159, 160)
219
II.5.
The bylaws, which specify
the limitation of the number
of votes that can be held or
exercised by a sole
shareholder, individually or
in coordination with other
shareholders, should
equally provide that, at
least every 5 years, the
amendment or
maintenance of this rule
will be subject to a
shareholder resolution
—
without increased quorum
in comparison to the legally
established
—
and in that
resolution, all votes cast
will be counted without
observation of the imposed
limits.
NOT
APPLICABLE
Section A-I, Topic
5 (Page 155);
Section B-I, b)
Topic 12 (Page
159)
II.6.
The company should not
adopt mechanisms that
imply payments or
assumption of fees in the
case of the transfer of
control or the change in the
composition of the
managing body, and which
are likely to harm the free
transferability of shares
and a shareholder
assessment of the
performance of the
members of the managing
body.
ADOPTED
Section A-I, Topic
4 (Page 155);
Section D - IV,
Topic 80 (Page
207); and Section
D - V, Topics 83-
84 (Page 207)
CHAPTER III
–
NON-EXECUTIVE MANAGEMENT, MONITORING AND SUPERVISION
III.I
Without prejudice to the
legal powers of the chair of
the managing body, if he or
she is not independent, the
independent directors
should appoint a
coordinator from amongst
them, namely, to: (i) act,
when necessary, as an
interlocutor near the chair
of the board of directors
and other directors, (ii)
make sure there are the
necessary conditions and
means to carry out their
functions; and (iii)
coordinate the independent
directors in the assessment
of the performance of the
managing body, as
established in
recommendation V.1.1.
ADOPTED
Section B-II, a)
Topic 18 (Page
165).
220
ANNUAL REPORT EDPR 2020
III.2
The number of non-
executive members in the
managing body, as well as
the number of members of
the supervisory body and
the number of the
members of the committee
for financial matters should
be suitable for the size of
the company and the
complexity of the risks
intrinsic to its activity, but
sufficient to ensure, with
efficiency, the duties which
they have been attributed.
The formation of such
suitability judgment should
be included in the
corporate governance
report.
ADOPTED
Section B-II, a)
Topic 18 (Pages
164 and 165)
III.3
In any case, the number of
non-executive directors
should be higher than the
number of executive
directors.
ADOPTED
Section B-II, a)
Topic 18 (Page
164 and 165)
III.4
Each company should
include a number of non-
executive directors that
corresponds to no less
than one third, but always
plural, who satisfy the legal
requirements of
independence. For the
purposes of this
recommendation, an
independent person is one
who is not associated with
any specific group of
interest of the company,
nor under any
circumstance likely to
affect his/her impartiality of
analysis or decision,
namely due to:
i. having carried out
functions in any of the
company’s bodies for more
than twelve years, either
on a consecutive or
nonconsecutive basis;
ii. having been a prior staff
member of the company or
of a company which is
considered to be in a
controlling or group
relationship with the
company in the last three
years;
iii. having, in the last three
years, provided services or
established a significant
business relationship with
the company or a company
which is considered to be
in a controlling or group
relationship, either directly
ADOPTED
The independence criteria applicable to EDPR are
those stablished under its personal law (Spanish
law).
Section B-II, a)
Topic 18 (Pages
164 and 165)
221
or as a shareholder,
director, manager or officer
of the legal person;
iv. having been a
beneficiary of remuneration
paid by the company or by
a company which is
considered to be in a
controlling or group
relationship other than the
remuneration resulting
from the exercise of a
director’s duties;
v. having
lived in a non-marital
partnership or having been
the spouse, relative or any
first degree next of kin up
to and including the third
degree of collateral affinity
of company directors or of
natural persons who are
direct or indirect holders of
qualifying holdings, or vi.
having been a qualified
holder or representative of
a shareholder of qualifying
holding.
III.5
The provisions of
paragraph (i) of
recommendation III.4 does
not inhibit the qualification
of a new director as
independent if, between
the termination of his/her
functions in any of the
company’s bodies and the
new appointment, a period
of 3 years has elapsed
(cooling-off period).
NOT
APPLICABLE
Section B-II, a)
Topic 18 (Page
164 )
III.6
The supervisory body, in
observance of the powers
conferred to it by law,
should assess and give its
opinion on the strategic
lines and the risk policy
prior to its final approval by
the management body.
ADOPTED
Section A -II,
Topic 9 (Page
158)
222
ANNUAL REPORT EDPR 2020
III.7
Companies should have
specialised committees,
separately or cumulatively,
on matters related to
corporate governance,
appointments, and
performance assessment.
In the event that the
remuneration committee
provided for in article 399
of the Commercial
Companies Code has been
created and should this not
be prohibited by law, this
recommendation may be
fulfilled by conferring
competence on such
committee in the
aforementioned matters.
ADOPTED
Section B - II, a)
Topic 15 (Page
161) Section B-II,
c), Topics 27, 28
and 29 (Pages
169 - 175)
CHAPTER IV
–
EXECUTIVE MANAGEMENT
IV.I
The managing body should
approve, by internal
regulation or equivalent,
the rules regarding the
action of the executive
directors applicable to their
performance of executive
functions in entities outside
of the group.
ADOPTED
Section B-II, b)
Topic 26 (Page
168)
IV.2
The managing body should
ensure that the company
acts consistently with its
objects and does not
delegate powers, namely,
in what regards:
i. the definition of the
strategy and main policies
of the company;
ii. the organisation and
coordination of the
business structure;
iii. matters that should be
considered strategic in
virtue of the amounts
involved, the risk, or
special characteristics.
ADOPTED
Section A -II,
Topic 9 (Page
158)
IV.3
In the annual report, the
managing body explains in
what terms the strategy
and the main policies
defined seek to ensure the
long-term success of the
company and which are
the main contributions
resulting therein for the
community at large.
ADOPTED
Chapter 1.1.6
Sustainability
Roadmap of the
Management
Report
–
Pages
18 and 19
223
CHAPTER V
–
EVALUATION OF PERFORMANCE, REMUNERATION AND APPOINTMENT
V.1 EVALUATION OF PERFORMANCE
V.I.I
The managing body should
annually evaluate its
performance as well as the
performance of its
committees and executive
directors, taking into
account the
accomplishment of the
company’s strategic plans
and budget plans, the risk
management, the internal
functioning and the
contribution of each
member of the body to
these objectives, as well as
the relationship with the
company’s other bodies
and committees.
ADOPTED
Section A -II,
Topic 9 (Page
158); Section B-II
b), Topic 24
(Page 168);
Section D
–
I
Topic 66 (Page
202); Section D
–
III, Topic 71 (Page
204)
V.2 Remuneration
V.2.I
The company should
create a remuneration
committee, the composition
of which should ensure its
independence from the
management, which may
be the remuneration
committee appointed under
the terms of article 399 of
the Commercial
Companies Code.
ADOPTED
Section B - II, c)
Topic 27 (Page
169); Section B-
II, Topic 29 (Page
173); Section D -
I, Topic 66 (Page
202)
V.2.2
The remuneration should
be set by the remuneration
committee or the general
meeting, on a proposal
from that committee.
ADOPTED
Section D
–
I,
Topic 66 (Page
202); Section D
–
III, Topic 69
(Pages 202, 203)
V.2.3
For each term of office, the
remuneration committee or
the general meeting, on a
proposal from that
committee, should also
approve the maximum
amount of all
compensations payable to
any member of a board or
committee of the company
due to the respective
termination of office. The
said situation as well as the
amounts should be
disclosed in the corporate
governance report or in the
remuneration report.
ADOPTED
Section D
–
IV,
Topic 80 (Page
207)
224
ANNUAL REPORT EDPR 2020
V.2.4
In order to provide
information or clarifications
to shareholders, the chair
or, in case of his/her
impediment, another
member of the
remuneration committee
should be present at the
annual general meeting, as
well as at any other,
whenever the respective
agenda includes a matter
linked with the
remuneration of the
members of the company’s
boards and committees or,
if such presence has been
requested by the
shareholders.
ADOPTED
Section B-I, a)
Topic 11 (Page
159); Section B-II,
a) Topic 29 (Page
174)
V.2.5
Within the company’s
budgetary limitations, the
remuneration committee
should be able to decide,
freely, on the hiring, by the
company, of necessary or
convenient consulting
services to carry out the
committee’s duties.
ADOPTED
Section D
–
II
Topics 67 (Page
202)
V.2.6
The remuneration
committee should ensure
that those services are
provided independently
and that the respective
providers do not provide
other services to the
company, or to others in
controlling or group
relationship, without the
express authorization of
the committee.
ADOPTED
Section D
–
II
Topics 67 (Page
202)
V.2.7
Taking into account the
alignment of interests
between the company and
the executive directors, a
part of their remuneration
should be of a variable
nature, reflecting the
sustained performance of
the company, and not
stimulating the assumption
of excessive risks.
ADOPTED
Section D
–
III,
Topics 70 -72
(Pages 203 - 205)
225
V.2.8
A significant part of the
variable component should
be partially deferred in
time, for a period of no less
than three years, being
necessarily connected to
the confirmation of the
sustainability of the
performance, in the terms
defined by a company’s
internal regulation.
ADOPTED
Section D
–
III,
Topic 72 (Page
205)
V.2.9
When variable
remuneration includes the
allocation of options or
other instruments directly
or indirectly dependent on
the value of shares, the
start of the exercise period
should be deferred in time
for a period of no less than
three years.
NOT
APPLICABLE
Section D
–
III,
Topics 73 and 74
(Page 205)
V.2.10
The remuneration of non-
executive directors should
not include components
dependent on the
performance of the
company or on its value.
ADOPTED
Section D
–
III,
Topic 69 (Page
203); Section D
–
IV, 77 (Page 206)
V.3 Appointments
V.3.I
The company should, in
terms that it considers
suitable, but in a
demonstrable form,
promote that proposals for
the appointment of the
members of the company’s
governing bodies are
accompanied by a
justification in regard to the
suitability of the profile, the
skills and the curriculum
vitae to the duties to be
carried out.
ADOPTED
Section B-II, a)
Topics 16, 17
(Pages 162, 163)
V.3.2
The overview and support
to the appointment of
members of senior
management should be
attributed to a nomination
committee unless this is
not justified by the
company’s size.
ADOPTED
Section B- II,c)
Topic 29 (Page
174)
V.3.3
This nomination committee
includes a majority of non-
executive, independent
members.
ADOPTED
Section B- II, c)
Topic 29 (Page
173)
226
ANNUAL REPORT EDPR 2020
V.3.4
The nomination committee
should make its terms of
reference available, and
should foster, to the extent
of its powers, transparent
selection processes that
include effective
mechanisms of
identification of potential
candidates, and that those
chosen for proposal are
those who present a higher
degree of merit, who are
best suited to the demands
of the functions to be
carried out, and who will
best promote, within the
organisation, a suitable
diversity, including gender
diversity.
ADOPTED
Section B-II, a)
Topics 16, 17
(Pages 162, 163);
CHAPTER VI
–
INTERNAL CONTROL
VI.I
The managing body should
debate and approve the
Company’s strategic plan
and risk policy, which
should include the
establishment of limits on
risk-taking.
ADOPTED
.
Section A -II,
Topic 9 (Pages
157); Section C) -
III, Topic 52 (Page
184)
VI.2
The supervisory board
should be internally
organised, implementing
mechanisms and
procedures of periodic
control that seek to
guarantee that risks which
are effectively incurred by
the company are
consistent with the
company’s objectives, as
set by the managing body.
ADOPTED
Topic 35 (Page
176); Section C
–
II, Topic 52
(Pages 184)
VI.3
The internal control
systems, comprising the
functions of risk
management, compliance,
and internal audit should
be structured in terms
adequate to the size of the
company and the
complexity of the inherent
risks of the company’s
activity. The supervisory
body should evaluate them
and, within its competence
to supervise the
effectiveness of this
system, propose
adjustments where they
are deemed to be
necessary.
ADOPTED
Section B- II, c)
Topic 29 (Page
171); Section B-
III, Topic 30 (Page
175); Section C
–
III, Topics 50-55
(Pages 183-198)
227
VI.4
The supervisory body
should provide its view on
the work plans and
resources allocated to the
services of the internal
control system, including
the risk management,
compliance and internal
audit functions, and may
propose the adjustments
deemed to be necessary.
ADOPTED
Section B- II, c)
Topic 29 (Pages
171 - 173);
Section B
–
III, b)
Topic 35 (Page
176)
VI.5
The supervisory body
should be the recipient of
the reports prepared by the
internal control services,
including the risk
management functions,
compliance and internal
audit, at least regarding
matters related to the
approval of accounts, the
identification and resolution
of conflicts of interest, and
the detection of potential
irregularities.
ADOPTED
Section B- II, c)
Topic 29 (Pages
171 - 173) Section
B
–
III, b) Topic 35
(Page 176);
VI.6
Based on its risk policy, the
company should establish
a risk management
function, identifying (i) the
main risks it is subject to in
carrying out its activity; (ii)
the probability of
occurrence of those risks
and their respective
impact; (iii) the devices and
measures to adopt towards
their mitigation; and (iv) the
monitoring procedures,
aiming at their
accompaniment.
ADOPTED
Section C)
–
III,
Topics 52 - 55
(1854 - 198);
Chapter 2 of this
Annual Report
(Pages 48-53)
VI.7
The company should
establish procedures for
the supervision, periodic
evaluation, and adjustment
of the internal control
system, including an
annual evaluation of the
level of internal compliance
and the performance of
that system, as well as the
perspectives for
amendments of the risk
structure previously
defined.
ADOPTED
Section C) -III,
Topics 52, 54, 55
(Pages 184, 195 -
199)
228
ANNUAL REPORT EDPR 2020
CHAPTER VII
–
FINANCIAL INFORMATION
VII.1 Finantial information
VII.1.1
The supervisory body’s
internal regulation should
impose the obligation to
supervise the suitability of
the preparation process
and the disclosure of
financial information by the
managing body, including
suitable accounting
policies, estimates,
judgments, relevant
disclosure and its
consistent application
between financial years, in
a duly documented and
communicated form.
ADOPTED
Section B- II,
Topic 29 (Pages
171, 172 and
173); Section B
–
III, b) Topic 35
(Page 176);
Section C
–
III,
Topic 55 (Pages
195 - 198)
VII.2 Statutory Auditor, Accounts and Supervision
VII.2.1
By internal regulations, the
supervisory body should
define, according to the
applicable legal regime, the
monitoring procedures
aimed at ensuring the
independence of the
statutory audit.
ADOPTED
Section B- II, c)
Topic 29 (Page
171), Section B
–
III, c) Topics 37
and 38 (Page
177); Section B
–
IV-V, Topics 45,
46 and 47 (Pages
178 and 179)
VII.2.2
The supervisory body
should be the main
interlocutor of the statutory
auditor in the company and
the first recipient of the
respective reports, having
the powers, namely, to
propose the respective
remuneration and to
ensure that adequate
conditions for the provision
of services are ensured
within the company.
ADOPTED
Sections B
–
II, c)
Topic 29 (Page
171); Section B
–
V, Topics 45, 46
(Pages 178 and
179)
VII.2.3
The supervisory body
should annually assess the
services provided by the
statutory auditor, their
independence and their
suitability in carrying out
their functions, and
propose their dismissal or
the termination of their
service contract by the
competent body when this
is justified for due cause.
ADOPTED
Section B
–
II, c)
Topic 29 (Pages
171 - 173);
Section B
–
III a),
Topic 30 (Page
175), Section B
–
III, c) Topics 37
and 38 (Page
177); Section B-
IV- V, Topic 45
(Page 178)
229
Annex I
Board of Directors EDP Renováveis 2020 - CVs
António Mexia
Born: 1957
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Chairman of the Board of Directors of EDP Renováveis, S.A.
•
Chairman and CEO of the Executive Board of Directors of EDP
–
Energias
de Portugal, S.A.
•
Permanent Representative of EDP
–
Energias de Portugal, Sociedade
Anónima, Sucursal en España, and Representative of EDP Finance BV
•
Chairman of the Board of Directors of EDP
–
Energias do Brasil, S.A.
•
Chairman of the Board of Directors of Fundação EDP
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
Sustainable Energy for All-Chairman
OTHER PREVIOUS POSITIONS
•
Minister of Publi
c Works, Transport and Communication for Portugal’s 16th
Constitutional Government
•
Chairman of the Portuguese Energy Association (APE)
•
Executive Chairman of Galp Energia
•
Chairman of the Board of Directors of Petrogal, Gás de Portugal, Transgás
and Transgás-Atlântico
•
Vice-Chairman of the Board of Directors of Galp Energia
•
Director of Banco Espírito Santo de Investimentos
•
Vice-Chairman of the Board of Directors of ICEP (Portuguese Institute for
Foreign Trade)
•
Assistant to the Secretary of State for Foreign Trade
•
Assistant Lecturer in the Department of Economics at Université de Genève
(Switzerland)
EDUCATION:
•
BSc in Economics from Université de Genève (Switzerland)
•
Postgraduate lecturer in European Studies at Universidade Católica
230
ANNUAL REPORT EDPR 2020
João Manso Neto
Born: 1958
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Executive Vice-Chairman of the Board of Directors and Chairman of the
Executive Committee (CEO) of EDP Renováveis, S.A.
•
Chairman of the Board of Directors of EDP Renewables Europe, S.L.U.,
EDP Renováveis Brasil S.A., EDP Renováveis Servicios Financieros, S.A.
and EDPR FS Offshore, S.A.
•
Executive Director of EDP Energias de Portugal, S.A.
•
Member of the Board of Directors of EDP España, S.A.U.
•
Permanent Representative of EDP Energias de Portugal, S.A. Sucursal en
España, and Representative of EDP Finance BV
•
Chairman of the Board of Directors of EDP Gás.com Comércio de Gás
Natural, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
Member of the Board of the Operador del Mercado Ibérico de Energía, Polo
Español (OMEL)
•
Member of the Board of OMIP
–
Operador do Mercado Ibérico (Portugal),
SGPS, S.A.
•
Member of the Board of MIBGAS
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Member of the Executive Board of Directors of EDP Energias de Portugal,
S.A.
•
Chairman of EDP Gestão da Produção de Energia, S.A.
•
CEO and Vice-Chairman of EDP España, S.A.U.
•
Vice-Chairman of Naturgás Energia Grupo, S.A.
•
Member of the Board of the Operador del Mercado Ibérico de Energía, Polo
Español (OMEL)
•
Member of the Board of OMIP
–
Operador do Mercado Ibérico (Portugal)
SGPS, S.A.
OTHER PREVIOUS POSITIONS
•
Head of the International Credit Division, and General Manager responsible
for Financial and South Retail areas at Banco Português do Atlântico
•
General Manager of Financial Management, General Manager of Large
Corporate and Institutional Businesses, General Manager of the Treasury,
Member of the Board of Directors of BCP Banco de Investimento and Vice-
Chairman of BIG Bank Gdansk in Poland at Banco Comercial Português
•
Member of the Board of Banco Português de Negócios
•
General Manager and Member of the Board of EDP Produção
EDUCATION
•
Degree in Economics from Instituto Superior de Economia
•
Post-graduate degree in European Economics from Universidade Católica
Portuguesa
•
Program in Economics at the Faculty of Economics, Universidade Nova de
Lisboa
•
Advanced Management Program for Overseas Bankers at the Wharton
School in Philadelphia
231
Rui Manuel
Rodrigues Lopes
Teixeira
Born: 1972
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Member of the Executive Committee of EDP Renováveis, S.A.
•
Member of the Board of Directors of EDP Energias de Portugal, S.A.
•
CEO of EDP España, S.L.U.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
(none)
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Member of the Executive Committee of EDP Renováveis, S.A.
•
Member of the Board of Directors of EDP Energias de Portugal, S.A.
•
CEO of EDP España, S.L.U.
•
President of EDP Gestão de Produção de Energia, S.A.
OTHER PREVIOUS POSITIONS
•
Consultant at McKinsey & Company, focusing on energy, shipping, and
retail banking
•
Project manager and ship surveyor for Det Norske Veritas
•
Assistant director of the commercial naval department of Gellweiler
–
Sociedade Equipamentos Maritimos e Industriais, Lda
EDUCATION
•
Graduate of Harvard Business School’s
Advanced Management Program,
AMP184
•
Master in Business and Administration from the Universidade Nova de
Lisboa
•
Master degree in Naval Architecture and Marine Engineering from the
Instituto Superior Técnico de Lisboa
232
ANNUAL REPORT EDPR 2020
Duarte Bello
Born: 1979
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Chief Operating Officer of EDP Renováveis, S.A. for Europe and Brazil
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Member the Executive Committee of EDP Renováveis, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
(none)
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Head of EDP Group M&A and Corporate Development
•
Member of EDP Group Investment Committee
OTHER PREVIOUS POSITIONS
•
Chief of Staff for EDP’s CEO
•
Project Manager in EDP Group M&A and Corporate Development
•
Financial Analyst at Schroder Salomon Smith Barney in London and Lisbon
•
Financial analyst in Citigroup’s Investment Banking division in London
EDUCATION
•
Business and Administration from Faculdade de Economia da Universidade
Nova de Lisboa
•
MBA from INSEAD (Singapore and France)
233
Miguel Ángel Prado
Born: 1975
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Chief Operating Officer of EDP Renováveis, S.A. for North America and
CEO EDP Renewables North America LLC
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Member of the Executive Committee of EDP Renováveis, S.A.
•
Responsible for Corporate Procurement at EDP Renováveis, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
(none)
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Head of Investments, Mergers and Acquisitions at EDP Renováveis, S.A.
•
Leadership of the asset rotation strategy of EDP Renováveis, S.A.
•
Member of EDPR Group Investment Committee
OTHER PREVIOUS POSITIONS
•
He has worked in EDP and EDPR for nearly 17 years, investing more than
18 Billion by executing a significant number of relevant acquisitions in 12
different countries
•
Manager at Arthur Andersen/Deloitte Corporate Finance department
EDUCATION
•
PhD in Business and Management by the University of Oviedo and Bradford
(UK)
•
Executive MBA by the IE (Instituto de Empresa, Madrid)
234
ANNUAL REPORT EDPR 2020
Spryridon Martinis
Spettel
Born: 1979
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Chief Executive Officer of Ocean Winds
•
Chief Operating Officer of EDP Renováveis, S.A. for Offshore and New
Markets
•
Chief Development Officer of EDP Renováveis, S.A.
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Member of the Executive Committee of EDP Renováveis, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
(none)
MAIN POSITIONS IN THE LAST FIVE YEARS:
•
Executive Business Initiatives Director, EDP Renováveis,S.A.
•
Executive Operating Director
–
Europe, EDP Renováveis,S.A.
•
Asset Management & Business Development Director
–
Europe, EDP
Renováveis,S.A.
•
Director of EDPR Polska, France and Belgium
•
Business Development Director & Coordinator
–
Europe, EDP
Renováveis,S.A.
OTHER PREVIOUS POSITIONS
•
Head of Business Development, Eastern & Northern Europe, EDPR
•
Project Finance specialist, Corporate Finance, Energy Division, BANKIA
•
Business Development Coordinator, Gamesa
EDUCATION
•
Executive Global Leadership Vanguard Program, Xynteo
•
International Executive MBA, IE Business School
•
Full time MBA, IEDE-Laureate University
•
Postgraduate degree in Finance, CESMA
•
University Degree in Economic & Business Sciences,Aristotle University
235
Vera Pinto Pereira
Born: 1974
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Executive Board Member at EDP Energias de Portugal SA
•
President of the Board at EDP Comercial
•
President of the Board at EDP Soluções Comerciais
•
Board Member at EDP España, S.A.U.
•
Board Member at EDP Renováveis, S.A.
•
Board Member at Fundação EDP
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
(none)
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Executive Vice President
–
Managing Director for Spain and Portugal at Fox
Network Group
•
Non-executive Board Member at Pulsa Media
OTHER PREVIOUS POSITIONS
•
MEO TV Business Director
–
at Portugal Telecom (Altice)
•
TV Service Director
–
at TV Cabo Portugal
–
PT Multimedia (NOS)
•
Founding Partner of Innovagency Consulting
•
Associate in Mercer Management Consulting
EDUCATION
•
Master in Business Administration (M.B.A.), Fontainebleau
–
INSEAD
•
Graduate & Post-Graduate Degrees in Economics
–
Universidade NOVA de
Lisboa
–
NOVA School of Business and Economics
236
ANNUAL REPORT EDPR 2020
Manuel Menéndez
Menéndez
Born: 1959
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Chairman of the Board of Directors of EDP España, S.A.U.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
CEO of Liberbank, S.A.
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Chairman and CEO of Liberbank, S.A.
•
Chairman of Cajastur
•
Chairman of EDP España, S.A.U.
•
Chairman of Naturgás Energía Grupo, S.A.
•
Member of the Board of Confederación Española de Cajas de Ahorro
(CECA)
•
Member of the Board of AELÉC
OTHER PREVIOUS POSITIONS
•
Member of the Board of Directors of EDP Renewables Europe, S.L.U.
•
University Professor in the Department of Business Administration and
Accounting at the University of Oviedo
EDUCATION
•
BSc in Economics and Business Administration from the University of
Oviedo
•
PhD in Economic Sciences from the University of Oviedo
237
António Nogueira
Leite
Born: 1962
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Chairman of the Nominations and Remunerations Committee of EDP
Renováveis, S.A.
•
Member of the Audit, Control and Related Party transactions Committee of
EDP Renováveis, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
Senior Board Advisor at Hipoges Iberia,S.A.
•
Chairman of the Board, Embopar, SGPS, S.A.
•
Chairman of the Board, Sociedade Ponto Verde, S.A.
•
Vice-
Chairman of “Fórum para a Competitividade”
•
Chairman of the Board at Forum Oceano
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Director of Sagasta, STC,S.A.
•
Member of the Advisory Committee at Incus Capital Advisors
OTHER PREVIOUS POSITIONS
•
Vice-Chairman of the Executive Committee of Caixa Geral de Depósitos,
S.A.
•
Chairman of the Board at Caixa Banco de Investimento, S.A., Caixa Capital
SCR SGPS, S.A., Caixa Leasing e Factoring, S.A. Partang, SGPS, S.A.
•
Director, Group José de Mello (one of Portugal’s leading private groups)
•
Director of Soporcel, S.A. (1997-1999)
•
Director of Papercel SGPS, S.A. (1998-1999)
•
Director of MC Corretagem, S.A. (1998-1999)
•
Chairman of the Board, Lisbon Stock Exchange (1998-1999)
•
Secretary of State for Treasury and Finance and Alternate Governor (IMF,
EBRD, EIB, WB)
•
Member of the Economic and Financial Committee of the European Union
•
Advisor GE Capital (2001-2002)
•
Director of Brisal, S.A.(2002-2011)
•
Director of CUF, SGPS, S.A. (2002-2011)
•
Director of CUF Quimicos, S.A.(2005-2011)
•
Director of Efacec Capital, S.A.(2005-2011)
•
Director of Jose de Mello Saúde, SGPS, S.A. (2005-2011)
•
Director of Jose de Mello Investimentos, SGPS, S.A. (2010-2011)
•
Chairman of the Board of Directors, OPEX, S.A. (2002-2011)
EDUCATION
•
Degree, Universidade Católica Portuguesa, 1983
•
Master of Science in Economics, University of Illinois at Urbana-Champaign
•
PhD in Economics, University of Illinois at Urbana-Champaign
238
ANNUAL REPORT EDPR 2020
Acácio Piloto
Born: 1957
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Chairman of the Audit, Control and Related-Party Transactions Committee
of EDP Renováveis, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
(none)
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Member of the Supervisory Board and Chairman of the Risk Committee of Caixa
Económica Montepio Geral
•
Member of the Nominations and Remunerations Committee of EDP Renováveis,
S.A.
•
Member of the Related-Party Transactions Committee of EDP Renováveis, S.A.
OTHER PREVIOUS POSITIONS
•
International Division of Banco Pinto e Sotto Mayor
•
International and Treasury Division of Banco Comercial Português
•
Head of BCP International Corporate Banking
•
Member of the Executive Committee of AF Investimentos SGPS and
Chairman of the following group companies: AF Investimentos, Fundos
Mobiliários; AF Investimentos, Fundos Imobiliários; BPA Gestão de
Patrimónios; BCP Investimentos International; AF Investimentos
International and Prime International
•
Member of BCP Investment Committee
•
Executive Board Member of BCP
–
Banco de Investimento, in charge of
Investment Banking
•
Millennium BCP Group Treasurer and Head of Capital Markets
•
Millennium BCP Chair of Group ALCO
•
CEO of Millennium Gestão de Ativos SGFIM
•
Chairman of Millennium SICAV
•
Chairman of BII International
•
Member of the Board of Directors and Member of the Audit Committee of
INAPA IPG, S.A.
EDUCATION
•
Law degree by the Law Faculty of Lisbon University
•
During 1984 and 1985 he was a scholar from the Hanns Seidel Foundation,
Munich where he obtained a Post-Graduation in Economic Law by Ludwig
Maximilian University
•
Post- Graduation in European Community Competition Law by Max Planck
Institut
•
Trainee at the International Division of Bayerische Hypoteken und Wechsel
Bank
•
Professional education courses, mostly in banking, financial and asset
management, namely the International Banking School (Dublin, 1989), the
Asset and Liability Management Seminar (Merrill Lynch International) and
the INSEAD Executive Program (Fontainebleau)
•
Nova SBE Executive Program on Corporate Governance and Leadership of
Boards
239
Francisca Guedes de
Oliveira
Born: 1973
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of EDP Renováveis, S.A.
•
Member of the Audit, Control and Related-Party Transactions Committee of
EDP Renováveis, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
Associate Dean at Católica Porto Business School (responsibility of Faculty
Management) (until june 2020)
•
Associate Dean for the Master Programmes at Católica Porto Business
School (until June 2020)
•
Assistant Professor at Católica Porto Business School
•
Member of the Social and Economic Council
•
President of the Tax Comitee of Unilabs Portugal
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Coordinator of the MSc programme in Business Economics at Católica Porto
Business School
•
Coordinator of the seminars in economics at the Master of Public
Administration at Católica Porto Business School
•
Coordinator of the PhD in Economics at the Universidade Católica de
Moçambique
•
Coordinator of the work group appointed by the Finance Minister dedicated
to evaluate Tax Expenditures
OTHER PREVIOUS POSITIONS
•
Assistant Professor at Católica Porto Business School
•
Researcher at the National Statistics Institute
EDUCATION
•
Executive programme at London School of Economics
•
PhD in Economics at Nova School of Business and Economics
•
Master in Economics at Faculdade de Economia da Universidade do Porto
•
Undergraduate degree in Economics at Faculdade de Economia da
Universidade do Porto
•
PhD scholarship from Fundação para a Ciência e Tecnologia
240
ANNUAL REPORT EDPR 2020
Allan J.Katz
Born: 1947
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of EDP Renováveis, S.A
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
Founder of the American Public Square
•
Executive Committee Chair of the Academic and Corporate Board to ISCTE
Business School in Lisbon Portugal
•
Board Member of the International Relation Council of Kansas City
•
Board Member of the WW1 Commission Diplomatic Advisory Board
•
Creator of Katz, Jacobs and Associates LLC (KJA)
•
Frequent speaker and moderator on developments in Europe and on
American Politics
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Ambassador of the United States of America to the Republic of Portugal
•
Distinguished Professor at University of Missouri Kansas City
OTHER PREVIOUS POSITIONS
•
National Director of the Public Policy practice group at the firm of Akerman
Senterfitt
•
Assistant Insurance Commissioner and Assistant StateTreasurer for the
State of Florida
•
Legislative Counsel to Congressman Bill Gunter and David Obey
•
General Counsel to the Commission on Administrative Review of the US
House of Representatives
•
Member of the Board of the Florida Municipal Energy Association
•
President of the Brogan Museum of Art & Science in Tallahassee, Florida
•
Board member of the Junior Museum of Natural History in Tallahassee,
Florida
•
First Chair of the State Neurological Injury Compensation Association
•
Member of the State Taxation and Budget Commission
•
City of Tallahassee Commissioner
EDUCATION
•
BA from UMKC in 1969
•
JD from Washington College of Law at American University in Washington
DC in 1974
241
Francisco Seixas Da
Costa
Born: 1948
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of Directors of EDP Renováveis, S.A.
•
Member of the Nominations and Remunerations Committee of EDP
Renováveis, S.A.
•
Member of the Audit, Control and Related Party Transactions Committee of
EDP Renováveis, S.A.
(appointed in January 19
th
, 2021)
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
Member of the Board of Directors of Jeronimo Martins SGPS, S.A.
•
Member of the Board of Directors of Mota Engil SGPS, S.A.
•
Member of the Board of Directors of Mota Engil Africa, S.A.
•
Member of the Audit Committee of Mota Engil Africa, S.A.
•
Chairman of the Fiscal Council of Tabaqueira II, S.A.
•
Chairman of the Advisory Council of A.T. Kearney Portugal
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Member of the Consultative Council of Calouste Gulbenkian Foundation
•
Member of the Independent General Council, RTP - Radio e Televisão de
Portugal, S.A.
•
Invited Researcher, Universidade Autónoma, Lisbon, Portugal
OTHER PREVIOUS POSITIONS
•
Portuguese ambassador to the United Nations, OSCE, UNESCO, Brazil and
France
•
Secretary of State for European Affairs (1995/2001), Portuguese
government, Lisbon
EDUCATION
•
Degree in Political and Social Sciences, Lisbon University
242
ANNUAL REPORT EDPR 2020
Conceição Lucas
Born: 1956
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of EDP Renováveis, S.A.
•
Member of the Nominations and Remunerations Committee of EDP
Renováveis, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
Chairwoman of Banco Atlantico Europa, S.A.
•
Member of the Nominations and Remunerations Committee of Banco
Atlantico Europa,S.A.
•
Chairwoman of Atlantico Europa, SGPS, S.A
MAIN POSITIONS IN THE LAST FIVE YEARS
•
Executive Board Member of Millennium BCP, for Corporate and Investment
Banking
•
Member of the Board of BCP Capital
•
Manager of BCP Africa SGPS
•
Vice-Chairman of the Board of Directors and Chairman of the Audit Board of
Medis
•
Vice-Chairman of the Board of Directors and Chairman of the Audit Board of
Ocidental
•
Vice-Chairman of the Board of Directors and Chairman of the Audit Board of
Millennium BCP Ageas insurance group
•
Vice-Chairman of the Board of Directors and Chairman of the Audit Board of
Ocidental Vida
•
Member of the Supervisory Board of Bank Millennium S.A. (Poland) (2012-2015)
•
Member of the Board of Banco Millennium Angola (BMA), in Angola
•
Member of the Board and Member of the Remunerations Commission of BIM
–
Banco Internacional de Moçambique
•
Member of the Remuneration Commission of SIM
–
Seguradora Internacional de
Moçambique
•
Board member and Vice-Chairman of Banque Privée, Geneve, Switzerland
OTHER PREVIOUS POSITIONS
•
Chairman of the Board of Directors of Millennium BCP Gestão de Ativos
(MGA)
•
Member of the Board of Fundação Millennium BCP
•
Executive Board Member of Banco Privado Atlantico
–
Europa
•
Co-head of Société Générale, Rep. Office, in Portugal
•
Senior Manager, Banco Espirito Santo,Portugal
•
Manager of Petrogal, S.A.
•
Générale Bank, branch in Portugal
EDUCATION
•
Degree in Management and Business Administration, Portuguese Catholic
University (UCP), Lisbon
•
Post-graduate degree in Hautes Etudes Européennes, major in Economics,
College of Europe, Bruges
•
MSc, London School of Economics,London University
243
Alejandro Fernández
De Araoz Gómez-
Acebo
Born: 1962
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
Member of the Board of EDP Renováveis, S.A.
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
Partner of Araoz & Rueda, Abogados
•
Member of the Board and Vice-Secretary of Inversiones Doalca Socimi, S.A.
•
Member of the Board of Bodegas Benjamin de Rothschild & Vega-Sicilia,
S.A
•
Vocal-International Advisory Board of Scope Ratings AG.
•
“Patrono” and Secretary of Fundación Ar
iane de Rothschild
•
Representative in Spain of Fundación Daniel y Nina Carasso
MAIN POSITIONS IN THE LAST FIVE YEARS
•
(none)
OTHER PREVIOUS POSITIONS
•
Lawyer at Estudio Legal, Abogados, Madrid
•
Secretary and legal advisor of Fundación José Ortega y Gasset-Gregorio
Marañón
•
Associate Professor of Commercial Law in Instituto de Estudios Bursátiles
•
Associate-Professor of Commercial Law in Facultad de Derecho
Universidad Complutense de Madrid
•
Associate-Professor at Program of Instruction for Lawyers (PIL), a joint
program between Harvard Law School and Instituto de Empresa
•
Professor in Instituto de Empresa
EDUCATION
•
Law Degree from the Complutense University, Madrid
•
Researcher, Ludwig-Maximilian Universitat, Munich
•
Researcher, Cambridge MA, Harvard Law School
•
Master in Law, New York University School of Law
•
Master in Law, London School of Economics and Political Science,
University of London
•
PhD in Law, Complutense University,Madrid
•
Business Tax Consultancy Course, ICADE
•
Advance Course of Maritime Busisness, Instituto Marítimo Español
•
European Business Law, City of London Polytechnic
244
ANNUAL REPORT EDPR 2020
Emilio García-Conde
Noriega
Born: 1955
CURRENT POSITIONS IN EDPR OR EDP GROUP OF COMPANIES
•
General Secretary and General Counsel of EDP Renováveis, S.A.
•
Member/Chairman and/or Secretary of several Boards of Directors of
EDPR’s subsidiaries
CURRENT POSITIONS IN COMPANIES OUTSIDE EDPR AND EDP
GROUP OF COMPANIES
•
(none)
MAIN POSITIONS IN THE LAST FIVE YEARS
•
General Secretary and General Counsel of EDP Renováveis, S.A.
•
Member and/or Secretary of several Board of Directors of EDPR’s
subsidiaries
OTHER PREVIOUS POSITIONS
•
Legal Counsel of Soto de Ribera Power Plant (consortium comprising
Electra de Viesgo, Iberdrola and Hidrocantábrico)
•
General Counsel of Soto de Ribera Power Plant
•
Chief of administration and human resources of the consortium
•
Legal Counsel of Hidrocantábrico
•
General Counsel of Hidrocantábrico and member of the management
committee
EDUCATION
•
Law Degree from the University of Oviedo
EDP Renováveis, S.A.
Independent Reasonable Assurance Report on the
design and effectiveness of the Internal Control System
Over Financial Reporting (ICSFR) as of December 31, 2020
PricewaterhouseCoopers Auditores, S.L., Torre PwC, Pº de la Castellana 259 B, 28046 Madrid, España
Tel.: +34 915 684 400 / +34 902 021 111, Fax: +34 915 685 400
1
R. M. Madrid, hoja 87.250-1, folio 75, tomo 9.267, libro 8.054, sección 3ª
Inscrita en el R.O.A.C. con el número S0242 - CIF: B-79 031290
Independent reasonable assurance report on the design and effectiveness of the
Internal Control System over Financial Reporting (ICSFR)
To the Board of Directors of EDP Renováveis, S.A.:
We have carried out a reasonable assurance engagement of the design and effectiveness of the Internal
Control System over Financial Reporting (hereinafter, ICSFR) and the description of it that is included in the
attached Report that forms part of the corresponding section of the Annual Corporate Governance Report of
the Directors Report, prepared according to the applicable portuguese regulation, accompanying the
consolidated annual accounts of EDP Renováveis, S.A., and its subsidiaries (hereinafter, the EDPR Group)
as at December 31, 2020. This system is based on the criteria and policies defined by the EDPR Group in
accordance with the guidelines established by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in its "Internal Control-Integrated Framework" report.
An Internal Control System over Financial Reporting is a process designed to provide reasonable
assurance over the reliability of financial information in accordance with the applicable financial reporting
framework and includes those policies and procedures that: (i) enable the records reflecting the
transactions performed to be kept accurately and with a reasonable level of detail; (ii) provide reasonable
assurance as to the proper recognition of transactions to make it possible to prepare the financial
information in accordance with the accounting principles and standards applicable to it and that they are
made only in accordance with established authorizations; and (iii) provide reasonable assurance in relation
to the prevention or timely detection of unauthorised acquisitions, use or sales of the Group’s assets that
could have material effect on the financial information.
Inherent Limitations
In this regard, it should be borne in mind that, given the inherent limitations of any Internal Control System
over Financial Reporting, regardless of the quality of the design and operation of the system, it can only
allow reasonable, but not absolute security, in relation to the objectives it pursues, which may lead to errors,
irregularities or fraud that may not be detected. On the other hand, the projection to future periods of the
evaluation of internal control is subject to risks such that said internal control being inadequate as a result of
future changes in the applicable conditions, or that in the future the level of compliance of the established
policies or procedures may be reduced.
Director's responsibility
The Directors of EDP Renováveis, S.A., are responsible for taking the necessary measures to reasonably
ensure the implementation, maintenance and supervision of an appropriate Internal Control System over
Financial Reporting, as well as the evaluation of its effectiveness, the development of improvements to that
system and the preparation and establishment of the content of the information relating to the ICSFR
attached.
Our Responsability
Our responsibility is to issue a reasonable assurance report on the design and effectiveness of the EDPR
Group Internal Control System over Financial Reporting, based on the work we have performed and on the
evidence we have obtained. We have performed our reasonable assurance engagement in accordance with
International Standard on Assurance Engagements 3000 (ISAE 3000) (Revised), "Assurance Engagements
other than Auditing or Reviews of Historical Financial Information", issued by the International Auditing and
Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC).
2
A reasonable assurance engagement includes the understanding of the Internal Control System over
Financial Reporting, assessing the risk of material weaknesses in the internal control, that the controls are
not properly designed or they do not operate effectively, the execution of tests and evaluations on the
design and effective implementation of this ICSFR, based on our professional judgment, and the
performance of such other procedures as may be deemed necessary.
We believe that the evidence we have obtained provides a sufficient and adequate basis for our opinion.
Our Independence and Quality Control
We have complied with the independence requirements and other ethical requirements of the Accounting
Professionals Code of Ethics issued by the International Ethics Standards Board for Accountants (IESBA),
which is based on the fundamental principles of integrity, objectivity, professional competence and
diligence, confidentiality and professional behavior.
Our firm applies the “International Standard on Quality Control 1 (ISQC 1)” and maintains an exhaustive
qualitative control system that includes documented policies and procedures regarding compliance with
ethical requirements, professional standards, and applicable legal and regulatory provisions.
Opinion
In our opinion, the EDPR Group maintained, as at December 31, 2020, in all material respects, an effective
Internal Control System over Financial Reporting for the period ended at December 31, 2020, which is
based on the criteria and the policies defined by the EDP Renováveis Group’s management in accordance
with the guidelines established by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in its "Internal Control-Integrated Framework" report.
In addition, the attached description of the ICSFR Report as at December 31, 2020 has been prepared, in
all material respects, in accordance with the requirements established by the Code of Recommendations of
the IPCG and the Appendix I to CMVM Regulation nº 4/2013 for the purposes of the description of the
ICSFR in the Annual Reports of Corporate Governance.
This work does not constitute an audit nor is it subject to the regulations governing the audit activity in force
in Spain, so we do not express any audit opinion in the terms provided in the aforementioned regulations.
PricewaterhouseCoopers Auditores, S.L.
Iñaki Goiriena Basualdu
24 February 2021
22725304Q IÑAKI GOIRIENA
2021-02-24 16:5
1
Signer:
CN=22725304Q IÑAKI GOIRIENA
C=ES
2.5.4.42=IÑAKI
2.5.4.4=GOIRIENA BASUALDU
Public key:
RSA/2048 bits
O
A
C
T
FROM TOMORROW TO BEYOND
Driving
change to set
new standards
Changing tomorrow now.
06
Remuneration Report
253
A - Remuneration structure and disclosure
255
B - Alignment of the application of the
remuneration with the Remuneration Policy
adopted. Contribution of the Remuneration
Policy to the long term performance of
the Company and criteria taken into account
257
C - Performance of the company
and remuneration average of the employees
259
D - Remuneration from other Group
Companies
260
E - Share-allocation and/or Stock
Option Plans
260
F - Refund of a variable remuneration
260
G - Information on any withdrawal of the
procedure for applying the remuneration
policy and the derogations applied, including
an explanation of the nature of the exceptional
circumstances and an indication of the
specific elements subject to the derogation
261
Other remunerations
261
REMUNERATION REPORT
253
Remuneration Report
EDPR has rooted in its organizational culture the challenge and ambition to implement and achieve, at all times, the best corporate
governance practices, and seeks, with transparency and rigor, to go beyond the legal and regulatory requirements applicable in
this area. Despite the understanding of the Portuguese Securities Commission (CMVM) that the remuneration report only needs
to be released and submitted to
shareholders, for the first time, at the annual general shareholders’ meeting subsequent to the
year in which the new remuneration policy is approved after the enter into force of Law nº 50/2020 of 25 August, (this is as of
2022), EDPR sought, under the terms of Article 245.º - C of the Portuguese Securities Code, to anticipate, already in 2021, to
provide a version aiming to the effective compliance of such legal requirement. This commitment seeks to materialize our culture
towards our Shareholders and the market in general.
Pursuant to the terms of Article 245-C of the Portuguese Securities Code, as amended by Law no. 50/2020, of 25 August, this
Remuneration Report envisages to provide a wide-ranging view of the remuneration attributed to the members of the corporate
bodies of EDP Renováveis S.A., including all benefits, regardless of their form, due or attributed during the financial year of 2020.
254
ANNUAL REPORT EDPR 2020
Definition and adoption of the Remuneration Policy of EDP Renováveis
The definition of the proposal of the remuneration policy for the members of the Board of Directors of EDPR is incumbent on
Nominations and Remunerations Committee which is a elegated body of the Board of Directors enterely composed by non-
executive and independent members. Under such competences this Committee takes the responsibility for proposing to the
Board of Directors the determination of the remuneration of the Executive Directors of the Company; the Declaration on
Remuneration Policy; the evaluation and compliance of the KPI’s (Ke
y Performance Indicators); the annual and multi annual
variable remuneration, and also proposes the remuneration of the Non-Executive Directors and members of the Board
Committees. As such, this Committee prepares a proposal that defines the remuneration to be attributed to Directors and to the
members of the Executive Committee, with the purpose that it reflects the performance of each of the members in each year of
their term of office establishing for the Executive Committee Members
a variable component which is consistent with the
maximisation of the Company's long term performance (variable annual and multi-annual remuneration for a three-year period),
and long term incentive plans for the achievement of the most challenging objectives of the business plan, thereby guaranteeing
the alignment of the performance of the governing bodies with the interests of the shareholders.
The Board of Directors is responsible for the approval of the above-mentioned proposals except to the extent it concerns the
Declara
tion on the Remuneration Policy which is annualy approved by the General Shareholders’ Meeting. The Board of
Directors also evaluates with an annual periodicity its own performance and the performance of its delegated Committees. The
evaluation of the performance of the Board of Directors and its Executive Committee, is then additionally submitted for the
approval of the General Shareholder Meeting.
The Declaration on the Remuneration Policy is submitted by the Board of Directors to the approval of the Gene
ral Shareholders’
Meeting as an independent proposal. According to the Company’s Articles of Association the Board of Directors remuneration is
subject to a maximum value that can only be modified by a Shareholders agreement.
The remuneration policy applicable for 2020-2022 was proposed by the Nominations and Remuneration Committee and
approved by the General Shareholders’ Meeting held on March 26
th
, 2020. It defined a structure with a fixed remuneration for all
members of the Board of Directors, whereas for the members of the Executive Committee defines a fixed and a variable
remuneration, with an annual component and a multi-annual component. Additionally, on its meeting dated October 16
th
, 2019
the Appointments and Remunerations Committee agreed to propose to the Board of Directors a Complementary Long Term
Program homogeneous for the three COOs and for the 2019-2022 term. Such Complementary Long Term Program was
approved at the Board of Directors’ meeting dated October 29, 2019.
255
A. Remuneration structure and disclousure
The remuneration policy applicable for 2020-2022 defines a structure with a fixed remuneration for all members of the
Board of Directors, whereas for the members of the Executive Committee defines a fixed and a variable remuneration,
with an annual component, a multi-annual component and a Complementary Long Term Program homogeneous for
the three COOs for the 2019-2022 term.
The Non-Executive Directors only receive a fixed remuneration, which is calculated on the basis of their work
exclusively as Directors or with their membership on the Nominations and Remunerations Committee and to the
Audit, Control and Related
Party Transactions Committee. Those members who are seated in two different
Committees do not accumulate two remunerations. In these cases, the remuneration to be received is the one that
corresponds to the highest value.
EDPR, in line with EDP Group corporate governance practices, has signed an Executive Management Services
Agreement with EDP, under which the Company bears the cost for such services to some of the members of the
Board of Directors to the extent their services are devoted to EDPR.
i.
Remuneration paid by EDPR to its Directors for their functions as Members of the Board and Members of the
Audit, Control and Related Party Transactions Committee and Nominations and Remunerations
Committee
for the year ended on December 31
st
2020:
o
Executive Directors
DIRECTOR
TOTAL
FIXED
(€)
João Manso Neto*
0
Rui Teixeira*
0
Duarte Bello**
61,804
Miguel Ángel Prado**
0
Spyridon Martinis**
61,804
** João Manso Neto and Rui Teixeira do not receive any remuneration from EDPR. EDPR and EDP signed an Executive Management Services
Agreement according to which
EDPR pays to EDP a fee for the services rendered by these Board Members
*Duarte Bello, Miguel Ángel Prado and Spyridon Martinis ,as Officers and members of the Executive Committee, and for the relevant period of
2020 corresponding to each of them, received their remuneration as Directors as desc
ribed on the table above and as other Group companies’
employees, as described at the end of this section.
o
Non Executive Directors that are not members of any delegated commitee
DIRECTOR
TOTAL
FIXED
(€)
Antonio Mexia*
0
Vera Pinto*
0
Manuel Menéndez Menéndez
45,000
Allan J.Katz
45,000
Alejandro Fernández de Araoz Gómez-Acebo
45,000
*António Mexia and Vera Pinto do not receive any remuneration from EDPR. EDPR and EDP signed an Executive Management Services
Agreement according to which
EDPR pays to EDP a fee for the services rendered by these Board Members.
256
ANNUAL REPORT EDPR 2020
o
Non Executive Directors that are members of the Audit, Control and Related party Transactions Committee
and/or the Nominations and Remunerations Committee
AUDIT, CONTROL AND RELATED PARTY TRANSACTIONS COMMITEE
DIRECTOR
TOTAL
FIXED
(€)
Acácio Jaime Liberado Mota Piloto (Chairman)
80,000
Francisca Guedes de Oliveira
60,000
António Nogueira Leite*
60,000
NOMINATIONS AND REMUNERATIONS COMMITTEE
DIRECTOR
TOTAL
FIXED
(€)
António Nogueira Leite (Chairman)*
60,000
Francisco Seixas da Costa
55,000
Conceiçao Lucas
55,000
*Those members who are seated in two different Committees do not accumulate two remunerations. In these cases, the remuneration to be
received is the one that corresponds to the highest value (as the case of Antonio Nogueira Leite)
ii.
Remuneration paid to EDPR Executive Directors (ex CEO) for the functions performed as Officers for the
year ended on December 31
st
2020
OFFICER
PAYER
FIXED
VARIABLE
ANNUAL
VARIABLE
MULTI-
ANNUAL
VARIABLE
PLURI-
ANNUAL
TOTAL
Duarte Bello
EDP Energías
de Portugal,
S.A. Sucursal
en España
228.196€
145,000€
37.500€
410.696€
Miguel Ángel Prado
EDPR North
America LLC
466,897$
162.328$
237.908$
45.725$
912.858$
Spyridon Martinis
EDP Energías
de Portugal
S.A. Sucursal
en España
228.196€
145,000€
0
373.196€
*All the amounts are in EUR, except Miguel Ángel Prado ones, which are in USD.
Likewise, in application of the deferral policy, in 2020 an amount of 84.443€ was paid
to Miguel Amaro (former
Executive CFO of the company), for the services rendered in 2016-2017.
257
iii.
Non-Monetary Benefits
The Officers, with the exception of the CEO, received the following non-monetary benefits: retirement savings plan (as
described in the following topic), company car and Health Insurance. In 2020, the non-monetary benefits amounted to
267.733 EUR. The Non-Executive Directors do not receive any relevant non-monetary benefits as remuneration.
iv.
Retirement Savings Plan
The retirement savings plan for the members of the Executive Committee that are also Officers, acts as an effective
retirement supplement with a range between 3% to 6% of their annual salary. The percentage is defined
according
with the retirement savings
plan applicable in their home country. The retirement savings plan applicable to 2020,
which is included within the Remuneration Policy applicable for the term office 2020-2022, was defined and proposed
by the Nominations and Remunerations Committee to the Board of Directors for its submission to the General
Shareholder’s Meeting, which approved it on its meeting held on March 26
th
, 2020.
The total amount of the remunerations that the Company paid to its Directors under the terms provided in the previous
paragraphs have not ex
ceeded the amount determined by the General Shareholders’ Meeting, which for year 2020 was set in
EUR 2,500,000 for the Board of Directors and in EUR 1,000,000 for the Executive Committee.
B. Allingment of the application of the remuneration with the Remuneration
Policy adopted. Contribution of the Remuneration Policy to the long term
performance of the Company and criteria taken into account.
The remuneration policy adopted by EDPR for 2020 included key elements to enhance a Company’s management performance
not only focused on short-term objectives, but also incorporate as part of its results the interests of the Company and of
shareholders in the medium and long term. These elements are: (i) the definition of the indicators in accordance with the 6
clusters, (ii) the relative weight assigned to each KPIs to calculate annual, multiannual variable remuneration, and if such is the
case, of the LTICPs, (iii) the relevance associated with the achievement of such KPIs on the platform in the case of COOs, (iv)
the three-year term considered for determining the value of variable multi-annual component of the remuneration, as well as the
four-year term considered for determining the value of the LTICP, (v) the deferral in three years for the payment of the variable
multi-annual as recommended by CMVM as a good corporate governance practices, as well as conditioning its payment to the
fact of there has not been unlawful actions known after the performance evaluated that may jeopardize the sustainability of the
company’s performance, (vi) the use of the qualitative criteria focused on a strategic and medium term perspective of
thedevelopment of the Company, and (vii) the existence of a maximum limit for the variable remuneration.
As previously exposed, the remuneration policy applicable for 2020-2022 defines a structure with a fixed remuneration for all
members of the Board of Directors (which is detailed in the previous section) and a fixed and a variable remuneration, with an
annual component and a multi-annual component.for members of the Executive Committee. The variable annual remuneration
may range from 0 to 68% over the annual fixed remuneration and the multi-annual remuneration from 0 to 102% over the annual
fixed remuneration for the CEO, and over 250.000€ for other members of the Executive Committee.
The key performance indicators (KPIs) used to determine the amounts of the annual and multi -annual variable remuneration
regarding to each year of the term are proposed by the Nominations and Remunerations Committee with the aim of align them
with the strategic grounds of the
Company: growth, risk control and efficiency. These are
the same for all members of the
Executive Committee, although with specific targets for the platforms in the case of COOs . For the year 2020 the KPIs were:
258
ANNUAL REPORT EDPR 2020
KEY
PERFORMANCE
INDICATOR
CEO
COO’
S NA AND EU
COO
IG
WEIGHT
WEIGHT
EDPR
RESULTS
WEIGHT
EDPR
RESULTS
PLATFORM
RESULTS
WEIGHT
EDPR
RESULTS
PLATFORM
RESULTS
Total
Shareholder
return
15%
100
%
TSR vs. Wind peers
& Psi 20
100%
100%
100%
100%
0%
100%
100%
0%
Shareholders
80%
60%
Operatin Cash Flow
(€ million)
10%
100%
10%
50%
50%
10%
100%
0%
AR/Sell-down + Tax
Equity
(€ million)
10%
100%
10%
100%
0%
10%
100%
0%
EBITDA+ sell down
gains
(€ million)
10%
100%
10%
50%
50%
10%
100%
0%
Net Profit
(€ million)
10%
100%
10%
100%
0%
10%
100%
0%
Core Opex Adjusted
(€ thousand/MW)
10%
100%
10%
50%
50%
10%
100%
0%
Projects with FID
(% of total ’19
-
’22
additions in BP)
10%
100%
10%
50%
50%
10%
50%
50%
Clients
10%
Renewable Capacity
Built
(in MW)
10%
100%
10%
50%
50%
10%
50%
50%
Assets &
Operations
10%
Technical Energy
Availability
(%)
5%
100%
5%
50%
50%
5%
100%
0%
Capex per MW
(€ thousand)
5%
100%
5%
50%
50%
5%
50%
50%
Environment
&
Commnunitie
s
5%
Certified MW
%
5%
100%
5%
50%
50%
5%
100%
0%
Innovation &
partners
5%
H&S frequency rate
(employees +
contractors)
5%
100%
5%
50%
50%
5%
100%
0%
People
Management
10%
People Management
10%
100%
10%
50%
50%
10%
50%
50%
Remuneration
Committee
5%
100
%
Appreciation
remuneration
committee
100%
100%
100%
100%
0%
100%
100%
0%
There is also a qualitative evaluation of the CEO about the annual performance of the members of the Executive Committee.
This evaluation will have a weight of 20% for the final calculation in the annual variable remuneration and of 32% in the multi-
annual variable remuneration. The other 80% will be calculated based on the weights indicated in the next paragraph for the
annual variable remuneration and 68% for the multi-annual variable.
According to the Remuneration Policy approved by the General Shareholders’ Meeting, the maximum variable remuneration
(annual and multi-
annual) is applicable if all the above mentioned KPI’s
were achieved and the performance evaluation is equal
or above 110%.
259
-16.1%
16.2%
12.4%
36.2%
118.8%
2016
2017
2018
2019
2020
Total shareholder return
Source: Bloomberg
103,349
101,267
101,574
104,851
102,958
2016
2017
2018
2019
2020
Employee average remuneration (€)
As mentioned above a Complementary Long Term Program homogeneous for the three COOs (COO NA, COO EU & BR and
COO Offshore) and for the 2019-2022 term was approved in 2019.
The conditions of such Complementary Long Term Program are: (i) four year period (2019-2022); (ii) Target Award will be 4 x
50% of base annual remuneration of each COO; (iii) KPIs are consistent through the whole term and specific for each COO; and
(iv) payments will be done in accordance with the percentage of the achieved fulfilment with a limit of 120% of the Target Award.
C. Performance of the company and remuneration average of the
employees
260
ANNUAL REPORT EDPR 2020
D. Remuneration from other Group Companies
As exposed in section B of this chapter 6 of the Annual Report, the remuneration of the Executive Directors related to the
functions permormed as Officers were paid by EDP Energías de Portugal S.A. Sucursal en España and EDPR North America
LLC as follows:
OFFICER
PAYER
FIXED
VARIABLE
ANNUAL
VARIABLE
MULTI-
ANNUAL
VARIABLE
PLURI-
ANNUAL
TOTAL
Duarte Bello
EDP Energías
de Portugal,
S.A. Sucursal
en España
228.196€
145,000€
37.500€
410.696€
Miguel Ángel Prado
EDPR North
America LLC
466,897$
162.328$
237.908$
45.725$
912.858$
Spyridon Martinis
EDP Energías
de Portugal
S.A. Sucursal
en España
228.196€
145,000€
0
373.196€
*All the amounts are in EUR, except Miguel Ángel Prado ones, which are in USD.
In 2020, in application of the deferral policy adopted by EDPR, an amount of 84.443€ was paid by EDP Energías de Portugal,
S.A. Sucursal en España to Miguel Amaro (former Executive CFO of the company), for the services rendered in 2016-2017.
Likewise, according to the Executive Management Services Agreement signed with EDP, EDPR is due to pay an amount to
EDP, for the services rendered by the Executive Managers and the Non-Executive Managers. The amount due under said
Agreement for the management services rendered by in 2020 is EUR 1,094,560, of which EUR 959,560 refers to the
management services rendered by the Executive Members and EUR 135,000 to the management services rendered by the
Non-Executive Members.
E. Share-allocation and/or Stock Option Plans
EDPR does not have any Share-Allocation and/or Stock Option Plans.
Should be noted that at 31
st
December 2020, Spyridon Martinis had 10,413 shares of EDP Renováveis, but all of them were
bought before his appointment as Director of the Company (being the first acquisition in 2011 and the last one in 2018).
F. Refund of a variable remuneration
EDPR has not regulated the option of refunding the variable remuneration of the Directors but in line with corporate governance
practices, the Remuneration Policy incorporates the deferral for a period of three years of the multi-annual variable
remuneration, being the relevant payment conditioned to the lack of any willful illicit action, known after the appraisal and which
endangers the sustainable performance of the company.
261
G. Information on any withdrawal of the procedure for applying the
remuneration policy and the derogations applied, including an
explanation of the nature of the exceptional circumstances and an
indication of the specific elements subject to the derogation
The remuneration policy applicable for 2020-
2022 was approved by the General Shareholders’ Meeting held on March 26
th
,
2020 and has been applied withouth exceptions since then. Should be noted to this extent that the Complementary Long Term
Program approved for the three COOs for the 2019-
2022 term that was approved at the Board of Directors’ meeting dated
October 29
th
, 2019 substituted the Complementary Long Term Program approved on 2017.
Other remunerations
•
Remuneration of the Chairman of
the General Shareholders’ Meeting
In 2020, the remuneration of the Chairman of the General Shareholders’ Meeting of EDPR, José António de Melo Pinto Ribeiro,
was EUR 15,000.
•
External Auditor remuneration in 2020 for EDP Renováveis S.A. and subsidiaries
TYPE OF SERVICE
PORTUGAL
SPAIN
BRAZIL
US
OTHER
TOTAL
%
Audit and statutory audit
of accounts
161,802
583,370
166,671
1,066,435
684,006
2,662,284
93.5%
Total audit related
services
161,802
583,370
166,671
1,066,435
684,006
2,662,284
93.5%
Other non-audit services
-
151,382
4,000
-
29,007
184,389
6.5%
Total non-audit related
services
-
151,382
4,000
-
29,007
184,389
6.5%
Total
161,802
734,752
170,671
1,066,435
713,013
2,846,673
100,00%
The amount of Other non-audit services in Spain includes, among others, services that refer to the entire Group such as the
review of the internal control system on financial reporting and review of the non-financial information related to sustainability
included in the EDPR Group’s annual report, which are invoi
ced to a Spanish companies. This amount also includes the limited
review as of June 30, 2020 of the EDPR Consolidated Financial Statements and other reviews for Group consolidation purposes
which are considered non-audit services according to the respective local regulation.
Total amount for Spain refers to services provided by PricewaterhouseCoopers Auditores S.L.
The above fees exclude the fees for full consolidated Viesgo companies which are also audited by PricewaterhouseCoopers
Auditores S.L in the amount of 90,471 Euros and the fees for the companies that were sold during 2020 (see note 6 of the
consolidated annual accounts).
Making
all forms of
sustainability real
Changing tomorrow now.
264
ANNUAL REPORT EDPR 2020
Concepts and definitions
A
Asset rotation
Strategy aimed at crystallizing the
value of a project by selling a
minority stake in an asset and
reinvesting the proceeds in
another asset, targeting greater
growth.
Availability
The percentage of time a wind
turbine is technically available to
capture the wind resource and
convert it to electricity.
B
Blades
The large “arms” of wind turbines
that extend from the hub of a
generator. Most turbines have
either two or three blades. Wind
blowing over the blades causes
the blades to “lift” and rotate.
BOP
Balance of plant. All the
supporting components and
auxiliary equipment of the wind
farm other than the generating
unit.
BP
Business Plan.
BU
Budget.
C
CAGR
Compound annual growth rate.
Carbon leakage
Occurs when due to the higher
costs related with climate change
policies (for example taxes or
other penalties on carbon
emissions), the companies decide
to move their production to
countries with more relaxed
policies, therefore leading to
higher carbon emissions ex-post.
Capex
Capital Expenditure. Funds used
by a company to acquire or
upgrade physical assets such as
property, industrial buildings or
equipment (ex: construction of
wind farms).
Cash-flow
Amount of cash generated and
used by a company in a given
period. Cash flow can be used as
an indication of a company’s
financial strength.
CfD
Contract for difference.
Remuneration scheme based on
the difference between the market
price and an agreed “strike price”
where if the “strike price” is higher
than the market price, the CfD
Counterparty pays the generator
the price difference.
CO
2
Carbon dioxide. A heavy colorless
gas that does not support
combustion, dissolves in water to
form carbonic acid, is formed
especially in animal respiration
and in the decay or combustion of
animal and vegetable matter, is
absorbed from the air by plants in
photosynthesis, and is used in the
carbonation of beverages.
COD
Commercial Operating Date. Date
at which the project starts officially
operating, after the testing and
commissioning period.
Core opex
Includes costs of supplies and
services and with personnel, costs
that are controllable by the
company.
Critical suppliers
Includes suppliers of turbines,
balance of plant and O&M.
Curtailment
The forced shut-down of some or
all the wind turbine generators
within a wind farm to mitigate
issues associated with turbine
loading export to the grid, or
certain planning conditions.
Curtailment is controlled by the
regional transmission operator.
265
D
Dividend pay-out ratio
Measures the percentage of a
company’s net income that is
given to shareholders in the form
dividends. (Total Annual
Dividends per Share / Earnings
per Share).
Dividend policy
Set of guidelines a company uses
to decide how much of its
earnings it will pay out to
shareholders.
E
EBITDA
An accounting measure calculated
using a company’s net earnings
,
before interest expenses, taxes,
depreciation and amortization are
subtracted, as a proxy for a
company’s current operating
profitability.
EMS
Environmental Management
System. System that assures the
protection of the environment
through a proactive environmental
management of the facilities in
operation.
EPS
Earnings per share. The portion of
a company's profit allocated to
each outstanding share of
common stock.
Equity consolidation
Accounting process of treating
equity investments, in associate
companies. Equity account is
usually applied where the entity
holds 20-50% of voting stock.
F
Feed in tariffs
Remuneration framework that
guarantees that a company will
receive a set price from their
utility, applied to all of the
electricity they generate and
provide to the grid.
Financial investment
An asset in which to put money
into with the expectation of
obtaining gains or an appreciation
in to a larger sum of money.
Forex/FX
The market in which currencies
are traded.
Full scope
Scheme of maintenance in which
a third-party supplier is directly
responsible for the full
maintenance of the project. The
project pays a fixed fee and
assumes low risk.
G
GC
Green certificate. Tradable
commodity proving that certain
electricity is generated using
renewable energy sources.
GCF
Gross Capacity Factor
–
The ratio
of a site’s gross output over a
period of time, to its potential
output if it were possible for it to
operate at full capacity
continuously over the same period
of time.
GHG
Greenhouse gases. Gases that
trap the heat of the sun in the
Earth's atmosphere, producing the
greenhouse effect; the two major
greenhouse gases are water
vapor and carbon dioxide; lesser
greenhouse gases include
methane, ozone,
chlorofluorocarbons, and nitrogen
oxides.
GO/GoO
Guarantee of Origin. Tracking
instrument that guarantees that
electricity has been produced from
renewable energy sources. Those
GO are traded and used by
suppliers to sell green energy.
Gross profit
An accounting measure calculated
using a company’s r
evenue minus
its cost of goods sold. Gross profit
is a company’s residual profit for
selling a product or service and
deducting the cost associated with
its production and sale.
GW
Unit of electric power equal to
1,000 MW.
GWH
Equal to 1,000 MW used
continuously for one hour.
H
Hedging
Risk management strategy used
in limiting or offsetting probability
of loss from fluctuations in the
266
ANNUAL REPORT EDPR 2020
prices of commodities, currencies,
or securities.
I
IFRS16
Regulatory standard of operating
leases that requires the
recognition of lease commitments
for the entire duration of contracts
into the balance sheet liabilities as
well as the recognition of a new
asset “Right of Use Asset” as
counterparty.
Installed capacity
Capacity installed and ready to
produce energy.
ISO 14001
ISO 14001:2015
–
Environmental
Management Certification is an
international standard for
designing and implementing an
effective environmental
management system (EMS) to
enhance the company’s
environmental performance.
ISO 45001
ISO 45001:2018 - Specifies
requirements for an occupational
health and safety (OH&S)
management system, and gives
guidance for its use, to enable
organizations to provide safe and
healthy workplaces by preventing
work-related injury and ill health,
as well as by proactively
improving its OH&S performance.
ITC
Investment tax credit. Tax
incentive in the US which differ
from the Production Tax Credit in
the sense that the Tax Equity
Investor receives a one shot tax
credit that covers a percentage of
the investment.
L
LCOE
Levelized cost of electricity.
Provides a common way to
compare the cost of energy across
technologies. LCOE takes into
account the installed system price
and associated costs such as
financing, land, insurance,
transmission, operation and
maintenance, and depreciation.
The LCOE is a true apples-to-
apples comparison of electricity
costs and is the most common
measure used by electric utilities
or purchasers of power to
evaluate the financial viability and
attractiveness of a wind energy
project.
M
M3
Modular maintenance model.
Maintenance scheme which is
halfway between the self-perform
and a full scope maintenance, with
some activities being performed
in-house.
MW
Unit of electric power equal to 106
watts.
MWH
Equal to 106 watts of electricity
used continuously for one hour.
N
Net capacity factor
(NCF)
The ratio of a plant’s actual output
over a period of time, to its
potential output if it were possible
for it to operate at full nameplate
capacity continuously over the
same period of time. Also known
as Load Factor.
Net debt
A metric that shows a company’s
overall debt situation calculated
using company’s total debt less
cash on hand.
Net investment
Equals (Capex + Financial
investments
–
Financial
divestments).
O
O&M
Operations and maintenance. All
the activities necessary to run the
wind-farm in a reliable, safe and
economical way including for
instance maintenance, repair,
monitoring and operation.
P
PPA
Power purchase agreement. A
legal contract between an
electricity generator (provider) and
a power purchaser (host). The
power purchaser buys energy,
and sometimes also capacity
and/or ancillary services, from the
electricity generator.
PTC
Production tax credit. The result of
the Energy Policy Act of 1992, a
commercial tax credit in the US
that applies to wholesale electrical
generators of wind energy
facilities based upon the amount
of energy generated in a year.
R
Renewable energy
Energy that is derived from
resources that are regenerative or
that cannot be depleted including
wind energy, solar, biomass,
267
geothermal, and moving water.
Also known as alternative energy.
REC
Renewable energy credit.
Represents the property rights to
the environmental, social, and
other non-power qualities of
renewable electricity generation. A
REC can be sold separately from
the electricity associated with a
renewable energy generation
source.
RES
Renewable energy sources.
RCF
Retained cash-flow. The amount
available to pay dividends to
shareholders and/or to fund new
investments and includes EBITDA
after paying interests and tax
equity investor’s costs and after
paying distributions to equity
partners and taxes.
ROIC Cash
Return on Invested Capital (based
on Cash Flows). Represents a
measure of the profitability and
value creation of a project or
company.
RPS
Renewable Portfolio Standard.
Regulation in the US that places
an obligation in certain states on
electricity supply companies to
source a specific percentage of
their energy from renewable
sources.
S
Self-perform
Maintenance scheme in which all
the maintenance works are done
in-house which means that the
project assumes the whole risk.
Sell-down
Divestment strategy by which the
company sells majority stakes of
projects in operation or under
development to recycle capital,
with up-front cash flow
crystallization, and creates value
by reinvesting the proceeds in
accretive growth, while continuing
to provide operating and
maintenance services.
SF6
Sulfur hexafluoride. Colorless,
odorless, non-flammable and
potent greenhouse gas which is
used in the electrical industry
especially in gas insulated
switchgear power installations.
Solar PV
Solar photovoltaic. Plant that
generates electricity by means of
solar power through photovoltaics,
consisting on an arrangement of
several components, including
solar panels to absorb and convert
sunlight into electricity, a solar
inverter, cables and other
electrical accessories.
T
TSR
Total Shareholder Return.
Measures the return that the stock
provides to the shareholder,
including dividends paid and the
stock price appreciation.
Tax equity
Financing structure (US) where
the tax equity investor contributes
capital in exchange of tax benefits
and cash distributions during the
1st ten years the park operates, or
until investment is recovered.
TEI
Tax Equity Investor
–
Financing
structure (US) where the tax
equity investor contributes capital
in exchange of tax benefits and
cash distributions during the 1st
ten years the park operates, or
until investment is recovered.
U
UN SDG
United Nation’s Sustainable
Development Goal.
W
WATT (W)
The rate of energy transfer
equivalent to one ampere under
an electrical pressure of one volt.
One watt equals 1/746
horsepower, or one joule per
second. It is the product of voltage
and current (amperage). Watts are
the yardstick for measuring power.
Wind energy
Power generated by converting
the mechanical energy of the wind
into electrical energy using a wind
generator.
Wind farm
Used in reference to the land,
wind turbine generators, electrical
equipment, and transmission lines
for the purpose of generating wind
energy and alternative energy.
Y
YoY
Year-on-Year.
YTD
Year-to-date.