Portuguese utility company EDP has agreed to sell two gas-fired power plants and a commercial business with 1.2 million residential customers in Spain to Total.
The €515 million deal, announced by EDP on Sunday, is expected to close in the second half of the year. The transaction is subject to certain conditions, including regulatory approval, Kallanish Energy reports.
Under the agreement, Total will acquire 843-megawatts (MW) capacity in the two thermal units in Castejon, in the Navarra region. It also includes the sale of a 50% stake in CHC Energy, a joint venture with CIDE to sell energy in this segment.
The asset sale is part of EDP’s strategy to curb its thermal generation portfolio and “exposure to price volatility in the wholesale market.” The company said it has fulfilled 65% of its 2019-2022 asset disposal and rotation target.
Total said on Monday the transaction allows it to implement its growth strategy in the Spain’s integrated gas and electricity value chain. It will become the fourth largest supplier of gas and power in the country, with residential market share of 12% and 6%, respectively.
The acquisition also complements Total’s future renewables power generation, “which is intermittent” and needs the flexible electricity generation capacities from gas.
“This is major new step in Total’s ambition to become a broad energy company,” said CEO Patrick Pouyanné. “This transaction enables Total to become one of the key players in the energy market in Spain, covering a wide spectrum from LNG imports to power generation from renewables and gas, as well as gas and electricity supply.”
Meanwhile, EDP CEO António Mexia noted that Spain continues to be a strategic market for the company, “where we will continue to invest in the generation, networks and supply of renewables.”
The deal is “fully aligned with our commitment to lead the energy transition, providing EDP with additional flexibility as we build a more sustainable future – a future that will be electric,” Mexia added.
This post appeared first on Kallanish Energy News.