Texas Freeze Cost EDP ‘Low Tens of Millions’ of Dollars

Portuguese utility EDP-Energias de Portugal SA is among the wind-farm owners that took a hit from the deep freeze that upended Texas last month.

The financial impact was in the low tens of millions of dollars, Chief Executive Officer Miguel Stilwell Andrade said in an interview. That’s a relatively modest hit compared to some other wind producers that racked up hundreds of millions in losses, he said.

Last month’s Arctic blast knocked nearly half of Texas power generation offline, left millions of homes and business without heat and light for days, and killed dozens of people. Wind turbines across Texas froze, and projects from some companies including Innergex Renewable Energy Inc. and RWE saw production curtailments. In some instances, wind operators unable to produce were forced to buy electricity at the $9,000-per-megawatt-hour price cap to fulfill delivery commitments.

Much, though not all, of EDP’s Texas portfolio benefits from power-purchase agreements, which limited losses. If assets with such contracts weren’t producing, they didn’t have to deliver energy, Andrade said.

“In Texas most people were having to deliver energy which they didn’t have, and so they were having to buy it in the market,” Andrade said.

Of EDP’s more than 1 gigawatt of assets in Texas, only 10% was affected by the freeze, showing “we have effectively a low-risk portfolio,” he said.

Despite the weather impacts, Andrade said companies probably won’t winterize their Texas assets, calling the storm that crippled the state’s grid “a once in a century event.”

“Typically the thinking would be that you wouldn’t necessarily need to pay to insure that risk,” he said. “But obviously it’s something that everyone will be looking at.”

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.