MADRID (Reuters) -Spanish power utility Endesa reported on Tuesday a 30% rise in first-half net profit to 1.04 billion euros ($1.20 billion), while warning that a proposed remuneration framework for power grid investments in Spain fails to offer adequate incentives.
The company, majority-owned by Italy’s Enel, has shifted its focus to expanding and upgrading power networks amid soaring electricity demand and connection requests, reducing spending on renewables.
A massive blackout on April 28 affecting Spain and Portugal has reignited discussions about the investment needs for the country’s power networks, which are regulated by Spain’s competition and energy watchdog CNMC.
The company criticised a proposal by Spain’s competition and energy watchdog CNMC to update the remuneration framework for investments in grids in the coming year, including raising the guaranteed return on investments in power grids to 6.46%.
“This proposal seriously jeopardises the level of investment Spain needs to achieve its decarbonisation, increase electricity demand and grid investment goals” included in the country’s climate and energy plan, Chief Executive Jose Bogas said.
Endesa booked a net profit of 1.04 billion euros ($1.20 billion) in the period. This compares with 800 million euros a year earlier, when results included a windfall tax on energy companies.
The company said it is on track to meet its targets this year.
“Endesa suffered a declining trend in its integrated electricity margin” in the second quarter “and lower, albeit still high, gas unit margins,” RBC analyst Fernando Garcia said in a note.
“We expect a declining trend in gas unit margins in the second half and beating guidance looks now more challenging,” he said.
($1 = 0.8632 euros)
(Reporting by Pietro Lombardi, editing by Inti Landauro and Louise Heavens)
