Finance
Portugal's proposal for EDP's grid returns still lags European peers
Published by Global Banking & Finance Review®
Posted on October 16, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on October 16, 2025
2 min readLast updated: January 21, 2026
Portugal's ERSE proposed grid returns for EDP are below European peers, impacting investment plans. EDP aims to double grid investments.
LISBON (Reuters) -Portugal's electricity market regulator ERSE proposed on Thursday an increase in returns on grid assets of the country's largest utility EDP, although below the return levels enjoyed by EDP's peers in other European countries.
A crippling blackout that hit Spain and Portugal on April 28 reignited debate about investments in power networks and their remuneration, which is needed to cope with higher power demand, including data centers, and the integration of renewable sources.
ERSE proposed that during the 2026-2029 regulatory period, the pre-tax rate of return for these assets should be in the 5.5-8.5% range, with a preliminary return, starting in 2026, of 6.33%, up from the current 5.5%.
That, however, is below the 6.46% proposed by the regulator in neighbouring Spain and a far cry from other European countries that reward investments with returns as high as 7.5%.
The preliminary return was calculated based on the evolution of Portugal's 10-year bond yields, but also took into account "the expected strong increase in investments in grid infrastructure", ERSE said.
EDP has been asking for an increase in returns on its regulated assets more in line with European peers, as it plans to nearly double investments in the expansion and modernisation of its distribution grid over the next five years, to 3.1 billion euros ($3.61 billion).
Analysts at BNP Exane, who had expected at least 6.7%, said the proposed preliminary return was "a bit disappointing and not really competitive compared to other countries - Italy, UK or Germany".
EDP owns the largest Portuguese distribution grid serving more than six million domestic and industrial customers.
ERSE has until December 15 to confirm or change the return rate after consulting consumers and businesses.
($1 = 0.8579 euros)
(Reporting by Sergio Goncalves, editing by Ed Osmond)
A regulatory framework is a set of rules and guidelines established by authorities to govern the operations and practices within a specific industry, ensuring compliance and protecting public interests.
Utility investment refers to the allocation of capital into companies that provide essential services such as electricity, water, and natural gas, often focusing on infrastructure development and sustainability.
Renewable energy is energy derived from natural sources that are replenished at a faster rate than they are consumed, such as solar, wind, hydroelectric, and geothermal energy.
A pre-tax rate of return is the profit earned on an investment before accounting for taxes, providing a measure of the investment's performance.
A blackout is a complete loss of electrical power in a specific area, often caused by failures in the electrical grid or significant demand exceeding supply.
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