Towards the future with Rui Teixeira

Considering the current scenario and economic projections, following an upward revision of the guidance for 2023, what are the expectations for the company's financial performance in the year 2024?

After a challenging year in 2023, we managed to achieve the set goals, which makes us optimistic about EDP's performance in 2024. We believe we are on the right path to meet the objectives communicated last March during EDP's Capital Markets Day, forecasting a net result between €1.2 and €1.3 billion for 2024. This result reflects the strength of our diversified and resilient portfolio. We anticipate good performance in our integrated Iberian business, driven by hydro reservoirs above historical maximum levels, a trend that started in 2023 and will continue this year. We also highlight the importance of electricity distribution networks, boosted by two positive regulatory reviews in 2023: the recent revision of regulated electricity distribution tariffs in Portugal, with a 4% increase compared to the previous year, and the impact of the regulatory review of distribution in Brazil. Moreover, active management of financial costs in 2023 is expected to have a positive impact due to the rebalancing of the weight of US dollars in our debt and a reduction in the weight of Brazilian reais in the total debt. The acquisition of 100% of the share capital of EDP Brazil will also positively impact the group's net profit for the year 2024.

Chinese real estate crisis, inflation expectations, climatic and geopolitical shocks, and high public debt... How are investors responding to these uncertainties and what are the prospects for energy investments considering the various risk factors?

Undoubtedly, in the past two years, the macroeconomic and geopolitical context has presented some challenges for the development of renewable energies. In particular, the year 2022 served as a wake-up call not only for the energy sector but for each of us: we had to face a global energy crisis due to the war, along with the worst drought in the last 90 years in Iberia. This context, and the increasingly tight deadline we have to decarbonize our planet, reinforce the urgent need to boost the energy transition, accelerating the growth of renewable energies and the electrification of consumption.

In this scope, EDP's commitment is clear, including to our investors, aiming to always ensure investment in projects that create value, always evaluating the projects in terms of risk and return, and meeting our return targets >2% IRR/WACC (internal rate of return/ weighted average cost of capital), which has been verified even in this context of high interest rates and inflation.

"Governments are already intervening and need to continue doing so through concrete measures, ensuring a stable and reliable regulatory framework for investors."

What will be necessary for the renewable sector to regain market confidence?

Companies in the sector must continue to devise their strategies, focusing their investment on renewables, maintaining the current long-term strategy of the European Union and the USA, and the consequent regulatory stability. We have witnessed the launch of relevant policy measures in the EU, which now aims to have at least 40% of renewable energy sources in its energy mix by 2030. EU guidelines are essential and constitute a very important first step, but now successful execution is up to the Member States who must ensure speed in licensing and connecting renewable projects to the grid.

In the USA, an important step was taken with the Inflation Reduction Act, which provided visibility of investment incentives for over ten years, across different technologies. This was the most consequential change in federal energy policy in the history of the USA, an extremely important measure to increase investor confidence in this market.

In summary, governments are already intervening and need to continue to do so through concrete measures, ensuring a stable and reliable regulatory framework for investors, otherwise, we could jeopardize the energy transition.