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Acciona Revenue Seen Reduced as Law Cuts $1.1 Billion From Value

Spain’s new pricing method for renewable energy threatens to cut to revenue for Acciona SA, the country’s second-largest wind park operator, and has led analysts to lower its valuation by as much as 14 percent.

Acciona tumbled 24 percent in four days through yesterday, the biggest four-session drop since October 2008, erasing about 850 million euros ($1.1 billion) from its market value. The shares climbed today in Madrid by 1.6 percent to 48.25 euros as of 1:16 p.m. local time. The new rules were published as law on Feb. 2.

Wind power generators will now have to choose between a fixed tariff or the market price for power, instead of choosing between a fixed tariff or a market price plus a subsidy, the government said in a statement Feb. 1. It was the latest in a series of moves to cut consumer costs for clean power.

The subsidized rate, or feed-in tariff, was also revised to rise annually based on a reduced inflation index. The new benchmark reflects Spain’s retail price index excluding the effects of tax increases, food, or energy products.

The new measures, meant to save as much as 800 million euros this year, follow a 7 percent tax on generation approved in December and are part of Industry Minister Jose Manuel Soria’s plan to eliminate the power system’s deficit this year.

“There needs to be a strategy adjustment” at Acciona, because the government may alter regulations again, said Nuria Alvarez, an analyst at Renta 4 brokerage in Madrid. The company “should continue to diversify internationally and reduce investments in Spain to compensate for the loss in Ebitda.”

Ebitda Forecast

Projected earnings before interest, tax, depreciation and amortization, or Ebitda, for 2014 were lowered 4.2 percent in the past four weeks, according to estimates from 15 analysts compiled by Bloomberg. Representatives for Acciona declined to comment.

Spain’s other large wind farm owners were also hit. Iberdrola SA tumbled 7.1 percent during the same four-day period. Endesa SA and EDP Renovaveis SA, dropped 5 percent and 7.3 percent, respectively.

Acciona is the most penalized utility due to its higher relative exposure to Spain, according to a BPI report on Spanish utilities published Feb. 1. About 70 percent of Acciona’s portfolio is in Spain, according to the report.

Analysts at Sabadell downgraded the company from buy to sell and lowered the price objective 14 percent to 60.3 euros, according to a report published Feb. 4. Based in the Madrid suburb of Alcobendas, Acciona now faces investor doubts over its future dividend payments, the report says.

Renewable energy subsidies last year were responsible for about 24 percent of the tariff deficit, or the gap between regulated income and costs in Spain’s electricity industry, lobby group Asociacion de Productores de Energias Renovables said last month.

To contact the reporter on this story: Patricia Laya in Madrid at playa2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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