Acciona SA, a Spanish renewables and water developer, will cut energy investment in half and may sell minority stakes to weather the fall-out from government efforts to eliminate the nation’s power system tariff deficit.
“We believe it’s a major breach in investor confidence and will have a massive impact” on earnings, Chairman Jose Manuel Entrecanales said today on a conference call with analysts. “With the plan that we intend to put in place in terms of cost reduction, it will be mitigated slightly.”
Acciona plans to reduce energy spending to a range of 550 million euros ($714 million) to 630 million euros this year and next, a 50 percent cut to its previous investment plan. It will also curb new developments to 345 to 395 megawatts and may sell minority stakes to financial partners.
The Spanish developer also plans to target international markets rather than rely on its home market, according to the chairman.
Spain has introduced measures including a 7 percent tax on electricity generation to eliminate an annual tariff deficit, the gap between costs and revenue in the power system. The changes, including a levy on hydropower, will hurt Acciona’s earnings before tax by about 160 million euros a year, the Alcobendas-based company said.