Bankinter | Endesa (ENE) is the largest Spanish electricity company in terms of electricity distribution lines (320,000 km) and is calling for higher remuneration to carry out investments in networks. Last year, Endesa launched a Strategic Plan that envisaged a total investment of €9.6 billion for the period 2025-2027 (8% up on the previous plan). Forty-two per cent of the total investment would be allocated to networks (40% more than in the previous plan), reaching more than €4 billion in three years.
In the Strategic Plan itself, Endesa already warned that in order to undertake the investment in power lines, an improvement in remuneration was needed and estimated a remuneration of around 7.5%. Last July, the National Commission for Markets and Competition (CNMC) proposed an annual return of 6.46% for the period 2026-2031. Although this is higher than the current 5.58%, it is below the 7% or 8% target demanded by the electricity companies.
Bankinter analysis team’s view: Endesa and the other electricity companies are demanding higher tolls from the CNMC to encourage investment and warn that, with current tariffs, it would not be financially viable to undertake these investments.
The Spanish electricity grid is at a point of saturation. The government’s plan (Pniec) envisaged €53 billion of investment between 2021 and 2030, but by December 2024 only €13 billion had been invested. These investments are necessary to advance the electrification of growing energy demand, meet decarbonisation targets, integrate renewables, improve efficiency and digitalisation, and facilitate the adoption of new technologies (storage, self-consumption, etc.).
Electricity companies have been fighting hard for weeks to achieve an improvement in the tolls they charge for their networks. The CNMC sets the remuneration for the networks, but the final say lies with the Government, which has mechanisms to encourage the CNMC to revise the tariffs upwards. Now the electricity companies are increasing the pressure and trying at all costs to convince the government to force the CNMC to improve this remuneration. We believe that the most reasonable outcome is that we will finally see an additional improvement in tolls, which will benefit Endesa. Endesa is part of our Spanish stock model portfolio.
