Renta 4 | Iberdrola, via its US subsidiary Avangrid, has requested a one month suspension on the project Park City Wind in Martha’s Vineyard. This is due to the impact on the viability of the park of the global energy crisis, the hikes in interest rates and the increase in raw materials’ costs, according to the press.
The project was assigned in 2015, with a planned investment of 3.5 billion euros. Solutions now being considered include a renegotiation of the pricess of the PPA contract, access to aid programmes within the new law against inflation and a reduction in costs.
Valuation:
It’s likely that given the current scenario, similar situations will continue to arise in some offshore wind projects, the conditions for which were agreed in a more favourable scenario. And due to their development being drawn out, the current scenario can complicate their viabililty.
We believe this situation should not have a big impact on Iberdrola’s accounts. We hope there is some revision to the conditions which allows all the parties involved in the process (developers, suppliers, clients and administrations) to assume sufficient changes to allow for the projects to be viable.
Target Price 12,73 euros/share, Overweight.
