STRATEGY

BUSINESS PLAN
OPERATIONAL EXCELLENCE

One of the strategic pillars that has always been a keystone of the company, setting it apart in the industry, is the drive to maximize the operational performance of its wind and solar plants. In this area, EDPR’s teams, namely in operations and maintenance (O&M), have established a strong track record that supports challenging targets set in the 2016-20 Business Plan. For this period, EDPR has set targets for three key metrics: Load Factor, Technical Availability and Core Opex per MW. These metrics provide an overall view of the progress in EDPR wind assessment, O&M and cost control efforts. They also serve as good indicators for the overall operational efficiency of the company.

STRONG EXECUTION

OPERATIONAL EXCELLENCE TARGETS

MAINTAINING HIGH LEVELS OF AVAILABILITY >97.5%

Availability is the ratio between the energy actually generated and the energy that would have been generated without any downtime due to internal reasons, namely due to preventive maintenance or repairs. Therefore it is a clear performance indicator of the company’s O&M practices as it focuses on reducing to a minimum any malfunctions and performing maintenance activities in the shortest possible timeframe.

The company has always maintained high levels of availability, having registered availability of 97.8% in 2017, in line with its 2016-20 Business Plan target. EDPR will continue to improve availability through new predictive maintenance optimization measures supported by the 24/7 control and dispatch centre, reducing damages most common during extreme weather and improving the scheduling of planned stops. Also a new spare parts warehousing strategy will be key in reducing downtime during unexpected repairs.

LEVERAGING QUALITY GROWTH ON DISTINCTIVE WIND ASSESSMENT TOWARDS 33% LOAD FACTOR

Load factor (or net capacity factor) is a measure for the renewable resource quality, that reflects the percentage of the maximum theoretical energy output, in a given period.

Ensuring the assets generate the maximum amount of energy possible is a key success factor. With regards to the operating portfolio, optimizing load factor is linked to the improvement of availability as above described and, if possible, introducing productivity enhancement retrofits that boost production by equiping older turbine models with the most up- to-date technological improvements available to increase efficiency in the utilization of the available resources of renewables. The energy assessment and engineering teams are responsible for the wind farms and solar plants development and designe in a way that maximizes load factor. They define the optimal layout of the plant by matching the positioning and choice of turbines with the characteristics of the site, specially the terrain, from the collected resource measurements and their estimated energy outputs.

The company has consistently maintained levels of load factor in the range of 29-30%, having registered 31% in 2017, which is slightly below the P50 (mean probability) assessment for the current fleet, given the lower wind resource in the period when compared with an average year. For 2020 EDPR has a target to reach 33% load factor, mainly on the back of the increase competitiveness of new capacity additions.

INCREASING EFFICIENCY, BY REDUCING CORE OPEX / AVG. MW -1%

In addition to all company initiatives to boost production, EDPR also focuses on strict cost control efforts to improve efficiency and profitability. Leveraging on the experience accumulated over time, EDPR set a target in the 2016-20 Bussiness Plan to reduce . by -1% CAGR 2015-20. Core Opex is defined by Supplies and Services (including O&M activities) and Personnel costs, which are the costs that EDPR can actively manage. The target of reducing the manageable company costs structure, also benefits from the economies of scale of a growing company. With regards to O&M, that represents c. 30% of total Opex, EDPR has already delivered results through the implementation of its M3 (Modular Maintenance Model) system and self-perform program to some of the wind farms that are no longer under initial warranty contracts.

M3 PROGRAM AND SELF-PERFORMANCE

As EDPR’s fleet becomes more mature the initial O&M contracts signed with the turbine suppliers expire. When that happens the company needs to decide between renewing the maintenance service with the OEM (Original Equipment Manufacturer) or insourcing activities to operate the wind farm on its own, whilst maintaining high levels of availability.

Based on EDPR’s expertise, under the M3 program O&M teams will decide on the optimal balance between external contractors and in-house maintenance. Usually, EDPR keeps control of high value-added activities such as maintenance planning, logistics and remote operations while outsourcing, under direct supervision, labour-intensive tasks. This new program has quickly generated savings in operational expenses and increased control over quality. During 2017 self- perform maintenance was implemented in additional facilities whose maintenance contracts were up for renewal. The self-perform program is a step further in EDPR’s integration of maintenance tasks and activities, which is being implemented in the US, and consequently minimizes third-parties dependency. EDPR targets to increase the share of its fleet under the M3 and Self-Perform program to c.50% by 2020, from c.30% levels in 2015.

INCREASING PRODUCTION

For the period 2016-20, and in line with its previous targets, EDPR aims to increase its total production by 10% CAGR 2015-20. This growth is to be supported by its distinctive competences and accretive projects.

EDPR is also creating value through the improvement of its assets by implementing new technologies to boost turbine power output without requiring major component changes. Performance Analysis teams are collaborating with the manufacturers to determine the best practices to apply this new technology. For instance, installing new versions of the softwares on the older machines with the support of the manufacturer, improves the operation of the turbine and increases their efficiency. Another measure is the implementation of Vortex generators where components are installed on the blades, modifying and improving the blades’ aerodynamics, achieving an increase in efficiency.