EDP/R: Key drivers - Part 2: Mispriced Iberian hydro with data center demand-driven upside

Research evidence excerpt

EDP/R: Key drivers - Part 2: Mispriced Iberian hydro with data center demand-driven upside

Jorge Alonso Suils +34 915 893 913 jorge.alonso@bernsteinsg.com 22 June 2026

DETAILS

As outlined in our April sector update, EDP and EDPR remain among our top picks. In this series, we explore key pillars of their equity

stories. In Part 2, we focus on Iberian hydro assets, which we view as undervalued, with additional upside from structurally rising

power demand supporting EDP’s integrated position in Iberia. Please see here for Part 1 on US renewable growth and upside.

KEY TAKEAWAYS

IBERIAN HYDRO: INEXPENSIVE MULTIPLES AND HIGH FCF GENERATION

Iberian hydro assets high FCF and long duration: EDP operates ~5.5GW of hydro assets in Iberia of which ~75% is reservoir-

based (flexible generation) and ~45% consists of facilities with pumped-storage capabilities. These assets capture a premium

over the wholesale price (~20% for reservoir and >60% for pumping). Considering the low maintenance capex, the FCF

generation is considerably high (we estimate EBITDA of €550m at €60/MWh). The assets have a remaining concession life of 27

years, on average providing long-dated, highly visible cash flows.

Inexpensive assets trading at an implied EV/EBITDA at 4.1-5.5x: Looking at 2028e (which factors in the normalization

of hydro output and selling prices) and based on EDP’s and EDPR’s market value with the remaining divisions valued at our

SOTP valuation, we estimate EDP’s hydro assets are trading at an implicit multiple of EV/EBITDA ~5.4x. Based on a DCF (27yr

concession) the valuation multiple is ~11.1x which could add ~€2.8bn to the company’s market value.

Increasing value of hydro assets: Power demand in Portugal and Spain grew +3.2% and +2.8% in 2025 respectively. Re-