Endesa doubles profits after eliminating the 'tax' and in the midst of an electrical battle

Endesa posted net profit of €583 million in the first quarter of the year, almost 100% higher (double) than the results obtained in the first quarter of 2024.

The strong growth comes after a rebound in electricity demand in Spain for the first time in years; amid profound volatility in electricity prices; amid a multi-front battle within the sector; and after the elimination of the so-called "tax increase."

The Spanish electricity market, which experienced a historic blackout on April 28, is currently facing numerous battles. Major energy companies are demanding that the government facilitate more network investments for Redeia, which is currently at the center of the controversy surrounding last week's blackout.

At the same time, thousands of new projects, especially data centers, are fighting to obtain grid connection licenses, which has generated significant speculation regarding these connections. Meanwhile, electricity companies are trying to get the government to delay the closure of nuclear plants. These are just some of the numerous clashes taking place.

Endesa's gross operating profit (EBITDA) reached 1.431 billion euros , representing a 33% increase thanks to the elimination of the extraordinary 1.2% tax levied on large energy groups, known as the "tax increase." The battle over this tax, which was finally abolished this year after two years in force, was one of the wars the major energy companies waged against the government in 2024.

Endesa also attributes its strong profits to the positive performance of its liberalized businesses, both in generation and marketing.

This quarter, the company is making progress in its " strategy to optimize the use of available capital " with the closing of the purchase of 626 megawatts of hydroelectric power from Acciona and the sale of a 49.9% stake in a second package of operating solar assets to Masdar. In addition, the group has launched a share buyback plan of up to 2 billion euros, of which 500 million are already underway.

In light of last week's blackout, the causes of which the government is still investigating, and the new challenges facing the sector, José Bogas, CEO of Endesa, called on the government and the market to focus on several issues.

"We are modern societies because we are electrified, and for this reason, ensuring the security of supply and competitiveness of our electrical system is essential.

Demand is showing signs of recovery, which represents a unique opportunity to reindustrialize the country," Bogas said. "To achieve this, we need a robust and resilient grid, which requires significant investments, along with fair compensation.

Furthermore, it is crucial to have a diversified and competitive generation mix. And, to achieve this, it is essential to review the taxation of nuclear energy to ensure its economic viability so that it can provide security of supply in the coming years.