EDP Renováveis S A : EDPR Annual Report 2023

Annual Report 2023

We

Choose

Earth

We

Choose

Earth

Our choice is part of who we are. The Earth is the heart of our company, and as a pure 100% renewable player, we're commied to tirelessly protect and sustain our precious home.

The energy sector stands at a crucial juncture and despite the challenging year for the renewable energy industry, we remain at the forefront of this vital change.

Proudly dedicated to a greener future, we continue to work on expanding our porolio of renewable energy projects. Our focus remains on innovating and delivering new models all around the world with technologies to accelerate the crucial transition to cleaner energy sources.

Through sustainable innovation, we reinforce our ambition to become Net Zero by 2040. We're creating superior value that protects the Earth and human life. That's our choice, give power to every leaf, every drop, every wind blow, and every sunrise.

We Choose Earth

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Annual Report 2023 Manifesto

Purpose

Our energy

Speaks of our stamina, our track record and what drives us to

continuously deliver green energy

and heart

Highlights our people and their key role in delivering our commitment to

our clients, partners and communities

drive a beer

Reflects our ambition and leadership in making change happen

tomorrow

The reason why we work every day

003

Annual Report 2023 Purpose

Index

Chairperson letter	7
Message from the CEO	9
PART I		PART II
Management Report
	Financial Statements	318
01 Our company	12
02 Our strategic approach	31	Concepts and definitions	484
03 Our performance	56
04 GRI report	100
05 Corporate governance report	216
06 Remunerations report	304

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Annual Report 2023 Index

Part I

Management Report

005

Part I

Annual Report 2023 Management Report

Part I

Management Report

Index

006

Part I

Chairperson letter	7
Message from the CEO	9
01 Our company	12
EDPR in brief	14
2023 in review	18
Organisation	21
02 Our strategic approach	31
Business Environment	33
Strategy	41
Risk management	48
03 Our performance	56
Financial capital	58
Human captal	68
Supply chain capital	72
Social capital	77

Natural capital Digital capital Innovation capital Sustainable development goals

04 GRI Report

Materiality assessment Materiality topics

Annex I: Alignment with TCFD recommendations

Annex II: Taxonomy alignment. KPIs under article 8 of EU taxonomy Annex III: Non-financial information statement

Annex IV: GRI content index

Annex V: Independent verification report

88	05 Corporate Governance Report	216
92	Part I - Information on shareholder,
95	organisation and corporate
99	governance	218
100	Part II - Corporate governance
assessement	278
102
Annex I - Curricula vitae of the Board
104	of Directores EDP Renováveis S.A.	289
174	06 Remunerations Report	304
180

199

205

212

Report 2023	Management Report | Index
Annual	Part I -

Chairperson leer

António Gomes Mota

Chairman of the EDPR Board of Directors

Dear Stakeholder,

This was a critical year for EDPR, one for acceleration across the entire industry with the world witnessing global uncertainly and the ongoing conflict in Ukraine and the Middle East.

The renewables sector experienced a period of volatility with rising inflation, increased capital expenditure, ongoing supply chain pressures and security issues, and a challenge around the world's ability to deliver on climate commitments. These trends combined have driven concern around the prospect of a sustainable and profitable long-term growth for our sector.

I would like to say that I remain confident in the future of our sector and EDPR's ambitions of growth.

Several positive moves towards triple renewables by 2030

In 2023, we witnessed a remarkable milestone in the renewable energy sector as the International Energy Agency (IEA) recently reported a noting 50% increase in renewable energy capacity, totalling almost 510 GW in 2023. This phenomenal progress underscores the growing momentum and potential within the renewable energy market. This same report highlights the upwards revision of 2023-2027 targets for renewable electricity capacity forecast, including key markets where we are present: Germany, Brazil & US.

Furthermore, regulatory bodies and international organizations, such as the European Union, are advocating for substantial reductions in greenhouse gas emissions. The EU's recommendation of a 90% reduction in net greenhouse gas emissions by 2040, compared to 1990 levels, sets a significant benchmark for our collective efforts towards net zero.

Recent developments such as the upward revision of offshore auction prices in the UK and the US signify the growing value and potential in offshore renewable energy projects. Additionally, improvements in the US grid connection infrastructure, facilitated by FERC's initiatives to reduce interconnection queue backlogs and enforce strict timelines, present promising opportunities for streamlined operations and enhanced efficiency.

EDPR is well-positioned to capture renewables growth potential despite 2023 challenges

At EDPR, we are well-positioned to meet these challenges as a climate energy leader while driving increased value for all our global stakeholders. In March, we announced our revised

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Business Plan for 2023-2026, reinforcing our company's ambitions to lead the energy transition. At the heart of this plan sits a €20 billion global investment, directed to Wind Onshore (40%) and Solar Utility Scale (40%) as well as emerging technologies (20%) such as Solar DG, Wind Offshore, Storage and Hydrogen. With this updated Business Plan, we reiterated our mission to create superior value by championing ESG excellence and a climate positive world, supporting our employees, clients, communities, shareholders, and partners in this transition.

We have successfully completed a 1 billion euros capital increase to partially finance the company's growth plan aracting long term investors to the shareholder's structure. We also implemented the Scrip Dividend Programme to offer to our shareholders a flexible remuneration mechanism, replacing the ordinary dividend corresponding to the year 2022, with a shares conversion rate of 92%, a clear indication of a highly positive view from the shareholders regarding the company's future. In 2024, EDPR's Board of Directors will propose in the 2024 general shareholder meeting to continue with the scrip dividend programme.

On risk management, we continuously monitor supply chain and permiing processes to mitigate the risks of delays and capital expenditure inflation, while also balancing the mix of merchant and long-term contracted revenues. EDPR prioritizes the preservation of a high weight of long-term contracted and hedged revenues, with 90% of its porolio generation secured under stable pricing arrangements in 2024, protecting the company from short-term volatility in energy markets.

Despite encountering challenges in 2023 such as delays in grid connection permiing for our wind projects in Colombia and unexpected solar panels supply chain bolenecks in US, which implied a delay in the commissioning of some of our solar projects there, we were able to add 2.5 GW capacity in 2023 and we are on track to add 4 GW for 2024.

There were also some externalities that penalized our profitability, namely the El Niño effect, generating a below average wind resource and contracyclical windfall energy taxes in Europe. Nonetheless, we were able to deliver a solid Asset Rotation execution, with strong valuation multiples, compensating a very challenging high interest rates environment.

On the other hand, our DNA strongly linked to ESG remained intact and we reaffirmed our ambition to achieve net zero emissions by 2040, as we collaborate closely with our suppliers to drive an impacul and lasting transformation. Empowering our local communities and reinforcing our commitment on protecting biodiversity are also key areas on our ESG strategy.

Leaner and more efficient Corporate Governance structure

The year of 2023 concluded a cycle of important progress in the governance of EDPR. We have reformed EDPR's Board substantially over the course of the 2021-2023 mandate. We reduced the size of the Board from 15 to 12 Directors, elected an Independent Chairperson, increased the representation of Independent Directors from 40% to 50% and, critically, increased the representation of women from 20% to 33%. We also ensured commiees are composed exclusively of Independent Directors. In 2022, we established a new commiee dedicated entirely to ESG, within the Board of Directors, clearly highlighting the central role of sustainability in the management of EDPR. We also updated EDPR's Remuneration Policy of the Board of Directors for the 2023-2025 period, moving to an incentive-based system aligned with ESG best practices. All these changes clearly align EDPR's governance model with the best market practices.

On behalf of EDPR's Board of Directors, I want to thank our global employees for their effort, commitment, and enthusiasm. You are at the heart of our successful history and of the bright future that I believe that lies ahead. A word of appreciation is due to our contractors, suppliers, clients, and partners, for your belief in the present and in the future of business. One final word to our shareholders that despite a very challenging environment have continued to support us and to believe in our commitment to deliver a sustainable creation of value.

Although in 2024 we will continue to work on a very demanding environment, I am fully convinced that EDPR will be able to navigate in these challenging times, continuing to contribute to the decarbonization of the economy and to respond to the interests of its stakeholders.

António Gomes Mota

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Annual Report 2023 Chairperson leer

Message from the CEO

Miguel Stilwell d'Andrade

CEO of EDP and EDP Renewables

Dear Shareholders and Stakeholders,

2023 was marked by a continued commitment to the energy transition. Governments around the world kept implementing supportive policies and regulations to promote renewable energy adoption. Many countries accelerated their transition away from fossil fuels, and clean energy sources continued to outpace traditional fossil fuels in new installations and capacity additions.

However, over the year, the sector and our business encountered multiple headwinds arising from the severe market dislocations in many areas. Rising inflation and interest rates led to higher costs; inadequate permi the development of

renewable projects; supply chain restrictions impacted solar panel deliveries, especially in the US, delaying the commissioning of projects. All these factors impacted confidence in the sector's growth value proposition.

EDP Renewables (EDPR) has remained focused on the medium and long-term goals and objectives, while adjusting to the unprecedented context and short-term volatility. In these uncertain times, the hard work and resilience, anchored on the capabilities and experience accumulated by our teams over the last decades, has paid off. We completely reconfigured the US solar supply chain in record time, we renegotiated PPAs, and we are proactively managing the development of our wind projects in Colombia (0.5 GW) expecting to reach the economic conditions that allow us to move ahead with the projects. We continue to drive efficiency and optimization of CAPEX and OPEX to mitigate the market disruptions. And we have raised the bar with a new Business Plan announced in March 2023 that ramped-up our targets to a yearly deployment of more than 4 GW in renewables corresponding to a €20 billion investment plan in wind, solar, storage and green hydrogen between 2023 and 2026. This revised ambition was supported by the successful execution of a €1 billion capital increase at EDP Renewables level to partially finance the company's growth plan - a testament of the trust of the investors in the company and in the sector.

Our growth in the current environment is a testament of our long-term commitment to Renewables, to a safe and affordable energy system, and to a sustainable future for the generations to come.

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2023	the CEO
Annual Report	Message from

During challenging times, experience is a key factor to successfully navigate uncertainties and adapt swi changing circumstances. At EDPR our long-lasting presence in the sector and our long-term contracted profile have cemented our position as a Renewables leader. While 2023 was one of the more challenging years we have experienced, our long-term performance to date gives us great confidence in the strength of our business, and the ability to meet the planet's clean energy needs while creating superior value for shareholders and other stakeholders.

Growth across our regional hubs

As we look back on 2023, despite the challenges faced in the sector, EDPR maintained a solid operational performance across markets where we operate. Our global teams jointly added +2.5 GW of new renewables' capacity, representing a 12% YoY increase of installed capacity to 16.6 GW.

We have commissioned Portugal and Spain's first hybrid projects combining wind and solar power generation at one single location. We have launched the largest European solar project in Poland with an installed capacity of more than 150 MWac, generating clean energy that will prevent the emission of more than 208,000 tons of CO2 annually. In the United Kingdom, we announced the installation of our first stand-alone Ba Energy Storage Systems (BESS), contributing to around 50 MW of capacity to the power grid.

We continued to grow in North America, having commissioned 1.2 GW in 2023, and by year-end we reached a record high capacity of c. 2.0 GW under construction. Moreover, EDPR North America and Google signed the largest US corporate sponsorship, focused on the development and installation of more than 80 distributed solar PV projects across six US states - an initiative that provides benefits to nearly 25,000 low-to-moderate income families.

In Brazil, we launched our largest wind farm complex worldwide with an installed capacity of 580 MW and 138 wind turbines. The complex, located in Rio Grande do Norte, can produce enough energy to supply more than 1.5 million people per year.

In the Asia-Pacific region, EDP9 has more than doubled our solar installed capacity to more than 1 GWp. We also successfully completed the construction of our largest single solar distributed generation (DG) project undertaken - 19 MWp in China's Anhui province.

In 2023, Ocean Winds, EDPR's 50/50 joint venture with ENGIE dedicated to offshore wind energy, has reached financial close for three offshore wind bo

West in the UK and the French projects of the Îles d'Yeu / Noirmoutier and Dieppe-Le Tréport. In total, by year end Ocean Winds holds a secured por

representing 16.6 GW of gross capacity, of which 1.5 GW is in operation, 1.9 GW under construction and 13.2 GW under advanced development. Furthermore, as part of our disciplined risk management and focus on returns, we canceled the South Coast PPA in Massachuse U.S.Ø given the change in market conditions, with a relevant positive impact on the optionality value of the project.

Further strides across environmental, social, and governance best

practices

Alongside our continued growth and solid operational performance, EDPR made further progress in sustainable practices and in creating positive impact with our multiple stake- holders.

Within our commitment to the circular economy, EDPR North America launched the program "Close the Loop" in partnership with SOLARCYCLE. This initiative, focused on fostering a more efficient use of resources and materials, aims at returning solar supplies back into supply chains to help grow the domestic solar manufacturing industry.

In addition, we were thrilled to see EDPR ranked as 4th in the Power Generation peer group Corporate Knights' 2024 Global 100 List, announced each year during the World Economic Forum in Davos, that ranks the world's most sustainable companies.

EDPR has once more received recognition from the Top Employer Institute for best practice in people management across countries where we operate including Portugal, Spain, France, Italy, Poland, Romania, Brazil and, for the first time, Greece and Colombia. Addition- ally, our company continues to be part of the Bloomberg Gender Equality Index (GEI), a recognition for good practices of inclusion and equal professional opportunities. This is a testament of the company's dedication to its people, and to their development and well-being. Yet, the best recognition of all is that more than 90% of EDPR's employees are proud to work for the company.

Superior value creation for EDPR stakeholders

The year was completed with a demonstration of the value that we can offer to our share- holders, despite the challenging context. EDPR has secured đ60% of the 1§ GW additions targeted in the 2023-2026 Business Plan, while keeping a very selective investment approach - looking at investments that not only target returns (>1.4x IRRp/WACC or the min-

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Part I

2023	the CEO
Annual Report	Message from