In Q3 2022, Enefit Green group total revenues increased by 66% y-o-y to €60.3m and EBITDA was up by 28% y-o-y at €32.7m. During the quarter, the group earned net profit of €22.9m (€0.09 per share), which is 50% more than in Q3 2021.
Aavo Kärmas, Chairman of the management Board of Enefit Green comments:
“Enefit Green will continue on a rapid growth course, because the only long-term solution to the energy crisis is a sufficient amount of renewable energy. Therefore, Enefit Green strives to reach additional investment decisions for more than 300 megawatts of new capacities before the end of this year.
In the third quarter, we invested nearly 80 million euros in renewable energy developments. We are building a total of seven new wind and solar farms in Estonia, Lithuania, Poland and Finland. With these assets we will add 258 megawatts of production capacity to our home electricity markets in 2023, which will produce more than 700 gigawatt-hours of electricity annually. This amount covers the annual electricity consumption of more than 200 000 households.
During the quarter, Enefit Green's solar energy development portfolio in Estonia grew by 200 megawatts. For the first 35 megawatts, we want to reach an investment decision already in the second half of next year.
The production results of the quarter were most affected by the exceptionally low wind conditions and the thorough repairs carried out at the Iru CHP plant before the winter heating season. We also focused on the maintenance of wind turbines to assure availability during upcoming peak season of wind energy production.”
Significant events
- Cornerstones laid in four wind farm
- Solar farm developments with up to 200MW capacity acquired
- Signed new long term PPAs in Lithuania and Estonia with a total volume of 3.1TWh
- Litigation regarding Purtse wind farm
- Iru power station repair stoppage
Key figures
Sales revenue and other operating income
The group’s electricity production in Q3 2022 was 189 GWh (a 24% decrease compared with 250 GWh in Q3 2021). The group’s average implied captured electricity price including support was 205.1 €/MWh (Q3 2021: 115.8 €/MWh).
The most important revenue driver was growth in electricity prices in the Estonia price area of the Nord Pool (NP) power exchange, which increased the group’s revenue by around €14.5m. The implied captured electricity prices of the group’s Estonian production entities in the respective periods were 275.1 €/MWh and 133.2 €/MWh. The Q3 implied captured electricity prices of the group’s Latvian and Lithuanian production entities were 362.1 €/MWh (Q3 2021: 129.7 €/MWh) and 87.6 €/MWh (Q3 2021: 79.2 €/MWh), respectively. On the Lithuanian market, during the third quarter we fully abandoned the previous revenue model, which was based on the national renewable energy support scheme with fixed electricity tariffs and replaced it with a combination of market prices and long-term PPAs.
Another factor that strongly affected revenue development was the quantity of electricity produced in Estonia, which decreased year on year due to less favourable wind conditions and a five-week outage at the Iru CHP.
Revenue growth was also supported by pellet sales, which grew by €6.7m as sales volume increased from 4k tonnes in Q3 2021 to 39k tonnes in Q3 2022. The sharp rise is attributable to differences in the timing of major pellet supplies during the reporting and the comparative period.
Heat energy production decreased by 32%, mainly due to an unplanned production interruption at the Iru CHP, while the price of heat sold increased by 23% year on year.
Renewable energy support and other income for Q3 2022 were strongly affected by a decrease in the renewable energy support received by the group’s Estonian wind farms, which dropped by €2.0m year on year. Renewable energy support is linked to the quantity of energy produced and since quantity decreased, support received also declined. The renewable energy support received by the Iru CHP decreased by €0.5m year on year due to its five-week outage.
Renewable energy support received by the Polish wind farms dropped by €0.9m year on year. Due to high market prices, revenue generated exceeded the guaranteed price and consistent with local laws in such a situation the positive balance has to be repaid to the Polish state.
EBITDA and segmental breakdown
Group’s EBITDA increased by 28% y-o-y to €32.7m in Q3 2022 driven mostly by the elevated electricity prices and differences in the timing of major pellet supplies. Increased variable costs, lower volume of wind energy production and to a lesser extent the increase in fixed costs and the unplanned maintenance stoppage at Iru had a negative impact on the EBITDA.
Variable costs have increased by €6.2m, which is largely driven by increased purchasing prices of biomass and electricity. In addition, variable costs increased in connection with the sale of inventories in the Solar energy segment due to the exit from the provision of turnkey solar solutions.
Group’s fixed expenses increased by 15% or €1.2m driven by payroll, research and consulting expenses.
Based on total revenues and EBITDA for Q3 2022, the group’s largest segment is Wind energy which accounted for 53% of total revenues and 72% of EBITDA. The Cogeneration segment contributed 34% to total revenues and 29% to EBITDA. The smallest reportable segment is Solar energy, which accounted for 12% of total revenues and 5% of EBITDA.
Among reportable segments, the strongest EBITDA growth was delivered by Wind energy and Cogeneration as they benefited the most from higher market prices of electricity.
Net profit
The group’s net profit increased 50% compared to Q3 2021, amounting to €22.9m for the reporting period. The most significant positive contribution came from high market prices of electricity, to some extent also from lower net finance costs and corporate income tax expense.
Capital Expenditures
The group’s Q3 capital expenditures grew by €71.6m year on year, rising to €79.7m. Growth resulted from development investments, which extended to €78.9m. Out of the total, €33.5m was invested in the construction of three wind farms: €19.2m in the Šilale 2 wind farm, €8.7m in the Akmene wind farm and €5.6m in the Tolpanvaara wind farm. In addition, Enefit Green acquired the Tootsi wind farm development from Eesti Energia for €26.9m. The largest expenditures on solar power were investments of €2.7m in the execution phase of the Purtse solar farm and €2.9m in the Zambrow solar farm. Additionally, Enefit Green AS acquired Rääbiste Põllud OÜ (which has been renamed Enefit Green Solar OÜ) for €6.6m, which is developing two large solar farms in Western Estonia. Base investments amounted to €0.9m in Q3 2022 compared with €0.2m in the same period last year and were mainly made in the cogeneration plants to ensure their availability during the upcoming heating period.
