Enefit Green's unaudited financial results Q4 and 12 months of 2024

Enefit Green’s consolidated Q4 2024 operating income increased by 5% and operating expenses (excluding depreciation) decreased by 13% compared to the same period last year. Group’s EBITDA increased by 28% to €37.8m and net profit for the period increased by €8.3m to €27.4m.

For the full year 2024, group’s operating income decreased by 4%, while operating expenses (excluding depreciation and amortisation) declined by 15% compared to 2023. As a result, the group’s EBITDA improved by 8% to €114.8m and net profit increased by €14.5m to €70.3m. Earnings per share for 2024 grw by 26% to €0.266 (2023: €0.211).

Juhan Aguraiuja, Chairman of the Management Board of Enefit Green, comments:

"In 2024, we focused on finalizing construction and achieving stable operation of our largest assets. Compared to a year ago, we have grown to become a large power generation company. We have significantly more production assets in operation, the volume of which now exceeds 1100 MW.

In 2024, we produced 1.9 TWh (+40%) of electricity and 415 GWh (-31%) of thermal energy. The growth in electricity production was driven by our production assets, which were gradually installed and reached more stable production, including the start of full-capacity production at the Sopi-Tootsi wind farm in Estonia (255 MW). This growth has significantly increased electricity production and sales volume and helped to better fulfil PPAs.

The result of thermal energy production was affected by the fact that a year ago we sold our biomass-based cogeneration and pellet businesses.

Although we ended the year with a strong production result, the financial results for the whole year were influenced by the slower-than-planned completion of new production assets and lower electricity prices. The addition of new production capacities to the market is in some instances causing oversupply and has led to higher renewable energy discounts. Digital solutions have allowed us to flexibly adapt and avoid production and unprofitable energy sales during periods of low electricity prices.

After several years of intensive growth, we are now focusing on ensuring a steady cash flow and finding a balance between the company's growth and profitability. Our focus is on the sustainable development of the company. It is important for Enefit Green as a large power generation company that every megawatt-hour of production volume creates maximum value. This means that we need to keep the operational assets in high availability, the projects that are still under construction must be completed on time, and the income potential of all assets must be fully realised."

Webinar to present the results 

Enefit Green is organising a webinar in English for investors today, 28 February at 13:00 (EET) to present the unaudited 2024 results. To participate, please use this link.

Highlights in 2024

• The installed electricity production capacity exceeded 1.1 GW level by year end
• Several important developments reached full capacity
• Fully commissioned Tolpanvaara (72 MW) wind farm in Finland
• Fully commissioned Debnik (6 MW) solar farm in Poland
• Loan agreements in total amount of €180 million signed and amended
• Cooperation agreement with RES Global Investments (early phase development of 360 MW wind farm projects in Poland)
• Agreement with GE Vernova regarding Akmene wind farm incident (which occurred in May 2023)
• Completion of the sale of biomass assets

Key indicators

* excluding D&A

Impact of assets sold on group performance

The comparison of the group’s performance indicators for 2024 with those for 2023 is affected by the sale of the Broceni CHP plant and pellet factory, which was completed in Q4 2023, and the sale of the Paide and Valka CHP plants, which was completed in March 2024 (‘assets sold’).

The group’s results for 2023 include operating income of €43.9m, operating expenses of €35.6m and EBITDA of €8.3m related to the assets sold. The same figures for 2024 are operating income of €7.2m (including sales gain of €5.0m), operating expenses of €1.6m and EBITDA of €5.6m. In following commentary, the term ‘continuing business’ is used in the context of figures and indicators from which the impact of the assets sold has been eliminated.

Operating income

The group's total electricity production increased by 540 GWh (+40%) to 1,883 GWh and production from new wind and solar farms completed and under construction increased by 561 GWh during the year. Heat production decreased by 188 GWh (-31%) over the year. The decrease in heat production was mainly due to the assets sold. The impact of the assets sold on electricity and heat production is shown in the table below.

Operating income decreased by €9.2m in 2024, the figure reflecting a €20.3m decrease in revenue and a €11.1m increase in renewable energy support and other operating income. Operating income from the continuing business increased by €27.6m, the figure including revenue growth of €19.9m and growth in other operating income of €7.7m.

Revenue from the continuing business grew by €19.9m, driven by electricity revenue, which grew by €20.0m due to higher electricity production (+579 GWh, +45%). In 2024, the average electricity price in the group’s core markets was €83.3/MWh (2023: €92.7/MWh) and the group’s average implied captured electricity price was €67.1/MWh (2023: €89.0/MWh).

The implied captured electricity price differs from the average market price in the group’s core markets, because it takes into account long-term fixed-price power purchase agreements (PPAs), renewable energy support, purchases of balancing energy, electricity purchases from the Nord Pool day-ahead and intraday markets, and the fact that the renewable energy generation profile differs significantly from the baseload profile.

The group’s average price of electricity supplied to the market in 2024 was €60.9/MWh (2023: €73.0/MWh). The amount of electricity supplied to the market in 2024 was 1,129 GWh compared with 783 GWh in 2023.

In 2024, 1,288 GWh of the group’s electricity production was covered by PPAs at an average price of €67.7/MWh. In 2023, 953 GWh of electricity was supplied under PPAs at an average price of €86.9/MWh. The average price of electricity sold under PPAs has decreased significantly compared to 2023 because the supply periods under the PPAs signed in Estonia, Lithuania and Finland in 2021 at relatively low prices began in Q1 2024.

In 2024, we purchased 546 GWh of electricity from the market at an average price of €99.0/MWh, compared with 411 GWh at an average price of €110.2/MWh in 2023 (the prices and volumes exclude the electricity purchased for pellet production in 2023).

The increase in the volume of electricity purchased (+135 GWh) is the result of both higher purchases for PPAs (+88 GWh) and an increase in production volume, which increased the volume of other purchases (+47 GWh).

The volume of electricity purchased to meet PPA obligations was higher than expected in 2024 due to delays in the start of production from wind farms under construction.

The realised purchase price decreased compared to 2023, in line with the overall decrease in market prices, but the relative difference between the purchase and sales prices increased due to a higher wind discount. Wind discounts increased slightly compared to the previous year. Enefit Green's wind discounts in Estonia and Lithuania were similar to the overall market level, increasing by 3.9 and 0.6 percentage points over the year in Estonia and Lithuania, respectively.

Heat energy revenue from the continuing business increased by €2.1m to €5.5m. The increase in heat revenue was due to an increase in the heat price of €5.9/MWh (+73%) compared to the previous year, while heat production from the continuing business decreased by 21 GWh to 395 GWh (2023: 416 GWh).

Renewable energy support and other operating income

Other operating income from the continuing business increased by €7.7m to €30.3m (2023: €22.6m). Renewable energy support for the continuing business increased by €1.5m to €22.4m. The renewable energy support is linked to the amount of electricity produced by eligible wind and solar farms in Estonia, the Iru CHP plant and solar farms in Poland.

The renewable energy support received for eligible generation assets located in Estonia increased by €0.9m. The eligibility period for the Purtse wind farm started in Q2 2024, which increased the amount of support received by €1.2m year-on-year, and the eligibility period for the Aseriaru wind farm ended in October, which reduced the support received in Q4 by €0.6m year-on-year. The support received in Poland increased by €0.6 million compared to 2023 because the market price of electricity (€96.1/MWh) was lower than the prices fixed in the Contracts for Difference (€125–134/MWh). As a result, Enefit Green was compensated for the difference between the market price and the fixed price.

Other operating income in 2024 and 2023 was significantly influenced by gains on the assets sold: the gain on the sale of the Broceni CHP plant and pellet factory completed in Q4 2023 (€1.0m) and the gain on the sale of the Paide and Valka CHP plants completed in Q1 2024 (€5.0m).

Other operating income for Q3 2024 included €5.3m of income related to a settlement reached between Enefit Green and GE Vernova in connection with an incident during the construction of the Akmene wind farm, which resulted in the collapse of a wind turbine. As a result of the negotiations, Enefit Green and GE Vernova agreed on an amendment to the Akmene wind farm turbine supply contract signed between the parties, including compensation of €8.2m, of which €3.9m was paid by GE Vernova to Enefit Green in cash and the remaining amount was offset against reciprocal receivables and liabilities. Of the €8.2m, €5.3m was recognised as other operating income and €1.6m as a reduction of previously made investments. GE Vernova and Enefit Green also entered into additional agreements totalling €1.3m, which had no impact on Enefit Green’s financial results.

Operating expenses

Electricity purchase costs

Electricity purchase costs include the cost of purchases from the power exchange and the balancing market as well as directly attributable administrative expenses. Compared to 2023, electricity purchase costs increased by €8.3m. Electricity purchase costs for the continuing business increased by 25% to €56.6m in 2024. The increase in the volume of electricity purchased (+135 GWh) is due to both purchases related to PPAs (+88 GWh) and growth in the production volume, which increased the volume of other purchases (+47 GWh). An overview of the volumes and prices of electricity purchases is presented in the revenue section above.

Fixed costs

Fixed costs are costs that are not directly related to the production volume. In 2024, fixed costs decreased by €2.0m (-5%) to €42.0m.

The impact of the assets sold on the decrease in fixed costs was €5.4m.

Fixed costs for the continuing business increased by €3.4m (+9%) to €41.3m, including an increase of €2.2m in the maintenance and repair costs of production assets and an increase of €1.3m in land costs related to production assets and development projects.

The increase in maintenance costs is related to the addition of maintenance costs for assets that started production in 2023. The growth in land costs is partly related to the addition of the land costs and taxes for new operating assets and the land costs for projects in the pre-development stage. Payroll expenses for the continuing business grew by €0.7m (+9%).

At the end of 2024, the group had 132 employees (2023: 154, including 133 in the continuing business).

Other variable costs

Other variable costs are costs related to the production volumes, which vary according to the intensity of production. These costs include direct and indirect costs incurred in the production process, excluding electricity purchase costs and fixed costs.

In 2024, other variable costs decreased by €24.3m (-76%), of which €25.5m was related to the assets sold.

Variable costs for the continuing business increased by €1.2m, of which €1.7m was related to the Iru CHP plant. The main driver of the increase in the variable costs of the Iru CHP plant was the increase in pollution charges (€1.1m) – a new, 12 times higher CO₂ emission charge (€25/t) for heat producers took effect on 1 July 2024. As heat energy prices are regulated in Estonia, the increase in the pollution charge was passed on to the price of heat energy sold by Enefit Green. The increase in the variable costs of the Iru CHP plant is further explained in the chapter on the cogeneration segment.

EBITDA

In 2024, the decrease in the price of electricity sold reduced EBITDA by €33.0m compared to the previous year. Due to the increase in production volume, the amount of electricity sold increased significantly, improving EBITDA by €54.4m compared to 2023. As the volume of electricity sold under PPAs increased significantly, the volume of electricity purchased to balance the electricity portfolio also increased, reducing EBITDA by €15.4m year-on-year. The overall effect of these items on EBITDA was influenced by both the volume and profile of electricity generation during the period.

The impact of the assets sold on EBITDA was negative at €2.7m.

The Iru CHP plant, excluding fixed costs and the impacts of electricity price and volume, reduced EBITDA by €1.2m. The figure reflects the effects of heat energy, gate fees and technological fuel (mainly natural gas). The results of the Iru CHP plant are described in more detail in the chapter on the cogeneration segment.

The increase in the fixed costs of the continuing business reduced EBITDA by €3.4m compared to the previous year (the drivers were explained above).

Depreciation, amortisation and impairment (D&A)

D&A expenses decreased by €1.4m (-4%) compared to 2023, of which €4.7m was due to the assets sold. The figure for the continuing business increased by €3.3m (+9%) due to the recognition of new assets in 2024.

The Purtse wind farm (D&A for 2023 €0.6m, D&A for 2024 €1.0m) and the Purtse solar farm (D&A for 2023 €0.3m, D&A for 2024 €0.5m) in Estonia were recognised as depreciable non-current assets in Q3 2023 and the Zambrow solar farm in Poland (D&A for 2023 €80k, D&A for 2024 €0.2m) and the Estonia solar farm in Estonia (D&A for 2023 €7k, D&A for 2024 €86k in 2024) in Q4 2023.

The Tolpanvaara wind farm in Finland (D&A for 2024 €1.9m) and the Debnik solar farm in Poland (D&A for 2024 €44k) were recognised as depreciable non-current assets in Q3 2024.

D&A expenses are expected to increase in 2025 due to the completion of major development projects in Estonia and Lithuania.

Net finance income and costs

The change in net finance income and costs was negative at €0.2m. Interest expense on bank loans increased by €12.2m year-on-year to €25.1m, but 98% of the loan interest was capitalised due to the construction period of the assets.

Interest expense recognised in the income statement is expected to increase in 2025, as the completion of development projects in Estonia and Lithuania will reduce the share of interest expense that is capitalised.

Income tax expense

Income tax expense decreased by €4.4m compared to 2023 due to a lower dividend distribution and therefore lower income tax expense in Estonia.

Net profit

The group's net profit increased by €14.5m (+26%) to €70.3m in 2024. The Management Board will make a dividend distribution proposal from the net profit for the financial year 2024 together with the publication of the audited annual report and in its proposal, will adhere to the dividend policy described above. The amount of the dividend and the payment procedure are decided by the general meeting of the shareholders after the approval of the audited annual report.

Investments

The Group's investments in 2024 amounted to €388.4m, €32.7m more than in 2023. The increase was driven by development investments, which totalled €382.0m. Of this, €324.1m was invested in the construction of new wind farms: €200.9m in the Sopi-Tootsi wind farm and €102.7m in the Kelme wind farms, including €47.4m in Kelme I and €52.5m in Kelme II. As regards solar developments, the largest investments were made in the Sopi solar farm (€28.4m) and the Latvian solar farms (€6.8m). Baseline investments (expenditure for the maintenance and improvement of existing assets) amounted to €6.4m in 2024 (2023: €5.1m) and were mainly related to wind farms in Estonia (€5.4m) and the Iru CHP plant (€1.0m).

At 31 December 2024, the carrying amounts of the non-current assets of the group's operating segments were as follows: Wind energy €1,245.9m (of which 53% in construction), Cogeneration €90.8m (of which 0% in construction), Solar energy €104.5m (of which 41% in construction) and Other €65.5m.

At 31 December 2024, the assets of the Wind energy segment included goodwill of €23.6m (2023: €23.6m), the assets of the Cogeneration segment included goodwill of €32.4m (2023: €32.4m) and the assets of the Solar energy segment included goodwill of €2.2m (2023: €2.2m).

Financing

The Enefit Green group finances its activities through equity and debt. In 2024, we continued to raise additional capital by entering into new loan agreements and drawing down previously secured loans to finance the development programme of new wind and solar farms that was launched in 2021.

During the year, we signed new loan agreements and amended existing ones for a total of €180m. In June, we signed an amendment to the loan agreement with Swedbank, increasing the loan amount from €50m to €100m. In August we signed a new 8-year loan agreement for €100m with EBRD and in September we signed a new revolving credit facility agreement of €20m with OP Bank and extended the €10m revolving credit facility agreement with SEB.

At 31 December 2024, the amount of investment loans raised but not yet drawn was €165m.

In addition to the investment loans, Enefit Green has three revolving credit facilities totalling €50m, which will mature in the period 2026–2027. At 31 December 2024, all the facilities were undrawn.

At 31 December 2024, the amortised cost of the group’s interest-bearing liabilities was €734.3m (31 December 2023: €486.4m). The figure consists of bank loans and lease liabilities of €724.9m and €9.4m, respectively.

The average interest rate on bank loans drawn down as at 31 December 2024 was 3.90% (31 December 2023: 4.09%). The base rates at the end of 2024 were lower than a year earlier. During the year, the 3-month EURIBOR decreased by 1.20 percentage points to 2.71% and the 6-month EURIBOR decreased by 1.29 percentage points to 2.57%. At 31 December 2024, the interest rate risk of 19.8% of the loans drawn by Enefit Green was hedged with interest rate swaps.

Condensed consolidated interim income statement

Condensed consolidated interim statement of financial position

Additional information:
Sven Kunsing
Head of Financial Communication
investor@enefitgreen.ee
https://enefitgreen.ee/investorile/

Attachments

• EGR1T_2024_interim_eng
• egr1t_2024_presentation_eng