Scatec Results Flat – Construction Begins on Projects in South Africa and Brazil

  • Scatec is starting construction of two major renewable power plants in South Africa and Brazil, ramping up site activities in Pakistan and moving its first green hydrogen project in Egypt into backlog. 
  • In the second quarter 2022, Scatec’s proportionate revenues increased to NOK 1,130 million (1,007) with an EBITDA of NOK 517 million (601).
  • Power production rose to 916 GWh (860).

“We reported solid operating results from our diversified portfolio of power plants during the second quarter and power production increased seven per cent compared to last year. We continue to see good availability and performance across the asset portfolio,” says Scatec CEO Terje Pilskog.

Power Production

Proportionate revenues in the Power Production segment increased by 16% from last year to NOK 1,015 million (875) driven by higher power sales in the Philippines, added capacity in Argentina, and foreign currency effects, which were partly offset by lower revenue from Ukraine.

Power production in the Philippines ended 20% above the 5-year average, but below the contracted sales volumes, as expected, and power was therefore purchased in the market resulting in cost of sales of NOK 198 million and a segment gross profit of NOK 810 million.

With a gross profit broadly in line with last year, EBITDA ended at 617 million (660) due to increased operating expenses compared to last year, driven by added capacity in Ukraine and Argentina, non-recurring costs, and foreign currency effects.

Development and Construction

Scatec is starting construction activities of the company’s hybrid solar and battery storage plant in the Northern Cape Province of South Africa, which is Scatec’s largest investment to date. In addition, the team is kicking off construction activities at the Mendubim solar site in the state of Rio Grande do Norte in Brazil, which will strengthen our position in a major renewables’ growth market with our partners Equinor and Hydro Rein.

At the same time, Scatec is ramping up construction activities at the Sukkur solar project in southeast Pakistan.

The projects under construction represent a total capex of NOK 15.3 billion. The projects will generate NOK 8.9 billion in revenues for Scatec as EPC-provider during the construction phase with an average gross margin of 10-12%. All major equipment orders and construction contracts are now being placed.

Development activities continued at a high level in the quarter. The green hydrogen project of 100 MW electrolyser capacity powered by 260 MW of solar & wind in Egypt and the 20 MW Magat BESS project in the Philippines were added to backlog. Further, Scatec has signed a binding term sheet with Yara Clean Ammonia for offtake of green ammonia from the first phase of the project in Oman, under development with Acme.

The project pipeline increased to 14.8 GW in Q2 from 14.6 GW in Q1 2022.

“In July, we reached two major milestones in our key markets South Africa and Brazil, and Scatec is now accelerating activities on three projects. Going forward, our top priority is to ramp up construction activities, optimise returns of our backlog projects and continue to mature our pipeline. Furthermore, we continue to develop our strategy to ensure we are in the best possible position to both grow in the short term and capture longer term opportunities,” concludes Pilskog.

Author: Bryan Groenendaal

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