Scatec Solar OL reported robust financial performance in Q1 2025, with consolidated revenues reaching 1.8 billion dollars, a 42% increase from the previous year. The company’s earnings call revealed significant growth across its segments, propelling a 6.79% increase in its stock price, closing at $8.37. According to InvestingPro data, the company’s market capitalization stands at $1.33 billion, with a trailing P/E ratio of 10.41, indicating relatively attractive valuations. The stock is currently trading near its 52-week high of $8.85, suggesting strong market momentum despite InvestingPro analysis indicating the stock may be overvalued based on its Fair Value calculations.
Key Takeaways
- Scatec Solar OL’s revenues surged by 42% to 1.8 billion dollars.
- EBITDA saw a 48% increase, reaching 1.5 billion dollars.
- The stock price rose by 6.79% following the earnings call.
- The company aims to double its operating capacity by 2027.
- Debt reduction and new green bond issuance signal financial health.
Company Performance
Scatec Solar OL demonstrated impressive year-over-year growth, driven by substantial gains in its Power Production segment, which saw revenues increase by 53% to 1.6 billion dollars. The company’s diversified portfolio, including solar, wind, and battery projects, has positioned it well in the competitive renewable energy market. This growth is part of a broader industry trend where renewable energy continues to gain traction as a cost-effective electricity source.
Financial Highlights
- Revenue: 1.8 billion dollars, up 42% year-over-year
- EBITDA: 1.5 billion dollars, up 48% year-over-year
- Proportionate revenues: 2.4 billion dollars, a 95% increase
- Proportionate EBITDA: 1.4 billion dollars, up 63%
Market Reaction
Following the earnings announcement, Scatec Solar OL’s stock rose by 6.79%, reflecting a positive investor response to the company’s strong financial results and strategic initiatives. The stock’s current price of 86.5 dollars is approaching its 52-week high of 91.45 dollars, indicating strong market confidence. This upward movement aligns with broader trends in the renewable energy sector, which continues to attract investor interest.
Outlook & Guidance
Looking ahead, Scatec Solar OL has ambitious plans to double its operating capacity by 2027. The company has increased its full-year EBITDA midpoint by 400 million dollars and continues to focus on expanding its solar, wind, and battery projects across multiple geographies. Scatec’s strategic investments and divestment plans aim to secure 4 billion dollars in proceeds by 2027, reinforcing its commitment to sustainable growth.
Executive Commentary
CEO Thadja emphasized, "Renewable energy is the most competitive source of electricity," highlighting the company’s strategic focus on clean energy solutions. CFO Hans Jakob stated, "We have no plans to increase corporate debt," underscoring the company’s disciplined financial management. These statements reflect Scatec’s confidence in its growth trajectory and financial stability.
Risks and Challenges
- Geopolitical and regulatory changes could impact project timelines and costs.
- Tariff negotiations, although not currently affecting operations, could pose future risks.
- Market saturation in established regions may limit growth opportunities.
- Supply chain disruptions could affect project delivery schedules.
- Macroeconomic pressures may influence investment and financing conditions.
Q&A
During the earnings call, analysts inquired about the impact of tariff negotiations and the company’s approach to project selection. Scatec’s management expressed optimism about the ancillary services market and reiterated a disciplined strategy for project development, emphasizing the importance of adapting to regulatory and geopolitical changes.
Full transcript - Scatec Solar OL (SCATC) Q1 2025:
Thadja, CEO or Senior Executive, Skatec: It’s been a very strong start of 2025 for Skatec. And financially, we have also had a strong first quarter. We have made significant progress in the quarter towards our strategic ambitions. We have and we continue to grow renewables within our core areas, and we also continue to progress well in terms of optimizing our portfolio and bringing down corporate debt on overall level. And I will as usual start with an overall summary and then Hans Jakob will take us through the financials.
So let us first start with the highlights of the quarter. Firstly, as I said, we have had a very strong financial quarter with SEK 2,400,000,000.0 in revenues on a proportionate basis and SEK 1,400,000,000.0 in EBITDA. These are figures that are significantly up relative to same quarter last year. Secondly, we currently have 4.2 gigawatts in backlog and in construction. This is an all time high number and enables us to have significant construction activity going forward and also enables us to double our operating capacity over the next couple of years.
Finally, we have also made significant progress on optimizing our portfolio, and we are now having a corporate net debt, interest bearing debt of 5,200,000,000.0. And this is based on proceeds from divestments as well as a very strong cash position in the company. Let me also mention the fact that we’ve issued a new green bond during the quarter of 1,250,000,000.00 at very attractive terms. And we’ve used the proceeds from this bond, including our available cash position, to also pay down our Eurobond. And through this, we have significantly improved the maturity profile of our debt on corporate level.
And I’d like to thank our investors for the confidence that they are putting us putting in us related to this. So altogether, this puts us in a very robust position in terms of exercising and realizing our growth portfolio even in the current turbulent times that we’re seeing in the capital market. And also on that note, let me also comment on what’s going on globally in terms of tariff discussions and tariff negotiations. I would like to say that Skatec and our growth portfolio, we see no direct impact on our growth portfolio in terms of those tariff negotiations that are currently ongoing. So let me then move to power production.
We continue to see high availability and stable operations across our portfolio of operating assets. And I think that our O and M teams, they are doing a stellar job in keeping this up. Power production for the quarter reached nine seventy nine gigawatt hours, and this is up from nine zero one gigawatt hours same quarter last year. And if you adjust from divestments, up from eight eleven gigawatt hours, and this is a 21% increase than in power production. And this is partly driven by the positive contributions from our new projects that has come into operation.
We have Botswana that came into operation in the first during the first quarter this year. And we also had Brazil and Pakistan coming into operation in first quarter last year. And all of these projects have contributed positively to the increase in power generation. And in addition, we have also had very good hydrology in Laos and The Philippines that has also contributed positively to our power generation. And the strong production has contributed to a 72% increase in our revenues in the Power Production segment.
And we are now reaching just about 1,600,000,000.0 in total revenues. And this has been driven by strong performance, obviously, across the portfolio, but we have also seen accounting gains related to the divestments of Uganda and of Vietnam. And we are also seeing a very strong quarter in The Philippines, which I will come back to. And in addition to that, we have also seen a one off payment from a tariff true up in Pakistan, and we’ve also seen other net positive movements. So let me then talk about The Philippines.
The Philippines delivered an exceptional quarter both in terms of power production, ancillary services and also in terms of financial contribution. And in The Philippines, we reached a power production of 149 gigawatt hours, which is, in principle, a doubling or close to a doubling of power generation relative to the same quarter the year before. And this is due to strong hydrology. We had good water levels when we came into the quarter, and we have also had good water inflows during the quarter to contribute to this. And also, please notice in terms of this quarter, despite being in the dry season, we have a long energy position.
And this is obviously partly due to the fact that we have a very strong generation, but also partly due to the fact that we have reduced our contract portfolio in The Philippines, which is then putting us in a more robust position in terms of the dry season in The Philippines. Net revenues in The Philippines increased by 2.8x, now reaching SEK320 million in the quarter. And we see that we have strong contributions both from power sales as well as from ancillary services. And this again shows the strategic value of the flexible position that we have at hydropower and the batteries in The Philippines. Further, ancillary services revenues reached SEK224 million, and batteries are now playing an important role in the revenue generation that we’re having in The Philippines.
And we see that batteries is outcompeting hydropower in terms of the short response ancillary services market. And on the back of this, we continue to develop and build out more battery capacity in the country. So in terms of EBITDA, this increased then to SEK270 million, which is an increase by 3.6x. So overall, again, this quarter highlights the earnings potential of The Philippines and particularly the growing contribution from the ancillary services segment and also from batteries. So let me then move to construction.
And we are growing our portfolio, and we currently have close to two gigawatts of projects in construction. And this is really an all time high for Skarthec. And since the last reporting, we have added new three new projects to our construction portfolio. We have the 1.1 gigawatt solar and 100 megawatt battery project, Oblisk, in Egypt. And then in addition, we have two battery projects in The Philippines.
And while these two projects are merely 56 megawatts, they represent they will represent a tripling of our battery capacity in The Philippines, and this is significantly improving our position in terms of the ancillary services market going forward. So in total then now we have a construction portfolio that is spanning six different countries. We have South Africa, where we have Grodfontein, which is now nearing completion, and we expect to put into operation during Q2 this year. And we also have the Mugube battery project that is now progressing well in terms of construction. In addition, we have Botswana, where we took Phase one into operation in the first quarter.
And they are now also well underway with constructing the second phase in Botswana, another 60 megawatt project. Construction is also further progressing well in Brazil, Tunisia and The Philippines, and we expect all of these projects to come into operation during the first half of twenty twenty six. And finally, we have the Obelisk project in Egypt that I just mentioned. This is a 1.1 gigawatt project with 100 megawatts of battery capacity. It’s being implemented on an accelerated schedule, and we aim to get the first half of the capacity solar capacity plus the batteries into operation first half next year and the second phase into operation during second half next year.
So I think that the breadth of our construction portfolio is obviously showing and is the result of the development approach, the solid development approach and activities that we’ve had over the last couple of years. And when these projects are being brought into operation during 2026, we will reach more than six gigawatts in operational capacity. So I will now zoom out a bit and talk about sort of the overall growth profile. So we continue to expand our near term growth platform. And in addition to the two gigawatts that I have currently talked about in construction, we also have 2.2 gigawatts in backlog.
And we have, since the start of the year, added 1.5 gigawatts into the backlog, which is a significant number. And in addition to the Romania project that we talked about during the first quarter or the Q4 reporting, we have also now added 120 megawatts where we have signed the PPA in Tunisia, which is then doubling our potential capacity in Tunisia, and Tunisia is emerging as a very interesting market for us. And then we have also signed 1.1 gigawatt PPA with Egypt aluminum. And this is a very interesting project. It’s the first corporate PPA in Egypt.
It’s being backed by sovereign guarantee. And Egypt aluminum is the largest energy consumer electricity consumer in Egypt. It’s also the largest CO2 emitter in Egypt. And this is a very important project in terms of industrial decarbonization in the country. So we will implement this portfolio based on our integrated model.
And let me also then add some comments in terms of how we capture value and also in terms of how we manage working capital of this portfolio going forward. So our growth is underpinned by strong D and C revenue model and also limited equity exposure enabling us to scale through a self funded model without overstretching our balance sheet. And on the left side here, you see our construction portfolio, which I’ve already talked about. It has a D and C or an EPC revenue value of about NOK 9,200,000,000.0. And the remaining contract value related to this portfolio is NOK 6,700,000,000.0.
And then in addition, you will see that in terms of the backlog, we also have about SEK 9,300,000,000.0 in EPC revenue value linked into that portfolio. So in total, with these projects together, we are seeing a remaining EPC value related to backlog and construction of about 16,000,000,000. In terms of the backlog, you will see that three of these projects, they are expected to reach financial close by the end of twenty twenty five. And in this among these three projects, you will also see our Egypt Green Hydrogen project, where we now expect financial close rather in the second half as we see that the restructuring and the financing of this project is taking more time than what we have previously communicated. And for the full near term growth portfolio, so for all of these projects, we are expecting to realize a gross margin in a range of 10% to 12%.
So this margin generated from our construction is key to our strategic strategy of capital efficient growth, and this is funding a large part of the equity injections that we will put into these projects. And also on the top right left top right side here, you will see that we will continue to implement this, obviously, based on an S curve. So all projects, they will have slower revenue recognition during the first and the last parts of the construction period, and then they will have a more aggressive revenue recognition during the middle part of the construction period. And importantly, we strive to obtain and maintain positive working capital during the construction period, as we are illustrated at the bottom right here, by trying to get milestone payments under the EPC contract in the beginning of the construction period and then push out payments to suppliers and to contractors towards the end of the construction period. And as you understand now, we have a transformative period ahead of us.
And we will implement this in all this portfolio as part of our self funded growth plan. And you will see that we have high construction activity now. For the next two to three years, we aim to implement this whole portfolio by the end of twenty twenty seven, which means that by the end of twenty twenty seven, we target to double our operating portfolio. So with that, I will hand it over to Hans Jakob to take you through the financials.
Hans Jakob, CFO, Skatec: Thank you, Thadja, and thank you for coming listening to Skatec today. So we present strong results across the group driven by the higher power production, the high D and C activity and gains from divestments. I’ll walk you through the group financials and the performance of our operating segments and I will also cover the improved capital structure and strategic progress. Starting with the group level performance, the strong results in the first quarter is backed by consolidated revenues significantly up 42% to $1,800,000,000 EBITDA $1,500,000,000 up 48%. To the right, you see the proportionate financials.
Revenues increased by 95% to $2,400,000,000 while EBITDA grew by 63 to $1,400,000,000 The increase was mainly driven by higher power production, especially in The Philippines, The divestment gains and our proportionate figure also reflect the high D and C activity in the quarter. Our Power Production segment delivered another strong quarter. The revenues reached 1,600,000,000 up 53% from the same quarter last year, and the EBITDA was $1,400,000,000 a 60% increase year on year. As mentioned, the growth was mainly driven by The Philippines and the divestment gains. On a twelve month rolling basis, the segment has delivered more than $6,000,000,000 in revenues and $5,200,000,000 in EBITDA, underlying the strength of the cash flow in our portfolio.
Overall, we are very pleased with the value generated from our operating assets. In our Development and Construction segment activity levels continued to increase. Proportionate revenues of $751,000,000 and EBITDA of 26,000,000 In this segment, the quarterly performance shows variability depending on project phasing. But the trend from the last twelve months confirm the long term strength and scalability of our D and C platform. It gives a clearer picture of the strong momentum we are building.
Over the past year, D and C revenues have reached $2,900,000,000 with a steady increase over the last three quarters and we aim to continue. Keep in mind that the twelve month rolling figures from Q1 last year includes the very busy construction period of 2023. The rolling EBITDA ended at $2.00 2,000,000 with contribution from high margin projects and disciplined cost control. The increasing trend reflects higher activity levels across several geographies. With a strong backlog moving into Construction, we expect D and C to remain a key engine of our continued profitable growth.
At the end of the quarter, we had an all time high available liquidity of billion. This was impacted by significant divestment proceeds and it has continued to strengthen. In total, the liquidity including undrawn RCF increased by $1,200,000,000 Let me explain some of the main movements. We received 155,000,000 in distribution from power plants, 2,000,000,000 in net proceeds from announced transactions. We invested net $214,000,000 in growth projects and paid three ninety one million dollars of interest and debt repayments.
Additionally, we have increased our RCF by $50,000,000 to $230,000,000 after the reporting date. In total, we now have close to billion in available liquidity. We continue to strengthen our capital structure. Net corporate debt was reduced to $5,200,000,000 from $7,000,000,000 in the Q4. The reduction was mainly driven by cash received from divestments.
The cash position and net interest bearing debt will vary over time, dependent on cash movements. We also repaid $240,000,000 of debt in combination of regular amortization and through refinancing. On project level, the net debt decreased to $13,400,000,000 down from $14,900,000,000 and this was primarily due to the removal of debt from divestments of the Uganda and Vietnam projects. We also report a 200,000,000 net increase of debt related to projects under construction. These reductions reflect our continued commitment to capital efficiency and balance sheet strength.
They position us well to finance growth without increasing corporate leverage. Now let me look at the progress on divestments and deleverage. We
: have
Hans Jakob, CFO, Skatec: set out a clear strategy to rotate assets and reduce corporate debt. We are targeting to self fund our growth while strengthening the capital structure by 2027. In the strategic update last year, you might recall that we specified divestment proceeds of minimum NOK4 billion, of which 75 percent would be used for debt repayments. I’m pleased to say that we have come quite far already. Since the Q3 last year, we have generated $2,600,000,000 in proceeds from asset divestments, including transactions in Uganda, Vietnam and South Africa.
This demonstrates both the market’s appetite for our assets and our ability to execute divestments timely. As a result of these divestments, our net corporate debt is down by $2,900,000,000 since the Q3 last year. We are on track to deliver on our 2027 targets. Here you can see the debt maturity profile of the corporate debt following the transactions in the quarter. In the quarter, we took further steps to extend and optimize our corporate debt profile.
We successfully placed a four year one hundred twenty five billion dollars green bond with a margin of three month LIBOR plus three fifteen basis points with the help and support of our core banks. This reflects the credit market’s confidence in our ability to continue to deliver strong operational and financial results in the future. These proceeds from the bond together with the existing liquidity were used to repay the 114,000,000 bond, and we have repaid or refinanced all major short term debt. We have our next large maturity in 2027. Overall, we have a well structured and extended maturity schedule with solid headroom to support growth and navigate market volatility.
Let me share the outlook for 2025. For the full year, we estimate the power production between 108,500 gigawatt hours, unchanged from last quarter. We have, however, increased our expected full year 2025 EBITDA midpoint by $400,000,000 The range of $450,000,000 to $450,000,000 for the Power Production segment is what we guide on. The update is driven by divestment proceeds, overperformance in the quarter and partly offset by negative FX effects. For the second quarter, we expect a total power production between 901,000 gigawatt hours, EBITDA in The Philippines of 180,000,000 to $220,000,000 based on normal hydrology and strong contribution from ancillary services.
In our D and C segment, we currently have a remaining contract value, as Thadde said, of $6,700,000,000 And we keep a gross margin guidance of 10% to 12% on average across portfolio for projects under construction and in backlog. For Corporate, we expect a full year EBITDA of 115,000,000 to $125,000,000 negative in line with previous guidance. These estimates reflect a strong base for operating assets, high construction activity and in line with the previous guidance. A good start to the year positioning us well for reaching our 2025 targets. And then I welcome Tharya to do the quick summary.
Thadja, CEO or Senior Executive, Skatec: Strong power production, good progress on other divestment tanks, and they also have very good D and C activity level and progress there. In terms of the growth part, we are now seeing that we have a portfolio, a near term growth portfolio linked to backlog and construction but is set to double our operating capital double our operating capacity in a 2027 perspective. And finally, we are progressing well in terms of optimizing the portfolio. And that activity with the divesting activities, refinancing activities is strengthening our balance sheets, enabling us to take down corporate debt now to SEK 5,200,000,000.0. And we also have a liquidity position, as Hans Jakob talked about, of SEK 5,000,000,000 and including the recent increase in the RCF, 5,500,000,000.0.
And all of this enables us and puts us in a good position to continue to implement and push forward with our self funded growth plan. Thank you. Then we open up for Q and A.
Hans Jakob, CFO, Skatec: Maybe he needs a microphone. Andreas, if you just repeat the questions he says. Okay.
Andreas Nygard, Analyst, Nordea: Andreas Nygard, Nordea. Now you’re heading into 2025, a lot of things under construction, I think, will be at peak ever, it looks like. Do you see any reason why that should not continue into 2027 that you are that you will be able to continue adding backlog for construction into 2027 in a way that actually keeps the activity level at the same level or higher than 2026?
Hans Jakob, CFO, Skatec: I can get the microphone.
Thadja, CEO or Senior Executive, Skatec: Yes. So I mean, 2027 is obviously our current sort of near term planning horizon. And as we said, we currently have 16,000,000,000 in remaining EPC contract value related to the projects we have in construction and in backlog. And that will take us also well into 2027 in terms of construction activity. And then looking at 2027 and beyond, I think you also then should look at what we have in pipeline.
We still have close to nine gigawatts of projects in pipeline. It’s a good diversification between solar, between wind batteries and also green hydrogen. And as you said, there’s no reason why we will not be able to continue to convert new projects from pipeline into backlog and into construction. It is still so that renewable energy is the most competitive source of electricity, not only on an intermittent basis, but also as a baseload and capacity energy in most, if not all, of the countries that we operate in. And the competitiveness of renewable is only going to continue to improve as costs come down and as we see technology development and scaling up of this within this industry.
Moderator: Thank
Thomas, Analyst: you, and congratulations on a good quarter. You’ve previously talked about the price increases on the long term ancillary service contracts in The Philippines, and you’ve also talked about the opportunity the spot ancillary service market in The Philippines gives you. The outperformance this quarter, is that the price increase on the longer term contracts? Or is it you’re playing in the spot market? Mentioned batteries, so yes.
Thadja, CEO or Senior Executive, Skatec: So approximately, I think that in terms of the ancillary services market, it’s in terms of the market, it’s about fifty-fifty contracts and spot market or reserves market, as we call it. Price variations is what we see on in the spot market, while obviously, the contract market, there, the prices are fixed. So what we are seeing what we’ve seen in Q1 is that we have had price volatility in the spot market and that with batteries, we’ve been able to capture high prices in that part of the segment.
Thomas, Analyst: And this was the case last year as well in the market?
Thadja, CEO or Senior Executive, Skatec: This was the case last year. Do
Thomas, Analyst: this is the kind of add on revenue service that we will see more of? Because last year, you were a bit more reluctant on saying
Hans Jakob, CFO, Skatec: that this is going
Thomas, Analyst: to maintain at least levels.
Hans Jakob, CFO, Skatec: Just adding the hydrology that we commented on as well. So the two of them are the main explanation for this quarter. So I think it’s harder to predict the hydrology. Remember, the last year was quite a soft one in a ten year perspective. So maybe this is more normal, but we still remain optimistic on ancillary services as we commented on.
But both of them are important for this quarter.
Thadja, CEO or Senior Executive, Skatec: But I think it’s difficult to say something firm about the longer term. I mean, if you continue to see extremely attractive prices, there will be built up more capacity. So it will normalize over time. But we continue to see that batteries are very competitive in the short response segment or part of this market, and we believe that it’s going to be possible to capture good value in that segment going forward. And that’s obviously also why we are now building out 56 megawatts in addition, and we are developing and looking at doing even more batteries in the future.
Thomas, Analyst: Great to see so much activity as well, but we’re seeing quite substantial construction in noncore markets, you’re also completing projects in noncore markets. Could you shed some color on what the plan is for those projects in noncore markets? Will you hold on to them? Or are you planning to divest them?
Thadja, CEO or Senior Executive, Skatec: Yes. In terms of what we’re doing in the noncore markets, think a general comment on noncore market is that we are only looking at markets where we believe there is a fundamental strong position, competitive position of renewables and that there is a clear opportunity for significant renewables build out over time based on renewables being the most competitive technology, based on an agenda of energy transition and also based on the general need for increasing electricity generation in the countries. So even though these are emerging markets where we have a bit of a more opportunistic perspective, if we see that we’re able to build out scale in those markets, then it’s not necessarily so that we will sell and divest those projects. If we see that these markets are changing and we don’t see an opportunity to build out scale, then over time, it’s natural that we’ll look at possibilities of divesting those projects.
Thomas, Analyst: Thank you.
: On corporate net debt, you’re now at the not corporate, but the overhead net debt, you’re now at SEK 5,200,000,000.0. And say, if you are to double your asset base, does that mean that you’re comfortable doubling the Holdco net debt as well? Or will net debt on a corporate level remain roughly where it is going forward? Could you give us some guidance on can
Hans Jakob, CFO, Skatec: give you a short answer to that. As we said, the net debt will vary with cash movements, but we have no plans to increase the corporate debt. So adding new activity will be on project level nonrecourse. That is the profile. So we are not adding corporate debt.
Thadja, CEO or Senior Executive, Skatec: And we’re still committed to what we have already said, target of NOK 4,000,000,000 in divestments and using 75% of that to pay down corporate debt in a 2027 perspective.
Moderator: Okay. Any more questions from the audience here? Thomas has another one.
Thomas, Analyst: Yes. I’ll add one more. Just thought it was fine to pass the microphone. In terms of the equity investment target of DKK750 million, obviously, suppose that’s maybe an average over some years. Is it fair to assume a bit more in 2025 and 2026?
Or am I mistaken?
Hans Jakob, CFO, Skatec: Yes. I can start and you can fill me entirely with color. But I think you’re absolutely right. We said $750,000,000 to 27,000,000 as an average. To give a pointer on our best estimates and also to nurture the discipline that we are progressing.
If we go above, will have to explain it. And when we wrap up the year, we will explain where we landed and where we are in this plant. That’s a natural follow-up. But on the direct question, is there a risk that we’ll go above this year? Yes, for commercial reasons.
That’s why we deliberately said this is an average for the three year the strategy period basically.
Thomas, Analyst: One final. Is on the you’re obviously guiding on the EPC gross margins of around 10% to 12%. And then I suppose that’s excluding any contingencies. And you’re closing in on Grodfontein, and you have some construction activity ongoing. CapEx levels are remaining at low levels.
Is it fair to assume that we can see more contingencies?
Hans Jakob, CFO, Skatec: That one is so hard. Need to list
Thomas, Analyst: Obviously, not on the projects that you haven’t started on constructing, but on the projects that have progressed.
Hans Jakob, CFO, Skatec: In the past, we have said very clearly that well, at least I have been very impressed by the D and C organization. One thing is to lay out a plan, include a contingency and not use them. This is a disciplinary act on many moving parts, many players in an integrated approach of delivery. And if you can do that again, there will be more milk and honey. I guess that’s the backing of your question, as happened with Kennot.
But we cannot say that upfront. But we always comment on it when it happens. Strong margins backed by, and then we explain.
Thomas, Analyst: Okay. Thank you.
: It seems like you’ve done a lot of right things last year or two. Debt is down. You’ve reignited growth. You’ve successfully constructed things on time, on budget and release contingencies. So everything seems to be moving in the right direction, and it seems like the equity market, at least, is agreeing today.
But what are the concerns right now? What are you worried about? Where can you step wrong?
Thadja, CEO or Senior Executive, Skatec: It’s not necessarily about where we can step wrong, but I mean it’s about we need to continue to be very disciplined in terms of what we do. We need to be disciplined in terms of what projects we are moving forward, making sure that they are attractive from an economic point of view, making sure that we are not moving projects forward, that in this current situation is too marginal, right? And then we need to continue to have a very, very strong focus, as Hans Jakob said, on EPC execution. I mean we have the largest EPC execution program that we have ever had in Skatek. We’re looking at six different countries, two gigawatts.
So obviously, it’s incredibly important for us to also have high focus on making sure that we are doing that in a good way.
: And these are internal risks, but external risks, what are you worried about externally?
Thadja, CEO or Senior Executive, Skatec: No, I think sort of the while renewable energy is becoming more and more competitive in the markets where we operate as an energy source. I mean there is still competition out there. We still sort of have to address that competition and make sure that we are able to capture good projects that are competitive in the countries where we operate and putting us in strong competitive positions when we are securing offtake and trying to get offtake for our projects. In terms of the geopolitical situation and the trade discussions going on politically. We are not so concerned, given that we don’t have operations in The U.
S. In terms of what is coming from The U. S, but there are obviously also potentially changes that are happening on a country by country level in terms of changing regulations. So that’s going to be important for us, watching closely going forward. And then obviously, we have a special attention as Skatek for Ukraine and the geopolitical situation and the war going on in Ukraine.
But that’s as much on the people side, on the moral side as well as it is from a business point of view.
Moderator: Okay. Thank you. Then we’ll take a couple of questions from our online listener. We have two questions from Anis Segaja from ODDOF. Could you please update us on current best CapEx level per megawatt hours?
Thadja, CEO or Senior Executive, Skatec: Yes. Obviously, we will not share any specific BEST capacity numbers. I think we are in our data sheet, we are sharing the CapEx levels of the projects that we’re doing also within BEST, for instance, the Mugubi BEST project in South Africa. So those numbers are available. It should also be noted that implementation of the BEST project in terms of CapEx will be very different country from country and also relatively to what services you provide, whether you just provide load shifting or if you also provide other types of grid stabilization types of services.
On a general note, I can still say that we have seen battery CapEx coming down significantly over the last couple of years. And over the last two years, I think we’ve seen a reduction in CapEx on the batteries themselves in sort of a 60% to 70 range.
Moderator: Another one from Annes. What changed your mind about the attractiveness of the Tunisian market?
Thadja, CEO or Senior Executive, Skatec: The economics of our projects, I would say. So obviously, the first project that we are now implementing, and we’ve been very clear on that, we are implementing these together with Toyota, which is a very strong partner and based on the climate funding, which is being provided by Japan. And this is something that we are seeing that we are able to replicate in Tunisia. And based on that climate funding, we are able to continue to be competitive in that market. Then I would say Tunisia has an aggressive ambition in terms of converting towards renewable energy, green energy, become more independent in terms of energy and electricity supply.
And this is obviously also something which is fueling opportunity growth in the market, and that’s why we are interested in the market.
Moderator: I see one question regarding proceeds from divestments. Do the NOK4 billion in targeted accumulated proceeds include farm downs in Egypt?
Thadja, CEO or Senior Executive, Skatec: No. I mean, NOK4 billion that we have been talking about, those are related to divestments in noncore market. I think that’s what we have indicated, and that’s also what sort of in terms of our plans are included in that figure.
Moderator: Thank you. One question from Temi Sulayman from Barclays. What are your expectations for hydrology in Philippines allows for the rest of 2025?
Hans Jakob, CFO, Skatec: That was actually commented on a normal hydrology for the remainder of the year, but still contributions strong contributions in The Philippines from ancillary services, particularly commenting on the second quarter as we normally do. Yes.
Thadja, CEO or Senior Executive, Skatec: And obviously, that is also reflected in our guidance when it comes to the full year. And The Philippines, there, we have provided guidance obviously on a shorter term basis. And it’s obviously also important that when we talk about the full year in terms of guidance, we have included the catch up in terms of the ancillary services contract prices, where we have seen that there has been a positive decision in the Energy Regulatory Committee in The Philippines, but the decision has not been formalized and issued yet.
Hans Jakob, CFO, Skatec: So these are the ASP revenues, 200,000,000, which is not included in the Q2, but is included for the full year guidance.
Moderator: Okay. We have no more questions online either. So I think with that, we’ll just say thank you for listening and end the presentation.
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