French renewable energy developer and power producer Neoen revised upwards its forecast for EBITDA in 2021 and announced new capacity targets through 2025 that will be budgeted at around €5.3 billion ($6.34 billion).
In terms of capacity, the company will strive to have at least 10GW of wind, solar and storage assets in operation or under construction by the end of 2025, versus 4.1GW in 2020.
The company will focus on achieving 2GW of new projects annually by putting effort into markets where it is already established and which offer attractive opportunities for growth, it said in a statement.
Xavier Barbaro, Neoen’s Chairman and Chief Executive Officer, commented: “Neoen reported a strong increase in revenue and EBITDA for 2020 in another demonstration of its growth profile. Despite delays to several projects, we commissioned close to 800MW in capacity and launched the construction of almost 1GW during the year. We also won over 1GW in new projects, proving once again our competitiveness and our ability to devise innovative solutions.”
Solar, wind and storage
Solar revenue rose 20% compared to 2019 as a result of the contribution from assets commissioned in 2020, especially in El Salvador and Mexico, and, to a lesser extent, those facilities that entered operation during 2019 in Australia, France, Jamaica and Zambia.
However, revenue was held back by less supportive irradiation conditions in Australia throughout the year, by the reduced availability of an asset in Australia in the first half as a result of grid upgrade work, and by the decrease in market prices, especially in Australia, over the last three quarters of 2020 compared to the previous year.
Wind revenue was 10% higher than its 2019 level. This increase was powered by the contribution from the new capacity added in Ireland and France during 2019 and also in Finland and France during 2020.
The early-generation revenue recorded by the Bulgana facility in Australia during the second half and the excellent wind conditions in Europe in the first quarter of 2020 also contributed.
These factors helped to make up for the less supportive wind conditions in Europe during the third quarter of 2020 and the lower average price recorded by the Hornsdale3 wind farm in Australia in the first nine months of 2020 compared to the previous year.
This asset had temporarily benefited from early-generation revenue prior to the entry into force of its long-term power purchase agreement in October 2019.
Storage revenue totalled €32.7million in 2020, up from €20.5million in 2019. An exceptional event in Australia during the first quarter was the main factor behind this very hefty increase. A power interconnection line linking South Australia and Victoria came down during a tornado in late January 2020, creating specific conditions that generated a high level of non-recurring revenue.
Conversely, the Group’s storage revenue was lower in the last three quarters of the year compared to the previous year as a result of unfavourable market conditions in Australia for the sale of network services (FCAS).
Neoen sets a new EBITDA goal
The 10GW goal is estimated to require investments to the tune of €5.3 billion, which will be secured from fundraising initiatives. Barbaro said: “To achieve our targets, we will continue to develop our own energy projects, to sign long-term power purchase agreements with high-quality partners and to hold these assets over the long term. We also plan to selectively sell assets to help fund our strong growth.”
After posting a 25% year-on-year increase in 2020 earnings before interest, tax, depreciation and amortisation (EBITDA) to €270.4 million, Neoen said it now expects to book between €295 million and €325 million in EBITDA in 2021, with an EBITDA margin of around 80%.
Post-2021, the company will target an EBITDA increase of more than 20% in 2022, as compared to the prior-year result, and pursue annual growth of at least 10% in the 2023-2035 period.
Neoen explained that the updated goals reflect the planned expansion of its installed capacity base and growth expectations related to future participation in tenders, but do not take into consideration any delays in project commissioning or other impacts on operation and construction related to the global pandemic.
Barbaro added: “We are thrilled to have won a call for tender initiated by the Victorian Government for its Victorian Big Battery project, which will be one of the largest battery storage facilities in the world, and also a pan-European contract with a consortium of four leading Dutch groups for a wind farm in Finland. Lastly, Neoen further reinforced its role as a pioneer in sustainable finance, with the signing of a syndicated loan integrating ESG criteria and the issue of the first ever green convertible bond in Europe.”