Covid-19 may have caused power demand to tumble in many major economies and wreaked havoc on supply chains, but the Danish renewables developer and Spanish energy giant's quarterly results suggest they remain upbeat
Despite the coronavirus spurring a significant fall in global power demand across Europe and wreaking havoc on supply chains, Spanish energy giant Iberdrola and Danish wind developer Ørsted are sticking to growth outlooks devised before the pandemic hit, financial results from both companies have today revealed.
Iberdrola, which recorded a 6.1 per cent uptick in EBIDTA in its wind and solar business in the first three months of 2020, has maintained a pledge to invest €10bn and recruit 5,000 more staff this year in support of its clean energy transition strategy.
The company said it intends to move ahead with 8.5GW of clean energy projects planned worldwide, with Ignacio Galán, Iberdrola chairman, noting that accelerating investment is key to rebooting coronavirus-ravaged economies. "There is complete consensus that the road to economic recovery must be green, with the fight against climate change at its core," he said. "The European Green Deal and the National Energy and Climate Plans across the EU already provide a clear pathway. Iberdrola is fully prepared to help deliver these targets."
Iberdrola revealed it had installed 1.2GW of new capacity in the last three months, taking total capacity to 53.3GW. Of €1.73bn of investments made in the first quarter of 2020, the biggest share, €810m, went to its renewables business. A further €766m was invested by its networks business.
In Spain, where mainland demand for electricity fell by three per cent and wholesale market prices fell 37 per cent over the first three months of 2020 as the country battled with one of the world's most acute coronavirus outbreaks, Iberdrola's EBITDA fell by three per cent.
Nevertheless, the Spanish energy giant said it would weather the worst impacts of the pandemic due to the "strength of a business model based on networks and renewables", the sale of a stake in wind turbine maker Siemens Gamesa, which generated €1.1bn in proceeds and brought in €484 million in capital gain in the quarter, and an 8.5GW development pipeline.
The Covid-19 outbreak had "no impact on production of [renewable] operation assets", the group noted in a presentation to shareholders, and all clean energy construction activities remain on track.
The firm added that it had enough liquidity to last for 30 months "in normal times", helped by the recent issue of €1.8bn-worth of green bonds.
Meanwhile, Denmark's Ørsted posted its quarterly results this morning, revealing a whopping 33 per cent increase in EBIDTA in the first quarter, with earnings from offshore and onshore farms up by 25 per cent. The renewable energy giant said the increase was driven by the ramp-up of generation from the 1.2GW Hornsea One offshore wind farm off the Yorkshire coast and the Lockett and Sage Draw onshore wind farms in Texas.
Henrik Poulsen, chief executive and president of Ørsted, noted that despite the Covid-19 crisis the company had "a good start to the year with strong financial results", with a fully operational asset base and availability rates for wind farms and power stations within their normal range.
In its results, Ørsted maintained its plans to invest DKK30-32 bn (£3.5bn-£3.7bn) in 2020 and stuck by its full-year guidance of DKK16-17bn (£1.9bn-£2bn), a forecast upped by DKK1bn (£117m) in early March due to updated assumptions following the part divestment of Hornsea One.
Despite conceding that Covid-19 related-issues were contributing to a delay in getting several offshore development projects in the US off the ground, the company said there was "no indication" the pandemic will significantly impact earnings for the year.
"Ørsted is a strong company with a resilient business model, and we are in a much less vulnerable position than many other sectors that are deeply impacted by the crisis," Poulsen said. "However, the impact of Covid-19 will have material ripple effects throughout all economies and sectors, and we cannot be complacent about its potential impact on us. Thus, we remain vigilant about the unfolding crisis and have identified a number of risks that potentially can impact our activities."
The wind developer noted "increased risk of component and service delays from suppliers impacted by the pandemic" could prove an issue and said it was collaborating closely with its partners to mitigate such risks without compromising health and safety standards.
Global Energy Review notes that renewables will be the only energy source to expand in 2020 despite a dramatic nosedive in energy demand worldwide caused by Covid-19's shutdown of economic and public life.
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