Results of companies

Greenalia 1H21 – Summary (Notes)

Greenalia has obtained better than expected results in the first part of the year. The main reason has been the high power prices. Moreover, the number of wind farms in operation has increased. Nowadays, they have 5 wind farms working. Although Croa I, Croa II and Monte Tourado (28 out of 74.5MW of Wind) are in the testing phase, which means that they are not contributing to the P&L. These 3 wind farms will start to produce revenue in this 2H21.

All the wind farms are selling electricity on “spot”, so they are taking advantage of the power prices.

Altogether, Greenalia has 125MW (575MW FV equivalents) operative and 950MW “under” construction (still with financial closings).

This 975MW under construction are 135MW of wind farms in Galicia and 840MW of Solar and batteries in the US (Misae phase 2 project)

Galician wind farms (Campelo, Bustelo, Monte Toural and Touriñan – Eolo I) are near to close the financial terms. All of these for wind farms will sell energy at a merchant price. It is expected to start the construction works in early 2022 and be operating at the end of 2022

The wind farms which shape the Eolo II plan are under the administrative process. They expect to have them operative at the end of 2023 They are working on 180MW. 135 of them are the ones obtained in the January auction this year (3800 hours at 28.89€)

In July, Greenalia acquired 670MW of solar and 170MW of storage in the US (Texas). It is the second phase of Misae solar (The first one was acquired by CIP). They expect to start building in the US in 2Q22. It would be operative in the 2H23. At this point in time, they have the administrative permissions and negotiating the financial closing.

The investment in the US to build this 840MW would be higher than $450MM. Also, they confirmed that are looking for more acquisitions in the US

They also said that Greenalia has another biomass plant being processed.

They are looking to secure PPAs around €40/MW with companies from Galicia.

Results Greenalia 1H21

Greenalia 1H21 results

We notice that current liabilities are much higher than current assets. There are more than €100MM of debt expiring in the next 12 months. Bond IV is expiring in 2025, and the rest of the debt is related to project finance. Currently, they have €43MM in cash and €320MM of debt (71% project finance)

The 2H21 results are not going to be as good as we could imagine with these power prices and the fact that Greenalia Wind farms are on “pool”. This will be because of the new Real Decreto (16th September) which affect 3 out of the 5 Wind farms until the next 31st March and the fact that Curtis suffers a diminishment of its capacity this quarter due to a change in the O&M company. Now, it is working at its run rate.

Moreover, later this month, the second auction of this year will take place. We expect higher prices than in January’s auction due to the current market conditions

Questions – First thoughts

  • How much have they paid for the US assets?

How long has been Curtis operating below the run rate due to the O&M changes?

  • When the strategic plan 2022-2026 will be released?
  • How do they plan to finance all these new projects? (AK would be considerable… Takeover?)
  • How big is going to be the impact of the Real Decreto? 2H21 earnings are going to be good (I assume that taking into account 6 months of Ourol, the incident in Curtis, the higher power prices, the Real Decreto since 16th September and the addition of Croas, it is difficult to estimate the EBITDA). We hope that 2H21 EBITDA will be similar but not better than the 1H21 EBITDA. 

Conclusion

We like the pipeline of Greenalia and the huge potential that the company has. However, we should also bear in mind that they will need a huge amount of money to finance its plan, the lack of information related to its acquisition costs and the slow pace they are delivering its projects

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