Isranomics

Enlight Energy shines despite industry challenges

by | Nov 27, 2022 | Company Reporting | 0 comments

Enlight Energy (TASE: ENLT), the Israeli renewable energy company, reported strong financial results for Q3, 2022. The company made NIS 64M profit in the reported period compared to NIS 2M in the corresponding quarter of 2021. The rise in profitability was a result of strong growth in revenue.

There hasn’t been a flood of impressive financial announcements from the renewable energy sector in recent weeks. For example, one of the industry’s giants, Energix, had to decrease its projection due to some headwinds in one of its key markets. Doral Energy, another company, was compelled to raise finance from large investment banks at an eyewatering 12% interest rate in order to fund its projects. Enlight, on the other hand, was able to distinguish itself from competitors due to its remarkable performance.

Enlight did not only report positive financial results, but also increased its revenue projections for 2022 to NIS 690-700 million, compared to the original forecast of NIS 610-640M. In addition, Enlight, has managed to raise the equity money it needs to carry out projects with a combined capacity of 2.6 gigawatts at a low interest rate of 3%, laying a foundation for a rapid expansion in the coming years. Having secured low cost financing, Enlight anticipates a yearly cash inflow of NIS 490 million from these projects.

Unlike other players in the industry, which have been impacted by the EU’s decision to cap the price of electricity until the end of the next year, Enlight does not anticipate it will have any effect on the conduct of its business. This is due to the fact that in both Spain and Sweden, where it operates, the selling price of the electricity it generates is far below the limit.

The company also indicated that it recognised regulatory assistance that boosts the predicted profitability rates of its projects in the United States, Spain, and Israel.

In Israel, the new regulation will go into effect in January 2024, permitting renewable energy producers to switch from selling electricity to the grid to selling directly to the end consumer.

The bill to reduce inflation enacted in the US in August 2022 provides significant benefits in the form of a tax credit of $27 per megawatt-hour linked to the consumer price index in the first 10 years of a project’s operation.

Enlight noted that the rise in the index will improve its cash flow by NIS 517 million over the next 20 years, given that the scope of the energy sales contracts it has signed is NIS 10 billion and its index-linked debt is NIS 2.6 billion.

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