Litgrid AB — Earnings Release 2024

Nov 8, 2024

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author: "Mantas Bieliauskas"
date: 2024-11-08 08:49:00+00:00
processor: python-docx+mammoth
status: success

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Press release

2024-11-08

Litgrid results for 9 months: completed crucial steps for synchronisation, important infrastructure projects are implemented

In the third quarter of this year, Lithuanian electricity transmission system operator Litgrid took the necessary steps for synchronisation with continental Europe and implemented projects that increase the reliability of the power grid and are important for the development of renewable energy and rail transport electrification. Compared to the same period a year ago, the company's revenue grew, while profits decreased.

“In the third quarter of this year, we took one of the most important steps towards the Baltic synchronisation with continental Europe: together with Latvian and Estonian operators, we notified Russia and Belarus about the non-extension of the BRELL agreement and will decouple from their electricity grids already in February of next year. Today is exactly three months until the planned disconnection, after which we will conduct a joint isolated operation test and connect to continental Europe via Poland. While implementing synchronisation projects, last quarter we started the construction works on the last section of the 330 kV power lines being built in Western Lithuania - Šyša-Bitėnai, we signed a cooperation agreement with the Polish operator PSE on the new land link Harmony Link, and we also started the territory planning work on this project,” says Rokas Masiulis, CEO of Litgrid.

In the third quarter, Litgrid continued to focus on the integration of renewable energy sources to the electricity transmission grid. In July we have successfully switched on a new 330 kV switchboard in Tytuvėnai, to which wind parks with a total capacity of more than 600 MW will be connected. During the quarter, Litgrid connected a 105.4 MW wind farm in the Kelmė district and a 50 MW solar power park in the Kaišiadorių district to the grid, and the total permitted generation capacity of solar and wind power plants in Lithuania crossed the 3 GW limit and currently stands at 3.5 GW.

Litgrid also continued work related to railway infrastructure. In the third quarter, after the reconstruction, the Lentvaris traction substation was switched on. This is the first of 6 substations that will be connected to the electricity transmission grid and will supply electricity the LTG Infra contact network on the Vilnius–Klaipėda railway section. Litgrid also started the design and construction works of the Žeimių traction substation and announced the procurement of construction works for the Tarvainiai traction substation. Litgrid also signed tripartite agreements, according to which the reconstruction and capital repair works of transmission lines will be carried out in the Rail Baltica project.

Reliability of supply

The amount of electricity transmitted through Lithuanian transmission grid to meet the country's needs decreased by 0.4% from 6.789 TWh in the nine months of last year to 6.760 TWh in nine months of this year.

In January-September of 2024, the average interruption time (AIT) indicator was 1.002 minutes, and the energy not supplied (ENS) indicator was 27.915 MWh. NERC has set the AIT for the whole year at 0.934 minutes and the ENS at 27.251 MWh. As a result of power transmission disruptions caused by a strong storm at the end of July, the levels of indicators set by the National Energy Regulatory Council (NERC) were slightly exceeded. NERC has set the AIT for the whole year at 0.934 minutes and the ENS at 27.251 MWh.

The overall availability of the interconnectors with Sweden (NordBalt) and Poland (LitPol Link) in the first 9 months was 99.18% and 97.97%, respectively.

Financial results

According to unaudited data, Litgrid revenue in the first 9 months of 2024 amounted to EUR 279.6 million. Compared to the same period last year, it was 1.7% higher.

Transmission revenue (including congestion management revenue used for tariff reduction) decreased by 39% to EUR 92.6 million. The average effective transmission price increased by a factor of 2 year-on-year, but the decrease in revenue is due to the use of congestion management revenues of EUR 106.7 million to reduce the tariff in the first 9 months of 2023.

Revenue from ancillary services increased by a factor of 5.1 to EUR 101.7 million. The main reason for the change was the 5.5 times increase in the price of ancillary services due to the planned higher costs by NERC.

Revenue from balancing activities increased by 1.5% to EUR 80.2 million. System balancing service is always zero-marginal for Litgrid, i.e. the change in revenue has no impact on the profit/loss as it only covers the actual costs incurred.

The company's earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first 9 months of 2024 were EUR 48.6 million, 22% less than at the same time last year, when EBITDA was EUR 62,1 million. Adjusted EBITDA (after adjustments for temporary regulatory deviations from the levels approved by NERC) amounted to EUR 37.3 million. This compares to an adjusted EBITDA of EUR 29.6 million for the first 9 months of 2023. Adjusted EBITDA was mainly driven by the EUR 9 million additional component for the financing of investments in the 2024 transmission revenues.

Net profit in the first 9 months of 2024 was EUR 31.7 million, 27% less than in first 9 months of 2023, when net profit was EUR 43.3 million. The lower profit was mainly due to EUR 59.8 decrease in transmission revenue, EUR 17 million lower other transmission activities result and EUR 4.1 million increase in operating costs. The result was positively affected by EUR 67.5 million higher result in ancillary services and EUR 1.7 million lower costs for compensation of technological losses. Adjusted net profit for the first 9 months of 2024 amounted to EUR 22.1 million, an increase of 42% compared to EUR 15.6 million in the same period last year.

Litgrid's investments in the first 9 months of 2024 amounted to EUR 147.1 million, of which 61% was allocated to the implementation of strategic and nationally important electricity projects and 39% to the reconstruction and development of the transmission network and operational support.

Congestion management revenue in the first 9 months of 2024 amounted to EUR 107.5 million, an increase of 39% compared to the same period last year. The congestion management revenue is not revenue neutral and does not directly contribute to Litgrid's operating result, and its use is governed by Regulation 2019/943 of the European Parliament and of the Council and the methodology approved by the Agency for the Cooperation of Energy Regulators of the European Union (ACER). Congestion management revenues are mainly used to partially finance the company's investments to increase the capacity of interconnectors.

About Litgrid:

Litgrid, the operator of the Lithuanian electricity transmission system, maintains the stable operation of the country's electricity system, manages electricity flows, and creates conditions for competition in the open electricity market. The company manages more than 7,000 km of overhead lines, more than 200 transformer substations, and 17 interconnectors with other countries in Lithuania and maintains them on a regular basis to ensure the adequate transmission of electricity to all the country's residents, institutions, and other organisations.

Since 22nd December 2010, Litgrid shares are listed on the Nasdaq Vilnius Stock Exchange's supplementary trading list. 97.5% of the shares of Litgrid are listed on the stock exchange. Litgrid's shares are owned by the energy transmission and exchange group EPSO-G, 100% of which is owned by the Ministry of Energy of the Republic of Lithuania.