Latvenergo has increased the amount of electricity generated and the number of customers in the first quarter of 2023
May 31, 2023
Today, 31 May, Latvenergo Group published its unaudited condensed interim consolidated financial statements for the first three months of 2023.
In the first three months of the year, Latvenergo Group's financial results were most significantly affected by the increase in electricity generation at the hydropower plants. Along with the larger inflow in the Daugava River, the hydropower plants generated 77% more electricity than in the same period last year. Latvenergo is the largest generator of green energy in the Baltics. In total, the Group's power plants generated 2,179 GWh of electricity – almost twice as much as a year ago. The generation of electricity was 1/3 higher than the amount sold in retail, providing the opportunity to export part of it to neighbouring countries.
Overall, 15% more electricity was sold to customers in the first quarter of 2023 than in the same period last year. The number of Elektrum customers grew rapidly, with the number of electricity customers increasing by 10% to over 832 thousand, while the number of natural gas customers increased by 42% to over 27 thousand.
The increase in the amount of electricity generated by the Daugava HPPs and the volume of electricity sold by the Group and the number of customers had a positive impact on the Group's financial results. In the first quarter of 2023, Latvenergo Group's revenues amounted to EUR 729.4 million, up 79% year-on-year, while the Group's EBITDA increased by 26% to EUR 155.7 million. After the end of the reporting period, Latvenergo AS paid EUR 134.0 million in dividends to the State on 2022 profits.
At the beginning of 2023, as electricity prices fell in Europe, the average electricity price in Latvia also fell in the first quarter of 2023 by 28% to EUR 100/MWh. This was mainly driven by a 16% decrease in the price of natural gas compared to the first quarter of 2022. After the end of the reporting period, this enabled a reduction in electricity sales prices for around 300 thousand Elektrum household customers.
With the Russian invasion of Ukraine in 2022, Europe experienced a sharp increase in electricity and natural gas prices. European Union countries are taking concerted action to limit energy price rise and ensure security of energy supply. Since the beginning of 2023, electricity prices have been decreasing, with the average Nord Pool system price falling by 22% compared to the same period last year to EUR 85/MWh. This was driven by a decrease in energy prices, mainly natural gas. In Latvia, the price of electricity fell by as much as 28% to EUR 100/MWh.
In the first quarter of 2023, the average water inflow in the Daugava River was 1,251 m3/s, almost twice as much as in the same period last year, so the amount of electricity generated by the Daugava HPPs increased by 77% compared to last year, to 1,573 GWh. Latvenergo Group is the largest generator of green electricity in the Baltics. The CHPPs’ output also increased by 146% this year to 601 GWh. In total, the Group generated 2,179 GWh of electricity, which is 43% of the total electricity generated in the Baltic states.
The volume of thermal energy generated decreased by 5% to 810 GWh, mainly due to energy efficiency measures, significantly reducing consumption in Riga's state and municipal buildings.
In the first 3 months in 2023, Latvenergo sold 1,635 GWh of electricity to its customers in the Baltics, 15% more than in the same period last year. The increase in electricity sales was driven by a 10% increase in the number of customers. In the first 3 months of 2023, the Group's electricity customer portfolio consisted of more than 832 thousand customers, including more than 194 thousand customers outside Latvia. Meanwhile, in the natural gas trading segment, the number of Latvenergo customers increased by 42%, exceeding 27 thousand customers at the end of March.
With the increased output of Daugava HPPs and the higher volume of electricity sold, as well as the impact of electricity sales prices, the Latvenergo Group's revenue for the first three months of 2023 amounted to EUR 729.4 million, which is EUR 321.7 million more than in the corresponding period last year. Latvenergo Group’s EBITDA increased by EUR 32.1 million to EUR 155.7 million. The profit of the Group for the reporting period amounted to EUR 108.4 million.
Our new business directions have an increasing impact on financial and operational performance. At the end of March, Elektrum Drive electric vehicle charging network reached 200 ports and more than 9,200 charges of 193 MWh were made, saving 118 tonnes of CO2 emissions.
In the first quarter of 2023, the number of contracts for the sale of solar panels and parts of solar parks exceeded 300. The total installed capacity of solar panels for Latvenergo Group's retail customers already exceeded 44 MW at the end of March, making Latvenergo one of the leading providers of this service in the Baltics.
36.2 million EUR were invested in 3 months of 2023. Of this, about 2/3 were invested in distribution network assets. According to the Group’s Strategy for 2022–2026, in the future, the Group’s investments in renewable energy resource generation capacity will increase significantly, which will reduce greenhouse gas emissions and promote the climate neutrality of Latvia by 2050.
Continuing to implement its growth strategy, Latvenergo Group is actively working on increasing its power generation portfolio to strengthen its position in the region's wind and solar power industry. The strengthening of green technologies in the ownership of the Latvian state-owned company reduces Latvia's energy dependence and reinforces the progress towards achieving the country's climate neutrality by 2050. The Group is developing its own projects and acquiring solar and wind projects at various stages of development to increase renewable energy generation capacity by 2,300 MW by 2030, which is twice the current amount. Latvenergo invites merchants to take the opportunity to become its partners and to offer mature and efficient solar and wind power plant projects for purchase consideration, thus creating a powerful green energy fleet owned by Latvia's most valuable company.
Latvenergo AS has stopped purchasing natural gas from Russia as of 24 February 2022, switching to LNG supplies from other countries. In September 2022, Latvenergo AS, having participated in the long-term capacity allocation procedure for the LNG terminal organised by Klaipėdos nafta AB, has obtained the right to use the 6 TWh annual capacity of the LNG terminal of Klaipėdos nafta AB for regular supplies of natural gas for the next 10 years. For 2023, Latvenergo AS has concluded contracts for 6 TWh LNG supplies from the USA and Norway.
In order to systematically involve school youth in the promotion of sustainable energy generation, its rational use and science, for the twenty-eighth consecutive year Latvenergo AS organises the “FIZMIX Eksperiments” erudition competition for 8th and 9th grade students, bringing together teams from Latvian schools. 231 teams or 1,155 students from 145 schools applied for the 2023 competition, confirming the popularity of the competition and the importance of the Group's activities in the field of social responsibility.
After the end of the reporting period, Latvenergo AS paid EUR 134.0 million in dividends to the State on 2022 profits. Also, after the end of the reporting period, in accordance with the terms of customer contracts, approximately 300 thousand household customers received a price reduction, taking into account the positive trends in the electricity market.
The unaudited condensed interim financial statements of Latvenergo Group for the first 6 months of 2023 will be published on 31 August, and for the 9 months, on 30 November. The unaudited condensed interim consolidated financial statements of Latvenergo Group covering the first three months of 2023 are available at www.latvenergo.lv in the Investors/Reports section.