Latvenergo: The first quarter is characterized by a significant increase in electricity prices

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During the reporting period, the volume of electricity and natural gas sold in retail trade has also increased by 9% and 120%, respectively. In the first quarter of 2021, the Group’s operations were affected by the increase in electricity demand due to colder weather conditions, as well as the general increase in energy prices, which resulted in a significant increase in the average price of electricity in the entire Nord Pool region. Growth »Latvenergo“In 2021, it has reached in all new business directions.

In the first quarter of 2021, Latvenergo Group’s revenue is 249.9 million lats. euros or by 14% more than in the corresponding period last year. Lower electricity generation at the Daugava HPP, in turn, has had a negative impact on the Group’s EBITDA, which is 80.7 million euros, which is 18% less than in the first quarter of 2020.

The first quarter of 2021 is characterized by a significant increase in electricity prices. In the first three months of 2021, a sharp rise in spot electricity prices was observed in both the Nordic and Baltic countries, due to higher demand for electricity due to colder weather conditions, as well as higher prices for other energy resources. If the average price of electricity in the Nord Pool system was almost 3 times higher (+173%) and reached 42.14 EUR / MWh, then in Latvia it was 88% higher than in the corresponding period last year.

In the first quarter of 2021, the Latvenergo Group is the largest electricity producer in the Baltics, producing 36% of the total electricity generated in the Baltic States or 1,565 gigawatt hours (GWh), half of which is electricity from renewable energy sources. The operation of Latvenergo AS TEC is adjusted to the electricity market conditions and heat demand. In the reporting period, Latvenergo AS TEC produced 2.6 times more electricity than in the corresponding period last year or 787 GWh. The increase is mainly due to warm weather and low electricity prices in the same period last year.

In turn, electricity generation at the Daugava HPP has decreased by 37% compared to the corresponding period last year, and it is 769 GWh. The development was influenced by a significantly smaller water inflow into the Daugava, which was 576 m in the first three months of the year³/ s (in the corresponding period a year ago – 979 m³/ s). Although the amount of energy produced by HPPs has decreased, we are the leader in the production of green electricity in the Baltics – the electricity generated from renewable energy sources in the Group is 775 GWh or 50% of the total amount of electricity produced.

Due to colder weather conditions, the amount of heat produced has increased by 37% compared to the corresponding period last year, reaching 1011 GWh. According to the data, the average air temperature in Riga in the reporting period was -1.3 degrees Celsius, but in the 1st quarter of 2020 +3.6.

During the reporting period, the retail sales of Latvenergo Group in the Baltics amounted to 1,799 GWh, which is 9% more than in the 1st quarter of 2020. In the first quarter of 2021, almost 40% of the total amount of electricity sold in retail is outside Latvia. With the opening of the Lithuanian household electricity market, by March 31, 2021, almost 20 thousand contracts have been concluded. The volume of natural gas sold has more than doubled during the reporting period, and it is 341 GWh. There is convincing growth in all new business directions – 153 new solar panel agreements have been concluded in the Baltics, as well as the Group’s first solar energy park has been opened in Lithuania. In the public charging, the customers of the “Elektrum” mobile application have performed more than 1,700 charges in the amount of 100 MWh. The range of “Elektrum Apdrošināts” customers and also the operation of the e-shop is expanding.

Latvenergo Group’s revenue in the first quarter of 2021 is 249.9 million euros, which is 30.1 million euros or 14% more than in the corresponding period last year, which was positively influenced mainly by higher electricity market prices, higher electricity and heat sales. Latvenergo Group’s EBITDA in the reporting period is 18% or 17.3 million euros lower than in the 1st quarter of 2020, and it is 80.7 million euros. This was mainly negatively affected by lower electricity generation at the Daugava HPP. The Group’s profit for the reporting period is 35.5 million euros.

The total amount of Latvenergo Group’s investments in the first three months of 2021 is 26.6 million euros, which is 28.9 million euros or 52% less than in the corresponding period last year, which was mainly affected by the separation of transmission assets. During the reporting period, investments in distribution network assets accounted for 73% of total investments or 19.5 million euros. By investing in environmentally friendly projects, in the 1st quarter of 2021, 4.2 million euros have been invested in the reconstruction of Daugava HPP hydro units.

After the end of the reporting period, on May 17, Latvenergo AS issued 7-year green bonds with a total nominal value of EUR 50 million with high investor interest. The proceeds from the bond issue will be used for the implementation of environmentally friendly investment projects.

After the end of the reporting period on May 12, 2021, at the shareholders’ meeting of Latvenergo AS, it was decided to pay out 98.2 million euros in dividends to the state. Dividends of Latvenergo AS are also used as a source of financing for the state budget program “Support for Electricity Users”, thus providing a smaller mandatory procurement component.

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