Earnings call transcript: Scatec Q3 2025 sees revenue surge, stock gains

Scatec Solar OL reported a strong third quarter for 2025, with revenues climbing by 22% to NOK 2.295 billion. The company’s earnings call highlighted significant growth in power production and strategic advancements in battery technology. Scatec’s stock responded positively, with a 1.77% rise, reflecting investor optimism about its future prospects.

Key Takeaways

• Revenue increased by 22% year-over-year to NOK 2.295 billion.
• EBITDA reached NOK 1.1 billion, indicating strong operational performance.
• Corporate debt reduced significantly from NOK 9.2 billion to NOK 6.7 billion.
• Stock price rose by 1.77% following the earnings announcement.

Company Performance

Scatec’s overall performance in Q3 2025 demonstrated robust growth, with a notable increase in power generation and a strategic focus on battery technology integration. The company’s multi-technology approach, including hybrid projects in South Africa, the Philippines, and Egypt, has positioned it well within the renewable energy sector.

Financial Highlights

• Proportionate revenues: NOK 2.295 billion, up 22% YoY
• EBITDA: NOK 1.1 billion
• Power production revenues: NOK 1.2 billion
• DNC segment revenues: NOK 1.76 billion
• Corporate debt: Reduced to NOK 6.7 billion from NOK 9.2 billion

Market Reaction

Following the earnings release, Scatec’s stock price rose by 1.77%, closing at 109.0 NOK. This increase reflects a positive market sentiment, likely driven by the company’s strong financial performance and strategic initiatives in renewable energy.

Outlook & Guidance

Scatec aims to invest $1 billion in equity annually until 2030, with plans to more than double its operating capacity to 9 GW. The company also targets reducing corporate debt to NOK 4 billion by 2030 and expects full-year power production to reach 4,100-4,200 GWh.

Executive Commentary

CEO Terje commented, "Renewables in our markets is now the most cost-efficient source of energy," highlighting the competitive edge of Scatec’s multi-technology capabilities. He also emphasized the transformative potential of battery technology, calling it "a game changer for the industry."

Risks and Challenges

• Potential supply chain disruptions could impact project timelines.
• Market saturation in key regions may limit growth opportunities.
• Fluctuations in currency exchange rates could affect financial results.
• Regulatory changes in emerging markets could pose compliance challenges.

Q&A

During the call, analysts inquired about the impairment of the Mandubim project and the company’s strategies for ancillary services and merchant projects. Scatec reaffirmed its focus on long-term contracts, ensuring stable revenue streams amidst market volatility.

Full transcript - Scatec Solar OL (SCATC) Q3 2025:

Terje, CEO, Scatec: Good morning everyone and welcome to our third quarter presentation. Today we are presenting another quarter with strong financials and also good progress on our strategic priorities. We will also provide an update on our strategy and targets towards 2030. Reflecting on our last 12 months, we have made significant progress on.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Our strategic priorities.

Terje, CEO, Scatec: Both in terms of growing our renewables portfolio and also in.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: terms of strengthening our balance sheet.

Terje, CEO, Scatec: We expect this momentum to continue.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: At an even higher pace than what we have seen over the last 12 months.

Terje, CEO, Scatec: Let me start with the highlights of the quarter and then Hans Jakob.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Will take you through the financials.

Terje, CEO, Scatec: I will come back with an.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Update on our strategy and our targets towards 2030.

Terje, CEO, Scatec: In terms of the highlights of the quarter, our total proportionate revenues.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Increased by 22% to nearly NOK 3 billion.

Terje, CEO, Scatec: In the quarter, our EBITDA was NOK 1.1 billion, representing increased activity levels.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Especially in our DNC segment, where we have had very good progress.

Terje, CEO, Scatec: Our projects under construction are progressing well, with revenues of NOK 1.8 billion in the.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: DNC segment and a very strong margin of 11.4%.

Terje, CEO, Scatec: I’m also very pleased with the development of the backlog that it is.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Now at an all-time high of 3.4 gigawatts, after we have included a new project in Colombia, 130 megawatts after we have signed a PPA there, and also included 80 megawatts of battery projects in the Philippines after these projects are progressing.

Terje, CEO, Scatec: Getting closer to construction. Here I would also like to.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Highlight the progress that we are making on Release, our platform for leasing out solar and battery equipment in Africa.

Terje, CEO, Scatec: Here we have started installing a new.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Solar and battery system and Release contract with ENEO in Cameroon, and we have also signed two new lease contracts in Liberia and Sierra Leone.

Terje, CEO, Scatec: We also continue to strengthen our balance sheet, and we repaid NOK 953 million of corporate debt during the quarter. With this, our net interest bearing debt.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: On corporate level is now down to NOK 4.3 billion.

Terje, CEO, Scatec: Finally, based on the strong progress on pipeline growth and corporate debt reductions, we are increasing our ambitions for our self-funded growth plan going forward.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We will talk more about this toward the end of the presentation.

Terje, CEO, Scatec: Let me talk about power production. We generated 1,202 GWh in the quarter, and this is an increase of 7%.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Adjusting for the divestments during the year.

Terje, CEO, Scatec: This is driven by good hydrology in.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: The Philippines and also a new project coming into operation during the year in Botswana.

Terje, CEO, Scatec: Revenues came in at NOK 1.2 billion. This also represents a small increase from the same quarter last year, adjusted for divested assets.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: This is also driven by the increase in generation.

Terje, CEO, Scatec: Let’s talk a bit. Also, in terms of more details on the Philippines, the Philippines delivered a strong quarter both.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In terms of power generation, in terms of ancillary services, and also in terms of financial contribution.

Terje, CEO, Scatec: Power Production increased by 16% from last year to 354 GWh.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: This is again based on strong hydrology.

Terje, CEO, Scatec: Contract volumes were also significantly up to about 150 GWh. This is based on selling replacement power.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: To other energy companies on shorter term contracts. These contracts are limited to the second half, where we have very good hydrology and we are long on energy generation.

Terje, CEO, Scatec: Prices in the Philippines have been down in the quarter, but based on our.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Flexible generation portfolio and trading activities, we’ve been able to secure above average market.

Terje, CEO, Scatec: Prices for the spot sales that we’re.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Doing in the Philippines.

Terje, CEO, Scatec: Revenues reached NOK 385 million in the quarter, and this is compared to NOK 432 million.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In the same quarter last year, when we had a catch up effect of.

Terje, CEO, Scatec: $60 million and underlying EBITDA increased by $10 million to $332 million, also reflecting good cost control in our.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Venture in the Philippines.

Terje, CEO, Scatec: In terms of construction, we currently have close to 2 gigawatts of solar.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Battery storage projects are under construction in six different countries.

Terje, CEO, Scatec: Since last reporting, we have had very good progress across the portfolio.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We have recorded DNC revenues in the.

Terje, CEO, Scatec: Range of $1.8 billion and also with.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: A very strong gross margin of 11.4%.

Terje, CEO, Scatec: The EBITDA for the DNC segment came.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In at $135 million.

Terje, CEO, Scatec: In South Africa, Groblersfontein is undergoing commissioning.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Testing as we speak and will.

Terje, CEO, Scatec: Come into operation shortly. In Tunisia, construction is progressing well.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Also, for these projects, we expect them to reach operation by the end of this year.

Terje, CEO, Scatec: We expect COD in the first half.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Of 2026 for our projects in Brazil, in Botswana, and also in the Philippines.

Terje, CEO, Scatec: When it comes to Muguba, our.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: First pure battery projects in South Africa, we expect this to come into operation in the second half of next year.

Terje, CEO, Scatec: Finally, the OBLIS project in.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Egypt, this one is being built in two phases, with these two different phases coming into operation in the first half and the second half of next year. I’m incredibly pleased with the progress that we are currently doing on construction across all these different projects in all of.

Terje, CEO, Scatec: These different countries and very, very proud.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Of the teams and seeing what the teams are able to do related to the construction progress.

Terje, CEO, Scatec: At the end of the quarter, we still have NOK 4.1 billion of remaining contract value, and we continue to expect to.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Be able to realize 10 to 12% gross margin related to these projects.

Terje, CEO, Scatec: Let me then zoom out a bit and comment on our total growth portfolio.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Growth continues to be supported by our integrated business model, limiting our net equity investments into our projects.

Terje, CEO, Scatec: This is enabling us to scale through.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: A self-funded approach without overstretching our balance sheet.

Terje, CEO, Scatec: On the left hand side here, you will see our project portfolio in construction.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: With estimated EPC revenues in total for the whole portfolio of about NOK 9 billion, and with NOK 4.1 billion remaining contract value.

Terje, CEO, Scatec: Below you’ll see our backlog, which includes the water projects with secured offtake agreements.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: These now represent close to NOK 17 billion in additional EPC revenues for our DNC segment.

Terje, CEO, Scatec: We target construction start for two of.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: These projects in 2026, while the rest of the project is expected to come into construction through 2026.

Terje, CEO, Scatec: Some projects have moved out in time, as you will probably recognize, but none of the projects have fallen out.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: The backlog, and we still aim to bring all of these projects into construction.

Terje, CEO, Scatec: As we have emphasized before, revenue recognition.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Resembles an S curve for our construction period for the projects, and we aim to have positive working capital through how we are structuring our projects through the construction timelines for the projects.

Terje, CEO, Scatec: As you understand, we have a transformative period ahead of us. We have a strong portfolio of secure projects, which will enable us to do more.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Than double our operating capacity over the next two to three years to more than 9 GW.

Terje, CEO, Scatec: Now I will hand over to Hans Jakob Hegge to take you through the financials.

Hans Jakob Hegge, CFO, Scatec: Thank you, Terje, and I’m pleased to say that we delivered strong results across the group. We have higher production and high DNC activity, and we had a very good.

Quarter in the Philippines.

I’ll walk you through the group financials and the performance of our operating segments and also cover the improvements in our capital structure, starting with group level performance. We delivered strong results in the quarter. Consolidated revenues was NOK 1.1 billion compared to NOK 3 billion last year, which where we.

Had sales gains from divestments in South Africa.

Africa, the EBITDA reached NOK 785 million. The results are impacted by an impairment in Mendubim of NOK 130 million due to new assessment of future curtailment levels and power prices. To the right you see the proportionate financials. Revenues increased by 22% to NOK 2.295 billion, while EBITDA ended at NOK 1.1 billion. Adjusted fuel sales gains were in line.

With the same quarter last year.

Now let me take you through the.

Segments.

Starting with power production, which delivered another solid quarter. Revenues reached close to NOK 1.2 billion compared to NOK 1.8 billion in the same quarter last year, where we also had sales gains and a catch-up payment. In the Philippines, EBITDA was NOK 955 million. On a 12-month rolling basis, you can see a positive trend, which shows both underlying growth and strong contribution from divestments. The slight downtick in the quarter is partly explained by the strong Q3 last year due to the divestments in South Africa. The last 12 months, we have delivered more than NOK 5.7 billion in revenues and NOK 4.8 billion in EBITDA. Overall, we are very pleased with the generation from our operating assets. In our DNC segment, activity levels continue to increase. Proportionate revenues were NOK 1.76 billion, and the EBITDA NOK 135 million, more than doubling quarter on quarter.

The trend of the last 12 months confirmed the long-term strength and scalability of our DNC business and gives a clear picture of the strong momentum that we are building. DNC revenues the last 12 months have reached NOK 4.5 billion, with a steady increase over the last five quarters, and we aim to continue rolling. EBITDA ended at NOK 261 million with strong contributions from high-margin projects and disciplined cost control. The increasing trend reflects higher activity levels across several geographies, with Obelisk in Egypt in the forefront. With a strong backlog moving into construction, we expect DNC to remain a key engine going forward with continued profitable growth. At the end of the quarter, we had available liquidity of NOK 4.7 billion. Let me explain some of the main movements.

We received NOK 424 million in distributions from power plants, including proceeds from refinancing in the Philippines, had positive working capital movements of NOK 1.4 billion, mainly related to milestone payments for Obelisk, invested NOK 414 million net in growth projects, paid NOK 139 million in interest, and NOK 943 million in debt repayments. The RCF is currently undrawn. We continue to strengthen our capital structure. The net corporate debt was reduced to NOK 4.3 billion from NOK 5.6 billion in the second quarter. The reduction was mainly driven by the change in cash and close to NOK 1 billion of corporate debt repayments. The reduction was mainly driven by the change in cash, as I said, and.

The $1 billion of corporate debt reductions.

This is a very positive trend where we are on project level, have increased the net debt by NOK 2.3 billion to NOK 15.9 billion. As we continue to grow, the debt for projects under construction had a net increase of NOK 2.5 billion, mainly related to Obelisk. Finally, I’ll take you through the outlook before I give the word back to Thalia. The outlook for 2025, with a full year perspective, is where we estimate the power production between 4,100 and 4,200 GWh. Our estimated full year EBITDA midpoint is increased by NOK 50 million to NOK 435 million. This is driven by an estimated strong performance in the Philippines in the fourth quarter.

For the fourth quarter, we expect a total power production between 1,000 and 1,100 GWh and the EBITDA in the Philippines of NOK 280 to 380 million based on normal hydrology, strong contributions from ancillary services, and in the DNC segment we have remaining contract value of NOK 4.1 billion and a gross margin estimate of 10% to 12% on average across the portfolio for projects under construction. For corporate, we expect a full year EBITDA of NOK 115 to 125 million negative, which is in line with the previous estimate. These estimates reflect a strong base for operating assets, high construction activity, and a healthy cost control. By that, Thalia, please take us.

Through the strategy update.

Terje, CEO, Scatec: Thank you, Jan Fourie. It has become a bit of.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: A tradition during our third quarter presentation.

Terje, CEO, Scatec: To also give a strategy update.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: This time we will increase also the time perspective until 2030.

Terje, CEO, Scatec: To be clear, we are increasing our growth rate.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We continue to be self-funded, and we will continue to take down the corporate debt levels. These are the main pillars of also how we are going to drive our strategy going forward.

Terje, CEO, Scatec: We are on a steady course to provide profitable growth from an all-time high construction program while our financial.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Flexibility will continue to improve going forward.

Terje, CEO, Scatec: Let me start by taking stock of our progress on the strategy communicated last year. We have made good progress on all key priorities, and I’m pleased to say that we are ahead of plan regarding growth. We have already secured projects in construction and backlog that will take us beyond the target of $750 million in equity investments annually. On divestments, we have secured $2.6 billion.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In proceeds, we have allocated more than 75% of these proceeds to bring down our debt on corporate level.

Terje, CEO, Scatec: Our corporate interest bearing debt is now at NOK 6.7 billion, which is a significant reduction from the NOK 9.2 billion that.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We had last year.

Terje, CEO, Scatec: All in all, we are on track to reach our 2027 targets communicated last year and well positioned to capture.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Future attractive growth going forward.

Terje, CEO, Scatec: In terms of the industry, we continue to see a very positive.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Development when it comes to the renewables industry going forward. This is really supporting our growth ambitions. Solar panel, wind turbines, and battery prices continue to come down, and they are now again at all-time low levels. Especially the reduction on battery prices is really a game changer for the industry and a game changer in the markets where we are operating. This increases the usability and significantly also increases the market size and opportunity space for us as renewable energy players. This is a development I think it would have been difficult to foresee only a few years ago in terms of how rapidly this is developing.

Terje, CEO, Scatec: We can now deliver dispatchable renewables.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: At competitive prices in most of the markets where we are operating and further with batteries.

Terje, CEO, Scatec: In addition, we can also provide ancillary services, frequency regulation, and also load shifting to the grid. It’s also increasing the services that.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We can provide in these markets.

Terje, CEO, Scatec: This makes renewables the most attractive.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Source of energy in the markets where we operate, and not only as intermittent power, but also as dispatchable and baseload power.

Terje, CEO, Scatec: This development will continue to fuel.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: The growth of renewables going forward in our markets.

Terje, CEO, Scatec: Bloomberg estimates that investments in renewables will exceed $100 trillion annually in relevant markets.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In the years to come.

Terje, CEO, Scatec: This will exceed, and this means.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: That it will exceed $500 billion in the period from now until 2030 in our emerging markets.

Terje, CEO, Scatec: This assumes a deployment of 2,500.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Gigawatts of renewables in this period. This is massive in terms.

Terje, CEO, Scatec: Of deployment at Scatec, we have a strong track record and we are well.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Positioned to compete in this space. The key for us going forward is really to identify the good opportunities and be able to identify opportunities where we are able to capture attractive value.

Terje, CEO, Scatec: In summary, our strategic progress over the last years, coupled with the development of the renewables industry, represents a strong.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Basis for increasing our growth ambitions going forward.

Terje, CEO, Scatec: Based on this, we, as I have already said, increase our growth targets towards 2030.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: While we will continue to deliver deleveraging.

Terje, CEO, Scatec: We target to invest on average at least $1 billion annually in equity in.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: New projects in this period.

Terje, CEO, Scatec: We will continue to focus on.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Selected markets where we see renewables fundamentally making sense, and where we see that we have a strong position.

Terje, CEO, Scatec: We will also continue to build.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: On our multi-technology skills, where we are able to deploy hybrid projects, I.

Terje, CEO, Scatec: Will say that we have good visibility.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: On short term growth, we have the ability, and we will continue to stay disciplined relative to our investment hurdles.

Terje, CEO, Scatec: We will also continue to deleverage our corporate balance sheet, and we aim to bring down our corporate debt to about NOK 4 billion by 2030, and this will.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Obviously increase our interest expenses and the burdening from our balance sheet significantly in this period.

Terje, CEO, Scatec: Finally, we stay committed to optimize our.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Portfolio to become even more capital efficient.

Terje, CEO, Scatec: We target to realize another NOK 3.4 billion in divestment proceeds in the period, and we will continue to optimize investment.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Structures so that we can also capture value in an efficient way and use our capital in a very efficient way.

Terje, CEO, Scatec: In terms of growth, our targets are backed by, as I’ve said.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Very good short-term visibility and a strong pipeline.

Terje, CEO, Scatec: We currently have 2 GW under construction.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In addition, we have a backlog of 3.4 gigawatts after we have added a project in Colombia and also battery projects in the Philippines, as I mentioned previously.

Terje, CEO, Scatec: These backlog projects are expected to.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Start construction over the next year.

Terje, CEO, Scatec: Together with these projects, we will be able to more than double.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Our capacity in operation to more than 9 GW.

Terje, CEO, Scatec: Further, we have a large pipeline of 7.6 GW of maturing quality projects. In addition, we also have a.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Significant portfolio of early stage and greenfield.

Terje, CEO, Scatec: Opportunities that we are developing over time.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: That will also move into the pipeline as these ones are maturing.

Terje, CEO, Scatec: We have not talked so much.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Recently, about the opportunities that we are.

Terje, CEO, Scatec: Working on because our main focus has.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Been on conversion, conversion from pipeline to backlog and from backlog to construction.

Terje, CEO, Scatec: We have more than 10 GWh.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Of also opportunity projects that have not yet been included in pipeline that we continue to work on.

Terje, CEO, Scatec: To be clear, we will continue to focus on the markets where renewables fundamentally are competitive and where we see.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Good opportunities to build scale over time.

Terje, CEO, Scatec: These markets are characterized by attractive solar and wind resources, obviously a growing.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Economy with sizable and growing energy demand.

Terje, CEO, Scatec: Clear energy targets with stable and.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Supportive regulatory environments for renewables.

Terje, CEO, Scatec: Our main regions are highlighted here on the map. These are markets with some of.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: The world’s best solar irradiation and wind resources.

Terje, CEO, Scatec: We will continue focusing the main.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Portion of our growth capital on existing markets, existing countries. We do already have strong positions, however.

Terje, CEO, Scatec: We also see value in having a diversified portfolio across different markets with strong potential for renewables. We will invest in solid projects where the fundamentals are strong and where.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We see outlook for long-term growth and building scale over time.

Terje, CEO, Scatec: Let me then address some of these markets and also shed some light.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: On the opportunities to grow beyond what we have currently communicated as pipeline.

Terje, CEO, Scatec: Egypt provides favorable conditions with its.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Strategy to promote industrial decarbonization, energy security.

Terje, CEO, Scatec: To achieve 42% renewable energy in.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: The generation mix by 2030.

Terje, CEO, Scatec: We continue to have discussions on new projects to support the government.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In reaching these targets.

Terje, CEO, Scatec: South Africa is offering attractive public turnarounds.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Which we have been successful in for many years. In addition, we do see a.

Terje, CEO, Scatec: Growing market for private offtake.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We are positioning ourselves here in the CNI segment through our LYRA platform.

Terje, CEO, Scatec: Where we are developing this together with.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Our partners Stanlib and Standard Bank. In South Africa we are developing a broad greenfield portfolio of new projects.

Terje, CEO, Scatec: That are not yet included in our pipeline to make sure that we are.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Positioned for opportunities also in the future.

Terje, CEO, Scatec: The Philippines has a target of 35% electricity generation from renewable energy by 2030.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: are targeting 50% by 2040. Today they are only at 22%.

Terje, CEO, Scatec: Together with our partner Aboitiz, we develop a multi-technology pipeline to also address.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: This market opportunity going forward.

Terje, CEO, Scatec: Let me also mention Tunisia and Romania. These are examples of relatively new growth countries for us with a very large potential.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Here we are more early stage. We are building our development teams, and we are developing pipelines for capturing opportunities here on a long-term perspective.

Terje, CEO, Scatec: These are examples. Our pipeline includes only projects that are.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: At least 50% likely to reach financial flows and move into construction.

Terje, CEO, Scatec: Obviously, to illustrate that here.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: You do have a significant.

Terje, CEO, Scatec: Volume of.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Opportunities which are coming behind this pipeline will move into the pipeline as they mature.

Terje, CEO, Scatec: Let me talk a bit about also our multi-technology approach. As I’ve said, we see that battery.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Technology and the development within batteries is really a game changer for the industry. Scatec is at the forefront of the development here.

Terje, CEO, Scatec: Let me share some examples. First, in South Africa we have Kennard, soon to be two years in operation.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: This project is already showcasing how renewables can provide dispatchable and baseload power in a competitive manner with other technologies.

Terje, CEO, Scatec: Second, also in South Africa, we have two battery storage projects that is enabling.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: ESKOM to unlock grid capacity at constrained.

Terje, CEO, Scatec: Points in the grid. Both were awarded in tenders and the.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: First one, Mugoba, is already in construction.

Terje, CEO, Scatec: Third, we have the Philippines where we have battery energy storage systems providing ancillary services.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: To enhance grid stability, we have 24 megawatts already in operation, 56 megawatts in construction, and 80 megawatts that we have now moved into backlog. We are also developing more projects together with Aboitis, supporting this going forward.

Terje, CEO, Scatec: Finally, we also have Egypt, where we are constructing the hybrid Obelisk.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Obelisk is building on the learnings and experience that we gained in Kenhar.

Terje, CEO, Scatec: We are adding battery capacity to enable delivering more energy during the period.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Peak hours in the evening so that it more fits with the needs of the grid in Egypt.

Terje, CEO, Scatec: These are examples, and it’s just the beginning as we expect this development and our track record to unlock significant.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: New opportunities going forward.

Terje, CEO, Scatec: Let me then also, before I move on, emphasize that we will continue, even in light of all of this growth, to stay disciplined with regards to our investment hurdles as we pursue these new projects.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Going forward, we have strict investment criteria, and we will only move forward with projects that are meeting these hurdles, our guardrails, our equity return hurdle.

Terje, CEO, Scatec: Continues to be 1.2 times cost of equity for our projects.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Our cost of equity is adjusted.

Terje, CEO, Scatec: For the market and the country.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We are in and is specific for the project that we realize.

Terje, CEO, Scatec: We are adjusting it, amongst other factors, for things like country risk and FX risk.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Also off-taker risk.

Terje, CEO, Scatec: As an indication, the average equity IRR from our power production and services.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: For projects under construction and backlog, it is in the range of 15%.

Terje, CEO, Scatec: We also do construction for most of our projects, and we also get a significant uplift from both development fees and construction margins, increasing average equity IRRs to around.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: 30% on a net equity basis.

Terje, CEO, Scatec: On top of this, when projects.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Are in operation, we will continue to seek ways of optimizing the value through, for instance, refinancing and also farming down equity in some of these projects.

Terje, CEO, Scatec: Let me also then move to the second strategic priority. We will continue to deleverage, and we target to bring the corporate debt level.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Down to $4 billion by 2030.

Terje, CEO, Scatec: We have already made good progress since last year, and we are reducing the debt. We have reduced the debt by about.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: 2.5 billion to NOK 6.7 billion during the year.

Terje, CEO, Scatec: Already now we start seeing the.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Results of our efforts to strengthen the capital structure.

Terje, CEO, Scatec: The run rate of corporate interest expenses has significantly reduced, and this will reduce the burden of the corporate debt on.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Our free cash flows going forward. This is important for us.

Terje, CEO, Scatec: Furthermore, the credit margin on our bonds has also been vastly reduced over the last two years. We issued our last bond at a.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Credit margin of 350 basis points.

Terje, CEO, Scatec: This one is now trading at an.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Implied margin close to 250 basis points. We have seen a significant improvement of our credit margins and debt costs only over the last couple of years.

Terje, CEO, Scatec: Strengthening the balance sheet and improving.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Our financial flexibility will continue to remain a key priority for us going forward.

Terje, CEO, Scatec: Finally, in terms of financial flexibility, we target $3.4 billion in additional divestments by 2030. We have shown good progress already in this area. This is on top of the.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: $2.6 billion that we have already realized.

Terje, CEO, Scatec: Thus, in the period from our strategy update last year to 2030, we target to realize in total in.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: The range of NOK 6 billion in divestment proceeds.

Terje, CEO, Scatec: We stay focused on capital recycling to fund further growth and also debt replacements. Let me then summarize.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Q3 was a very strong quarter for us. We had good financial results. Most importantly, we’ve seen very good progress on our growth activities, both in terms of construction progress and in terms of increasing our backlog.

Terje, CEO, Scatec: Finally, during the quarter, obviously we.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Have also seen very good progress on reducing the corporate debt levels.

Terje, CEO, Scatec: We are also seeing a continued.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Very positive development of the industry component. Prices are at all-time low, and we continue to see new opportunities being emerged and delivered in terms of the very good ability of renewables now to compete with all other sources of energy generation. Renewables in our markets is now the most cost efficient source of energy, not only on intermittent basis, but also as dispatchable or baseload power.

Terje, CEO, Scatec: Based on these two very.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Positive developments, we’re very comfortable with increasing our growth rates. We are upping our growth rate to have a target to invest $1 billion in new equity annually in the period until 2030. At the same time, we will bring down debt and continue to grow on a self-funded basis.

Terje, CEO, Scatec: Thank you very much for your attention.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: I think we will now open up for Q and A.

Thank you, Tarja. Thank you, Hans Jakob. Yes, we’ll then open up for Q and A. We’ll just start with our audience here and then move on to the ones that are listening online. If you would like to ask a question, just raise your hand and you will get the microphone from Bragi, starting with Daniel from ABG.

Daniel from ABG. One question on the backlog and the new growth target. Based on the backlog you now have, how much of the new growth targets in the period towards 2030 would you say is already covered by that from your view? That is my first question.

Terje, CEO, Scatec: I mean we are talking about.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: $1 billion in, $1 billion in equity investments annually. Obviously, we are indicating a growth target and the backlog is represented in terms of gigawatts and megawatts, not in terms of money. I do believe that you have, we have a significant portion of that growth target already in our backlog. I’m not going to come out with a precise %, but as I said towards the end there, we are quite comfortable with the backlog that we are having and we believe that we are now in a position where we can really be disciplined in terms of the hurdle rates and making sure that we only do investments that are meeting our hurdle rates.

Okay, good. I have a second question. I think you said last quarter that you are in advanced talks on potential deals. I don’t know if you have any new comments on that this quarter versus last quarter.

Yeah, maybe you can check my outlook and see where I’m traveling. No joke to the side, I.

Hans Jakob Hegge, CFO, Scatec: Think that still holds.

As Thaddja said before, doing one to two of these per year is time consuming, and it’s a lengthy process. We are a bit cautious on coloring more, but advanced talks is fairly accurate.

Thank you. Maybe a last one on Mandu Bim. Can you maybe add some color there in terms of load assumptions?

Terje, CEO, Scatec: Yeah.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: On Mende Bim, we have new reports on the market that we have procured. In these reports, we see that the expected curtailment levels are going to expand further into the future than what we had seen before. We now also see that there are very concrete initiatives in Brazil in terms of improving the grid and making sure that the curtailment levels will come down over time. The impairment is based on seeing that curtailment will last a bit longer than what we had anticipated before based on new external reports.

Okay.

Anyone else would like to ask a question? Thomas, Sparbanken Market.

Thank you.

I usually have a lot of questions, but today everything was pretty, pretty clear. That’s good. Could you just touch a bit upon the Philippines ancillary services? You continue to say that you get a strong contribution there. You also mentioned that new projects with dispatchable renewable energy will open up opportunities for doing ancillary services also in other markets. Could you just elaborate a bit on that opportunity?

Yeah.

Terje, CEO, Scatec: I think.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In the Philippines, you see what is being contributed by ancillary services. I don’t think we’ll start dissecting what’s coming from batteries and what’s coming from the hydro power plants, but clearly the ancillary services volumes and prices in the Philippines have been very attractive over the last year, also with the opening up of the ancillary service market so that you both have contracted revenues and you have also more. They had spot related revenues. It gives a very good platform on the revenue levels in the Philippines. We do see that this is a market that is going to increase going forward with the further additions of renewables, intermittent renewables in the market. We believe that it’s going to be an opportunity that’s going to be there for some time that can be captured from also new volumes being brought into the market, also from our side.

In the other markets, I think in.

Terje, CEO, Scatec: Most of the other markets that are.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: More regulated than the Philippines, I think we will see to an increasing degree that the batteries will come as part of a hybrid project, where the project will offer a number of different services to the grid and to the grid operator, not only providing electricity but also providing regulating power. That is being part of what you are selling in new products going forward in these markets. The situation will obviously be slightly.

Terje, CEO, Scatec: Different.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In regulated markets relative to deregulated markets, I think we also see in many of the markets where we are the emergence of capacity or storage auctions and tenders. This is becoming more and more an integrated part of how the regulators are thinking about.

Terje, CEO, Scatec: Developing the grids going forward.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Not only strengthening the grid, but also providing storage batteries to manage their regulating power and unlock grid points.

In terms of the expected returns on projects that are combined solar and battery, do you see kind of terms improving as in terms of when you just had solar standalone, say one and a half years when you started as CEO?

Yeah.

Terje, CEO, Scatec: I’m not going to give.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: You sort of want a straight answer on that question. I think we will.

Terje, CEO, Scatec: On all our projects, we will continue.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: To make sure that we meet our investment criteria, investment hurdles. Obviously, in markets where you are more exposed to different types of risks, you will seek to get a higher return than in the markets where everything is contracted.

In terms of you booked a lot of contingencies at Kenhart because, of course, you had those to be released and you won’t comment on contingencies coming. Could you say when the contingencies would come, if there are any on the projects that you are now?

Terje, CEO, Scatec: In principle, contingencies will.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Be released as you are comfortable with the risk of schedule and quality and everything on the construction coming down. Naturally, contingencies are more likely to be released towards the end of the project and when the project has been finished than during the construction of the project. If you talk about EPC related contingencies, obviously, which I think you are.

Yep, okay. Thank you.

More questions, Anders.

Thank you. I have a couple of questions. Firstly, on the impairment in Brazil, what was the hurdle rate used in the impairment testing?

I don’t think you have talked loudly about it. I rather rephrase saying based on the external report on long term assumptions, it was difficult for us to defend the value. We thought that we were more better off long term also doing this impairment now, basically. I could segue into compensating measures and so on. Your direct question, we are not answering that specifically, but we have done an extensive review of all our assets and we did an impairment in Mandarin particularly.

Okay, will we find it in?

The annual report, a comment on hurdle.

Rates for impairment testing?

Being a CFO, I can’t recall us going into that level of detail, but Andreas and I can check it up and basically.

Okay, come back to you. How much of the asset was impaired? What was the gross value of the asset prior to the impairment?

25%.

You mean at 25% of the gross asset. Thank you. My second question is it seemed to me that you probably had some headwind on currency in the third quarter because of the strengthening of the NOK against a lot of these currencies that you have assets in. Did that have any material impact on the results from power production in the third quarter?

No, it’s the short answer because it’s.

Hedged and everything is.

Yeah, nothing significant. Anyway, they commented on it.

Okay. My last question is, when will we see Scatec do projects only relying on, say, market or spot prices? I appreciate that you might do long term contracts, but are we there that you will pursue projects which is basically selling into a well functioning market without any sort of subsidies, or initiate that kind of projects?

Terje, CEO, Scatec: I mean we are already doing it.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: In the Philippines, with our battery projects in the Philippines, we are doing it.

Terje, CEO, Scatec: And this.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: it is very much linked to the overall model on how we realize the projects. If you do something which is very much based on merchant, or you have shorter term contracts, or you don’t have contracts for 100%, then your leverage in the project will go down. You have to carry more of the CapEx through the equity that you inject into the project.

Terje, CEO, Scatec: Depends also on how.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: We want to realize projects and how we think about being capital efficient in the way we move forward. In the Philippines, we can still get project financing on a merchant basis based on the large portfolio that we already have there. We have a very, very good advantage from that point of view.

Terje, CEO, Scatec: I think as we move.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Into other markets where more of the offtake is related to corporate PPAs, maybe some contracts for differences, other type of structures, you will maybe see that a portion of the project might be exposed to more merchants. Like for instance, we already have in Mandebim where about 60% to 65% of the project is selling on a contract to Ala Norkta, while the rest is being sold into the market on short medium term contracts.

Terje, CEO, Scatec: I think it’s not sort of.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: It’s not black or white. You’re going to see it as a transition in most of the markets where we are.

You still have a preference for longer term coverage because of the leverage you will be able to obtain.

Terje, CEO, Scatec: Yeah, I think it’s incredibly important.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Things are changing now with the technology of the industry where you.

Terje, CEO, Scatec: Can combine, and you can provide more.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Base load, you can provide mid merit, you can also provide some flexibility based on renewables in hybrid structures. Obviously, we are not going to take on a type of risk that we don’t feel that we can manage. You will never go in and sell a pure solar project into a merchant market because you know there might be low prices during the day if there’s over implementation of solar, and then you want to be stuck there having to take low prices.

Terje, CEO, Scatec: You need to sort of put.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Yourself and your projects into a position where you control the risk, and you have the flexibility you need if you’re going to be taking merchant risk.

Excellent, thank you.

Thomas had another question.

Yeah, just a quick follow-up on kind of those merchant projects because looking from the outside on the eastern parts of Europe, say Romania for instance, if you’re allowed to connect the Chinese battery to the grid, it looks like a completely no-brainer in terms of kind of the payback times you see on average day-ahead prices. I mean the spread is multiple, multiple times of what you need to break even. Number one, do you see the possibility of getting those grid connections for standalone battery projects in the eastern parts of Europe? Number two, do they accept Chinese equipment, full turnkey project?

I think on the first one, yes, we do see those opportunities in certain markets in Europe and also certain other markets. Obviously, it’s about timing. It’s about when you can get the grid connection and when you can get the project installed. In terms of limitations on Chinese equipment, it is not about Europe itself in terms of there is a limitation or not, but it’s more about what financing institutions are you working together with and what will those financing institutions accept to fund in terms of Chinese equipment. I don’t see in general a limitation of bringing Chinese equipment into Europe.

You work with Chinese financing institutions on SPV level.

You could, but I think we probably see other more attractive financing alternatives than working with the Chinese, which is mainly vendor financing, which we don’t think is that interesting.

We should not be surprised if we see standalone battery projects in the eastern part of Europe.

No, I don’t think you should be surprised.

Okay, thank you.

Okay, thank you. We have a couple of questions from our online listeners as well. This is from Jurgen in Danske Bank. Good morning. Related to your new and lifted divestment proceeds, amount of NOK 3.4 billion by 2030. Can you elaborate on this? Has your scope been expanded or does this still align with previous perspectives, and also any changes to sales process, etc.

Terje, CEO, Scatec: I mean our scope has been.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Expanded in the sense that we now look towards 2030, but in terms of what we are considering for divestments, farm downs, and capital recycling, the scope is still the same. We will continue to look at investments in markets where we don’t see continued attractive growth opportunities. We will also look at farm downs, recycling capital in some of our larger markets where we may think it makes sense to recycle the capital and invest into new opportunities. That still remains the same.

One more question from Jurgen related to Mandebim. I think we partly have covered it, but the question is also could this also have effect on other projects, our other projects in Brazil, and then might trigger impairments on those projects?

It’s covered in the report, and we specifically say that we have no grounds to speculate. We have done the impairment assessment of all assets, and it’s only Manduim.

Hans Jakob Hegge, CFO, Scatec: This is also partly due to contract.

Structures, counterparties, and geographical location.

Thank you, Hans Jakob. I actually think we have covered the rest of the questions here. If there are no further questions, I think we will thank you for listening and end today’s presentation.

Terje, CEO, Scatec: Thank you.

Unnamed Co-Speaker, Likely Executive/Presenter, Scatec: Thank you.

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