The international energy company “Ignitis Group” seek to double the installed capacity of Green Generation by 2025, thus ensuring higher electricity production in the region and less energy dependence on third countries. The Group announced this goal in the Strategic Plan 2022-2025 on Monday.
The Strategic Plan envisages that the Green Generation installed capacity of Ignitis Group should reach 2.0-2.2 GW by 2025 (currently 1.2 GW) and 4 GW by 2030.
“Recent geopolitical events show that it is necessary for Lithuania and the entire region to increase the capacity of clean local electricity generation, and the most sustainable way to achieve this is the development of Green Generation. Ignitis Group has set ambitious goals and every year moves towards their implementation. In the Strategic Plan we also maintain and strengthen our commitment to sustainability and decarbonisation, thus ensuring that we contribute to stop climate change,” says Darius Maikštėnas, Ignitis Group CEO and Chair of the Management Board.
The Group’s planned CAPEX for 2022–2025 is EUR 1.7–2.0 billion. Over 90% of investments in 2022–2025 will be sustainable, and 85–95% of them are directed towards the implementation of the projects which are directly or indirectly related to the United Nations Sustainable Development Goals.
Around 50% (or EUR 0.8–1.0 billion) of the investments will be directed towards the Green Generation segment – this will allow to increase the Green Generation installed capacity to 2.0–2.2 by 2025. The current Green Generation installed capacity of the Group amounts to 1.2 GW.
The Strategic Plan also establishes targets to ensure the digitalisation of the networks as well as to increase the service quality, network efficiency and resilience, which will support the energy transition. The investments into the Networks segment makes up 45% of the total estimated CAPEX of the Group for 2022–2025, which amounts to EUR 0.8–0.9 billion.
By the end of 2025, we aim to install smart meters for all business customers and households, consuming >1,000 kWh/year. It is estimated that by 2025 there will be 1.1–1.2 million smart meters installed. Investments in the Networks segment will be directed towards replacing overhead electricity distribution lines with underground cables, facilitating grid connections and empowering prosumers. Investments in network efficiency will boost the distribution network resilience.
Progress in creating a sustainable future
The Group has committed to create a sustainable future and is pursuing its goals under the four main pillars: climate action, preserving natural resources, ensuring future-fit employees and a robust organisation.
The first two pillars include green generation development, greenhouse gas (hereinafter – GHG) emissions reduction, promoting circular economy and preserving ecosystem and biodiversity. The Strategic Plan sets out the Group’s GHG emissions reduction pathway of 23% by 2030 and around 47% by 2050 (compared to 2020 baseline). This pathway is in line with the Group’s emission reduction targets validated in 2021 by ‘Science Based Targets initiative’ and a long-term net-zero goal.
The Group takes care of its employees and intends to focus on occupational health and safety, growing a diverse and inclusive organisation, improving employee experience. Transparent and ethical conduct, business resilience and sustainable value creation are also among our top priorities.
The Group will continue to monitor its progress in accordance with the evaluation results of international rating agencies Sustainalytics and MSCI, which asses ESG risk management, as well as CDP, a globally recognised environmental disclosure organisation.
The updated Strategic Plan sets out a commitment to maintain a strong financial position of the Group. The Group’s adjusted EBITDA in 2025 is expected to reach EUR 370–410 million, and the sustainable share of adjusted EBITDA should amount to 70% or above. EBITDA growth in 2022–2025 is estimated at 11–23%, compared to 2021, and will be mostly affected by the development of Green Generation and Networks segments.
Ignitis Group also plans to maintain a solid investment-grade ‘BBB’ or above rating over the period of 2022–2025. The net debt and adjusted EBITDA ratio will not exceed five times.
Green Generation determined 2021 results
Although the natural gas and electricity markets have been challenging for the past year, investments in Green Generation and new capacities have helped to deliver strong results. The Group’s Adjusted EBITDA grew by 35.3%, compared to 2020, reaching EUR 332.7 million. We surpassed our guidance of EUR 300–310 million by 7.3%.
Green Generation EBITDA last year increased by 113.3 percent up to 107.5 million Eur. The main driver was installed capacity expansion that allowed the higher electricity generation due to the launch of Pomerania WF (94 MW) and Vilnius CHP WtE unit (19 MWe, 60 MWth), and a full year effect of Kaunas CHP (24 MWe, 70 MWth) launched in August 2020. Increased results of Kruonis PSHP, due to better commercial result exploiting favourable spread between peak and off-peak market prices, and Kaunas HPP, mostly due to higher electricity market price, were also supporting factors, adding to the Group’s Adjusted EBITDA.
It is important to mention, that our pipeline further increased by up to 460 MW after acquiring wind farm projects in Latvia and Poland, a solar portfolio in Poland and the start of greenfield development by securing land plots for onshore wind and solar projects in Lithuania and Poland. To accelerate growth even further as well as to capture return premium, we aim to initiate asset rotation program in 2022.
In 2022, we expect Adjusted EBITDA in the range of EUR 290–335 million. We expect increase in results from both of our main segments – Green Generation and Networks. However, in Customers & Solutions segment skewed result of natural gas business between 2021 and 2022 (more positive effect falling to 2021 and more negative to 2022) will have a negative impact.
In line with the Dividend Policy, for 2021 we intend to distribute a dividend of EUR 1.19 per share, corresponding to EUR 87.6 million and a yield of 5.7% for ordinary registered shareholders, and – 5.8% for GDR holders (considering the year-end closing prices). Worth mentioning, a dividend of EUR 0.600 per share (out of EUR 1.19) for the second half of 2021, is subject for approval at the Ordinary General Meeting of Shareholders, to be held on 29 March 2022.