Development & Construction The Development & Construction segment derives its revenues from the sale of development rights and construction services delivered to power plant companies where Scatec has economic interests. Power Production The power plants produce electricity for sale primarily under long term power purchase agreements (PPAs), with state owned utilities or corporate off-takers, or under government-based feed-in tariff schemes. The weighted average remaining PPA duration for power plants in operation is 17 years. The electricity produced from the power plants in the Philippines is sold on bilateral contracts and in the spot market under a renewable operating license, and as ancillary services.
Power Production Second quarter operations were stable with high availability of the power plants. Power production reached 9161) GWh in the second quarter compared to 860 GWh in the same quarter last year. Revenues increased by NOK 140 million to NOK 1,015 million in the second quarter mainly driven by significantly higher power sales in the Philippines, a new power plant in Argentina and foreign currency effects, partly offset by lower revenues in Ukraine after the Russian invasion. In the Philippines, production for the quarter ended 20% above the 5-year average explained by improved hydrology and reขallocation of production volumes from ancillary services to spot sales to optimise revenues However, total power production ended below the contracted sales volumes, as expected, and power was therefore purchased in the market. This led to cost of sales of NOK 198 million, an increase of NOK 131 million compared to the same period last year. Total gross profit for the quarter ended at NOK 810 million, broadly in line with the same period last year. Foreign currency effects, NOK 13 million of non-recurring costs and operating expenses for new power plants in Ukraine and Argentina, led to an increase in operating expenses of NOK 44 million compared to the same quarter last year.
EU Taxonomy update 100 percent of Scatec’s revenues, operating expenses and investments are derived from Taxonomy eligible activities. In 2021, third-party assessments were carried out to evaluate the Company’s alignment to the EU Taxonomy. The assessment of the “Do no Significant Harm” (DNSH) principle of the EU Taxonomy Annex 1 Technical screening criteria confirmed that all six hydropower assets are aligned with the Taxonomy DNSH criteria, but lack a detailed site-specific climate risk assessment. Two site-specific climate risk assessments were completed by end of second quarter 2022 and the remaining four are now under development. The two completed site assessments did not identify any major climate risks related to safety or power production. The remaining assessments will be finalised over the next few months.
During second quarter 2022, Scatec conducted Environmental and Social Impact Assessments (ESIAs) and due diligence or baseline studies for projects located in South Africa, Brazil, India, Cameroon, Rwanda and the Philippines. All assessments were conducted in close dialogue with project and financing partners for all new projects under development with a certain level of maturity. All projects assessed during the second quarter are Category B projects according to the IFC Performance Standards, with potential limited adverse social or environmental impact. The GHG emissions avoided from the renewable power projects where Scatec has operational control amounted to 0.4 million tonnes, broadly in line with first quarter 2022, as no projects reached commercial operation date during second quarter 2022. First half of the year is also consistent with the same period last year.
Basis of preparation These condensed interim consolidated financial statements are prepared in accordance with recognition, measurement and presentation principles consistent with International Financing Reporting Standards as adopted by the European Union (“IFRS”) for interim reporting under International Accounting Standard (“IAS”) 34 Interim Financial Reporting. These condensed interim consolidated financial statements are unaudited. These condensed interim consolidated financial statements are condensed and do not include all of the information and notes required by IFRS for a complete set of consolidated financial statements. These condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements. The accounting policies adopted in the preparation of the condensed interim consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for 2021, except for revenue recognition policy applied in the Philippines. Refer to Note 10 Change in accounting policy for further details.
You must be logged in to post a comment.