2024-05-10
Litgrid's results for the first quarter: strategic projects successfully implemented, improved financial indicators.
In the first quarter of 2024, Litgrid, Lithuania's electricity transmission system operator, continued its preparations for synchronisation with the continental European grid, completed one of the strategic projects necessary for this preparation, and ensured reliable electricity transmission. Compared to the same period a year ago, the company's revenues and profits grew in the first quarter.
"We are less than a year away from the strategic goal of energy independence - breaking away from the russian-controlled electricity system and joining the synchronous zone of continental Europe. At the beginning of this year, we continued to successfully implement our preparations on time. At the beginning of the year, we completed the implementation of the automatic generation management system. At the end of the quarter, we completed the first phase of the reconstruction of the Neris transformer substation and switched on the upgraded part of the substation. Many other ongoing projects are nearing completion this year or next year," said Rokas Masiulis, Litgrid CEO.
Electrification of the railways is another important strategic objective for the country. In January, Litgrid signed a cooperation agreement with LTG Infra and RB Rail to prepare electricity transmission networks for connection to the traction substations of the Rail Baltica project. In March, the company launched a design and construction tender for the Žeimiai traction substation switchyard, which will contribute to the implementation of the Vilnius-Klaipėda rail electrification project.
"As in the past, we continue to work consistently to create the right conditions for the development of renewable energy and energy storage systems in Lithuania. We are pleased to see that investor interest continues to grow, with the last transmission network capacity reservation cycle being the largest since the beginning of last year. We are also already seeing the first results of the development of solar and wind energy: it is symbolic that 11 March was the first day since the closure of the Ignalina Nuclear Power Plant that more energy was produced in Lithuania's electricity system than consumed," said R. Masiulis.
Litgrid continued to focus on innovation in the first quarter. The company completed trials of its variable line capacity technology, which showed an average increase in line capacity of 52% compared to the design capacity, thanks to the use of artificial intelligence and various sensors. "Litgrid and Kaunas University of Technology also carried out unique tests on a 1 MW experimental battery and a smart energy system with a thermal storage unit, which plays an important role in the development of solutions for power system flexibility and the integration of renewable energy sources.
Reliability of supply
The amount of electricity transmitted through Lithuania's transmission grid to meet the country's needs increased by 5.9% from 2.627 TWh in the first quarter of last year to 2.782 TWh in January-March this year.
Litgrid maintained and managed the electricity transmission system, consistently meeting its reliability targets. In the first quarter of 2024, the average interruption time (AIT) indicator was 0.342 minutes, and the energy not supplied (ENS) indicator was 10.596 MWh. The National Energy Regulatory Council (NERC) has set the AIT for the whole year at 0.934 minutes and the ENS at 27.251 MWh.
The overall availability of the interconnectors with Sweden (NordBalt) and Poland (LitPol Link) in the first quarter was 99.77% and 94.87%, respectively. LitPol Link availability was primarily affected by planned works conducted by the Polish operator PSE.
Financial results
According to unaudited data, Litgrid's revenues in the first quarter of 2024 amounted to EUR 113.0 million. Compared to the same period last year, it was 30.1% higher.
Transmission revenues (including congestion management revenues used for tariff reduction) decreased by 29% to EUR 37.7 million. The average effective transmission price increased by a factor of 2 year-on-year, but the decrease in revenues is due to the use of congestion management revenues of EUR 35.6 million to reduce the tariff in the first quarter of 2023.
Revenue from ancillary services increased by a factor of 5.5 to EUR 40.7 million. The main reason for the change was the 5.5 times increase in the price of ancillary services due to the planned higher costs in NERC.
Revenue from balancing activities increased by 40% to EUR 34.1 million, but Litgrid's system balancing service is always zero-marginal, i.e. the change in revenue has no impact on the profit/loss as it only covers the actual costs incurred.
The company's earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first quarter of 2024 were EUR 29.4 million, 49.2% more than at the same time last year, when EBITDA was EUR 19.7 million. Adjusted EBITDA (after adjustments for temporary regulatory deviations from the levels approved by VERT) amounted to EUR 12.8 million. This compares to an adjusted EBITDA of EUR 9.4 million for the first quarter of 2023. Adjusted EBITDA was mainly driven by the additional component for the financing of investments in the 2024 transmission revenues.
Net profit in the first quarter of 2024 was EUR 21.5 million, 66.7% more than in January-March 2023, when net profit was EUR 12.9 million. The higher profit was mainly due to a better result from ancillary services, lower costs for compensation of technological losses and a better result from financial activities, while the result was negatively affected by lower transmission revenues and a worse result from other transmission activities. Adjusted net profit for the first quarter of 2024 amounted to EUR 7.4 million, an increase of 84% compared to EUR 4.0 million in the same period last year.
Litgrid's investments in the first quarter of 2024 amounted to EUR 38.8 million, of which 64% was allocated to the implementation of strategic and nationally important electricity projects and 36% to the reconstruction and development of the transmission network and operational support.
Congestion management revenues in the first quarter of 2024 amounted to EUR 30 million, an increase of 43% compared to the same period last year. The congestion management revenue is not revenue neutral and does not directly contribute to Litgrid's operating result, and its use is governed by Regulation 2019/943 of the European Parliament and of the Council and the methodology approved by the Agency for the Cooperation of Energy Regulators of the European Union (ACER). Congestion management revenues are mainly used to partially finance the company's investments to increase the capacity of interconnectors.
