The transition of the 400 MW Western Downs solar farm in Queensland to a fixed price contract, and a fall in revenues from its Australian big batteries after the bonanza in 2022 have combined to crimp the latest quarterly revenues from the country’s most successful renewable and storage developer Neoen.
The French-based company late last week noted that its 3rd quarter revenues had fallen 8 per cent to €120 million, although its nine-month revenues still looked strong with a 12 per cent lift to €397.5 million.
The apparently conflicting trends indicate a number of different factors, including seasonal variations in output, the transition from some new plants from highly profitable merchant sales from the wholesale spot price to less spectacular long term supply contracts, and the inherent volatility of battery earnings.
Western Downs is Neoen’s biggest solar project and was completed in June this year. After enjoying good initial returns from high wholesale prices at the time, it has now transitioned to its power purchase agreements, including with the Queensland state-owned CleanCo.
Neoen’s two biggest completed battery storage projects in Australia, the 300MW and 450 MWh Victoria Big Battery, and the 150 MW and 193 MWh Hornsdale Power Reserve, also delivered lower revenues in the 4rd quarter following the big revenue and profits in the same period in 2022, when the fossil-fuelled energy crisis drove wholesale prices and price volatility to record levels.
“With every passing quarter, Neoen generates substantially larger volumes of electricity, demonstrating our ability to rapidly expand our portfolio of power plants and to deliver first-class operating performance,” CEO Xavier Barbaro said in a statement.
“The slower pace of growth of our cumulated revenue since the beginning of the year was widely anticipated … as several major PPAs came into force, revenue streams at prices secured over the long term mechanically replaced last year’s early generation revenue, which was inflated by extremely high market prices.
“Likewise, the highly volatile conditions in Australia’s electricity markets ratcheted up our storage revenue last year and made for an unfavourably high base of comparison for this period, something which was clearly identified.”
Neoen is currently building the 412 MW Goyder South wind project in South Australia, that state’s biggest, and another four big battery projects, including the 100 MW, two hour battery in Canberra (which is suffering big delays), and the Western Downs battery which has recently been expanded to 270 MW/540 MWh.
It is also building the 200 MW/400 MWh Blyth battery in South Australia, which is supporting a “renewable baseload” contract with BHP’s Olympic Dam mine in conjunction with the Goyder South project, and a landmark 219 MW/876 MWh Collie battery in Western Australia.
That battery has a two year contract with the Australian Energy Market Operator to shift excess solar away from the middle of the day to the evening peaks, and is so lucrative Neoen earlier this year upgraded its 2025 earnings forecasts by around €100 million.
The company confirmed that new Ebitda earnings target of more than €700 million in 2025 in its latest announcement, and confirmed its target of reaching 10 GW of total capacity in operation or under construction by the end of 2025.
Earlier this year, Neoen said it had become the first company to have more than 3 GW of renewable capacity operating in Australia. Its expected Ebitda for the 2023 calendar year is between €460 million and €490 million.
