Encevo Group Net Profit Doubles to €80m in 2021

On Wednesday 11 May 2022, Luxembourg-based energy provider Encevo Group announced its financial results for 2021, a year marked largely by a global economic recovery.

The COVID-19 pandemic still impacted certain business sectors of the group without causing significant disruption. In the field of networks, the group had to deal with flooding in the summer and in the last months of the year were marked by a spike in energy prices on the wholesale markets. This energy price crisis continues to pose significant challenges to energy companies across Europe. Faced with these developments, the group was able to take advantage of the solid foundations established in previous years and the result reached the level before the pandemic crisis.

The net profit for 2021 returned to its level before the pandemic crisis and amounted to €79.7 million, compared to €38.2 million in 2020). EBITDA increased to €238.6 million cpmpared to €223.3 million in 2020. The group is therefore posting a good performance in an environment marked for the most part by an economic recovery.

The most significant challenge of 2021 was the spike in energy prices, especially natural gas, on the wholesale market after the summer. Indeed, prices have experienced variations of up to 500% of the price of the previous year. Thanks to its supply strategy, Enovos, the energy supplier of the Encevo Group, was able to limit the effects for its customers, although increases were inevitable towards the end of the year. In this context, 2021 will have been proof that the energy market has become a global market, the effects of which are also reflected in Luxembourg. The situation on the markets remains very volatile with high risks, especially in the geopolitical context of the war in Ukraine.

Investments in the infrastructures of tomorrow

In 2021, €268 million were invested, most of it in network activities (€203 million). These investments by Creos concern above all the modernisation of electrical networks, digitilisation efforts and infrastructure for electromobility. The network of public charging stations (Chargy, SuperChargy) has grown further to reach 538 stations, in addition to 354 municipal or private charging stations integrated into the network and also accessible to the public. The deployment of smart meters is also complete (99% for electricity and 97% for gas) and will contribute to the development of smart networks essential to the success of a sustainable energy transition.

New large-scale infrastructure projects are also on the horizon, such as the 380 project, which consists of the construction of a new very high voltage line to replace the existing infrastructure. Similarly, Encevo and its subsidiaries, in particular Creos Deutschland, are working on projects aimed at modernising existing gas networks as well as the question of the capacity of networks to accommodate more green gases (biogas and hydrogen) with a view to decarbonisation. Among the initiatives in this direction can be mentioned the mosaHYc project (conversion of natural gas networks into a 100% hydrogen infrastructure) as well as the "Greater Region Hydrogen" initiative, which aims to develop a hydrogen economy in the Greater Region: Saarland (Germany), Lorraine (Grand-Est, France) and Grand Duchy of Luxembourg.

Development of renewable energies

With regard to renewable energies, the installed renewable energy production capacity increased to 374 megawatt (MW), compared to 358 MW in 2020, of which approximately 184 MW in Luxembourg. Wind energy production is slightly down, which is also explained by the fact that major wind repowering projects are underway, i.e. that existing wind turbines have been dismantled without the new, more efficient wind turbines having already replaced them. On the other hand, photovoltaic production capacity doubled in 2021 in Luxembourg (from 15.7 MW to 30.2 MW), thanks to innovative projects such as the country's first floating photovoltaic installation, a carport and the extension of the largest large ground-mounted installation as well as new rooftop installations. Added to this are new projects in the Netherlands (five parks with a total of 5.8 MW) as well as the first park of a large photovoltaic project in Germany. In the Südeifel region, a project comprising eleven production sites for a total capacity of 214 MW will be carried out in 2022 and 2023.

The field of technical services has developed into an increasingly important and mature activity. Encevo has assigned a new proper name to this activity, previously known as Enovos Services and now called Teseos. At the beginning of the year, the company diego was added, now its own commercial company which belongs 100% to Teseos and which offers innovative solutions in relation to the energy transition and with the support of renowned Luxembourg partners. Despite some difficulties in the supply chain due to the COVID-19 pandemic, the field of technical services benefited above all from a dynamic year in the construction sector.

The three pillars of the Encevo Group (networks, supply and renewable energies, technical services) make it a key player in the transition to a sustainable energy world. Assuming this role will require significant investments in the years to come, which will probably exceed those of the past year, especially in the modernisation of energy networks and in renewable energy production capacities. The group has a strong base to face these challenges, as evidenced by its ratio of financial debt to company equit) of 34.8%, compared to 34.7% in 2020.

Risks in perspective

While the pandemic crisis has not yet been completely overcome, the war in Ukraine is strongly influencing European energy markets, both for gas and for electricity. The current geopolitical context is a source of uncertainty for the economy and in terms of energy prices and security of supply. These current crises add to the challenges posed by an energy transition. Encevo remains convinced that the transition to a sustainable energy world, i.e. towards the decarbonisation of industry, towards more renewable energies, towards more energy efficiency remains more than ever the approach to follow.

In 2021, the number of employees of Encevo Group amounted to 2,332 people (average over the year; compared to 2,164 people in 2020).

The full annual report is available at www.encevo.eu.