Page 172 - RusRPTApr21

Fortum to supply green energy to Shekinoazot.
On Friday 5 March, Interfax reported that the Second Wind Farm of Fortum had started to supply green energy to Shekinoazot, with the latter having a strategic plan (to be finalised by the end of the year) to move to consuming electricity from renewable sources. That is part of its ESG programme to help it reach its long-term goal of reducing GHG emissions under the Green deal. According to the release, the supplier was chosen out of several generation and supply companies.
We see the news as supportive, with more industrial consumers increasing the demand for green electricity. TGK1 was recently able to sign bilateral contracts with Sibur and PhosAgro, while RusHydro announced that it was signing a contract with Polyus, with industrial producers getting ready for the EU carbon tax (for details see our Russian Utilities Yearbook 2021 – EU BCA to drive investors out of Russian utilities, Fourth edition, of 25 February). Along with that, gencos are trying to find a way to fit in, with more companies indicating their interest in further renewables projects (in addition to Enel Russia, InterRAO, Unipro and TGK1 under our coverage) as well as such companies as Fortum expanding their renewable portfolio, not only by building assets but also by buying already operating assets.
In addition, there is active work ongoing to develop the legislation for low-carbon certificates, as well as other documents, with Russia aiming to deliver on its obligations as part of the Paris Climate Agreement (see Electric Utilities – ESG investing; First climate pack, of 21 December 2020 and Russian Utilities ESG Almanac, vol. 2 – Decarbonising Russian Power, of 19 November 2020).
ROSSETI’s 4Q20 revenue dropped 4.5% y/y to RUB 282.2bn due to connection fees falling to RUB 16.3bn, while electricity distribution revenue was up 1.1% y/y to RUB 234.6bn and electricity resale revenue was up 8.4% y/y to RUB 23.3bn in 4Q20. RSTI’s FY20 revenue was down 2.7% y/y to RUB 1trln, which is nearly in line with our estimate of RUB 999.7bn. Opex increased 2.7% y/y to RUB 256bn, while depreciation rose 6.6% y/y to RUB 36bn. EBITDA declined 23.8% y/y to RUB 60.1bn in 4Q20, while the company’s FY20 EBITDA was down 8.6% y/y to RUB 288.5bn, coming in 3.1% higher than we expected. RSTI's net loss reached RUB 16.7bn in 4Q20 vs. net income of RUB 8.2bn in 4Q19, as total non-cash one-offs increased RUB 8.7bn y/y. Net income for FY20 was down 41.9% y/y to RUB 61.2bn due to the one-off revaluation, which was higher than in 2019. As a result, the FY20 number was 15.3% lower than we expected.
RusHydro’s FY20 numbers were its most robust set of financials ever.
And we expect more in the coming two years, foreseeing further EPS growth of 36%, driven predominantly by the moderation of write-offs and normalisation of the tax rate.
Unlike fossil-fuel gencos, this profit relies little on guaranteed
172 RUSSIA Country Report April 2021 www.intellinews.com