Scatec makes comeback after missing target

With new projects allocated and having multiplied profit, the Norwegian solar developer returns to challenged projects several places around the world.

Photo: Ole Jørgen Bratland / Equinor

With a profit ratio of 66 percent booked for the third quarter of 2021, Scatec demonstrates that things are going rather well despite earlier setbacks. The pre-tax bottom line result of NOK 230m (EUR 23.6m) vastly outperforms the NOK 10m made by the Norwegian solar project developer in the same period last year.

Meanwhile, the company announces that it has won its bid for three photovoltaic farms totaling 273MWp in the fifth round of South Africa's renewable power tender, the Independent Power Producer Procurement Programme (REIPPP).

Earlier this month, Scatec had to acknowledge that its capacity expansion target wouldn't be achieved. The developer had otherwise announced plans to have 5.9GW either in operation or under development by late 2021, but numerous projects apparently failed to live up to the group's required rate of return, obliging Chief Executive Raymond Carlsen to retract the goal.

However, Scatec retains a strong position, he says – and not only within solar power, which has historically been the company's raison d'être. For instance, the company has dipped its toes into wind energy with a smaller project in Vietnam, while the group has also entered an agreement with The Sovereign Fund of Egypt and ammonia producer Fertiglobe concerning development of green hydrogen.

"Scatec is well positioned for continued growth with a broad renewable offering, focus on high growth markets and a proven business model. We are maturing a large project pipeline in several renewable technologies and building on our multi-technology capabilities and experience in realizing complex projects," Carlsen writes in a statement on the Q3 report, adding:

"The recent award for 270MW solar in South Africa and the new partnership with Fertiglobe and the Sovereign fund of Egypt to develop a 50-100MW green hydrogen facility in Egypt are testimonies of this."

Postponed expectations

Basically, the future is set for the developer, whose owners include Equinor. With 13.9GW in the project pipeline, within PV, onshore wind, offshore wind, hydroelectric and hybrid projects, the company will have plenty to do in the long term.

In the short term, though, challenges persist around the world. One of the challenges of being so geographically dispersed as Scatec is vulnerability to an equally wide range of political regulations and potential tripwires. In the interim report, the timeline for projects of 2.5GW is also moved forward to next year due to a variety of reasons.

In Pakistan, a 150MW project is being held back because of problems tied to border issues. In neighboring India, the government has a dispute with China – incurring associated limitations on importing solar panels – thus delaying a 900MW project announced this summer. Further, South Africa is still having some trouble in getting renewable projects approved, stymieing the progress of a hybrid project of 540MW.

At the same time, Scatec is still facing issues related to Covid-19 and general problems with supply chains, causing worries across sectors and national borders – also factors behind the recently scrapped build-out target for 2021. Hence, the Norwegian company has decided to give up a project of 101MW in Brazil as well as 65MW in Ukraine because both undertakings are no longer deemed economically viable.

In the longer term, Scatec maintains its ambitions, however, meaning that by the end of 2025, the company aims to have invested NOK 100bn toward installing a combined effect of 15GW. That calls for the group adding 12GW in the coming four years.

Scatec expands into Iraq with 525MW solar project

Scatec falls short of 5.9GW target

Scatec wins millions supporting hydro-solar plant


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