Voltalia has announced that the National Electric System Operator (ONS) is currently imposing significant restrictions on certain parts of the grid. If these restrictions continue and are not financially compensated, they could impact the company’s 2024 EBITDA by up to €40 million.
In a statement issued on August 19, Voltalia highlighted that the curtailment—where the National System Operator (ONS) limits the transmission of electricity to maintain grid stability—could result in an impact of up to €40 million on its EBITDA for 2024.
Curtailment, a measure taken to prevent grid instability, has become more frequent according to Voltalia. Historically, such maximum limits were uncommon in large power grids like Brazil's. However, following a blackout in August 2023, the operator began imposing these limits more frequently to avoid instability. These limits were reduced to minimal levels by the end of 2023 as the grid stabilized.
Voltalia has engaged in multiple meetings with the transmission network operator and has initiated legal actions in federal and local courts to claim compensation for its affected power plants. Concurrently, the company is in discussions with the operator and public authorities to expedite financial compensation and reduce the current cap's duration.
Estimating the exact financial impact of the production limitation on 2024 EBITDA is challenging. If the current restrictions persist without compensation, and with an average €/R$ exchange rate of about 6 for the latter half of the year, EBITDA could decrease by around €40 million.
In the first half of 2024, the Brazilian cap was low, aligning with Voltalia’s forecasts. For this period, Voltalia anticipates a consolidated EBITDA of approximately €75 million, marking a 33% increase compared to the first half of 2023.
The impact of the current restrictions in the second half of the year will be magnified by seasonal production patterns, which are typically higher in the latter half, and by expected above-average wind and solar resources based on recent data and forecasts.
Professional organizations representing electricity producers argue that the network operator’s cautious approach is not technically necessary and could harm the Brazilian economy in the long run. They, along with Voltalia, advocate for financial compensation for producers, as reflected in the ongoing litigation.
Voltalia remains hopeful that technical and financial solutions will be reached with Brazilian authorities. The company reaffirms its 2027 ambitions, including an EBITDA target of around €475 million, with approximately €430 million expected from energy sales.
For 2024, Voltalia projects an operational and construction capacity of about 3.3 GW, with around 2.5 GW already operational. By 2027, the company aims to surpass 5 GW of operational and construction capacity, with approximately 4.2 GW in operation.
“While we are surprised by the announcement of an unusually high level of restriction in Brazil, we are confident in the effectiveness of Voltalia’s collective and specific actions aimed at minimizing it and financially compensating it. We will keep our shareholders informed as progress is made,” Voltalia CEO Sébastien Clerc.
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