DENIS KRASNOVSKIY
Expert, Corporate Ratings Group +7 (495) 139 04 80, ext. 188
1 LARISA LOZNOVA
2 0 2 Managing Director, Global Head of
Corporate Ratings Group +7 (495) 139 04 98, ext. 171 [email protected]
Media contact SEPTEMBER 6, ALEXEY CHURILOV Manager for External Communications +7 (495) 139 04 80, ext. 169
Y
POWER & UTILITIES | RUSSIA
PERFORMANCE OF RUSSIAN ENERGY COMPANIES IN H1 2021: HELPED BY THE WEATHER AND A PARTIAL RECOVERY OF
ANALYTICAL COMMENTAR ECONOMIC GROWTH Dynamics of electricity and heat generation In July and August, a number of Russia’s power generating companies published operating and financial results for the first half of this year. Almost all of them recorded growth in the volume of produced electricity and heat in H1 2021 compared to indicators for H1 2020 — by 0.4–14.6% and 5.4–27%, respectively. This is due to the following factors: — Lower temperatures in winter 2021 and a longer heating season compared to 2020, as a result of which more heat energy was consumed; — This year, the beginning of summer was warmer than last year, which led to growth in electricity used by cooling equipment (fridges, air conditioners, etc.); — Higher consumption of power amid a gradual recovery in economic activity following the downturn triggered by limitations imposed during the coronavirus pandemic; — Softening of restrictions of the OPEC+ oil production cut agreement, which led to a decrease in electricity consumption by oil companies.
PERFORMANCE OF RUSSI AN ENERGY COMPANIES IN H1 2 021
Table. Dynamics of operating indicators and revenue for the sample of companies in H1 2021 compared to H1 2020
DISCHARGE OF HEAT ENERGY ELECTRICITY COMPANY FROM COLLECTORS, REVENUE, RUB GENERATION, KWH GCAL
Inter RAO Group +14.6% +14.7% +18.1%
Mosenergo PJSC +13.1% +25% +26.6%
SEPTEMBER 6, 2021
OGK-2 PJSC +0.4% +11.7% +10.2% TGС-1 PJSC +7.7% +11,6% +16.2%
RusHydro PJSC -6% +5.4% +6.3%
Y Siberian Generating Company LLC +3% +27% no data En+ Group +12% +11% no data Unipro PJSC +4.3% +24.3% +12.1% T Plus PJSC +8.6% +15% +12.1% Rosenergoatom JSC +7% no data no data
Note: For the sake of comparison, only data on the Russian generation of Inter RAO Group was used, and only En+ Group’s data on the power segment was used. Sources: companies’ data, public sources, ACRA
ANALYTICAL COMMENTAR The growth of production of electricity and heat had a positive impact on the revenue of generating companies — it grew by 6.3–26.6% over the reporting period, while in the first half of last year it declined. The cold weather factor mainly influences the operation of cogeneration power plans as electricity generation is forced to increase when growth in thermal capacity takes place. At the same time, a
lower water level and a corresponding technological decrease in the utilization of hydroelectric power plants also lead to an increase in the utilization of thermal generation capacities and higher operating results in this segment. Growth in the volume of electricity consumption in Russia’s Unified Energy System Information on payments (UES) in the period from January to June this year (+5.2% compared to the indicator for electricity can be found for H1 2020), as well as increased consumption of heat energy led to higher in ACRA’s analytical commentary Payment electricity prices. Prices grew by 13.4% for end users (except the population) over six Discipline in Russia’s months compared to the same period in 2020. These growth rates were recorded in Electricity Sector: End the first pricing zone of the Wholesale Electricity and Capacity Market, which is Consumers’ Debt is dominated by heat energy. Growing from July 15, 2021. Particular attention should be paid to the hydroelectric and nuclear power segments, which have their own specifics. The operational performance of RusHydro PJSC in terms of electricity generation differs from the situation in “classical” thermal generation. For H1 2020, the company posted a 32% increase in electricity generation at hydroelectric power plants due to high water content amid a general decline in electricity generation and consumption in that period, while in 2021, electricity generation declined by 6% due to a lower water content. In the nuclear power segment, electricity generation has been steadily growing, which is directly related to the technological capabilities of nuclear power plants. The operating specifics of nuclear power plants and hydroelectric power plants is that their capacities are utilized in the first place and are not taken into account in electricity pricing.
–p. 2 PERFORMANCE OF RUSSI AN ENERGY COMPANIES IN H1 2 021
In H1 2021, electricity consumption in the UES outpaced the level observed in the same period in 2020 (last year, the decrease in energy consumption was associated with warm weather, quarantine restrictions, and the OPEC+ agreement), as well as consumption seen in H1 2019 (a 2.3% increase). These dynamics were facilitated by the colder winter in 2021 and the recovery of the domestic electricity industry against the backdrop of growing demand from the
Russian economy. Taking into account the growth in electricity consumption in H1 SEPTEMBER 6, 2021
2021, ACRA expects that by the end of 2021, the total volume of energy consumption may grow in comparison with both 2020 and 2019 — by up to 6% and 3%, respectively. Summing up the above trends in the industry, it should be noted that the moderately
growing demand for energy produced by Russian generating companies provides Y some support for the sustainability of their financial and operational performance indicators.
ANALYTICAL COMMENTAR
–p. 3 PERFORMANCE OF RUSSI AN ENERGY COMPANIES IN H1 2 021
(С) 2021 Analytical Credit Rating Agency (Joint-Stock Company), ACRA (JSC) 75, Sadovnicheskaya embankment, Moscow, Russia www.acra-ratings.com The Analytical Credit Rating Agency (ACRA) was founded in 2015, with its 27 shareholders representing major Russian corporate and financial institutions and its authorized capital exceeding RUB 3 bln. ACRA’s main objective is to provide the Russian financial market with high-quality rating products. Methodologies and internal documents of ACRA are developed in compliance with Russian legislation and with regard to global rating industry best practices. The provided information, including, without limitation, credit and non-credit ratings, rating assessment factors,
SEPTEMBER 6, 2021 detailed credit analysis results, methodologies, models, forecasts, analytical reviews and materials, as well as other
information placed on the ACRA website (further referred to as Information), coupled with the ACRA website software and other applications, are intended for information purposes only. Information must not be modified, reproduced or distributed by any means, in any way or form, either in whole, or in part, in marketing materials, as part of public relations events, in news bulletins, in commercial materials or reports without prior written consent from, and reference to, ACRA. Any use of Information in violation of these requirements or the law is prohibited.
ACRA credit ratings reflect ACRA’s opinion about the ability of a rated entity to meet its financial obligations or about Y the credit risk of individual financial obligations and instruments of a rated entity at the time of publication of the relevant Information. Non-credit ratings reflect ACRA’s opinion about certain non-credit risks assumed by interested parties interacting with a rated entity. The assigned credit and non-credit ratings reflect all material information pertaining to a rated entity and known by ACRA (including the information received from third parties), the quality and reliability of which ACRA considers appropriate. ACRA shall not be responsible for the accuracy of information provided by clients or relevant third parties. ACRA does not audit or otherwise verify the provided data and shall not be held responsible for their accuracy and completeness. ACRA conducts rating analysis of information provided by customers using its own methodologies, with the texts thereof available on ACRA’s website – www.acra-ratings.com/criteria. The only source that reflects the latest Information, including the one about credit and non-credit ratings assigned by ACRA, is ACRA’s official website – www.acra-ratings.com. Information is provided on an “as is” basis.
ANALYTICAL COMMENTAR Information shall be considered by users exclusively as ACRA’s statement of opinion and must not be regarded as advice, recommendation or suggestion to buy, hold or sell securities or other financial instruments of any kind, nor shall it be viewed as an offer or advertisement. Neither ACRA, nor its employees and persons affiliated with ACRA (further referred to as the ACRA Parties) provide any direct or implied guarantee expressed in any form or by any means regarding the accuracy, timeliness, completeness or applicability of Information for making investment and other decisions. ACRA does not act as a fiduciary, auditor, investment or financial advisor. Information must be regarded solely as one of the factors affecting an investment decision or any other business decision made by any person who uses ACRA’s information. It is essential that each of such persons conduct their own research and evaluation of a financial market participant, as well as an issuer and its debt obligations that may be regarded as an object of purchase, sale or possession. Users of Information shall make decisions on their own, involving their own independent advisors, if they deem it necessary. ACRA Parties shall not be responsible for any action taken by users based on Information provided by ACRA. ACRA Parties shall under no circumstances be responsible for any direct, indirect or consequential damages or losses resulting from interpretations, conclusions, recommendations and other actions taken by third parties and directly or indirectly connected with such information. Information provided by ACRA is valid only as of the date of preparation and publication of materials and may be amended by ACRA in the future. ACRA shall not be obliged to update, modify or supplement Information or inform anyone about such actions, unless the latter was recorded separately in a written agreement or is required by legislation of the Russian Federation. ACRA does not provide advisory services. ACRA may provide additional services, if this does not create a conflict of interest with rating activities. ACRA and its employees take all reasonable measures to protect all confidential and/or material non-public information in their possession from fraud, theft, unlawful use or inadvertent disclosure. ACRA provides protection of confidential information obtained in the course of its business activities as required by legislation of the Russian Federation.
–p. 4