Eolus Vind is a leading Nordic wind pow- er developer. Eolus creates value at every level of project development, establish- ment and operation of renewable energy facilities. We offer attractive and competi- tive investment opportunities in the Nordic region, Baltic countries and the US to both local and international investors. Founded in 1990, Eolus has been in- volved in the construction of more than 500 of the approximately 3,400 wind turbines now operating in Sweden. The Eolus Group currently has customer contracts for asset management services comprising some 350 MW. Eolus Vind AB has about 6,400 shareholders. Eolus’s Class B share is traded on Nasdaq Stockholm, Small Cap. Eolus Vind AB Box 95, SE-281 21 Hässleholm, Sweden Street address: Tredje Avenyen 3 Tel: +46 (0)10-199 88 00 E-mail: [email protected] www.eolusvind.com ANNUAL REPORT 2016/2017 THE PAST YEAR SIGNIFICANT EVENTS DURING THE FISCAL YEAR RECORD VOLUME IN NORWAY GERMAN KGAL SELECTED EOLUS In November 2016, Eolus was granted a final permit for the In December 2016, Eolus signed an agreement with the German Norwegian Øyfjellet project. This is Eolus’ largest permitted asset- and investment manager, KGAL, regarding divestment of project to date, with capacity of up to 330 MW and estimated the Gunillaberg and Lunna wind farms. The transaction totaled generation of approximately 1.4 TWh per year. Wind measure- 15.4 MW, divided between seven Vestas V100-2.2 MW wind ments and efforts to optimize the project are currently taking turbines. This is KGAL’s first transaction in Sweden. place to maximize generation and economic value. Both wind farms were handed over in August 2017. Eolus will provide asset management services for both of the farms. EFFICIENT DEVELOPMENT OF THE JENÅSEN WIND FARM In May 2017, Eolus signed an agreement with Munich Re regarding divestment of the Jenåsen wind farm which is under construction in the Municipality of Sundsvall. This is Eolus’s 92.8 largest transaction to date, with a combined capacity of 79 MW. During the fiscal year, the In October 2016, Eolus signed an agreement with E.ON Elnät equivalent of 36.8 wind turbines regarding grid connection for the wind farm, and an agreement with a combined capacity of with Vestas for the delivery of 23 V126-3.45 MW wind turbines 92.8 MW were handed with a total height of 190 meters. The ongoing investments to over to customers. connect Jenåsen to the grid will also present opportunities to 72.2 connect other wind farms in the area. Eolus owns several projects During the fiscal year, in the area. All electricity generated by the Jenåsen wind farm is Eolus deployed 25 wind covered by a ten-year Power Purchase Agreement with Google turbines with a combined and the farm is scheduled for completion in summer 2018. capacity of 72.2 MW. MISSED OPPORTUNITY FOR OFFSHORE WIND POWER In December 2016, the Swedish Government decided not to grant a permit – based on the Environmental Code – for the Blekinge Offshore wind power project, in which Eolus owns a 56% share. WIND WALL The application comprised a project with up to 2,500 MW capacity. – NEW ACQUISITION IN THE US The Government’s negative decision, with reference to the Swedish In December 2016, Eolus acquired a 60% in- Armed Forces’ activities, represents a missed opportunity to add terest in Wind Wall Development LLC through green electricity generation in Electricity Price Area 4, in which electrici- its Eolus North America Inc subsidiary. Wind ty consumption exceeds generation. It also means that many new jobs Wall Development is planning to establish will not be created. Eolus’ objective – to find a balance between about 40 MW of wind power in Tehachapi, national defense interests and the community benefits California, in the US. In connection with the of renewable electricity generation and jobs acquisition, Eolus placed an order for the – remains firm. Blekinge Offshore will, therefore, delivery of sufficient wind power components continue to monitor potential business to receive a full value Production Tax Credit opportunities, as well as market and (PTC) for renewable energy in the US. community developments. 2 ANNUAL REPORT EOLUS VIND AB 2016/2017 THE PAST YEAR CONTENTS Significant events during the fiscal year .......................................2 Five-year summary ...............................3 Message from the CEO ........................4 Eolus in brief .........................................6 Market ..................................................8 Customer groups ...............................11 Project development segment ............12 Project development segment – customer case .................................19 IGLASJÖN AND LÅNGMARKEN HANDED OVER TO CUSTOMERS Asset management segment ..............20 During the fiscal year, the Iglasjön and Långmarken wind farms were completed and handed Electricity generation segment ............21 over to customers. When Iglasjön, comprising eight Vestas V112-3.3 MW wind turbines with Repowering ........................................23 a combined capacity of 26.4 MW, was handed over to Munich Re, Eolus passed the 500 mark Employees and society .......................24 for established turbines. Långmarken, comprising eight Vestas V126-3.3 MW wind turbines, Financial summary ..............................27 was handed over to Mirova/the European Investment Bank, Kalmar County Council and the City of Malmö. Key figures for the Group ....................27 Share and ownership structure ...........28 Management ......................................30 EOLUS’S CUMULATIVE INSTALLED CAPACITY Directors’ Report ................................32 MW Corporate Governance Report ...........37 900 800 Consolidated statement of income .....40 700 Consolidated statement 600 of other comprehensive income ..........41 500 400 Consolidated statement 300 of financial position .............................42 200 Consolidated statement 100 of changes in equity ............................44 0 2011/2012 2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 Consolidated Installed capacity during the fiscal year + Total installed capacity cash-flow statement ...........................45 MW Parent Company income statement ....46 900 Parent Company statement FIVE-YEAR SUMMARY of other comprehensive income ..........47 800 SEK M 2016/2017 2015/2016 2014/2015 2013/2014 2012/2013 Parent Company balance sheet ..........48 700 Net sales 1,065.7 693.4 1,502.1 465.8 1,204.9 Parent Company statement 600 of changes in equity ............................50 Operating profit/loss 40.2 -15.9 90.0 41.5 146.7 500 Parent Company cash-flow Profit/loss before tax 34.2 -29.1 75.2 13.1 135.3 400 statement ...........................................51 Net profit/loss for the year 24.5 -23.9 80.0 9.9 141.6 300 Notes .................................................52 Earnings/loss2011/2012 per share,2012/2013 2013/2014 2014/2015 2015/2016 2016/2017 Signatures ..........................................80 before and after dilution, SEK 1.02 -0.92 3.25 0.44 5.75 Auditor’s Report ..................................81 No. of constructed and operational turbines 25 14 33 27 30 Board of Directors ..............................84 Constructed and operational Glossary .............................................86 turbines, MW 72.2 37.7 68.6 53.0 62.1 Annual General Meeting, financial Electricity generation, GWh 58.6 123.6 242.3 172.1 220.9 calendar, definitions of alternative performance measures .......................87 ANNUAL REPORT EOLUS VIND AB 2016/2017 3 MESSAGE FROM THE CEO EOLUS IS FIRMLY POSITIONED FOR A FUTURE DOMINATED BY RENEWABLES “The cost per megawatt-hour has continued to fall, and wind power is now a seriously competitive source of energy with the absolute lowest cost for new establishments.” CEO Per Witalison opening the Gunillaberg wind farm in October 2017. 4 ANNUAL REPORT EOLUS VIND AB 2016/2017 MESSAGE FROM THE CEO Due to a strong finish, we can summarize a In the past fiscal year, we established 25 tur- sessing Eolus’s performance, monitoring the fiscal year in which we achieved most of the bines with a combined capacity of 73 MW. development of our high-priority projects will goals we set ourselves at the beginning of the However, the 25 turbines that we expect to become increasingly important. We have year. The year’s transactions mean that we establish during the 2017/2018 fiscal year will therefore begun to report the current status of successfully delivered wind farms to interna- have a combined capacity of 84 MW. On aver- these projects in our interim reports and on tional investors such as Munich Re, Mirova, age, the turbines will be 16% larger than in the our website. For a summary and description the European Investment Bank and KGAL, as preceding year. Despite the same number of of the projects, refer to pages 14–17. Over well as public players and private investors in turbines year-on-year, the transaction volume the next few years, the estimated transaction Sweden. will increase because the turbines are larger. volume of these eight projects is about SEK Technology is advancing fast and over the 9 billion. In addition to these projects, Eolus’s In addition to newly established turbines, we past six months, several manufacturers have project portfolio also contains a number of divested 21 MW net of our own facilities during launched models with a capacity of over 4 MW high- quality, smaller projects with high realiza- the year. In two years, divestments have re- and rotor diameters of about 150 meters.