Good morning, everybody, and welcome to our Q3 presentation. The third quarter has been an eventful quarter with a very high activity level across the Scatec group. We have had strong underlying performance, especially in the D&C segment, and we have continued our progress when it comes to our strategic priorities and also in terms of our growth targets. The case for renewables continues to strengthen. Renewables is becoming more and more competitive, and as I have said many times before, not only as an intermittent source of energy, but also in terms of delivering baseload or dispatchable energy. We are also seeing that energy security is continuing to come, coming higher and higher up on the agenda, and these developments are in general opening up for more and more opportunities for Scatec.
However, the quarter has also given us a challenging backdrop in terms of the macroeconomic development, the geopolitical situation, and also some regulatory changes. I will come back with more detailed comments on the revised EBITDA outlook for the power production segment, obviously, especially when it comes to the Philippines. In the quarter, we have also taken impairments. This is in Ukraine and Pakistan. Obviously, Ukraine continues to be impacted by the war, and due to increased disruptions in the energy sector, we have taken significant impairments in Ukraine. Finally, today, after Hans Jakob has gone through the financials, I will also provide an update on the strategy and the targets towards 2030. Here, we have an ambition to double our self-funded growth space in this timeframe.
Let me first go through some of the highlights of the quarter, and we continue to have, as I said, good progress on our growth agenda. In terms of some of the key numbers, proportionate revenues came in at NOK 2.3 billion, and EBITDA came in at NOK 1.2 billion. Also cash flow to equity came in at NOK 385 million, and this is up 35% relative to the same quarter last year when you adjust for the refinancing gains of about NOK 250 million that we had in the Philippines. Other key highlights include that we have started construction of Shadwan and the first phase of Dandara in the Philippines. Shadwan is a 900 MW wind project. It is the largest wind project in Africa, and it will produce about 4 TWh when it is fully operations.
We are planning to bring it into operations in phases during the first half of 2028, so we are also implementing this project at a record pace. Then we have Dandara, which is the first corporate PPA in Egypt. Here, we signed loan agreements earlier this week with EIB, EBRD, and also with AfDB, and we also signed agreements for NBE, the National Bank of Egypt, which is a commercial bank, to come in and take a 20% equity stake of the project. Also in the quarter, we have signed an equity platform agreement with EBRD, and EBRD will take 40% of this platform and has committed $221 million towards the platform.
This is obviously enabling us to reduce the capital need related to pursuing the project portfolio that we have in Egypt. Also, in relation to this, EBRD, through the platform, will come into Obelisk, and our equity stake in Obelisk is being reduced to 24%. We have also secured an equity bridge loan of $150 million. This is related to enabling equity light in our project portfolio in Egypt. Finally, we have also issued a new bond of NOK 1.5 billion, and this is at 250 basis points of credit margin. These are very attractive terms, and we will use this to refinance more of our expensive debt, or we have already done it, and this will contribute to NOK 50 million in reduced interest costs on an annual basis. As I said, finally, we have also recognized impairment loss of about NOK 1.1 billion in the quarter.
This is related, as I said, mainly to Ukraine, but also some in Pakistan, and Hans Jakob will come back with more details on this. In terms of power production, in the quarter, we generated about 1.5 TWh, and this is an increase of 22% relative to the same quarter last year. A lot of this is coming from new projects. More than 400 GWh is coming from new projects, and this is from South Africa, Tunisia, it is from Botswana, it is from Egypt, and Brazil. This shows that now a significant amount of the growth that we've been working on is actually coming into operation. We also see that there's less generation in the Philippines. This is due to less water, and we'll come back to this shortly.
We have also generated less in Ukraine, and this is obviously due to the war. In terms of revenues, we increased our revenues in the segment to NOK 1.3 billion, and this is up 10% relative to same quarter last year. Here, we have new projects contributing to about NOK 140 million, and we also have a slight increase in the Philippines, while the Ukraine contributed negatively. In summary, when it comes to power production, we now start to see significant contributions from the new projects that are coming into operation. Let me then go to the Philippines. In the Philippines, in terms of the third quarter, it was a strong quarter.
When we came into the quarter, there were some concerns in terms of the water levels that were quite low in the beginning of July, but the water levels has increased during the quarter, and when they came out of the quarter, the water levels were above the norm, so the water levels were at good levels. In the quarter, we have had lower production at 218 GWh, but we've had high prices across all the different segments in the quarter. If you look at this slide, you will also see that there is a jump in the ancillary services price in the quarter, and this was driven by high prices in the reserves market. Our previous outlook for Q4 also assumed that these price levels would continue.
In terms of revenues, they came in at NOK 411 million, and we've had strong levels across all the different segments, but as you will also see from the chart, there has been a reallocation of revenues towards the ancillary services segment from pure energy sales. EBITDA came in at NOK 367 million. This is up about 10% from the same quarter last year and is in line with the outlook that we had given for the quarter. In summary here, we continue in the Philippines to capture value based on our flexible asset base and our ability to optimize the commercial strategy across the different segments that we're seeing. Let me then also address the reserves market in the Philippines, as this was then a key item in our revised full-year outlook.
The reserves market was suspended on October 14, and this was due to very high prices in Visayas and Mindanao region. There were also high prices in the Luzon region, where we are operating, but these prices were not as extreme as in the two other regions. The regulator has then requested the redesign of the ancillary services market within six months, and we expect it to come back into operation again after this six months. The estimated effect for us relative to our outlook in Q4 is about NOK 80 million, as SNAP also had assumed continued high prices in the fourth quarter. Just a couple of words in terms of the history of the reserves market. The reserves market was established in January 2024, almost three years ago.
Immediately when it was established, prices were incredibly high, and it was suspended after only a bit more than one month of operations in March 2024. The regulator wanted to do an audit of the price-setting mechanisms in the market. This audit was done. It was cleared. New price limits or ceilings were put into the structure, and then the reserves market was again relaunched in September 2024. Since September 2024, it has been operating without significant disruptions with expected price levels. Obviously now, in Q3, we have seen that the price levels have been peaking. Obviously, we and the industry, we are not sitting still. We are working with measures to try to compensate for the current situation.
The industry has immediately proposed measures to how to manage the current situation and the high prices, and the industry, we have also requested an immediate reinstatement of the reserves market, because suspending the reserves market is also pushing costs over onto other producers in the market that are not being compensated for those costs. In terms of our JV, SNAP, we also work on the compensating measures. We try to shift delivery of replacement and contracted ancillary services to our BESS units to free up capacity in the hydro plants to sell more energy in the spot market. We also offer bilateral ancillary services contracts to the market operator, and in addition to that, we do intraday trading with our BESS in the energy market.
All of these are compensating measures, but obviously the real compensating thing here will be to get the reserves market reinstated as soon as possible. In summary, there is a continued strong need for ancillary services in the market, and this need and this demand will only increase as the mix of renewables in the power segment and the grid is continuing to increase. We expect reserves market to be reinstated within this timeline that has been announced, and we expect normalized prices when the market is reinstated, prices like we have seen historically. The most likely change, we believe, is that there will be additional price caps put in, but they will most likely not impact the average prices that we have typically been seeing.
It is also important to remember that the marginal capacity in the ancillary services market in the Philippines is significantly more expensive than our batteries and our hydropower plants. In terms of the longer-term perspective, we expect limited economic impact of this. Turning to construction and the D&C segment, where we are having record-high activity levels. We have revenues of NOK 948 million, gross margin of 26%, and an EBITDA of NOK 168 million. This is partly related to COD of Obelisk, where we have been able then to release more contingency as this project is now finalized. In terms of activity level, we have about 1.4 GW in construction related to solar, 1 GW of wind in construction, and close to 700 MWhs of battery storage in construction, as we have moved Shadwan and the first phase of Dandara into construction.
We now have a remaining contract value of about NOK 10.5 billion, and this is up from NOK 3.5 billion last quarter, so almost a three times increase. Finally, just to mention that as well, the COD for the Mogobe BESS project in South Africa has moved into next year, and this is due to delays on Eskom interconnection works. With that, I will hand it over to Hans Jakob to take us through the financials.
Thank you, Terje, and thank you for coming here today. I will walk you through the group financials and the performance of our operating segments. I will also cover the guiding and the improvements in our capital structure. Looking at the quarter at group level, we continue to deliver EBITDA growth, driven by new assets in operations and strong execution in D&C. Consolidated revenues were NOK 1.7 billion compared to NOK 1.1 billion in the same quarter last year. We delivered an EBITDA of NOK 1.1 billion, up from NOK 785 million last year, and the increase is driven by a combination of new assets in operation and NOK 220 million of construction revenues from Taka to in South Africa. On a proportionate basis, revenues were NOK 2.3 billion compared to NOK 3 billion last year. The reduction is driven by D&C, as the same quarter last year had very high construction activity on Obelisk in Egypt.
Power production revenues increased by approximately 10%. Proportionate EBITDA was NOK 1.2 billion, up 14% from last year, and it was driven by assets in operations and a closeout effect on Obelisk in D&C. Our power production segment delivered revenues of NOK 1.3 billion, 10% up year-on-year. EBITDA, NOK 1.1 billion, up from NOK 955 million, driven by new projects in operation. Over the last 12 months, we have delivered NOK 4.3 billion in revenues and NOK 3.4 billion in EBITDA. The reduction from last year is mainly explained by the gains of sale of assets, which contributed by NOK 1.2 billion to the EBITDA in the previous 12-month period, mainly divestments in Uganda and Vietnam. The underlying figures also include EBITDA contribution from the divested assets. As more new projects reach COD, we expect the underlying contribution from operational assets to continue to grow.
Let's have a look at D&C. In the Development & Construction segment, revenues were NOK 948 million compared to NOK 1.8 billion year-on-year, driven by construction activity on Obelisk that was last year at its peak. EBITDA was NOK 168 million, up from NOK 135 million last year. This is closeout effects of NOK 140 million on Obelisk, reflecting timely and cost-efficient execution of the project. Excluding these effects, the underlying gross margin was 11%, in line with our guiding of 10%-12%. Over the last 12 months, the D&C revenues were NOK 5.1 billion, up 14% from last year, and the EBITDA almost tripled to NOK 753 million, driven by strong execution and disciplined cost control, which has resulted in contingency releases of NOK 340 million so far this year on Obelisk. Looking ahead, we expect activity to increase as construction ramps up on Shadwan and Dandara in Egypt.
With the remaining contract value of, if I may say, an impressive NOK 10.5 billion under construction, we have strong visibility on D&C revenues going forward. Let me start by explaining the updates we have done to our impairment assessments. During the quarter, we recognized an impairment of NOK 1.15 billion on consolidated basis and NOK 1.066 billion on proportionate basis related to Ukraine and Pakistan. In Ukraine, the war is sadly continuing, and our thoughts go to the people in Ukraine, which are doing a courageous job in a devastating situation. Russia has intensified attacks on critical energies infrastructure, and the restoration of the plant that was targeted in 2025 is being delayed. The prolonged war is further affecting country risk premium and the outlook for longer term power prices.
These developments resulted in impairment losses of NOK 1 billion on a consolidated basis and NOK 952 million on a proportionate basis in the quarter. This comes on top of the NOK 816 million impairment loss recognized in 2022 when the war started. In Pakistan, the updated assessment was triggered by an increase in the discount rate, reflecting higher country risk premium and higher long-term USD interest rates, combined with the increased uncertainty regarding the timing and amount of future cash flows. As a result, an impairment loss of NOK 150 million on a consolidated basis and NOK 114 million on a proportionate basis was recognized in the quarter related to these assets. Our free cash position ended at NOK 1.2 billion in the quarter, down from NOK 1.6 billion in the second quarter. From operations, we received NOK 147 million in distributions from power plants, and we generated NOK 137 million in EBITDA from D&C and corporate.
Working capital had negative change of NOK 746 million, mainly related to Obelisk reaching COD. Following the end of the quarter, we started construction of Shadwan and Dandara, which will positively affect working capital. We invested close to NOK 700 million in growth projects, and we paid NOK 147 million of interest. Net charges in corporate financing was NOK 854 million, mainly reflecting the drawdown of the RCF to cover short-term fluctuations in the working capital. Including the NOK 1.5 billion in undrawn RCF, total available liquidity was NOK 2.7 billion, and NOK 3.9 billion, including the additional RCF capacity, which is now available. Thanks for the support from the banks also in making these arrangements. Corporate gross interest-bearing debt increased from NOK 6.4 billion to NOK 7.1 billion as a result of the RCF 700 drawdown. This is expected to be repaid in the first half of 2027.
Long-term corporate debt is unchanged, as we have used the proceeds from the new bond to repay outstanding corporate debt. Our strategic direction on corporate debt is unchanged. We are targeting to reduce our corporate debt. On project level, gross debt was stable at NOK 19.5 billion, and debt for projects in operation increased to NOK 14.2 billion, and debt for project under construction fell to NOK 2.2 billion, mainly reflecting Obelisk phase II moving from construction into operation. Cash held in SPV was stable at NOK 3 billion. Then to the outlook. As announced on October 21st, we have reduced our full-year EBITDA guidance in power production to NOK 3.3 billion-NOK 3.6 billion, NOK 300 million lower than the previous midpoint. The bridge on the right shows the drivers behind the full-year power production EBITDA guidance, with operational effects accounting for NOK 214 million.
Philippines was reduced by NOK 80 million, reflecting the suspension of the reserves market. Pakistan, NOK 40 million related to delays in the true-up tariff, previously expected to be resolved in the fourth quarter of this year. South Africa, NOK 40 million, mainly related to delayed connection work on the Mogobe BESS asset by Eskom, which is the state-owned utility. Ukraine, NOK 30 million, as the repairs of the damaged power plant has been delayed. FX, a negative NOK 86 million. While some of these delays and updates are actually delays, we continue to work on compensating measures for the impact of the reserve market revenues, as Terje has explained. We now expect full-year power production of 4,950-5,150 GWh, 150 GWh lower than the previous estimate, driven by the third-quarter performance, delays in Ukraine, and other minor adjustments to the portfolio.
For the fourth quarter, we expect production to be 1,300-1,400 GWh and EBITDA in the Philippines of NOK 200 million-NOK 300 million. In D&C, the remaining contract value is, as I said, NOK 10.5 billion, and we continue to expect a gross margin of 10%-12% on average across the portfolio for projects under construction. For corporate, we expect a full-year EBITDA of -NOK 110 million to -NOK 120 million. This is an improvement of NOK 15 million from our previous guidance. Then, it is time for the strategy update, Terje, so please come back on stage.
Thank you, Hans Jakob. In terms of the strategy, two years ago, we set out a clear plan to invest in profitable growth, recycle capital through divestments, and also to reduce the debt on corporate level. We have progressed well on all three. This has put us in a strong and even stronger position. Our near-term growth portfolio is at a record high, our cost of borrowing has come down significantly, and our integrated business model continues to create value across the full project life cycle. Today, we will be presenting the next phase of our strategy, where we are aiming to double our equity investments to target NOK 8 billion in equity investments towards 2030, while we continue to reduce debt and more than double cash flow to equity in the period.
We will do this in a fully self-funded plan, as we've done before, with no new need for equity and also possibilities of having available liquidity towards the end of the period. Let me take you through this now. First of all, in terms of the industry, the competitive position of renewables, as I've said, it continues to strengthen. Costs are coming down, and renewables is the most competitive source of new power generation in the markets where we are operating. This is obviously due to the fact that modules have come down by 60% over the last three to four years, and battery systems have come down by close to 80% over the last three, four years.
In addition, renewables is providing energy security and predictability and independence, which is incredibly important in many of the markets where we are operating, and it is the fastest and most flexible generation source to deploy. For Scatec, this means we can target new applications, we have a stronger value proposition, and we see a lot of new opportunities in the market. One example of this is Energy Valley, which is a project, a hybrid project, where we're combining renewables to deliver energy on a 24/7 basis, in addition to installing battery systems to support, provide frequency control, and regulating power to the grid. Taking stock of where we are. We are progressing well relative to the targets that we also announced last year.
We are ahead of the target for equity investments into new profitable projects, and we estimate to reach NOK 1.3 billion in equity investments this year, which is well above our target of NOK 1 billion. We have also secured projects in construction and in backlog to invest in total NOK 5 billion over the next two, three years. This is already secured growth. We are also progressing well on the target for capital recycling. NOK 2.6 billion has been done out of the target of NOK 6 billion. We will also receive another NOK 300 million in proceeds related to EBRD buying into establishing the platform, and then in principle also buying into Obelisk. We are confident about the remaining NOK 3.1 billion, but the timing and the price must be right. There will be some smaller transactions and some larger transactions to reach this target.
Also, in terms of deleverage, we are on track to reduce corporate debt to NOK 4 billion by 2030. We are down NOK 2 billion now to NOK 7.1 billion by the end of the quarter. As Hans Jakob also mentioned, there has been a slight increase this quarter as we drew on the RCF due to working capital fluctuations. Based on this, we are increasing our targets towards 2030. This means doubling equity investment targets to NOK 2 billion annually. Out of these NOK 2 billion annually, 60% is already secured in the period between now and 2030, and it is already in construction or in backlog. In terms of growth, we will continue to focus on scalable markets, the integrated business model, and our multi-technology approach, and markets where we see that renewables fundamentally make sense, and we see a good value proposition for renewables.
Secondly, we also introduce a new target on cash flow to equity, and here we aim to double cash flow generation to NOK 2.5 billion from 2030. In this period, the D&C cash flow will be increasing given the growth that we are seeing, and this will fund a large share of the equity investments in the period. We also see a large share of increased cash generation coming from long-term PPAs, and this will provide predictable cash flows. We see that new assets should contribute with about NOK 1.2 billion in cash flow in the period. Finally, we also continue to focus on strengthening the balance sheet. We maintain our target to reduce corporate debt to NOK 4 billion in the period. 40% of this has been delivered, and NOK 3.1 billion remain, and we are also confident to reach this target.
The business plan as we present here is fully funded through divestments and also through strong cash generation from both power plants in operation as well as from the D&C segment. With this plan, we will most likely be able to generate available liquidity towards the end of the period, available liquidity that can be used either for growth, for deleverage, or for shareholder distributions. First, let us talk about the growth part. The near-term growth portfolio covers about 60% of the target towards 2030. On the generation side, we have 2.3 GW in construction and 4.3 GW in the backlog. This will take us to a total capacity on the generation side to 12.3 GW by end of 2028.
In terms of storage, we have 0.7 GWh in construction and 4.7 GWh in backlog, and this will take us to 6.8 GWh towards the end of 2028. This is four to five times increase relative to where we are today. On top of this, we have a robust pipeline which has increased significantly related to battery storage because we are also working on permitting batteries related to the projects that we have on the PV side. For further growth, we do see significant potential in the markets where we already have a strong position, like South Africa, the Philippines, Egypt, Tunisia, and Romania. These markets all have very strong characteristics like competitive economics, renewables is the most competitive solution, scalability, these are large and growing energy markets.
We have established offtake routes in the markets, which is important for us to have a long-term perspective to develop a pipeline. We have a strong competitive position where we can benefit from our capabilities in these markets. These markets that we are presenting here alone represent more than 50 GW of renewables growth potentials towards 2030 for us. We have South Africa and the Philippines. These are large markets with attractive frameworks, and they also need to shift away from coal, which might happen quickly or take a bit more time, but it represents a significant potential. Egypt and Tunisia, as well as the North African region, have fantastic resources. Today, they are dependent on importing gas at very high prices, and it is important for them to move over to renewables to reduce cost of power generation, as well as for energy security and independence.
Romania, a large market with a supportive framework, supported also by the EU through contract for differences, and it is also going to be an interesting market for BESS. In addition to this, we will continue to be opportunistic. We will continue also to look at other markets, but they need to match these criteria. There needs to be attractive economics, and there needs to be attractive scale in the market. Energy markets are evolving in terms of maturity, offtake routes, and deregulation, and we also have to relate to this. Our capabilities enable us to compete across these different types of markets, while renewables now offer the required competitiveness and flexibility to take a large space in these markets. In terms of traditional markets, our traditional markets are regulated. This is like Egypt and Tunisia.
Here, there is a single buyer of electricity offering long-term PPAs at a fixed price. This is our home turf. This is where we get predictable cash flow, high leverage, and very high capital efficiency. Some markets will deregulate, like we have experienced in South Africa, and we also see in Colombia. Here, they open up typically for direct sales to the private sector. Here, key is in addition to the development capabilities that we are having, being able to originate offtake and optimize generation and customer portfolios. As an example, this is exactly what we are doing in our Lyra Energy platform in South Africa, setting up an entity to manage this in a good way. Finally, we have deregulated and merchant markets like the Philippines and to some extent Romania and Brazil. Here, it is important to build a flexible mix of generation and storage assets.
Based on this, you can capture value with a mix of contracted revenues, based on which you can get leverage and selling into the merchant market. As I said, markets are deregulating. We are present in different types of markets, but we do have the capabilities to compete across these different markets. Going forward in terms of future growth, over and beyond what we have already secured, we will continue and focus on these three pillars. We have the traditional IPP business with long-term contracted offtake. This is the most capital-efficient way to grow. We continue to see huge growth potential for us here, like in Egypt, like in Tunisia, but also across the North African region. This is going to very likely be the majority of our growth towards 2030.
Then we will continue to position ourselves in markets with mixed offtake portfolios, like the Philippines, Brazil, Europe, also to some extent South Africa. These require flexible generation and storage portfolios, and the typical approach is a base of contracted revenues to enable leverage while capturing upsides from market volatility and managing downside risk. We expect this to be a significant part of the future growth, but given that we are also very present in the Philippines already and have a significant cash flow from the Philippines, we do not see that this is going to increase significantly in terms of the share of our overall portfolio. In terms of new demand and offtake routes, here, we see that competitive and baseload renewables will increasingly unlock new infrastructure projects in all our markets going forward.
We have been looking into green hydrogen, we are looking into desalination, we are also looking into data centers. Here, across this space, our track record, market position, and integrated business model provides a strong basis for engaging and for competing in this space. This will take more time to convert, but we do see an attractive longer-term opportunity space also for us here. This was in terms of growth. Let us move to cash generation target. Our cash generation target is supported by our capital-efficient integrated business model, and more than 50% of equity required for our growth is secured and covered by the cash flow from the D&C segment. This is a fairly busy slide with a lot of numbers, so let us start in the middle. The total CapEx related to our projects in construction and backlog is about NOK 54 billion.
If you assume 80% leverage and on average 40% equity stake of Scatec, it is a bit below 50% because we are going quite down in Egypt, the equity investment will be around NOK 5 billion for this portfolio. In terms of the D&C business, which is on the left here, assuming 70% EPC scope and 11% gross margin yields, this will give us about NOK 4.2 billion in gross profit. This time, let us go all the way down to the cash flow. After OPEX and tax, this represents about NOK 2.8 billion in total cash flow over the next few years in the D&C segment, and this is more than 50% of the equity to be invested in this period. Obviously, on the right-hand side, our equity investment must meet our hurdles, and this will build a portfolio of operating assets with attractive cash flows and returns over time.
We have 1.2x cost of equity as a hurdle and also 20%-30% services margin. Based on this portfolio should deliver in the range of NOK 750 million average annual cash flow when the full portfolio has been completed. This represents, on average, about 15% cash yield across the portfolio. Let us take one step further and look at how this looks across the total portfolio on a corporate level when we come towards 2030. The current run rate in terms of cash flow is in the range of NOK 1.2 billion, and we aim to more than double this towards 2030 to NOK 2.5 billion. The NOK 8 billion in equity investment should add about NOK 1.2 billion in new cash flow. The higher investment pace should also increase cash flows from D&C by about NOK 0.5 billion.
And obviously, some existing cash flow in power production will be lost as we divest and farm down in projects or exit certain markets. However, also with the lower corporate debt, the lower interest cost will improve the cash flow in this period. This brings us to an annual cash flow target of about NOK 2.5 billion in a 2030 perspective. This plan is fully funded and can, based on these targets, even generate available liquidity towards the end of the period. Again, if you look at the overall numbers in terms of growth, equity investments over four years amount to NOK 8 billion, and more than 50% will be funded by D&C. The rest will come from cash flow from operations. In terms of the leverage, corporate debt repayments can be funded by the NOK 3.4 billion in targeted divestments that we have in the period.
As I said, this leaves potentially free capital towards the end of the period. In summary on this, the plan is self-funded. Equity investments are not dependent on divestments. Divestments are used to take down leverage. If the plan yields free liquidity, there is room for more growth, more deleverage, or alternatively, also shareholder distributions. Then, in terms of the balance sheet, our target, as I have said, is to bring corporate debt down to NOK 4 billion by 2030, and this target stands firm. We are on track to achieve this. We have reduced debt by more than NOK 2 billion since announcing this target, so it is NOK 3.1 billion left to get down to NOK 4 billion, and this is covered by the target divestment proceeds. We already see significant effects of deleveraging and refinancing to debt today.
Significant reduction in credit margin has been achieved since our 2023 bond, which was at very high levels. We have issued a new bond now in Q3, NOK 1.5 billion, with 250 basis points in credit margin, and this bond has been used to refinance older, more expensive debt. This alone saves us about NOK 50 million annually in terms of interest costs. Then, in terms of summarizing today, first of all, when it comes to the quarter, we have had solid financials, especially within D&C, with a gross margin of 26%. We have started construction of Shadwan and Dandara, and we now have NOK 10.5 billion in remaining contracted revenues in the D&C segment. We have secured equity platforms with EBRD, and we have also secured EBLs for the projects in Egypt to ensure that we can implement them on an equity light basis.
Then in terms of the strategy, renewables continue to strengthen the value proposition, and for us, this means that the opportunity space increases in the markets where we are operating. We have a target to double equity investments and cash flow to equity towards 2030, and 60% of that growth has already been secured. We have a self-funded approach, and we have the possibility to have available liquidity towards the end of the period to fuel either, as I have said, further growth, more deleverage, or shareholder distributions. Thank you very much. Then we will go and take questions.
Thank you, Terje and Hans Jakob. We will then take questions. As usual, we will start here in the room, and then we have some questions from our online listeners. We are starting with Andreas from Arctic.
Thank you. Looking ahead now that you have put this situation in the Philippines behind you, I think you have done a good job in explaining the market, what is happening, and what we can expect going forward. Very good to hear. Big ambitions going forward, NOK 2 billion of equity investments annually. Can you say something, because in Egypt especially, you do this on a fully funded basis. Are you talking about NOK 2 billion in book equity or cash equity?
We are talking about NOK 2 billion in cash equity.
Cash flows from corporate down to the SPVs?
Yes.
Okay. If we are looking at Egypt, of course, those structures are really attractive, and the scale of the projects are immense. What can we expect going forward from Tunisia and Romania? I know that in Romania, you are now the EPC scopes on what you currently have in the backlog, not that high comparing to what you are doing in Egypt. Can we expect higher EPC shares of those projects and in Tunisia? What will that look like?
Yeah. Well, I think in Tunisia and across the North African region, I think that we see significant ambitions in terms of accelerating the deployment of renewables from basically in all countries. So, in Tunisia, we hope to see larger projects and accelerated deployment in the country. There, we will take the full EPC scope, as we typically do, and as we have done in the projects that we have implemented so far in Tunisia. In Romania, our ambition is also to take the full EPC scope and have a fully integrated business model. Typically, you have to expect in Romania that it is a different contracting structure. The leverage will be slightly lower. So, from that point of view, equity relative to D&C margins will be slightly shifting. But obviously, still, we have the same hurdle rates for Romania as we have other places.
Our ambition is also to take the full EPC scope, as I said, in Romania.
Okay. That is clear. One more on Tunisia. What stands in the way for seeing gigawatt-plus solar projects in Tunisia going forward?
Well, Tunisia, as I said, is a fully regulated market. So, it is the authorities that, for the time being, decide how quickly they are going to build out, and under what type of procurement mechanisms they are going to build out. Tunisia, so far, has been running tender processes, while in Egypt, we are able to do bilateral negotiations, so there are slight differences. But rest assured, we are engaging actively with the authorities in Tunisia and trying to show them what we can do in other places, for instance, in Egypt, to motivate them also to accelerate the pace of renewables in Tunisia. And obviously, today, Tunisia is highly dependent on importing gas to generate electricity, and renewables is a significantly more attractive solution from an economic point of view.
Okay, thank you.
Anders, SEB.
I think it is inevitable to touch on the Philippines, although you have explained it. But in this presentation, you have not included the overview of drivers in the Philippines for the quarter, which you have done in the previous quarters, breaking down prices. I appreciate that you have it in the chart, but volumes and prices. So, could you provide that also for this quarter and going forward?
Yes. As you said, on the chart, you see the prices. The main element is, of course, somewhat lower production, but just quite high prices, as Terje explained, including spot and reserves market.
Mm-hmm. But in the previous quarters, you provided a separate slide which details transaction volumes and prices split on segments.
Yeah. It would be very good if you could provide that to the market, given the uncertainty and confusion on how those revenues are composed. A second question on the transaction volumes, because you have in the past indicated ancillary service volumes, and you have provided a figure for the effective ancillary service price. Could you say something about the split of volumes on contract and on the reserves market? How much of those volumes are contract, and are the volumes comparable?
Yeah. Isn't that partly included in one of the slides?
Yeah.
The one that we shared.
I think we will add that slide.
Yeah.
Okay, so the volumes are comparable, or?
The volumes are comparable. The contract volumes, they vary throughout the year. Typically, the contract volumes will be lower when we believe and when the forecast is that we have higher energy prices in the market, so we can use more of the water to sell energy. The contract volumes will typically be lower, or higher, when there is less attractiveness of typically less attractiveness in the spot market for selling energy. But they are comparable in terms of overall volumes. Yeah.
The annual volumes, this is actually can be found in the Philippines, some of the documents there. It's not the easiest one, but it's around 3 GWh on the ASPA contract.
Yes. But the contracted volumes in ancillary services is at 225. I think you've reported that in a press release a while back. Is that correct?
That's the ASPA price you refer to, right?
Yeah, that is the contract.
Yeah
part of ancillary services.
Yeah.
Your average selling price in ancillary services was NOK 2.6 in the second quarter. That is also a figure that you reported in Q2. That suggests that a very high portion of your volumes are contract. Is that fair to assume?
That is fair to assume, yes.
Yes, given the time of the year we are in.
Yeah.
Yeah.
Is that like 90%?
I do not have the figure.
Okay.
I think you have to come back to us on that one.
We will provide the slide you asked for, yeah.
Yeah. But just as a final comment, I really appreciate better transparency on this. I do think that you should continue to provide that information you provided in the past.
Mm-hmm. Just to comment on that, it is obviously so that the ancillary services market in the Philippines is also three different segments, right? It is immediate, short term, it is sort of medium term, and it is long term. It is different prices in those different types of services, as it is typically in any deregulated energy market, like you have in Europe as well. So the contracted volumes are linked to two of those segments with different price levels as well. So, we will provide the information at an appropriate aggregation level, but there are also some nuances to this, just to be clear on that.
Okay, any further questions in the room? Then we can have a couple of questions from our online listeners. Do you expect to recognize a gain on the Egypt farm-down to EBRD, and is this included in the guidance?
There is likely to be a gain related to the farm-down related to Obelisk, but this has not been included in our guidance.
That we will do when we close.
Another question. On the Philippines, as a mitigating action in the Philippines, you state you will reallocate BESS capacity to existing long-term contracts while simultaneously stating limited long-term effects. Given this, is it fair to assume that you expect the ASPA tariff on new contracts to be broadly in line with your existing contracts at PHP 2.25 ?
I don't think we will comment on, at this point in time, exactly where prices are going to be, how much volume we might potentially reallocate to long-term contracts relative to keeping for selling into the reserves market. It's obviously also important to remember that currently we have 40 MWh of battery capacity in the Philippines, and we are currently expecting to bring one new battery online over the next couple of months, and two new batteries online during next year. So we will also increase the battery capacity in the Philippines from 40 MWh to 160 MWh over the next 12 to 15 months. So we will also have more capacity to operate in the ancillary services market going forward.
Thank you, Terje. Another question, or actually two questions from Anis Zgaya, ODDO BHF. On the Philippines, you expect only limited long-term effects from the reserves market suspension. What gives you confidence that ancillary services earnings can recover once the six-month suspension ends? What should we assume as a normalized earnings level beyond 2026?
Well, there is a couple of elements, and I mentioned some of them in the presentation. First of all, the market needs ancillary services. Currently, the market or potentially must-run facilities, they are having additional costs related to the suspension of the market. We believe also that the market will increase in the sense that there are going to be more variable renewable on the grid, and therefore there will be more need for ancillary services in the future. Second point is that the marginal capacity for ancillary services is related to diesel and heavy fuel oil generation. So it is very expensive capacity that represents the marginal capacity. Then, we have also seen historically that when they are changing and trying to adjust the ancillary service market or the reserves market to manage prices, they typically put on a price cap, or price ceiling.
This is at least what we are currently expecting the outcome to be this time as well. Obviously, we do not know, but this is sort of what we are currently expecting. From that point of view, we do not believe that supply-demand situation in the ancillary services market and the reserves market will change significantly. The high prices will be capped, especially in Visayas and Mindanao, but we expect the prices to normalize and that historical prices, not Q3, but historical prices is a good benchmark for what we will see in the future.
Thank you. Another question. With a higher investment ambition, should we expect any change in your return thresholds, or project mix, particularly between renewables and storage? Do you believe the larger pipeline allows you to double investments without compromising returns?
We will not compromise returns.
That is clear. Thank you. One from Jørgen Lande, Danske Bank. "Good morning. Just a clarification. The NOK 2 billion annual average equity investments that you guide towards 2030, is this gross, i.e., before cash inflow from D&C?" Yes.
Yes.
I can confirm that.
This is gross.
Yes.
Yeah.
There was another question. "Which of the plants in Ukraine was impaired?
That is across the portfolio.
Okay. Another one from Jørgen Lande, Danske Bank. "On the Philippines, just to understand the production volumes for 2027, if we assume normal net production to Scatec is around 750 GWh per year, how should we think the impact from the suspension or the reserves market will hit your 2027 production in terms of deviation from a normal year?
You should not expect it to impact our total generation. I mean, the water will be used to generate power, whether it is used to sell into the spot market or whether it comes through the turbines to deliver incidental energy related to the capacity that we offer in the ancillary services market. All water will be used to generate electricity at the end.
Yes. Okay. We have one. "Can you provide guidance for 2026 given the moving parts in the Philippines?" Thank you. "Could you update us on asset rotations?" When we are on that, is there anything you want to add on that?
No, as I said in the presentation, we expect to receive in a range of EUR 300 million related to the platform that we have established in Egypt, or for Egypt with EBRD. We are working on a number of other, both smaller and larger potential farm downs and exits. But we will provide more information when they materialize.
Can you shed some more light on how you expect earnings from ancillary service to look like in 2027? Under what timeframe do you consider it's probable to sign longer term agreements for your BESS capacity?
I think we will come back with further information on 2027 when we provide the outlook for 2027.
The work to see if it's possible to secure bilateral contracts on ancillary services has already started, but it's very difficult to provide so early a time perspective on that.
One last question. "Are you considering selling your hydropower business in the Philippines, should an attractive offer arise?
I don't think we should comment on that.
Another one popped up just now. "You show, NOK 0.3 billion in divestment cash from Egypt. Is this related to Dandara?" Yes, I can confirm that. One more from Andreas.
In terms of the Philippines, could you just say that what we saw on ancillary services revenues in 2024, would that be like a very bottom part of the range in terms of what you should expect? You didn't have much sales to the reserves market then.
Yeah, I don't think I will make a comment or a promise on exactly the level. I agree, 2024, I mean, the market started, we had one or two months, maybe one and a half months of the market working, and then it worked the last, I don't know, four months. In principle, five, six months of operations. If the prices are the same and we have now six months of suspension, we should have a bit more in 2027 than 2024. But I think it's, at this point in time, as I said, we have to come back on the perspective of 2027 when we come with the outlook.
Okay, thank you.
When do you expect the transaction, Obelisk transaction to close, so the bigger transaction?
The Obelisk transaction will close in Q4.
Okay, we have some more questions coming in. I think it's three more. We have one from Anis Zgaya again, from ODDO BHF, on Tunisia. Says, "You previously faced some challenges with STEG regarding grid connections for new projects." I am not sure what the reference is, but, "Have these issues now been resolved, or do you see grid connection bottlenecks in Tunisia? Also, there has been some load shedding and periodic power cuts during last summer's peak demand to protect the grid. Did this have any impact on operations or production?
Yes, I assume the question is referring to Tozeur and Sidi Bouzid, the first two projects. I believe they came into operation a bit late.
The load shedding last summer has not had any impacts on us, but obviously it has a lot of impact on the country, and the energy situation in the country. I was in Tunisia last week and had the discussions with the Minister of Energy, and he is trying to encourage us to accelerate the construction of our projects so that we can get them on grid and help them manage the difficult situations on the grid during the summer. Clearly, we are working together, us and the authorities, to make sure that they can get more power onto the grid as quickly as possible.
Okay. What about This was referring to the previous question about 2026 guidance, so a follow-up on that. What about 2027 guidance? Are the problems in 3Q spilling into 2027?
I think Terje has commented that we will come back to the 2027 guidance. I also think that one of the key messages was that we, in the Philippines particularly, see a lot of opportunities and expect less impact going forward as the compensating measures take effect.
Yes. Another one on specifically future guidance on the Philippines. I think we've been through that. One question, "With NOK 0.3 billion in cash from Obelisk and the D&C contribution, and your remaining stake, any estimate of your IRR on this investment? Must be high." I think, yes, it is high. We're not specifically providing guidance on that. It's been a very good investment, of course.
That obviously depends how you calculate the return.
Yes.
If you calculate the return on gross investment or net investment. I mean, the net investment is negative, so to speak. If that makes sense.
Very short payback time.
Okay. I think we've been through the questions.
Okay.
Thank you.
Thank you.
Thank you very much.
Thank you.