Welcome to Orrön Energy's webcast for Q1 2025. Today we will listen to our CEO, Daniel Fitzgerald, and our CFO, Espen Hennie, presenting the Q1 results and giving an update on the developments in Orrön Energy. We will have a Q&A session at the end of the presentation, so please feel free to send your questions across. We will collect and go through them at the end. With that, I would like to hand over to Daniel to start off this presentation.
Thank you, Jenny. Good afternoon and welcome to our Q1 results for 2025. Just before we dive into the results, a quick recap on Orrön Energy. We are a pure-play renewable energy company, and we have around 380 MW worth of producing assets, which are wind assets, where 80% of them are in Sweden and 20% in Finland. That gives us a really good platform for long-term asset life and long-term cash generation. Organic growth out of that platform is something we are really focusing on: extending lifetimes of assets, expanding the opportunities to produce energy from those sites is something we are really looking for across both the producing asset base and the greenfield platform. We have a large-scale greenfield pipeline of projects, primarily in the U.K., Germany, and in the Nordics.
We will touch on that a little bit through this presentation, where we are starting to see the monetization of those projects, and we expect to start seeing some revenues through the course of 2025 from that portfolio. Finally, the company remains in a robust position financially with over EUR 100 million worth of liquidity headroom. When we look at the quarter, I think we are delivering against our strategy. There has been some really strong performance across all of the business units and business areas, and the company is in a great position to grow from here. However, we do need to acknowledge that the market conditions in Q1 remain like we have seen towards the end of 2024, where Nordic electricity pricing still remains slightly lower than where we expected to be, and that, of course, impacts our financial results.
Turning now to the quarterly results, we delivered power generation of 251 gigawatt hours in the quarter, and that's slightly below where we expected to be in terms of our base case. The two reasons for that: around half of the reduction is due to weather conditions in the first quarter, where we've seen lower-than-expected wind speeds. The second portion of that is due to curtailments, either linked to ancillary services or linked to price curtailments, and the majority of that being ancillary services. Our revenues for the first quarter amounted to EUR 10 million, leaving us with EBITDA of EUR 1 million on a proportionate basis and an achieved price of around EUR 40 per MW hour. On the elements that we can control, which are our internal costs, we delivered in line with our expectation and our guidance for Q1 on all of those costs.
On the greenfield project side, I'm excited to share that we've now launched a sales process for our first project in Germany, which is at the ready-to-permit stage, and we'll touch on that a little bit later in the presentation. That is the first project in Germany starting to hit the market, and it's a really pivotal point for the greenfield business as we're starting to see projects reach the right level of maturity and entering the market. In the U.K., we've had a second project now, is at ready-to-permit, and we'll touch on that in a little bit as well. We have a good portfolio in the U.K. ready for sale once we reach the conclusion of this grid reform process. Our net debt at the end of Q1 was EUR 69 million, leaving us with over EUR 100 million of liquidity headroom against our EUR 170 million facility.
All in all, I think the things within our control during Q1, we performed quite well. The market conditions in Q1 were not as strong as expected, and both on weather conditions and electricity pricing, slightly less favorable than what we had hoped during the quarter. On the production side, as I touched on, we delivered 251 GW hours, and we remain on track at this stage for our production guidance range of between 900 and 1,050 GW hours. Obviously, with the slight shortfall in Q1, we are slightly below the midpoint on that if we just forecast the rest of the year. As with every quarter on weather conditions, we will see some quarters above and some quarters below. We remain on track with our guidance at this point in time.
For the curtailments linked to ancillary services, the primary asset that we have online for ancillary services is MOK, and we bid into this market and potentially curtail volumes to provide these services to the grid operator at points in time when we can achieve a higher price than the spot price for that period of time. We are better off, and we achieve slightly higher revenues by providing these services, even though we curtail production, because the revenues we receive are in excess of what we would have received had we been producing the volumes at that point in time. The second element that we have running on around two-thirds of our assets and will increase during the course of this year is the price-dependent bidding.
When we see really low pricing or negative pricing below our marginal cost of production, we do step in and purposely curtail some of the volumes from our production because economically it's a much better thing to do. On both of these elements, both ancillary services and price-dependent bidding, these are things that we've put in place through the course of the last year to ensure that we have the ability to mitigate some of the effects of market volatility within our portfolio. On ancillary services, we will look to qualify more of our assets into the ancillary services market. MOK is there right now and operating.
Carl Sixtensson is in the final stages of qualification and testing, and we should have that online, and we're looking at more of the portfolio to add into this because it does optimize our revenue slightly compared to producing the volumes into the market. Our greenfield teams are making really good progress both in the U.K. and Germany on maturing projects, and we're seeing every quarter now, we're seeing more and more of these projects reaching key milestones. As of the end of last year, we had 1.9 GW worth of projects in the U.K. at ready-to-permit, and we'd launched a sales process for that project.
Now, unfortunately, at the end of last year, the U.K. National System Operator and the regulator launched a grid reform process which aims at accelerating grid connections for projects that are ready and in the queue and looks to push out projects which do not have the right level of maturity. We are going through that process now. The actual steps in the process have been approved by the regulator, and we are now in the stages where we are reapplying for some of the elements of grid that we have to get either a better or a more certain connection date as a part of this process. With a broader portfolio in the U.K., we expect to hear more during the course of the second half of this year.
Towards the end of Q3 or early Q4, we should know more about where our projects sit in terms of timeline for those grid connections, and we will look to mature more projects to the ready-to-permit stage. We have 2.5 GW at this stage just awaiting the confirmation of grid, and then the remainder of the projects that we're high grading towards this process, we'll see the results in the second half of this year. In Germany, we have our first project, just shy of 100 MW, which has reached ready-to-permit, and that's now moved into a sales process, and we'll touch on that in the next slide. Overall, over the next two years, we expect to see around an additional 3 GW worth of projects reaching key milestones in terms of ready-to-permit and then moving through these processes.
Unfortunately, we have to wait for the outcome of the U.K. grid connection reform to understand where our projects sit in the queue, the final dates, and then move into the sales processes on those. Germany remains unaffected by that, and we see a number of projects that are coming beyond this first project into the pipeline for our sales processes. Looking at our first project in Germany, it is an agri-PV project which combines working the land and the agricultural farming on the land with the photovoltaic solution, and it allows both to exist in coexistence where the German government in a lot of places, and we see this across France and some of the other European countries, are really trying to protect the agricultural industry. These types of solar projects we expect will become more and more prevalent compared to just traditional ground-mounted solar.
On this project, it is an agri-PV project. We have secured land, secured grid, and we have unanimous approval from the municipality on the project moving forward into the final stages of permitting and approval. That gives us a really strong foundation to move into a sales process, and we launched that earlier in Q2. We have strong appetite from a range of bidders, and we expect to hear more through the summer of this year and expect to be able to share more on the process. Unfortunately, with the process ongoing, it is too early to comment, but we are seeing strong interest and strong appetite from a broad range of investors in this project. I am keen to be able to share a little bit more once we reach the conclusion of the sales process on this.
As we say on the bottom of the slide, there are many more projects that are advancing towards ready-to-permit, and I expect that both the U.K. and Germany, this year is going to be a pivotal year where we start to see more and more projects entering maturity and entering the sales pipeline. With that, I'll pass over to Espen to cover the financials for Q1.
Thank you, Daniel, and good afternoon, everyone. I'll go through the financials for the first quarter of 2025, starting here with some of the highlights. The quarterly power generation came in at 251 GW hours, as Dan already mentioned, and achieved price for the first quarter was EUR 40 per MW hour, and we will look at the achieved price a bit more in detail at a later slide. The quarterly volume and price equates to revenues of EUR 10 million, and we achieved an EBITDA excluding non-cash G&A items of EUR 1 million for Q1. We ended the quarter with a very comfortable net debt position of EUR 69 million, and when you compare that to our debt facility of EUR 170 million, it is obvious that the financial position of the company is highly robust and resilient.
Taking a look at our full year guidance and how we performed on the different items during the first quarter of the year, starting with operating costs, we had actuals in Q1 of EUR 5 million, and it is fair to say that we did face some headwinds related to higher than expected balancing costs, but also some impact from the SEK strengthening versus the euro during the quarter. It is also important to note that we do expect the OpEx to come down over the next couple of quarters, as we also expect somewhat lower volumes before picking up again in Q4, and that is why we reiterate our full year guidance of EUR 17 million for operating costs. For G&A and Sudan legal costs, it was very much business as usual for the first quarter, and we are sticking with our previously disclosed full year guidance on these items.
For CAPEX, we do expect higher spend during the upcoming quarters, which is consistent with our EUR 12 million guidance for the full year. Taking then a look at some of the key financial metrics for Q1 and the preceding quarters going back to the same quarter last year, revenues came down year over year on lower volumes and achieved price, but we did see an uptick of EUR 1.4 million versus Q4, driven by stronger price more than offsetting the lower volumes. On EBITDA, there is a lower gap versus the preceding quarter, mainly driven by the sequentially higher OPEX, which I touched upon on the previous slide, and we can see the same pattern of our quarter-over-quarter improvement in reported CFFO before working capital changes, which came in at EUR 0.6 million for Q1 compared to EUR 0.6 million in Q4 last year.
A bit more details on our achieved price during Q1. The Nordic system price achieved EUR 46 per MW hour during Q1, whereas the average production-weighted spot price for our portfolio was EUR 47 per MW hour. Ancillary service income, sale of GOOs, and hedging had a total positive impact of EUR 1 per megawatt hour for the quarter on our achieved price before deducting capture price discounts to arrive at the quarterly achieved price of EUR 40 per MW hour. As we said at our CMD back in February, we do expect average capture price discount for the year to end up not far away from the levels we saw in 2024, but it is encouraging to see that we have started 2025 on a somewhat lower trajectory in percentage terms compared to what we saw in the two preceding years.
So far this year, 17% compared to then about 20% on average for the two full years, 2023 and 2024. If we then move to our quarterly reported cash flow and our liquidity position, the CFFO excluding working capital was EUR 0.6 million, as mentioned earlier, and the impact from working capital changes was a positive EUR 1.2 million during the quarter. Cash flow from investing activities totaled EUR 4.3 million, and that consists of EUR 2.4 million of CapEx, being investments into greenfield projects, and just shy of EUR 2 million of cash flow impact from acquisitions of producing assets.
Taking these changes into account leads to a proportionate net debt position of EUR 69 million at the end of the quarter, and as we can see on the right-hand chart on the slide, this results in approximately EUR 100 million of liquidity headroom at the end of Q1, consisting of EUR 20 million of cash on the balance sheet and more than EUR 80 million of an undrawn amount under our RCF facility. We presented the 2025 cash flow outlook at our CMD in February, which we now have updated post-Q1 to reflect the actuals year- to- date, and for this outlook, we assume 975 gigawatt hours of power generation being the midpoint of our guidance and also costs as per our guidance, as we touched upon on an earlier slide.
It is important to note that revenues from greenfield sales are excluded from this illustration, so that will obviously come in addition to the figures on this chart when it occurs. We are applying, as you can see at the right-hand of the chart, price ranges from EUR 25-EUR 45 per MW hour in achieved price for the remaining quarters of 2025, which we view as a realistic range of possible outcomes, and we are then obviously reflecting the EUR 40 achieved for Q1.
Starting then with revenues, we now expect that to end up between EUR 28 million and EUR 43 million for 2025, based on the mentioned assumptions, with a corresponding EBITDA excluding Sudan legal costs ranging between EUR 2 million and EUR 17 million, with a corresponding EBITDA break-even price of EUR 27 per MW hour, so meaning that at all prices at or above EUR 27 per MW hour, excluding Sudan, we are generating positive EBITDA for the year. When including Sudan legal costs, and as we have said numerous times before, it is important to remember the temporary nature of those costs compared to the more than 20 years of average remaining lifetime of our assets, but if we include Sudan legal costs, EBITDA will end up between EUR 5 million and EUR 10 million for the year as per our outlook.
Moving to free cash flow before CapEx, we anticipate EUR 3 million-EUR 12 million excluding legal costs and EUR 10 million-EUR 5 million including the Sudan legal costs. I think the key takeaways from this chart and taking into account the EUR 100 million of available liquidity is that we have ample headroom to finance our planned investment activities and multiple times over, even in a low-price scenario, and it clearly shows that the company is resilient and can withstand prolonged periods of low prices if necessary. Importantly, and finally, the company has liquidity available to pursue and capitalize on accretive opportunities if and when they arise. With that, I'll hand the word over to Dan for some concluding remarks.
Thank you, Espen, and I think it's important to look at that market context in the broader picture in Sweden. We're sitting here with Q1 and futures pricing below the break-even cost of new supply coming to market, and we've seen that in the lack of investment decisions across the Nordics for new power generation, and that will have an impact longer term. We're seeing offshore wind is slowing down. We're seeing the political regime not as supportive as it has been in the past for some of these technologies. I think even though we're in a strong position to withstand these conditions, I think in the medium and longer term, the fundamentals for renewable energy are much, much stronger than what we've seen in the last, say, one or two quarters and last 12 months.
Orrön Energy is really well established and set up to withstand this period of low market pricing, but also to generate value through that period. The assets we have have long-term cash generation potential with a relatively low break-even cost. We have a greenfield pipeline that the revenues from that will start to hit the balance sheet and the P&L statement through the course of this year. We're financially resilient with a lot of liquidity headroom to go and build a business countercyclically when markets are like they are today. We have strong teams across five countries which are growing organically, which is by far one of the best ways to create value once you have the platforms established. As I touched on, there will be a change as we start to realize revenues from the greenfield platform. It really is a change for the company moving forward.
With that, I'll pass back to Jenny and invite Espen to join me up here for the Q&A.
Thank you very much. As mentioned before, we will now have a Q&A session. You have a function on the bottom of your screen where you can submit a question, and let's go right into it. How do you see M&A opportunities in this market environment?
Yeah, I think there are M&A, accretive M&A opportunities, and we're seeing as the prices remain low, we're seeing more and more opportunities coming to the market. We have the financial firepower to go and act on that, but we also have to take into account what the shorter-term futures price looks like. We were active through Q4 and a little bit into Q1 with some of the transactions. The seller's expectations are still probably a little bit higher than where we would transact today, but what we're seeing in the larger-scale assets, we're starting to see a bit more, a few more opportunities where people are looking through the shorter-term nature.
One of the recent deals was the Equinor deal, which is right next to Carsgrove, the Carsgrove asset in southern Sweden, and the equivalent valuation that Equinor paid is EUR 150 million for our Carsgrove asset, and that goes against a market cap of the company today of EUR 120 million and an enterprise value of EUR 190 million. The market is still valuing assets like Carsgrove, MLK, and the bigger assets at a much higher multiple than where public companies are trading. I see a bit of a mix in M&A. There are opportunities in the market. We will execute on those where they make sense, but there are also opportunities for divestment should the buyer universe be in the right place.
Looking at the Nordic market, the electricity price has been fairly low. Is this something you think will continue moving forward, or what's your view on the long-term pricing?
I think shorter term, there's, with market sentiment, Trump's Liberation Day tariffs, global growth expectations, companies' ability to invest, it's a really challenging time, I think, for all sectors today. The shorter-term period, I think, is we should expect some weakness, which Espen has shown in the financials for this year, that we're forecasting that weakness in the guidance we're giving. I think medium term, with no new supply coming on, GDP growth still moving forward in a fashion we're going to see increasing demand over time. I think that has to have an impact on pricing in the medium and longer term. Our expectation still is that pricing will pick up as we move into the medium and longer term.
No, fully agree, and just again, want to highlight sort of the resilience and robustness of the company and the balance sheet and fairly low break-even prices, which we went through in the presentation, which means that although if it actually happens that we see a prolonged period of low prices, we can clearly withstand it and capitalize when the market rebounds.
Will your strategy change if the current prices remain, or will you look into other opportunities?
I think strategy-wise, we're on track with our strategy, and it's as resilient in a low-priced environment as in a high. As Espen touched on, we have a relatively low break-even price all in for our EBITDA and free cash flow, especially once the Sudan case finishes. I think we're always looking at the valuation on our assets. We're looking at the cash flow of the assets based on futures and looking at where the market is willing to pay. We executed on the Lighthanger transaction last year, which was very accretive and much higher than where we would be receiving revenues today. We are active in understanding the value of all of our assets, both from a sale perspective and a purchase perspective. You should expect us to continually update or nudge the strategy as markets evolve over time.
We got some questions about acquisitions. Are we also looking at buying assets in Germany, U.K., France, or other regions than the Nordics?
We're always active in a range of regions. I think Germany and the U.K., we see much stronger electricity pricing. On our projects that we're bringing to market, we're seeing that pricing reflected in buyers' willingness to pay. Those markets are a little more challenging in terms of a lower expected rate of return and a much higher electricity price. I wouldn't say it's easy to go and step into M&A in the U.K. and Germany, but to really meet our return requirements, I think it's challenging at this point to find the portfolios and platforms that are really accretive in those countries.
We also have a few questions around batteries in the Nordics and also solar. Is this something we're looking at in the Nordics?
Yes, so we have a pipeline. We have not shared a lot of it today. We shared a bit more at the Capital Markets Day. If there are more questions on the Nordic pipeline, there is more information on our Capital Markets Day presentation on the website. In the Nordics, we have a broader portfolio than the greenfield pipeline we have, than the greenfield pipeline in the U.K. and Germany, and we have wind, solar, and batteries within that pipeline. I think we saw a period when batteries first started hitting the market in commercial quantities. We saw really strong revenues for a number of years, and we quickly saturated some of the early ancillary services. We are starting to see more depth in some of the ancillary services, and we are starting to see battery economics picking up again. We have opportunities that are ready to build at this stage.
We have opportunities that are ready to hit the market in terms of sale, but they are much smaller in terms of megawatts than our greenfield platform. Where we reach economics that we are happy with, we will take investment decisions and move forward on those.
Good. We got a few questions about the current share price. When will you start buying back shares? Is this something you're looking at, or are you happy with the current share price levels?
Not happy at all with the current share price levels, and I think that's a resounding theme when we speak to investors. Trading today at around SEK 4.5 a share gives us a market cap of EUR 120 million where we see if I just look at the multiples on MLK and Carsgrove from recent transactions in the market, we're probably sitting north of EUR 200-EUR 250 million on a conservative basis just for those assets. I think there remains a disconnect between our share price and the underlying value of the assets. I think you should expect this discussion to remain alive at the board level, and if and when the board are comfortable to move forward, we have all of the required AGM support and shareholder support to move forward on a buyback.
When the conditions are good for a buyback, the board will make that decision and move forward.
Great. Looks like we have one final question, and it's about the recent allegations surrounding the legal case. What do you have to say around the recent allegations on this?
Yeah, I think I assume this is in relation to the Calefactor production, and I think it takes a very one-sided view and a non-contextualized view of some of the elements. The one thing that comes out of both the Calefactor program and the prosecution who have investigated this is it was all closed down back in 2023 with absolutely no link between the allegations and the company. I think from our side, there's absolutely no wrongdoing. There's been a bunch of material that's completely taken out of context, and the investigation that's been undertaken has proven no link between the company and these allegations. Unfortunately, there's nothing behind that that makes any sense from our perspective.
Great. I do not see any more questions. With that, I would like to say thank you to Dan and Espen for this.
Thank you very much for joining us.
Thank you for everyone who asked questions, and feel free to reach out in case you have any additional questions. You know where to find us. Thank you.