La war in Ukraine resulted in a drop in supplies of gas and a dizzying surge in gods commodity prices. These three factors together triggered the global energy crisis still in progress and have had a strong impact on the accounts and strategies of energy operators with lower liquidity reserves and small and medium-sized energy producers. What were the effects on the main Italian utilities ed European? Thanks in some cases to the vertical integration between production and sales, and in others to the limited exposure to merchant risk and to a cost structure not influenced by the dynamics of the commodities, these realities have managed to face the crisis successfully, managing to guarantee security of supplies and to increase the investments in the energy transition. This is the picture of the sector contained in the "Utilities Report 2023-Utilities in the face of the energy crisis: investments and economic-financial performance”, created by act in collaboration with the Intesa team St. Paul, and presented at the Conference on Utilities organized by Agici e Accenture.
Italian utilities: revenues and ebitda growing, profits down
In the last year, the aggregate revenues of Italian utilities increased by over 49 percent, going from 58,8 billion at the end of 2021 to 87,8 billion at the end of 2022. “The Energy Groups and Multiutility clusters have the greatest impact on the positive performance, with an increase of 104% by 32%, since they benefit from greater business diversification and are subject to lower revenue volatility”, explains the report, according to which network operators also recorded an increase in turnover, but much more contained and equal to 2,9 %. The reason? In this case “the business is based on regulated activities with revenues that are less elastic with respect to the change in commodity prices”, explains Agici.
Turning to the other financial parameters, according to estimates, the aggregate gross operating margin of Italian companies increased by 5,3% (+21,6% for Energy Group clusters). The multiutilities performed well, with aggregate EBITDA growing by 3,8%. Also in this case, the result of the Network Operators is lower, for which a result is expected to be substantially in line with 2021 (+1,8%). In fact, while on the one hand the generalized increase in prices has led to higher revenues from the sale of electricity and gas, on the other hand it has led to higher costs for raw materials, as can be seen from the report. Instead, they decreased by 7%. useful, mainly due to customers' payment difficulties, the increase in the tax on extra profits, the increase in interest rates. In particular, the reduction is expected for the Energy Groups (-24,9% compared to 2021) and Multiutilities (-8%), while the profit of the Network Operators is expected to be in line with 2021.
And in Europe? In 2022, continental utility revenues are expected to rise from 634,8 to 636,6 billion. The reason is easy to say: "the increase linked to the rise in demand and prices of energy commodities - explains Agici - was offset by the deconsolidation of Uniper from the Fortum balance sheet”.
Italian utilities: 15 billion investments in 2022
Despite the blows of the crisis, in 2022 Italian utilities continued to invest, carrying out projects for 15 billion euros, 3 billion more than 2021.
From a sectoral point of view, the report estimates for multiutility a total investment of 5 billion euros for 2022 (+43%), intended above all for the modernization of the electricity, water and gas networks, the development of renewables and the efficiency of industries and buildings were the priority fields of intervention. For the energy groups on the other hand, investments rose by 21% to 5,5 billion thanks above all to RES development activities from photovoltaic and wind power, electricity and gas distribution networks and energy services. Finally, for the Network Operators the report estimates a total investment of 4,1 billion, up 10% compared to 2021.
The increase in investments also concerned the European operators: resources amounting to 2022 billion were invested in 96, 25% more than in 2021.
The growth prospects of Italian and European utilities
According to the report, in the period 2022-25, the aggregate revenues of Italian operators will grow by 1,9% per year, going from a total of 48,2 billion in 2022 to 51 billion in 2025. The prospects for investments, with Italian utilities that have planned investments for 2023 billion in the three-year period 2025-53, more than 17 billion euros a year. In particular, 26% of planned resources refer to Multiutilities, 42% to Energy Groups and 31% to Network Operators.
The trend of the European operators: in the period 2022-2025, revenues should fall by 2,3% per year, going from around 636,6 billion to around 594,2 billion in 2025, while planned investments should grow from 189 to 215 billion euros in the three-year period 2023 -2025. “In line with 2022, the strategic priorities for the coming years remain: decarbonisation and development of new renewable capacity, expansion and maintenance of electricity grids. Added to these is the growing interest in starting innovative projects dedicated to the production of green hydrogen", underlines the report, according to which "despite the turbulence that affected the energy sector in 2022, economic and financial health of the main Italian and European utilities remained stable and the related investments continued to increase, confirming the trends that emerged in previous years”.
“After the pandemic, utilities have had to deal with the financial and industrial impacts of a crisis unprecedented global energy – says Marco Carta, CEO of Agici – Faced with this dramatic situation, the utilities have shown all their solidity and the ability to respond to challenges, guaranteeing the security of supplies, continuing to invest in the territories and implementing measures to help the most vulnerable consumers. For the future, also thanks to the role of the Pnrr, Italian utilities are accelerating the path towards the creation of an increasingly resilient energy system, attentive to consumers and environmentally sustainable: it is essential that the Government follow this momentum and adopt all the measures to streamline procedures and bureaucracy”, concludes Carta.
