Windforce 2Q profits up on solar and hydropower sales

• Company’s 10MW waste-to-energy project in Karadiyana awaits Cabinet nod  

Windforce PLC, Sri Lanka’s largest independent renewable energy producer with an expansive portfolio, reported higher profits for the three months to September, on the growth of its solar and hydropower segments but its outsize wind energy portfolio saw lower revenue, due to the drop in tariff rate and being forced to operate below capacity, owing to a failure at the Norochchalai wind collector substation. 

The group filing its third interim financial report since going public this year reported earnings of 63 cents a share or Rs.880.7 million for the July-September quarter, compared to 65 cents a share or Rs.740.6 million in the corresponding period last year.

Windforce reported revenues of Rs.1.51 billion in the three months, up 3 percent from a year ago period, as the wind energy segment, the group’s largest of the three, had to suffer some set back over the tariff rate at its two projects identified as Daily Life and PowerGen, as the two entered their second tier in operations.

Besides, three of the company’s wind plants, which include the aforementioned two and Nirmalapura, were compelled to operate below capacity, due to a failure in the 75 MVA power transformer at the Ceylon Electricity Board’s (CEB) Norochcholai wind collector substation since July last year.  As a result, the revenue from wind energy declined by 10 percent in the six months, the company said. 

“However, it was successfully restored in September of 2021. Aside from this, our largest wind power project to date, the 15MW wind project in Mannar, received the Letter of Intent from the CEB in June 2021. The construction of the plant has begun and is expected to be commissioned in mid-2022,” said Windforce Managing Director Manjula Perera in an earnings release.  During the six months to September, the company reported earnings of Rs.1.05 a share or Rs.1.43 billion on revenues of Rs.2.66 billion, barely unchanged from the comparable period last year.   Wind energy accounts for 61 percent of the company’s first half revenues.  

The company went public in April this year to raise Rs.3.2 billion to advance its expansion plans, as the green energy is rapidly gaining traction and is becoming mainstream, replacing energy produced out of traditional energy sources such as fossil fuel and coal, which are considered more environmentally hazardous. At COP26, the United Nations’ Climate Summit, which concluded in Glasgow in November, the governments reached an agreement not to commission any more coal-powered power plants and to phase down the current ones in operation to bring down global warming, which they consider is at the centre of causing many of the environmental crises facing the world in recent times. 

Meanwhile, Windforce increased its revenues from solar energy and hydropower by a robust 32 percent and 37 percent during the six months over the same period last year. The performance of the solar energy segment was made possible mainly by the “notable foreign currency contribution from the Tororo Solar Plant, commissioned in Uganda in August of 2020”.

Apart from Uganda, the company has solar power plants in Pakistan and Ukraine, with eyes already set for expansion into Bangladesh and Cameroon. The company in an earlier occasion said it had submitted bids for another 100MW solar plant in Pakistan. The company has also secured a tender for a 30MW solar plant, with 7.5MW battery storage in Senegal. The Senegal solar power project has the largest allocation of Rs.1.38 billion from the IPO proceeds and the outlays are earmarked for the current quarter. 

Meanwhile, the constantly high rainfall in the catchment areas helped the hydropower revenues of the group.  
In a further bid to expand its sources of renewable energy, the company embarked on a waste-to-energy project in Karadiyana, which is currently awaiting the Cabinet approval. The plant will be equipped with a 400 metric tonne per day incinerator plant and a 100 metric tonne per day anaerobic digestion plant, with a collective capacity to generate 10 MW of electricity to the national grid.  The company in May signed a share sale and purchase agreement to acquire a 92.5 percent stake in Fairway Waste Management Private Limited, which developed a 500MT/day Karadiyana waste-to-energy plant.  Further, the company in September acquired 100 percent in Sky Solar (Pvt.) Ltd from Sunshine Energy (Pvt.) Ltd, raising the number of rooftop solar plant companies under its wing to three and paving the way for the company’s total installed capacity to reach 220.2 MWh. The company paid Rs.200 million for the deal, while a further Rs.65 million is expected to be invested in the ongoing quarter, according to the interim results.  As at September 30, 2021, Akbar Brothers Private Limited, Hirdamani Private Limited and Debug Investments Private Limited held 35.91 percent, 20.67 percent and 12.14 percent stakes in Windforce, respectively, being its three largest shareholders. 

Tundra Sustainable Frontier Fund had a 5.18 percent stake, being the fourth largest shareholder.