Last week, Romanian blue chip – Hidroelectrica, held its Capital Markets Day. Today, we’re bringing you key takeaways from the conference.

Hidroelectrica, the largest electricity producer in Romania, held its Capital Markets Day last week. The company presented its strategic growth plan, focusing on expanding its renewable energy capacity, modernizing its hydro portfolio, and maintaining a balanced capital structure for future growth. The Group also commented on Romania’s macroeconomic development with the country’s GDP per capita coming close to its regional peers. The group noted that in the future, the Romanian market will remain their main focus. Finally, Hidroelectirca emphasized they are proud of “breaking” the perception that a state company cannot have a clear path and that before anything else, transparency, is finally changing.

Strategic Growth Plan: Renewable Energy Expansion

By 2027, Hidroelectrica aims to increase its renewable energy capacity by more than 700 MW, both organically and through M&A:

500 MW from inorganic solar and wind projects through M&A, which will require a CAPEX of app. RON 2.2bn.

155 MW from organic hydro expansion projects, divided into key projects:

• Rastolita Phase 1 (Cluj branch): 35 MW, completion by 2025 with an estimated cost of RON 80m.
• Livezeni-Bumbesti (Portile de Fier branch): 65 MW by 2026, costing RON 419m.
• Surduc Siriu (Curtea de Arges branch): 55 MW, completion by 2027, costing RON 414m.

56 MW from organic solar expansion, which includes:

• Tudor Vladimirescu Solar Project: A 46 MW solar project.
• Nufarul: A 10 MW pilot floating solar project.

Additionally, the company is partnering in a JV (50/50) to develop 2 GW of renewable energy sources (RES) capacity, which will include floating solar, ground solar, and energy storage systems (BESS). Hidroelectrica will hold 1 GW directly, with all output to be commercialized through its existing market channels.

CAPEX Plans Through 2026

Hidroelectrica’s planned CAPEX amounts to RON 3.18 bn by 2026, divided as follows:

• RON 1.231bn for hydro development.
• RON 1.510bn for refurbishments.
• RON 418m for maintenance.

Projected Organic Growth – ongoing & planned

• Rastolita Hydro Power Plant (Phase 1): 35 MW with expected annual production of 46 GWh.
• Livezeni-Bumbesti Project: 65 MW with 259 GWh projected production.
• Surduc Siriu Project: 55 MW with 152 GWh of expected energy output.

The solar projects include:

• Tudor Vladimirescu: 46 MW with expected energy production of 64 GWh annually.
• Nufarul Floating Solar: A pilot 10 MW project.

Modernization and Refurbishment Strategy

Hidroelectrica is modernizing its existing hydro assets, focusing on extending plant lifecycles and improving operational efficiency. Major modernization projects include:

• Vaduri, Remeti, and Arcesti hydro plants with ongoing works led by Hidroserv and UCMH.
• Extensive refurbishments at the Stejaru, Vidraru, and Mariselu plants, with a combined potential additional capacity of over 300 MW upon completion, expected in 2034.

Inorganic Expansion and Partnerships

The mentioned JV plays a pivotal role in Hidroelectrica’s ambition to add 2 GW of new RES capacities. The joint venture will develop floating solar, ground solar, and BESS storage facilities, leveraging Hidroelectrica’s expertise and infrastructure.

Financial and Operational Efficiency

Despite a challenging hydrological year, Hidroelectrica’s financial performance remains strong. The company emphasizes operational efficiency, with a focus on cost management and balancing long-term investments with immediate shareholder returns.

The company’s hedging strategy and commercial flexibility ensure stability in volatile market conditions, while the company aims to maintain a dividend payout ratio of >90%.

Key Takeaways

1. Significant Capacity Expansion: Targeting over 700 MW of new renewable energy capacity by 2027.
2. Robust Financial Health: CAPEX of over RON 3.18bn by 2026, on the back of strong cash generation and efficient cost control.
3. JV partnership: Aiming for 2 GW of RES capacity through a 50/50 joint venture.
4. Sustainability Focus: Commitment to green energy, with all new developments aligned with environmental and sustainability goals.