Enefit Green AS (EGR1T) Earnings Call Transcript & Summary

Hello, dear investors, welcome to the Q3 results presentation of Enefit Green. My name is Juhan Aguraiuja, and I am the new CEO of Enefit Green. I'm really glad to be here, but I'm not here alone. With me today here are Mr. Andres Maasing, who is the Chief Development Officer and Management Board member; and Sven Kunsing, who is our Head of Investor Relations. Mr. Maasing filled the CEO position in quarter 3, while there was not me present. He did a great, excellent job, keeping the company in good hands. So great thanks for that. And as well Sven is keeping up the financial department as the temporary CFO until the next one arrives. But I would like to take the chance and shortly introduce myself to you, dear investors. My background is 12 years in the energy sector. And I also have a master's degree from the Tallinn Technical University for thermal power engineering. I have spent my last job before joining Enefit Green at Adven, who is specializing in district heating and industrial energy solutions in the Nordics and in the Baltics. I was there part of the group management team responsible for the Baltics business. Before that, I was employed by German energy company called Danpower and there is the place where I got my best knowledge for the energy. That's what I'm hoping to bring to Enefit Green is the experience and best practices from the Nordics and also from Central Europe. Of course, the investor is interested that what do I bring to the -- or what do I see from the first weeks here. It's my third week here actually only and starting to get to know what is happening here, and that has been, of course, my main focus to understand the processes, the main topics and to getting to know of the people. But what I have seen so far is that it's a highly professional team, a strong company and a good platform for future development. And as my focus is still into getting an understanding that's why the Q3 results will today be presented still by Andres and Sven as they were the persons managing the company in the last quarter. But before we go to that, I'm also glad to introduce our next CFO and Management Board member Argo Rannamets, who will start in end of January as the CFO. Of course, he will be responsible for all daily financial management and financing and investment opportunities and planning. He is a very strong finance expert with more than 20 years of experience in the sector. He has worked in different international companies in different roles. He is a good addition to the team to develop us further. But with that, I will give over now the talking to Andres, who will start presenting the results. And I will see you again in the Q&A session. So please feel free to ask in the Worksup environment under the Q&A panel, the questions. and me, together with my colleagues, we will be ready to answer. So please, Andres.

Thank you, Juhan, and thank you for the kind words. So breaking this tradition, we decided to add a new slide to our discussion in this quarterly review being the -- why are we actually doing what we're doing every day, why do we wake up and come to work and feel excited about it. Looking at our markets where we operate and when we look down to the bottom left corner, we see that Estonia, Latvia, Lithuania, the Baltic states currently import 40% of the energy from Poland, Finland and Sweden. One reason for us to exist is to fill that gap to make sure that energy support -- energy delivery in Baltic states is continued to be sustainable and will be secure. When we look at bottom right corner -- sorry, bottom left corner of the slide, then you'll see that Estonia and Poland have a very high carbon intensity in terms of the production of generation currently. It is much higher than countries in our region, but also generally in Europe. So in order to fulfill the energy trilemma challenges of environmentally clean energy supply and doing it securely and safely and affordably is the reason why every day, the people in Enefit Green in your company get up and come to work in order to fulfill the requirements and challenges of the Baltic states and our host markets. Moving forward to the underlying energy prices that we experienced during the third quarter where at the time where I was acting CEO. We've experienced continuously higher prices in the Baltic states. This is largely caused because of modest wind conditions in the Baltic states, but also because EstLink2, the link between Finland and Estonia was damaged and inoperable for a better part of Q3 and only came into operation in the middle of September. Looking at the long-term power prices, what we can say is the external experts have indicated that the prices continue to remain largely unchanged compared to previous published periods. However, we have seen some modest changes of 10% in the Poland and Finland markets in the early years of '25 to '27. What we expect this to be the case is because of lower carbon permit prices but also because of the lowering gas prices. However, as we live in a geopolitically challenging world and stable world, what we are seeing is continuous volatility in the carbon markets and gas prices, which will also reflect in volatile interim power prices in the upcoming periods. Moving forward to the regulatory developments. Here would bring out only a few most important ones that we have experienced over the last quarter. I think the most important one for our Estonian operations is the fact that it's following the disconnection of Estonian, Latvian and Lithuanian market from the BRELL network. We will lose our ability to rely on that support for the system services. And as a result of that, in the last quarterly review, we indicated that the Estonian government had introduced a EUR 5.31 per megawatt hour liability on electricity per users. Following a large amount of dismay to this matter by Estonian producers and encouragement to the Estonian government to discuss the matter with Latvian and the Lithuanian government as well as to harmonize approach across these markets to the system services, we were able to secure a 6-month relief from introduction of that fee of EUR 5.31 and we encouraged Estonian government continually to follow in harmony in approaching this issue with the Latvian and Lithuanian market. Because otherwise, we will find ourselves in an unlikely situation where -- or unnecessary situation where Lithuanian or Latvian market may be a lot more attractive for the investment than the Estonian market. We continue to engage with the state on the CFD scheme that is being proposed next year for the release with respect to Estonian offshore wind as well as the onshore development projects. We are continuing to work to ready ourselves for our offshore wind farm to be ready for that CFD bid by mid-next year. And we encourage Estonian government to continue their hard work in this matter and continue to retain cool head and look towards the other markets for examples. In Lithuania, we were very glad to see the adoption of the new national climate and energy plan whereby Lithuanian government has committed to have 100% target for renewable energy compared to previous 45%. Moving on to the wind conditions. We've experienced relatively modest wind conditions in Estonia and Lithuania. Last quarter, in quarter 3, we have accounted for about 20.7 gigawatt hours of loss across our portfolio as a result of it. However, we have seen a positive wind results in Finland and that has been largely in line with our expectations. For the first time, we're also showing in the bottom of the slide, the market wind profile or really a coincidental captured price. What we're seeing here is a continuous reduction in the coincidental production price during the high wind periods due to the build-out of renewable energy generation at the time of low demand. And where we're seeing the most challenging time period is in Finland, where at the same time, as nuclear power generation is operating, there is a large amount of wind also operational. However, in positive news, Tolpanvaara wind farm performs above the market due to its location in the grid -- and we are seeing that when average Finnish market is showing 44.9% discount or coincidental production discount, then our wind farm is 20% better. Moving to availabilities as the previous quarter and generally this year, we have experienced a very strong availability. Our development team and our operations team have done extremely well in making sure that wind and power production from solar projects remain strong as well as our Iru, combined heat power station continues to deliver strong performance in this respect. And what it shows is your operating team in your company is very, very committed to making sure that we continue to perform well even in a volatile time periods and manage things that we can control. Moving to a development pipeline and the construction pipeline. What we have achieved during the last 3 months is a first for a Baltic renewal energy company, whereby we have over 1,000 megawatts of renewable energy capacity installed across all of our home markets. We have moved Debnik solar farm in Poland to an operating asset. And we have now 453 megawatts of assets that are under commissioning and producing electricity every day. While they're not doing it at the same level of availability as operating assets, they are contributing enormously to the bottom line of your business. When we look at the projects under construction, which have caused quite a bit of anxiety amongst investors over the last period of time, we are seeing stabilization in our delivery. We continue to deliver our projects on time. We're trying to do so on budget, and we have been able to achieve that so far. And we are doing it safely, which is a very important value for your business. Where we are [indiscernible] we have been able to, in our highlights, settle with GE Vernova due to the collapse of the turbine that occurred last year. This settlement of about EUR 8 million in our opinion, is fair and reasonable, and we are continuing to engage with the insurers to secure some additional compensation with respect of that project and the delays that we've incurred. At this time, Akmene project is being -- is going through the commissioning process, the final lid grid testing and will be handed over to operations team before long. Similar to Silale project, which we officially opened in September, is going through the lid grid tests and is also intended shortly for the handover to operating team as both of these projects, Akmene and Silale continue to operate 100% capacity. We're also seeing good progress at Carnikava in Latvia. Smaller of the projects, [indiscernible] has achieved 95% completion in terms of construction and [indiscernible] has achieved 35% completion. Here, we remain steadfast to continue to deliver first energy before end of the year. However, minor construction works will continue throughout the winter. At Sopi-Tootsi, which is our flagship project, we have seen very good results during the third quarter. All of our turbines have now been installed during the quarter and 35 of the 38 turbines have achieved first generation. On -- a couple of weeks ago, during high wind periods in Estonia, we've also had a highest production from a single wind farm, whereby 155 megawatts was delivered by Sopi-Tootsi wind farm. Here, we continue to finalize the commissioning of the project being a very large scale, it takes some time. At Sopi PV we can also indicate a very strong construction and delivery performance. Nearly 100% of the solar field has been completed. 2 of the 8 inverters are -- started exporting energy 2 days ago. So we are now operating in the current autumn conditions at 25% of the installed capacity. The continuous work -- there is continuous work to bring the entire operation into full operation before too long. Where we're at expressed some -- where we've seen some challenges is Kelme I project, where all the turbines have been erected and dry commissioned and we are waiting for energization of that site following arrival of transformer that has been delayed. We still expect for the first energy before end of the quarter. However, we recognize that some delays have occurred both in terms of production and delivery of this site. Where we are seeing positive news, though, is Kelme II project, which is adjacent to Kelme I. We laid the cornerstone to this site during the quarter. And we have now 10 turbines foundations installed. We have 10% of the overall site electrified, and we have -- we are readying the site for the first delivery of the turbines from Vestas early in the new year. Looking at our interim period or near-term development portfolio, we haven't had any material changes in respect to the delivery of these sites. The work around the development is continuing. And in positive news here, we're continuing to explore your company's potential participation in the hydrogen world. Here, we have applied and secured EUR 17 million support from the Lithuanian government for the potential delivery of 22 megawatts worth of electrolyzers. This is across 4 sites, and each of the sites is adjacent or nearby our existing or newly proposed wind farms. So looking for hybridization in this environment. In terms of the overall delivery of the near-term development pipeline as well as long-term development pipeline, we are currently in the process of identifying an aligned and valuable financial adviser who will help us with the strategic review of the future delivery of these projects in the best and most sustainable way to you as our investors. Looking at our long-term pipeline. What we can say is we are continuing to focus just like last quarter on delivery of our long-term pipeline towards the near term. Where we are seeing good progress is Poland, where we collectively continue to work with RES Global that we've announced in the last quarter. as well as we are continuing to work with the delivery of the offshore wind farm at Liivi, which is off the coast of Estonia. And here, they are proposing to deliver under the state government CFD a 1,000-megawatt project. And your team at the development group is working very hard to ensure that this project will be delivered for the CFD in the most competitive manner, so that we could have a most competitive and best project potentially delivered by the time the CFD is being enacted and needs to be operational in early in the next decade. Looking at summary and the share of new assets. We are seeing enormous growth in the share of production. Nearly half of the production in quarter 3 came from the new assets. As you're aware, during the last 2 to 3 years, the business has grown enormously. We have doubled the production. We have doubled the installed capacity and nearly tripled the installed capacity compared to the IPO period by the time we finished construction of a currently sanctioned projects in calendar '25. Here, we have undertaken an enormous growth path of investing about EUR 1 billion over the period of 3 years across 12 projects. And what I'm proud to say is that the team has delivered here nearly -- has delivered into first energy 10 of those 12 projects, and the work is continuing on the other 2. But at this point, I'll hand over to Sven to cover the third quarter and 9-month financial results.

Thank you, Andres. Hello from my side. I'm Sven Kunsing, and I'm the Head of the Investor Relations since the IPO of this company. And this time also in that function here walking you through the financials on the earnings call for last quarter. So to begin with, what we have seen this quarter is definitely the growth from -- of production from the new assets, which have driven the total production growth to 32% compared to last year. But it hasn't, of course, been reflected in the operating income growth or EBITDA growth. Net profit has grown slightly. And the reason for that, why it's not reflected is, of course, the effective power price that we are able to or that we have been able to earn last quarter. And why this is so we will come to the reasons going forward. During the third quarter, we have brought here 3 highlights. We signed an agreement with EBRD -- a loan agreement with EBRD for EUR 100 million to support the finalization of our projects. We also settled the negotiations or the dispute with GE Vernova for the Akmene incident. We'll talk about that also later. And finally, I think one of the very important milestones for the Estonian market is that the largest wind farm in the Baltics, Sopi-Tootsi produced its first production in third quarter somewhat was produced already in August, but in September, a more notable 12 gigawatt hours was contributed to this total third quarter production figure that you see here. But this was, of course, from the very first turbines and not indicative of the full potential of this part. Nine-month trends are more or less similar. So maybe what is different is that the power price that we have been earning in the first 9 months is better. So the third quarter was really, really reducing this 9-month achievement here quite a bit. And in general, the highlight of the year has been really a finalization of the construction of our existing construction pipeline, and also the -- maybe the agreement with Polish developer, RES Global, which we announced last quarter, which then is somewhat long term in nature. I mean, this co-development agreement will affect our long-term sort of plans in Poland. So coming now to the reason why the power price that we have earned was as low as it was. So -- 40% lower than last year. This is somewhat complicated slide. But to quickly trying to cover it, I think I should say that one of the main sort of new things that has appeared here is the power wind profile and solar profile discounts, that have been much bigger than in previous quarters. So there has been a deterioration of that. That has affected the price of electricity sold to the market, which is nearly 40% lower than it was last year. And then another thing is the PPA price. That is also lower now compared to last year and actually reached as we see it now, it's low point in third quarter compared to the previous quarters compared to the quarters to come. So that is by approximately 25% lower than last year. So these two factors, I think, have contributed the most to the implied captured electricity price being also 40% lower. Of course, this PPA price and the market price also being lower, this also relates somewhat to our production mix. As a year before, we were not so present yet on the Finnish power market. Tolpanvaara has been added to the operating mix and has, of course, led to core market average electricity price being lower and all these other prices basically also being lower. And then yes, the discount also in the Finnish market, of course, has been quite high. And that means also that we have been unfortunately, yes, kind of exposed to these not so great developments on our power markets. What else is maybe important if you look at the chart there in top left corner, you can see that the ratio. We haven't brought out this ratio here on the chart, but the ratio between sales via PPA, the light green box compared to the black box, the production in current quarter. This ratio has been relatively high, meaning that a very large proportion of our actual production has been sold via PPAs during this quarter. And that unfortunately, yes, with baseload PPAs means also that our purchases once again in this quarter have been somewhat higher than we would like them to see. And that, of course, has affected the implied captured electricity price during the quarter. Going now through the income statement, the operating income by segments, which you can see here, how it has changed and what is it composed of. You can see that wind energy and solar energy to some extent, have been growing the operating income of the company. There are, of course, several factors behind those in wind energy segment, it's the Akmene settlement that has positively affected the operating income. In CHP or cogeneration segment, we have indicated here that the assets that we have been selling, the biomass-related cogeneration business that we have been selling in fourth quarter last year and first quarter this year, obviously, is not anymore with us, and this affects our operating income negatively as revenues were there last year. This year, they are not so minus EUR 5.8 million from that factor. And then the other effects here maybe are already smaller. On the EBITDA side, here, you can see how the price of electricity sold, which has been considerably lower, has had pretty large effect on our EBITDA, which I think with what we just explained minutes ago with this kind of power price changes is quite large. On the positive side, we, of course, have been helped by increased electricity production which you can see in this sort of dotted line box there. So we have sold more electricity, but as we still have been lacking somewhat the production in all the quarters of this year, we have been also buying more electricity and that then has somewhat reduced this effect of volumes -- larger volumes being produced. And yes, then of the other effects, maybe again, Akmene settlement, of course, has a prominent positive effect on the quarter. Going now more detail into the segments about this Akmene settlement once again. So we have announced that the sort of headline settlement figure was EUR 8.2 million. So EUR 5.3 million of those EUR 8.2 million were recognized as other operating income. EUR 1.6 million was the reduction of previously made investments and the remaining EUR 1.3 million was settlement of some liabilities that were not yet recognized in the books of Enefit Green. So we reduced those with the settlement. What is also maybe interesting on that slide is how our operating expenses per installed megawatts are slowing -- kind of the growth has slowed down. And actually, if you compare quarter-to-quarter, third quarter to last year's third quarter, you can see also that they actually have declined. So the operating efficiency is kind of improving with the new parks being added to the operating mix. So here, Tolpanvaara in third quarter has reduced this figure quite considerably. While, of course, these contracts will be indexed also in the future, meaning that, I mean, in the future, you should together with inflation, still expect some growth here. Yes, let's move ahead. Cogeneration segment, here, as I mentioned, one of the most important drivers has been the business that we have sold. So that has reduced our operating income the most by EUR 5.8 million, compared to last year's third quarter and EBITDA by EUR 0.8 million. So the remaining asset in that segment actually is one power plant, the Iru waste-to-energy plant and the business there has been relatively stable, although also somewhat -- the results are somewhat lower and mostly due to the -- a little bit longer than expected plant maintenance in July, so the production of electricity and heat has been declining a little bit compared to last year. And that has had also an effect of -- on the EBITDA from that plant. Solar segment this quarter, the most stable one. as the energy price has been relatively stable here. And this is due to the fact that a large portion of the solar segment revenues are related to the Polish market. And they're the most parks -- solar farms are enjoying the CFD scheme, which means that the prices for the NHR are fixed, and they are also being indexed from year-to-year. So the operating income and EBITDA have been relatively stable here. I see that we have one chart having a wrong heading here. The bottom right chart should be EBITDA, not or actually -- yes, it seems that we are even missing here the EBITDA chart, it's both operating income. Sorry about that. The correct charts are available in the report. Investments continued in third quarter as we are finalizing our construction of several wind and solar farms. Most importantly, once again, Sopi-Tootsi, being finalized now in Estonia. Kelme I, not yet producing, but we are finalizing that one also during this year and Sopi PV, again, in Estonia, which has also got some investments as it's also being -- it's just started providing first electricity to grid this week. Third quarter earnings are so EUR 0.02 per share, which is relatively low, if you consider the whole sort of annual outcome of Enefit Green and this is due to the seasonality factors, simply, the production for wind heavy producer is relatively lower in second and third quarter. And most of our earnings are coming in, in a normal year in first and fourth quarters. So the leverage and the financing side. So we are -- as we have been mentioning several times already, finalizing our sort of construction pipeline. And this means that while a lot of wind farms and solar farms have been in the construction or under construction, we -- not all of them have been yet producing energy or are producing energy in a sort of unstable way. Until we are sort of stabilizing them, the cash flows also, of course, remain from those assets relatively smaller. And this means that the sort of leverage, if you measure it in terms of net debt-to-EBITDA or the sort of loan burden has been growing quite rapidly. So net debt-to-EBITDA figure is -- has reached 6.2%. And we, of course, now as new assets are coming into operation expect this to start decreasing at some point after the assets have started to -- so to provide cash flows. And that probably will take still some time as we have to continue investing into the finalization of the construction. And the return on investment capital or return on equity figures. This, of course, also has to do with the same issue that this unfinished construction is not optimized yet in terms of their sort of operations and how much cash flow they can provide. Good news probably from this slide is that the interest rates have been slowly coming down and our sort of proportion of the loans, what have the fixed interest rate have also -- has also come down, currently above 20% here in the end of the quarter. So that means that the existing loans then have kind of more exposure to this declining interest rate environment. Yes, and we have unutilized investment loans in tune of EUR 200-plus million, which means that we can comfortably -- we should be able comfortably to finalize our current construction plans. And the final slide from me is the electricity price risk management. So as I already mentioned, the third quarter marked the low point of our PPA pricing. It should be more stable going forward from here as we haven't signed for approximately 2 years, any new material PPAs also currently do not have any intentions to sign new baseload PPAs. And that should then mean that over time, as our production should increase from the new assets, that should start decreasing this PPA ratio to the current production. And in fourth quarter, actually, some of it compared to the previous quarters of this year already is expected to actually happen. Yes. And what we also have done this year is managing the risks from purchases that we need to make under these baseload PPAs we have for the fourth quarter, for example, here, bought 56 gigawatt hours of electricity to reduce these risks of purchases needed to construct the base load kind of profile for our baseload PPAs. And that is it from my side. So I give back to Andres?

Thank you, Sven. So pulling together the third quarter and the first 9 months of the performance of your company, it can be said that we worked steadfastly as a management team in order to deliver the projects that we have safely on time and on budget. We didn't always succeed, but that is what happens sometimes when you are delivering a large volume of projects into operation across a very small period of time. But what we have been able to do is and show to you is that we have nearly doubled the operating capacity. We have now 592 megawatts of operating assets in the operations team. We have 453 megawatts of assets under commissioning that are producing electricity every day and will very soon be passed across to the operations team making this business a very much an operating business and one of the largest renewable energy businesses in the world. As well as we have still nearly 200 megawatts of renewable energy capacity under construction that will further add to the operating capacity next year and further improving and delivering the economic returns that you, as our shareholders expect. But looking at 9 months, while the operating income has been below our expectations and compared to last year, largely reflected due to the lower production coming from late delivery of some of the projects, such as Akmene, where we have achieved the settlement, but our EBITDA and net profit have improved, particularly net profit is 20% up on a corresponding period. What we also have done is we've also experienced, as I mentioned, decline in electricity prices and decline particularly in captured prices off a low market base. But in positive news, as we've number of times mentioned, we have achieved settlement with Akmene that is fair and reasonable, and we've done it quickly in order to bring that asset back into operation as well as do it safely, so that we don't compromise our landowners, our stakeholders and you as our shareholders. And always act in the way you expect us to act. We have delivered a Sopi-Tootsi wind farm construction during the quarter as well as now have 35 of the 38 turbines operational, all -- not all at the same level as they're going through the commissioning and various levels of testing. But we do expect that all turbines will be commissioned by the end of fourth quarter this year. We have also produced first electricity from Sopi PV project, which is a big milestone. And we anticipate to have Kelme I and Latvian PV projects producing first Energy before long. While at the same time, we, as your management are looking at the ways we can optimize the future build-out of our vast portfolio and doing so in a most sustainable manner for this business. So pulling this together, we now have time for some questions and answers, and we look to Sven to read out the questions.

Okay. Thank you. Yes, there are quite a few questions actually this time. So it's good that we have interested potential and actual investors online. First one is easy. I will answer that. What is your share price prediction for 2025? Enefit Green is not in the prediction business. So we are in the -- or we predict -- try to predict wind but not share prices. This is for the financial advisers. You can have a look at our investor web page where we try to keep up with what the analysts are recommending or write the contacts there and their opinions, and you can engage with the analysts. We have covered -- our stock is covered with research by Erste Bank, by Swedbank, LHV and Nordea currently. How large proportion in the fall of captured electricity prices related to the PPA obligations and have you estimated how large has been the effect on unearned revenue? This is rather tricky question to answer here in live, but maybe the general answer is that these PPA agreements have been signed to mitigate the potential disastrously low energy prices. Because imagine if we hadn't fixed anything, and we had to sell our power at, I don't know, EUR 5 per megawatt hour without any production at all. So while these baseload PPAs are not the idle way to mitigate the power price risk, this has been the, unfortunately, the -- practically the only way that has been available on the Baltic market. Yes, we would like to, in the future and also in the past, we, of course, would like to sign more pay as produced PPAs. So if any interested parties are watching this broadcast here, please contact us, and we are happily considering all sorts of pay as produced proposals to buy power from us. So we really would like to do that. But to try to maybe offer also some figures here, so we had purchase costs for electricity around EUR 14 million this quarter and EUR 9.6 million have been related to PPAs. So for this baseload construction. Partially, this has been sort of larger than anticipated, because we were indeed expecting larger production from our assets. But it's very hard to go like into very much more detail here on this live broadcast. I would probably need some additional data for that. And what more I can say is, once again, this is risk management. And risk management is -- I mean, you can always feel sorry that you did some risk management exercise in the past -- and what if you hadn't done that, is a good question to ask, but it adds very little value. It maybe can sort of teach you for the future, what you should maybe do more and what you should do less or what you should be doing more and less. But in general, I think risk management is needed. And yes, you can maybe select better instruments, but if -- what if those better instruments are simply not available at all times. Then an easier question here. Why no offshore wind in plans? There are offshore plans in our pipeline. So maybe, Andres, you would like to once again.

Sure. So we do have an offshore wind farm planned. We have currently in medium-term planning Liivi offshore wind farm. It is 1 gigawatt in scale. And we are currently, as I mentioned before, preparing to launch a government subsidy support scheme-based submission to the government by middle of next year, where we would hope to secure a CFD from the government for a period of 20 years to build, own and operate at this near 1 gigawatt scale project between the years of 2028, '29 to 2032. And once operational, the project is anticipated to produce 4 terawatt hours of renewable energy. And when doing so, you will support the state requirements and the demand of Estonian state for the next 20 years via that CFD product and beyond that, based on the market conditions at that time. So very hard to predict what the market conditions will be today in 2053. But nevertheless, we are working to make sure that this project will see the day alike.

Okay. Then we have a question. Has the wind discount come as a surprise? Or has this been taken into account when making investment decisions? Have you reconsidered any plans based on this new dynamic?

Yes. Probably, I can answer that question is that. The wind discount is not a surprise. The coincidental production of wind and solar is being seen in rest of the world and has been also seen in Europe in kind of more sunnier places like Portugal and Spain, but also last summer in Estonia. In terms of the wind coincidental production in Finland at the levels that it is now, hasn't been seen before and it hasn't been anticipated. However, it's a -- I think with the -- like it's a sword with 2 edges. On one side, when you make investment decisions, you anticipate certain levels of power prices, and you anticipate a certain level of captured price and coincidental production is part of that assumption. However, at the same time, you anticipate a certain level of demand as well and a certain level of energy mix coming into the system. And we are currently in this situation where the energy mix is very wide. We still have in Poland, conventional coal-fired assets. We still have oil shale based power generation in Estonia. And as a result of that, and we haven't seen increase in demand. As time goes on and as we address the energy trilemma, we expect these conventional generation methods to exit the market. And as they exit the market, we anticipate that the market discount or coincidental production discount would deteriorate. And as demand increases, also the captured price for our projects will improve in the medium term.

Then what would be the financial effect regarding this expiring subsidy in euro in 2025, that should be...

So that matter, we actually addressed during the last quarter, it was about EUR 2.6 million from memory. And yes, it is a matter that we've addressed in the last quarter. We are disappointed with the state for doing so. We've expressed our disappointment to them and also taking that into account -- and we'll continue to take that into account in the future when we bid for government subsidies in the state of Estonia. However, it is the way the things have gone. And unfortunately, it is -- we have no ability to recover that at this time.

Then how much capitalized interest expenses per quarter? I don't have the exact figure in our statement, but the total interest and loan fees paid don't have actually the split also here in our statement. But currently, most of the interest expenses are capitalized. And if you think in terms of our loan volume -- where do I have it? Then it's about, let's say, it's about EUR 700 million, somewhat less by the end of the quarter. So if you take that times 4%, it's EUR 28 million divide that by 4. It's not exactly the figure for the fourth -- or third quarter, but basically, you can assume that, that figure is then -- practically all of it has been currently capitalized each quarter. And of course, that means that once these assets become operational, they will be -- these expenses, interest expenses will show up on the income statement in the future. And what is maybe more the same is true with the depreciation of assets that is currently also relatively stable, still compared to the previous periods, only the assets that are put into operation classified as operational assets they will start being depreciated going forward. Then the average production cost of your wind power parks per megawatt hour production costs. Do they mean LCOE or the variable costs? Variable cost is 0 or close to 0.

I think maybe there was a slide that you showed earlier on the kind of O&M cost across the quarter per megawatt hour produced, maybe referred to that slide. LCOE for our projects is something that we do not publish. Because each of them is different and we don't also average that out, but operating expenses per megawatt are brought out per last -- each of the last quarter here in one of the bottom slides.

Yes. So maybe that slide should answer it. So [indiscernible] per installed megawatt. But this is not, of course, mega -- per megawatt hour, but per installed megawatt. Were the electricity purchase costs, EUR 15 million in third quarter, how much have you lost on a cumulative basis with unsuccessful portfolio management? Yes, they were about that figure on successful portfolio management. I would sort of refrain you sort of answer or that question because successful portfolio managers are also only not those that have the perfect foresight. So -- we believe we have made the best out of the hand we have been dealt by the markets. And as I said, the PPAs that we have had have been signed mostly 2 or more years ago. We indeed have not been sort of maybe making the best decisions with the timing of the PPAs in respect to the -- where our -- or when our production from the constructed assets has started. But yes, this is the nature of this business. And another question, what originally went wrong on your PPA agreements so that you have recorded losses from power purchases? They're not recorded losses but costs from power purchases. We have against all odds remained a profitable company. Yes, the profits were relatively slim in third quarter, which is a seasonally low period for us as a wind producer. But yes, I would answer it like that. And then finally, our business proposal. Are you interested to buy 5 gigawatts of Finnish wind power development portfolio from [indiscernible]? So I think we have a pretty strong pipeline of projects, and Finland perhaps is currently not the market where we are most focused or...

Yes, I think it probably be fair to say that we do believe they have a very strong midterm and long-term pipeline. We are continuing to look at opportunities at all of our home markets -- but for now, we're only looking to acquire assets that are better than ours. We believe we have a very strong development team that has developed very strong and very variable group of development assets, but have a strong potential for our future portfolio. And you only generally engage in M&A activities when they generate value to you or when they have a better -- come at a better price or better value to those that you have developed yourself. And for now, we have only engaged in the M&A activity this year where we've secured a development asset from RES Global in Poland, where we are finding ourselves to be behind the [indiscernible] in terms of our development portfolio. However, at this time, elsewhere around the market, we believe our development assets are superior to those that are available in the market for the overall development as compared to what you can buy from the market.

Okay. Thank you. And this -- I hope I haven't missed any questions. That's the most questions I have seen for several quarters. So thank you for your kind interest in what we do. We are making our best efforts to take this business forward from here. And please do write us -- or your questions to [email protected], where I can try my best to answer them as quickly as possible. And I think you also gave us perhaps maybe some ideas how to and what to improve in our reporting going forward. So thank you for these ideas. Good questions.

And Yes. Thanks, Sven, for taking the summary, but I agree. So glad to see that we have such a great investor pool who has very high-quality professional questions that drive us also forward. And as Sven said, we will take them into account in improving our presentations also in the future. But glad to welcome you here, and thanks for listening and until the next time.

Thank you.

Thank you.