This week ESB Group has published its Interim Financial Statements for the six months ended June 30, 2024 (H1 2024). Operating profit of €446m for the period represents a reduction of €230m (34%) on the same period last year, although it remains ahead of previous norms reflecting the continued growth of the business. The reduction compared to last year is primarily due to lower energy margins* earned in its Generation and Trading business, reflecting the continued normalisation of global energy markets, following the extraordinary volatility and peaks in pricing experienced in 2022 and early 2023.
During the first half of 2024, ESB has made substantial capital investments of €75m in vital energy infrastructure and network resilience projects, all of which is funded through the profits generated and additional borrowings. Almost 80% of this investment is in electricity network infrastructure under agreed regulatory programmes. ESB Networks has now connected approximately six GigaWatts (GW) of grid-scale renewables (including over one GW of solar PV generation) to Ireland’s electricity grid. One GW of storage is now connected to Ireland’s network as we continue our sustained investment in a cleaner electricity system. ESB is also continuing to invest in electricity generation projects, including renewables, battery storage and flexible generation projects which enhance system flexibility and security of supply.
An exceptional provision of €135m has been recognised as at June 30, 2024 related to the Neart na Gaoithe offshore wind project, a joint venture development between ESB and EDF Renewables off the east coast of Scotland. The charge arises as a result of delays to the construction programme experienced during 2024. ESB remains confident that the project will achieve full commercial operation in 2025 and will be a valuable asset for ESB, as well as reducing carbon emissions from electricity generation over the longer term.
Commenting on the results, Paul Stapleton, ESB’s Chief Financial Officer, said: “ESB’s performance for the first half of 2024 is reflective of more stable global energy markets following an unprecedented period of upward volatility in energy prices. The significant softening of wholesale market prices has reduced the level of profitability in our generation business in both Ireland and the UK compared to the same period last year. However, increased profits from our networks’ businesses, reflecting the continued substantial investment in those areas, provided resilience to the Group position and a robust overall performance.
“Notwithstanding a significant decrease in ESB’s operating profit, ESB continues to invest heavily in critical energy infrastructure with €751m of capital expenditure during the first six months of the year. ESB remains committed to further growth in the level of capital investment to ensure a reliable and sustainable electricity system as we transition to net zero. Maintaining the financial strength of ESB is critical in allowing us to continue to fund this investment.”
Electric Ireland has now announced three price reductions on electricity and gas to its 1.1m customers in the past year, with the latest announcement on September 5, bringing to €713 the cumulative annual savings for its dual fuel customers. Stapleton continues: “Electric Ireland has passed on the benefit of wholesale price reductions to its customers. However, we are very mindful of the impact of continued elevated energy prices, and we remain committed to supporting our customers in so far as we can.”
The full interim financial results for H1 2024 can be accessed here.
* Energy Margin= energy related sales less direct energy costs, before overheads and operating costs
