Tel-Aviv, Israel, September 28, 2023 – Ellomay Capital Ltd. (NYSE American; TASE: ELLO) (“Ellomay” or
the “Company”), a renewable energy and power generator and developer of renewable energy and power projects
in Europe, USA and Israel, today reported unaudited financial results for the three and six month periods ended
June 30, 2023.
Financial Highlights
• Revenues were approximately €25.5 million for the six months ended June 30, 2023, compared to
approximately €29.2 million for the six months ended June 30, 2022. This decrease mainly results from the
decrease in electricity prices in Spain and from a curtailment of the electricity supply from the Company’s
facilities to the grid during June 2023 due to maintenance and upgrade work on the main transmission line
between Spain and Portugal, which caused a decrease in revenues of approximately €1 million. The
Company subsequently implemented a solution aimed at minimizing the impact of future similar
curtailments. The decrease in revenues was partially offset by an increase in revenues from the Company’s
biogas plants in the Netherlands, resulting mainly from increased production and an increase in the 2023
gas price, and from the connection to the grid of Ellomay Solar (a 28 MW photovoltaic plant in Spain)
during June 2022, upon which the Company commenced recognition of revenues.
• Operating expenses were approximately €12 million for the six months ended June 30, 2023, compared to
approximately €13.1 million for the six months ended June 30, 2022. The decrease in operating expenses
mainly results from a decrease in payments under the Spanish RDL 17/2022, caused by a reduction in the
electricity market price. RDL 17/2022 established the reduction of returns on the electricity generating
activity of Spanish production facilities that do not emit greenhouse gases, accomplished through payments
of a portion of the revenues by the production facilities to the Spanish government. As a result of the
decrease in the electricity market price in Spain during the first half of 2023, the payments under RDL
17/2022 were lower during this period compared to the same period last year. This decrease in operating
expenses was partially offset by increased operating expenses in connection with the Company’s biogas
operations in the Netherlands caused by the use of higher quality raw materials due to lower availability of
cheaper raw materials, and from the connection to the grid of Ellomay Solar during June 2022, upon which
the Company commenced recognition of expenses. Depreciation expenses were approximately €8.1 million
for the six months ended June 30, 2023, compared to approximately €8 million for the six months ended
June 30, 2022.
• Project development costs were approximately €2.2 million for the six months ended June 30, 2023,
compared to approximately €1.6 million for the six months ended June 30, 2022. The increase in project
development costs is mainly due to the increase in development activities in connection with photovoltaic
projects in Israel and USA.
• General and administrative expenses were approximately €2.9 million for the six months ended June 30,
2023, compared to approximately €3.3 million for the six months ended June 30, 2022. The decrease in
general and administrative expenses is mostly due to a decrease in D&O liability insurance costs and
bonuses paid to employees in 2022.
• Share of profits of equity accounted investee, after elimination of intercompany transactions, was
approximately €1.5 million for the six months ended June 30, 2023, compared to share of loss of equity
accounted investee of approximately €0.6 million for the six months ended June 30, 2022. The increase in
share of profits of equity accounted investee was mainly due to the increase in revenues of Dorad Energy
Ltd. (“Dorad”) due to higher quantities produced and a higher electricity tariff in Israel, partially offset by
an increase in operating expenses in connection with the increased production and higher tariff.
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• Financing income, net was approximately €1.6 million for the six months ended June 30, 2023, compared
to financing expenses, net of approximately €2.2 million for the six months ended June 30, 2022. The
change was mainly attributable to income resulting from exchange rate differences amounting to
approximately €6.9 million in the six months ended June 30, 2023, mainly in connection with the New
Israeli Shekel (“NIS”) cash and cash equivalents and the Company’s NIS denominated debentures,
compared to income in the amount of approximately €2.6 million for the six months ended June 30, 2022,
caused by the 7.1% appreciation of the euro against the NIS during the six months ended June 30, 2023,
compared to the 3.3% appreciation of the euro against the NIS during the six months ended June 30, 2022.
• Tax benefit was approximately €1.2 million for the six months ended June 30, 2023, compared to taxes on
income of approximately €1.1 million for the six months ended June 30, 2022.
• Profit for the six months ended June 30, 2023, was approximately €4.6 million, compared to a loss of
approximately €0.6 million for the six months ended June 30, 2022.
• Total other comprehensive income was approximately €31.1 million for the six months ended June 30,
2023, compared to total other comprehensive loss of approximately €34.8 million for the six months ended
June 30, 2022. The change mainly resulted from changes in fair value of cash flow hedges, including a
material increase in the fair value of the financial power swap (the “Talasol PPA”) that covers
approximately 80% of the output of the Talasol PV Plant compared to the same period last year. The Talasol
PPA experienced a high volatility due to the significant changes in electricity prices in Europe that included
a substantial increase in prices during 2021 and 2022 and a substantial decrease in prices during 2023. In
accordance with hedge accounting standards, the changes in the Talasol PPA’s fair value are recorded in
the Company’s shareholders’ equity through a hedging reserve and not through the accumulated
deficit/retained earnings. The changes do not impact the Company’s consolidated net profit/loss or the
Company’s consolidated cash flows. As the Company controls Talasol, the total impact of the changes in
fair value of the Talasol PPA (including the minority share) is consolidated into the Company’s financial
statements and total equity.
• Total comprehensive income was approximately €35.7 million for the six months ended June 30, 2023,
compared to total comprehensive loss of approximately €35.4 million for the six months ended June 30,
2022.
• EBITDA was approximately €9.9 million for the six months ended June 30, 2023, compared to
approximately €10.6 million for the six months ended June 30, 2022. See the table on page 14 of this press
release for a reconciliation of these numbers to profit and loss.
• Net cash provided by operating activities was approximately €5.3 million for the six months ended June
30, 2023, compared to approximately €8 million for the six months ended June 30, 2022. The decrease in
net cash provided by operating activities for the six months ended June 30, 2023, is mainly due to the
decrease in electricity prices in Spain.
CEO Review Second Quarter 2023
The first six months of 2023 were characterized by a decline in the electricity prices in Europe in general and
in Spain specifically. The second quarter, which is a transition quarter, was mainly harmed by the decrease
in electricity prices. During the third quarter, which is a summer quarter, the electricity prices increased
and stabilized on approximately €80 per MWh. Despite the decrease in electricity prices during the first half
of 2023, the EBITDA decreased only by approximately €0.7 million compared to the same period last year.
The development of projects in the USA that was added to the development of projects in Italy and Israel
increased the project development expenses. The connection of two first projects in Italy (20 MW PV) is
expected in the coming month. The connection will be at a delay of six months compared to the initial
expectation and the Company is expected to receive financial indemnification for the delay in the connection
from the construction contractor. The Dorad power station showed an increase in revenues and net income
and this trend is expected to continue also during the third quarter.
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The Company’s operations concentrate on three main fields:
- Construction of New Projects: solar projects in Italy and a pumped hydro storage project in the Manara Cliff
in Israel. - Initiating and Developing of New Projects: solar projects in Italy, Spain, USA and Israel.
- Management, Operation and Improvement of Generating Projects: in Israel (PV), Spain (PV) and the
Netherlands (bio-gas).
The Company’s revenues for the quarter were approximately €13.4 million, a decrease of approximately €4 million
compared to the same period last year. These revenues are lower than the revenues for the same period last year
mainly due to a decrease in electricity prices in Spain. Maintenance and upgrade work on the main transmission
line between Spain and Portugal caused a curtailment of the electricity supply from the Company’s facilities to the
grid for a short period and the impact of this forced curtailment was approximately €1 million. The decrease in the
operating profit was more moderate and amounted to approximately €1 million due to a decrease in the expense
resulting from the tax imposed on profits of energy manufacturers, which was also caused by the decrease in the
electricity prices in Spain. The decrease in prices was expected and was taken into account by the Company.
The cash flow from operations for the second quarter of 2023 was approximately €3.4 million and the cash flow
from operations for the first half of 2023 was approximately €5.3 million.
The net profit for the second quarter of 2023 was approximately €1.3 million and the net profit for the first half of
2023 was approximately €4.6 million.
Activity in Spain:
The electricity prices in Spain decreased during the second quarter of 2023 to an average price of €57 per MWh
compared to an average price of €159 per MWh for the same quarter last year.
The Talasol PV project (300 MW PV) (Company’s share is 51%) produced during the second quarter revenues
from the sale of electricity and green certificates of approximately €7.1 million. Talasol is a party to a financial
hedge of its electricity capture price (PPA). Approximately 80% of its production (75% based on P-50) are sold
under this agreement for a fixed price. The remaining electricity produced by Talasol is sold directly to the grid, at
spot prices.
The Ellomay Solar project (28 MW PV) produced during the second quarter of 2023 revenues from the sale of
electricity and green certificates of approximately €1.2 million.
Activity in Italy:
The Company has approximately 505 MW PV projects under advanced development stages, of which licenses have
been obtained for approximately 203 MW. Projects with an aggregate capacity of 20 MW are expected to be
connected to the grid during the coming month. Preliminary construction works in projects with an aggregate
capacity of approximately 105 MW commenced during the third quarter of 2023 and construction works in the
remainder of the licenses (approximately 78 MW) are expected to commence in early 2024.
The Company has additional projects in early development stages (in addition to the 505 MW in advanced
development stages), the intention of the Company is to reach a portfolio of approximately 1,000 MW PV by the
end of 2026. The Company is negotiating a financing agreement with a leading European bank in the field.
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Activity in Israel:
The Manara Pumped Storage Project (Company’s share is 83.34%): The Manara Cliff pumped storage project,
with a capacity of 156 MW, is in advanced construction stages and expected to reach commercial operation during
the second half of 2026, and to produce average annual revenues of approximately €74 million and EBITDA of
approximately €33 million.
1 The Company and its partner in the project, Ampa, invested the equity required
for the project (other than linkage differences), and the remainder of the funding is from a consortium of lenders
led by Mizrahi Bank, at a scope of approximately NIS 1.18 billion.
Development of PV licenses combined with storage:
Projects no. 1 and 2 are based on tender No. 1 that the Company won and there is an option of transition to regulation
that enables a direct sale to end customers.
- The Komemiyut Project: intended for 21 MW PV and 47 MW / hour batteries. The project has an approval
for connection to the grid and is in the process of receiving a building permit. Commencement of construction
is planned for the first quarter of 2024. - The Qelahim Project: intended for 15 MW PV and 33 MW / hour batteries. The project has an approval for
connection to the grid, and is in the final stages of the zoning approval. - The Talmei Yosef Project: an expansion of the existing project to 104 dunams, intended for 10 MW PV and
22 MW / hour batteries. The request for zoning approval has been filed and approval is expected to be received
in the fourth quarter of 2023. - The Talmei Yosef Storage Project in Batteries: there is a zoning approval for 30 dunam, intended for
approximately 400 MW / hour. The project is designed for the regulation of high voltage storage. - The Sharsheret Project: intended for 20 MW PV and 44 MW / hour batteries. The zoning request was
submitted. - In addition, the Company has approximately 250 dunams under advanced planning stages.
Dorad Power Station (Company’s share is approximately 9.4%): the gas flow from the Karish reservoir that began
in November 2022 reduced the gas costs of Dorad. Dorad benefited from the increase in the TAOZ and the
production component compared to the same period last year. In addition, the Israeli Electricity Authority’s
resolution in connection with the changes of the hourly tariffs, which entered into force in January 2023, means an
extension of the “summer” period (a month was added to the “summer” season in which the tariffs are higher), the
elimination of the “GEVA” (average consumption) hours and the change in the “PISGA” (peak) hours in the
intermediate seasons to the afternoon and evening. As a result, Dorad provides availability to the system manager
for the “SHEFEL” (low) period, which is longer and the demand of the system manager is higher. As a result of the
continuous operations of the power plant, the maintenance expenses decreased and the hours of operation increased,
increasing production and the revenues and profit. Moreover, the Israeli government decided to increase the power
station by an additional 650 MW and the National Infrastructure Committee approved the TTL/11/B plan –
expansion of the Dorad power station.
In June 2023, an arbitration award was given that, among other issues, obligated Zorlu and Edeltech to refund
approximately $130 million to Dorad and to pay the derivative plaintiffs NIS 20 million as reimbursement of legal
expenses. The Company expects that appeals on the arbitration award will be submitted and the appeal process was
agreed in advance and is limited to approximately a six-month period.
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EBITDA is a non-IFRS measure. The Company is unable to provide a reconciliation of the Manara Project’s EBITDA to the
Manara Project’s net profit/loss on a forward-looking basis without unreasonable effort because items that impact this IFRS
financial measure are not within the Company’s control and/or cannot be reasonably predicted. These items include, among
others, exchange rate fluctuations, depreciation and amortization, other income, finance income, finance expenses and taxes
on income. Such items may have a significant impact on the future financial results and the Company believes such a
reconciliation for the projected results will not be meaningful.
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Activity in the Netherlands:
In connection with the military conflict in Ukraine and the stoppage of Russian gas supply to Europe, there are
substantial changes in the field of biogas in the Netherlands and Europe. Europe in general and the Netherlands
specifically have set ambitious goals for increasing gas production from waste. Various incentives are being
considered, the main one is increasing the price of the green certificates. The price of these certificates has increased
from approximately 13–15 euro cents per cubic meter to around 45 euro cents per cubic meter. The prices of greed
certificates continue to rise and the expectation is that the price will reach approximately 60 euro cents per cubic
meter towards the end of the year.
The Company estimates that with the increasing importance of the biogas field, this field entered into a new era. In
the Netherlands, new legislation was adopted that obliges the gas suppliers to incorporate green gas in a scope of
up to 20% of the amount supplied by them, valid commencing January 1, 2025. This legislation and the growing
demand for green certificates derived from the biogas industry, is expected to add and significantly improve the
results of the biogas segment of the Company.
Activity in Texas, USA:
The Company executed a joint development agreement for the development of photovoltaic projects in the State of
Texas, USA. The agreement covers an initial two projects, with an aggregate installed capacity of 26 MW DC, and
an option for two additional projects under similar terms with an aggregate installed capacity of 20 MW DC. The
first two projects have reached ready-to-build status and are expected to be constructed within the next 8-10 months.
One of the two additional projects has also reached ready-to-build status and the other additional project is expected
to achieve ready-to-build status during the fourth quarter of 2023. It is expected that the two additional projects will
be constructed during the second half of 2024. The estimated capital cost for the first two projects is $30-$32
million, of which the Company’s share is expected to be approximately $19-$21 million. The estimated capital cost
for the two additional projects is $24-$26 million, of which the Company’s share is expected to be $15-$17 million.
The remaining capital costs are expected to be covered by tax equity partners with whom the Company is currently
in discussions.
Use of NON-IFRS Financial Measures
EBITDA is a non-IFRS measure and is defined as earnings before financial expenses, net, taxes, depreciation and
amortization. The Company presents this measure in order to enhance the understanding of the Company’s
operating performance and to enable comparability between periods. While the Company considers EBITDA to be
an important measure of comparative operating performance, EBITDA should not be considered in isolation or as
a substitute for net income or other statement of operations or cash flow data prepared in accordance with IFRS as
a measure of profitability or liquidity. EBITDA does not take into account the Company’s commitments, including
capital expenditures and restricted cash and, accordingly, is not necessarily indicative of amounts that may be
available for discretionary uses. Not all companies calculate EBITDA in the same manner, and the measure as
presented may not be comparable to similarly-titled measure presented by other companies. The Company’s
EBITDA may not be indicative of the Company’s historic operating results; nor is it meant to be predictive of
potential future results. The Company uses this measure internally as performance measure and believes that when
this measure is combined with IFRS measure it add useful information concerning the Company’s operating
performance. A reconciliation between results on an IFRS and non-IFRS basis is provided on page 14 of this press
release.
About Ellomay Capital Ltd.
Ellomay is an Israeli based company whose shares are registered with the NYSE American and with the Tel Aviv
Stock Exchange under the trading symbol “ELLO”. Since 2009, Ellomay Capital focuses its business in the
renewable energy and power sectors in Europe, USA and Israel.
To date, Ellomay has evaluated numerous opportunities and invested significant funds in the renewable, clean
energy and natural resources industries in Israel, Italy, Spain and Texas, USA, including:
• Approximately 35.9 MW of photovoltaic power plants in Spain and a photovoltaic power plant of
approximately 9 MW in Israel;
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• 9.375% indirect interest in Dorad Energy Ltd., which owns and operates one of Israel’s largest private
power plants with production capacity of approximately 850MW, representing about 6%-8% of Israel’s
total current electricity consumption;
• 51% of Talasol, which owns a photovoltaic plant with a peak capacity of 300MW in the municipality of
Talaván, Cáceres, Spain;
• Groen Gas Goor B.V., Groen Gas Oude-Tonge B.V. and Groen Gas Gelderland B.V., project companies
operating anaerobic digestion plants in the Netherlands, with a green gas production capacity of
approximately 3 million, 3.8 million and 9.5 million Nm3 per year, respectively;
• 83.333% of Ellomay Pumped Storage (2014) Ltd., which is involved in a project to construct a 156 MW
pumped storage hydro power plant in the Manara Cliff, Israel;
• Ellomay Solar Italy One SRL and Ellomay Solar Italy Two SRL that are constructing photovoltaic plants
with installed capacity of 14.8 MW and 4.95 MW, respectively, in the Lazio Region, Italy;
• Ellomay Solar Italy Four SRL, Ellomay Solar Italy Five SRL, Ellomay Solar Italy Seven SRL, Ellomay
Solar Italy Nine SRL and Ellomay Solar Italy Ten SRL that are developing photovoltaic projects with
installed capacity of 15.06 MW, 87.2 MW, 54.77 MW, 8 MW and 18 MW, respectively, in Italy that have
reached “ready to build” status; and
• Fairfield Solar Project, LLC, Malakoff Solar I, LLC, Malakoff Solar II, LLC, that are developing
photovoltaic projects with installed capacity of 13 MW, 6.5 MW and 6.5 MW, respectively, in the Dallas
Metropolitan area, Texas, and have reached “ready to build” status.
For more information about Ellomay, visit http://www.ellomay.com.
Information Relating to Forward-Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties, including
statements that are based on the current expectations and assumptions of the Company’s management. All statements,
other than statements of historical facts, included in this press release regarding the Company’s plans and objectives,
expectations and assumptions of management are forward-looking statements. The use of certain words, including
the words “estimate,” “project,” “intend,” “expect,” “believe” and similar expressions are intended to identify
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The
Company may not actually achieve the plans, intentions or expectations disclosed in the forward-looking statements
and you should not place undue reliance on the Company’s forward-looking statements. Various important factors
could cause actual results or events to differ materially from those that may be expressed or implied by the Company’s
forward-looking statements, including changes in electricity prices and demand, regulatory changes, including
extension of current or approval of new rules and regulations increasing the operating expenses of manufacturers of
renewable energy in Spain, increases in interest rates and inflation, changes in the supply and prices of resources
required for the operation of the Company’s facilities (such as waste and natural gas) and in the price of oil, the
impact of continued military conflict between Russia and Ukraine, technical and other disruptions in the operations
or construction of the power plants owned by the Company and general market, political and economic conditions in
the countries in which the Company operates, including Israel, Spain, Italy and the United States. These and other
risks and uncertainties associated with the Company’s business are described in greater detail in the filings the
Company makes from time to time with Securities and Exchange Commission, including its Annual Report on Form
20-F. The forward-looking statements are made as of this date and the Company does not undertake any obligation
to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact:
Kalia Rubenbach (Weintraub)
CFO
Tel: +972 (3) 797-1111
Email: hilai@ellomay.com
