Release Date: November 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Solaria Energia y Medio Ambiente SA (SEYMF, Financial) is expanding its data center business across Europe, with a strong focus on Spain, and is negotiating joint ventures with Tier 1 players from Europe and the United States.
- The company is entering the UK market, which is seen as promising for renewable energy expansion, particularly in wind technology.
- Solaria has a robust pipeline with 1.7 gigawatts of power land solutions for data centers, primarily in the Iberia region.
- The company is maintaining its EBITDA targets for the year, with an estimated range of EUR205 million to EUR215 million, despite challenges in electricity pricing.
- Solaria is strategically focusing on combining solar, wind, batteries, and data center consumption for a comprehensive infrastructure strategy.
Negative Points
- The company experienced a 14% reduction in EBITDA due to low electricity prices in the first half of the year.
- Solaria is facing delays in construction projects due to issues with small players sharing infrastructure, impacting timelines.
- The Spanish government's 7% generation tax has significantly affected Solaria's EBITDA.
- There is uncertainty regarding the timeline for revenue generation from the data center joint ventures, with expectations set for late 2026 or 2027.
- The company is dealing with infrastructure delays, particularly affecting the Garonia project, which has been pushed to the second half of 2025.
Q & A Highlights
Q: When will the revenue from the joint venture data center deals start, and can you provide a timeline for signing these agreements?
A: Revenue from data centers is expected to begin by the end of 2026. We aim to announce joint ventures before the February results presentation, with construction taking approximately 1.5 years. The focus is on entering a new business with key Tier 1 players, transforming Solaria into an energy partner for the technology world.
Q: How many megawatts of data center capacity with grid connection do you currently have, and how many are pending?
A: We currently have 270 megawatts secured and 730 megawatts pending. We have more pending than the secured capacity, but we are not updating the market on this today.
Q: Can you provide more details on the cash flow generation from the data center business, and is this revenue recurring?
A: It's too early to discuss cash flow specifics, but entering as a joint venture player will provide recurring cash flow over 30 years. Our intention is to secure a good business opportunity with long-term recurrent cash flow.
Q: What explains the 60% fall in prices in Portugal and Greece?
A: The fall in prices is due to the transition from merchant to PPA in Portugal. Previously, revenue came from merchant sales, but now the 63-megawatt plant operates under a PPA at around EUR22 to EUR23, leading to reduced revenue.
Q: Are you still committed to generating EUR670 million of cash from the data center business over 2024-2028?
A: Yes, if Tier 1 players recognize our cash with shares of a business generating recurrent cash flow, it is even better. We aim to combine both cash and shares, transforming Solaria with long-term partnerships.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
