However, company has also had to purchase electricity from the market, to fulfill pre-sale obligations following lower than expected outputs.

This means the company's net debt has recently risen sharply, while at the same time cash flows from business operations have fallen.

Enefit Green debts reached €663 million at the end of the third quarter of this year (Q3 2024), compared with €386 million at the end of the same quarter last year, and €116 million in Q4 2022.

Meanwhile, Enefit Green's cash flows from its business operations have fallen, from €31 million in Q3 2022, to €9 million in the same quarter this year.

This is however an improvement on the 2023 figure, when cash flows from business operations were only €6 million in the third quarter of that year.

Sven Kunsing, Enefit Green's head of financial communications, told ERR that since the IPO carried out three years ago, the company has made historically large investments, in order to bring new renewable energy capacities to market.

More specifically, Enefit Green has invested around €1 billion in wind and solar parks in Estonia, Lithuania, Finland, Poland, and Latvia over the past three years.

"We have already more than doubled our previous 457-megawatt production capacity, and this is in line with the plans we announced at that time," Kunsing said.

Because the construction of new capacities has taken longer than expected, Kunsing went on, the number of ongoing projects has been large at the same time as their contribution to cash flow generation has been smaller than anticipated.

Kunsing said: "There are also more complex factors at play here, related to our past electricity pre-sales through base-load PPAs (Power Purchase Agreements), which mean that in the event of a production shortfall for any reason, electricity must be bought from the market to fulfill pre-sale obligations."

Eesti Energia posted Q3 2024 €5.6 million losses.

Kunsing acknowledged that smaller cash flows also spell reduced investment capacity until the situation stabilizes – when assets begin to operate and generate cash flow.

This is clearly happening now, Kunsing went on, given that in addition to the almost completed Akmene and Šilale II wind parks in Lithuania, most of the turbines at the Sopi-Tootsi wind park in Pärnu County are now online and generating electricity.

"Right now the aforementioned factors have limited our investment capacity, though it could also be said that developments in the electricity market have contributed to that. At the moment, it can be stated that, in the short term, a considerable amount of wind and solar energy capacity has been entered into the Baltic markets, with more to come from ongoing developments," Kunsing said.

He added that it will still take time for these capacities to get integrated into the market, while the hope is that electricity demand will adjust to the increased local supply.

Kunsing said: "We have not needed to make new investment decisions this year, and we do not see our competitors doing so with much urgency either."

€180 million in loans needed to complete ongoing developments

Enefit Green's problems are not insurmountable, the Enefit Green spokesperson added.

Kunsing highlighted that the company has sufficient loan capacity, including bank loans already agreed upon but not yet utilized.

As of the end of Q3 2024, the company has €210 million in unused investment loans and €50 million in liquidity loans to its name. These loans can be utilized to complete ongoing developments, however, to a total of around €180 million.

The largest proportions of renewable energy support last year were received by Enefit Wind and Utilitas, as well as by Enefit Green.

On this Kunsing said: "As a producer focused on wind energy, our cash flows are primarily concentrated in the fourth and first quarters, so this [current] quarter and the next are those times of year when we earn the majority of our annual cash flow. At present, we also have significantly more electricity production capacity in operation to boost this cash flow."

Regarding current loans, Kunsing added that significant repayments for Enefit Green are not due until 2026, and this should not pose issues, as the company's production portfolio is expected to be stable and generate sufficient cash flow for future repayments by that time.

According to Kunsing, with the completion of ongoing projects, primarily the Kelme I and II wind parks near Šiauliai in Lithuania, Enefit Green's production assets' electricity generation capacity will exceed 1.2 GW next year.

The first of these wind farms is due to start production, at part capacity, later this year.

"We see a continuing energy deficit in our main home markets in the Baltic states and in Poland, which is why we have invested so heavily in increasing production capacity," Kunsing said.

Last year, electricity consumption in the three Baltic states and Poland collectively exceeded local production, by more than 23 TWh. In Estonia alone, consumption outstripped generation by 3.5 Twh.

Kunsing added that the energy deficit leads to higher electricity prices and dependence on imports from neighboring markets.

This also means that investments in new production capacities in energy-deficient markets are more profitable for investors compared to other regions, he said.

The Enefit Green representative also noted that existing energy production in Estonia and Poland remains highly carbon-intensive, relying on oil shale and coal respectively.

"Under current EU market rationale, this, among other things, means that these types of production methods are uncompetitive. Their share will have to decrease under the existing market logic in the future," Kunsing concluded.

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