Enlight Renewable Energy Ltd. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone Q4 filing; quarterly consolidated results are not provided in the supplied filing text. Financial statements are prepared under IFRS and presented in U.S. dollars.
Business context and portfolio
Enlight develops, finances, constructs, owns and operates utility-scale wind, solar and energy-storage projects. It primarily sells electricity under long-term power purchase agreements (PPAs), with some merchant-market sales. At February 26, 2024, its global portfolio comprised approximately 20.6 GW of generation capacity and 30.7 GWh of storage, including 5.4 GW and 5.6 GWh, respectively, in “Mature Projects.” These are post-year-end portfolio figures, not year-end 2023 operating results. Approximately 80% of Mature Project capacity was contracted, with an average remaining PPA term of 16 years; approximately 15% was exposed to merchant risk.
Financial performance
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | $255.7 million | $192.2 million | +33.1% |
| Gross profit / margin | $139.1 million / 54.4% | $111.2 million / 57.8% | Margin down 3.4 percentage points |
| Operating profit / margin | $158.1 million / 61.8% | $90.6 million / 47.2% | +74.5% |
| Profit for the year | $98.0 million | $38.1 million | +157.1% |
| Profit attributable to owners | $70.9 million | $24.7 million | Up from prior year |
| Adjusted EBITDA (non-IFRS) | $188.8 million | $129.9 million | +45.3% |
| Net cash from operating activities | $149.6 million | $90.4 million | +65.5% |
| Net cash used in investing activities | $798.1 million | $820.0 million | Continued high project investment |
| Net cash from financing activities | $855.3 million | $684.7 million | Higher financing inflows |
Revenue growth was principally driven by new projects and the ramp-up of existing facilities; approximately $49 million of additional revenue came from named new and ramping projects, with a further $9 million from inflation-adjusted PPAs. Merchant sales represented approximately 27% of FY2023 revenue, versus 26% in 2022; PPA revenue was approximately 70%, versus 68%. The U.S. contributed approximately 1% of revenue in 2023.
Gross margin declined as depreciation and amortization rose with projects entering operation. Operating profit and net income also benefited materially from $58.7 million of other income, including a $33.7 million reduction in estimated Clēnera acquisition earn-out and put-option liabilities, $9.5 million of supplier compensation for production delays, and $9.8 million of project-sale gains. Adjusted EBITDA excludes non-recurring other income; it is a company-defined non-IFRS measure and should not be treated as a substitute for IFRS results.
Liquidity, debt and capital
- At December 31, 2023, cash and cash equivalents were $403.8 million; bank deposits were $5.3 million. Restricted cash totaled approximately $181.6 million and is not equivalent to freely available cash.
- Current assets were $664.6 million and current liabilities $583.3 million. The filing reports consolidated indebtedness of approximately $2.5 billion, net of deferred financing costs. Project-finance debt was approximately $1.9 billion; corporate and convertible bonds were approximately $451 million, alongside $117 million of corporate bank loans.
- Management said cash, cash equivalents, short-term deposits and operating cash flow were expected to meet liquidity and capital needs for at least 12 months from the report date. This depends on project execution, financing access and cash availability at subsidiaries, which may be restricted by debt covenants.
- Investing cash use remained substantial, primarily for project development and construction. Financing included $420.4 million of net project-level financing, $116.0 million of tax-equity cash, and $334.8 million from holding-company debt and equity issuance.
- Enlight invested $304 million of equity in Atrisco during 2023, $204 million above plan because non-recourse construction financing was delayed; those funds were recycled to the balance sheet after the project’s December 2023 financial close. The company also disclosed approximately $480 million in project procurement commitments as of February 26, 2024.
Material changes, outlook and risks
- Operating performance: Gecama, operated on a merchant basis, generated 23% of revenue in both 2022 and 2023; Blacksmith generated 13% in 2023, versus 15% in 2022. Lower Spanish power prices weighed on Gecama: Q4 2023 net realized price was €40/MWh versus €110/MWh in Q4 2022, and quarterly revenue fell 52% to €10 million.
- Wind availability: Supplier quality and repair delays slowed the ramp-up of new wind projects. Björnberget’s 2023 availability was 78%; Genesis Wind’s was 84% since reaching commercial operation in October, below the company’s expected 95–97%. Enlight recognized approximately $9.5 million in production-delay compensation during 2023.
- Growth and financing: Management expects revenue to grow as projects under construction and in development reach commercial operation, and plans further project financing and asset sell-downs to recycle capital. No specific FY2024 revenue, earnings or cash-flow guidance is provided in the supplied text.
- Market exposure: Israeli electricity-market deregulation effective January 1, 2024 means new corporate PPAs require matching customer demand profiles. Enlight may need to buy grid power or discharge storage when its own projects are not generating, increasing exposure to market prices.
- Israel and geopolitical risk: The company said the war that began in October 2023 had not materially affected operations or financial results to date. It cautioned that escalation could affect staff availability, financing, trade, shipping, infrastructure and projects, including facilities in the Golan Heights; some Israel-related losses are not fully covered by private insurance.
- Other key risks: Project permitting and interconnection delays, construction cost overruns, supply-chain and trade restrictions, electricity-price volatility and curtailment, weather and resource variability, counterparty performance, currency and interest-rate exposure, and significant debt and refinancing requirements. The company also disclosed specific project covenant matters for which lenders granted waivers.
- Subsequent developments: Enlight acquired 80% of Israeli rooftop solar and storage developer Aria Energy in February 2024. A household and small-business electricity-supply joint venture with Electra Power was signed in March 2024 and is subject to regulatory approval.
Investor verification points
- Review the audited IFRS statements and notes for the composition, maturity schedule, covenants and refinancing needs of the approximately $2.5 billion of debt, and distinguish project-level from corporate obligations.
- Assess earnings quality by separating recurring project operations from the $58.7 million of other income, especially the earn-out remeasurement and supplier compensation.
- Track wind-turbine repairs, availability recovery and any further supplier claims, and test whether project output supports contracted and forecast cash flows.
- Monitor Gecama’s merchant exposure, hedging coverage and realized prices, as well as the cost of balancing and other market charges.
- Verify delivery schedules, financing and interconnection progress across the project pipeline; portfolio capacity reported at February 2024 is not equivalent to operating capacity or assured future revenue.
- Evaluate liquidity after restricted cash, project commitments, guarantees, covenant limits and potential additional equity needs; confirm the status and conditions of project-level waivers.
Audit and controls: KPMG’s member firm Somekh Chaikin issued an unqualified opinion on the FY2023 consolidated financial statements. Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2023; the filing did not include an auditor attestation on internal controls because of the company’s emerging-growth-company transition relief.