Abu Dhabi National Energy Company PJSC (“TAQA”, the “Group” or the “Company”), one of the largest listed integrated utilities in Europe, the Middle East and Africa, reported its earnings for the period ending 30 September 2023 and unveiled revised growth targets that will see the Group accelerate the development of new power and water generation assets while maintaining its transmission and distribution infrastructure investments. The updated investment plan also targets a higher share of renewables within its portfolio by 2030.
Building upon its 2021 growth strategy, the revised growth targets see TAQA aiming for 150 gigawatts (GW) of gross power generation by 2030, up from the previous target of 50 GW, with around 65% of its generation capacity coming from renewable power sources. Previously, TAQA had committed to a target of 30%; however, with its leading stake in Masdar’s renewable energy operations, the Group has upgraded this target. On a standalone basis, Masdar’s clean generation capacity is expected to reach 100 GW by 2030. In terms of net power generation capacity, TAQA is set to reach 50 GW by 2030, up from its current net capacity of 17 GW.
TAQA is also ramping up its growth targets for water generation with a plan to increase the Group’s water generation capacity to 1,300 MIGD, with two-thirds of this capacity coming from the highly efficient and low carbon reverse osmosis (RO) technology. Currently, TAQA’s desalination capacity sits at just over 1,180 MIGD.
To facilitate the development of future projects and associated infrastructure networks, TAQA is planning to invest AED 75 billion until 2030 towards power and water capacity expansion and UAE-based transmission and distribution networks. This figure includes the previously committed spend of AED 40 billion between 2021 and 2030 to grow its UAE transmission and distribution networks.
TAQA is also actively seeking to expand its Transmission and Distribution business beyond the UAE through both inorganic and organic opportunities.
In the first nine months of 2023, TAQA delivered a solid financial performance driven by strong and stable returns from its long-term contracted utilities business whilst it has remained focused on delivering its growth strategy.
Financial highlights:
- Group revenues were AED 39.5 billion, unchanged versus the prior-year period, as higher pass-through bulk supply tariffs and transmission use of system within the Transmission and Distribution segment offset a decline in Oil and Gas revenue.
- Adjusted EBITDA was AED 15.3 billion, down 11%. This fall was led by a decline in contribution from the Oil and Gas segment on the back of lower realised oil and gas prices and reduced production.
- Net income (TAQA share) was AED 15.0 billion, an increase of AED 8.5 billion, driven by a one-off gain of AED 10.8 billion recognised on the acquisition of a 5% shareholding in ADNOC Gas, in part offset by a one-off AED 1.2 billion deferred tax liability associated with the introduction of UAE corporate income tax from 1 January 2024. Net income excluding these one-off items was AED 5.4 billion, 17% lower than the prior period, mainly due to lower contribution from the Oil and Gas segment.
- Capital expenditure was AED 3.3 billion, 34% higher than the prior year, as project execution picked up pace in the Transmission and Distribution segment.
- Free cash flow generation was AED 10.2 billion, 20% lower compared to the previous year. The decline was driven by lower contribution from the Oil and Gas segment.
- Gross debt was AED 61.7 billion, unchanged on the amount outstanding at the end of 2022.
Operational highlights:
- Generation global commercial availability was 97.9%, marginally higher than the prior-year period (where availability was 97.8%).
- Transmission network availability for power and water was 98.4%, marginally lower than the prior-year period (98.6%).
- Oil and gas average production volumes were 110.5 thousand barrels of oil equivalent per day (boepd), a decrease of 10% compared to 2022. This decrease is due to the enforced shutdown of operations in Iraq due to the closure of the export pipeline and the natural decline in production of late-life UK assets.
- TAQA continued to receive recognition for its progress on ESG initiatives, with multiple agencies improving the company’s ESG rating.
Jasim Husain Thabet, TAQA’s Group Chief Executive Officer and Managing Director, commented: “In the first nine months of 2023, TAQA remained unwavering in its commitment to creating long-term shareholder value, delivering a steady performance on the back of strong returns from the Group’s utility business despite headwinds caused by fluctuations in commodity prices and the enforced shutdown of our production in Iraq.
I am pleased to note that we have continued to deliver on TAQA’s growth agenda with project execution across the Transmission and Distribution segment, further supported by a pickup in regulated capital expenditure. During the third quarter of 2023, we reached financial close on a USD 2.2 billion (AED 8.3 billion) sustainable water supply project in collaboration with ADNOC as TAQA continues to be a partner of choice for industrial players and their decarbonisation ambitions towards net zero. As a low-carbon power and water champion and in line with TAQA’s Green Finance Framework and ESG Strategy, we also completed the secondary listing of our dual-tranche bonds onto the ADX, including our first TAQA-issued green bond.”
On TAQA’s revised growth targets, he added: “We approach the year-end with positive momentum as TAQA continues to expand its footprint domestically and internationally in line with our revised growth targets. Our continued success and rapid expansion have made it imperative to align our targets to the evolving ambition of the business while maintaining our commitment to innovation and delivering on our promise to our stakeholders. TAQA is an excellent example of the energy transition in action as we turn ambition into tangible outcomes to support the UAE’s decarbonisation efforts. TAQA’s growth has laid the foundation for achieving sustainable growth, putting us on the path towards a low carbon future whilst maintaining attractive returns for our shareholders and helping to deliver energy security in the markets we serve.”
Upon approval of the financial results, TAQA’s Board of Directors also declared a third interim cash dividend for the year of 0.65 fils per share (approximately AED 731 million), in line with the Company’s new dividend policy.
