ESB Group has reported a 34% decrease in operating profits for the first half of 2024, attributing the decline to the normalization of global energy markets following the extreme volatility seen in 2022 and early 2023. The company’s operating profits fell to €446 million, down from €676 million during the same period last year. Profits after tax and exceptional items also plummeted by 65%, from €492 million to €171 million.
The energy giant’s revenue and other operating income decreased to €3.733 billion, a significant drop from €4.903 billion reported in the first half of 2023. The decline in profitability reflects the drop in global energy prices, which has squeezed margins for wholesale suppliers like ESB.
In response to these challenges, ESB has continued its substantial investment in energy infrastructure. During the first six months of 2024, the company invested €751 million in critical projects, primarily focusing on electricity network infrastructure. Almost 80% of this investment was directed towards agreed regulatory programs.
ESB Networks has successfully integrated around six gigawatts (GW) of grid-scale renewables into Ireland’s electricity grid, including over one GW of solar photovoltaic (PV) generation. The company is also advancing its investments in renewable energy projects, battery storage, and flexible generation to enhance system flexibility and security.
One notable development is the Neart na Gaoithe offshore wind project, a joint venture with EDF Renewables. ESB has recognized an exceptional provision of €135 million due to delays in the construction program, which were exacerbated by the Covid pandemic and ongoing issues with turbine installation. The project, located off the east coast of Scotland, is expected to achieve full commercial operation by 2025.
Paul Stapleton, ESB’s Chief Financial Officer, acknowledged the significant decrease in operating profit but highlighted the company’s resilience. “The softening of wholesale market prices has reduced profitability in our generation business. However, increased profits from our networks’ businesses have provided a robust overall performance,” Stapleton said.
Stapleton also emphasized the company’s commitment to investing in critical energy infrastructure despite the financial challenges. “ESB remains committed to further growth in capital investment to ensure a reliable and sustainable electricity system as we transition to net zero.”
In addition, Electric Ireland, a subsidiary of ESB, has implemented three price reductions for electricity and gas over the past year, reflecting wholesale price reductions. Stapleton expressed hope that retail prices could stabilize if wholesale prices remain steady.
Looking ahead, Stapleton indicated that the security of supply for the winter is expected to be more comfortable than last year due to added capacity. He also noted progress in the planning and development of offshore wind farms, with the company working on competitive options and awaiting the outcome of planning applications.
Overall, despite the current financial challenges, ESB is focused on long-term growth and sustainability in its energy projects.
