Electrica is taking a decisive step into a territory rarely explored by Romanian energy companies: financing large investments through green bonds. The energy industry is facing volatility, uncertainties and huge capital needs. In this context, the company proposes a model of stability and trust, both for investors and for the market, based on an ambitious investment plan.
During a thorough conversation with Gabriel Avăcăriței, at “WATTs Next”, the new podcast format by Energynomics, Alexandru Chiriță, CEO of Electrica Group, explained the reasoning and context of this strategic decision. In his opinion, the fact that the interest rate (4.56%) is lower than those at which the Romanian state borrows should not be interpreted otherwise than as an expression of market confidence: “The fact that we are lower in terms of financing cost than the Romanian state shows that Electrica is appreciated as an independent company, with its own rating and its own vision and strategy.”
The green bonds issued by Electrica – worth 500 million euros – are intended exclusively for investments in renewable energy: “We invest in renewable energy. There is no option to use these funds for other purposes. Nor is it our intention… these amounts are directed directly towards green energy investments.” Asked if this label also comes with advantages, Chiriță confirmed: “For green financing, the interest rate is better,” but stressed that the fundamental data regarding the company is decisive.
Electrica’s project financing does not stop there. In parallel with the bond issue, the company has accessed substantial European funds. “In the distribution area we have 450 million euros taken from funds. In the production area we have I think about 20 million euros accessed and we continue to access whatever is available.” Sources include the Modernization Fund, the NRRP and – very recently – the contract for difference (CfD) scheme: “In wind power, we won the first tender on the CfD scheme, with half of the park’s capacity, at the best price – 77 euros per MWh.”
In the medium and long term, the company’s strategy involves investments of almost one billion euros: “Our target of 1 GW [in own generation and storage capacities, e.n.] translates into a final investment of approximately 700 or 800 million euros.” The current bond issue partially covers this objective, and a new issue is already being considered: “For the difference, of course our intention would be to go back to the market for a new bond issue, also green.”
Chiriță stressed that investor interest is greater than the company’s current capacity to absorb capital: “Following the roadshow we did before the issue, we realized that investor appetite is greater than we can absorb at the moment.” He also confirmed that the same mechanism could be used for investments in the distribution area: “It’s a slightly different story, but in principle it’s the same thing.”
The context that made this leap possible in terms of the volume of investments planned by the Electrica group is twofold: on the one hand, the emergence of European support mechanisms that did not exist until recently, on the other hand, a change in attitude and competence within companies: the interest in attracting funds, the administrative capacity to build credible projects and the professionalism of the teams involved.
At the same time, Alexandru Chiriță admitted that the capping / compensation scheme applied in recent years temporarily affected the company’s liquidity: “As a result of the support scheme, we still have considerable amounts to recover. We are talking about approximately 400 million euros and then the financial flow situation at the company level is not the most favorable.” However, Chiriță specified that the investment plan can be sustained: “We are confident that this will be resolved. We will return to a stable cash position and we have enough resources to be able to continue investing.”
Beyond the numbers, the issuance of green bonds also comes with a governance and transparency dimension: “These bonds come with a series of obligations, but we do not see them as obligations in themselves, but as a method to improve our corporate governance, to be much more transparent, to be able to progress with these investments.”
In a market where myths and lack of information still distort perceptions, Electrica is trying to offer a model of coherence. And the long-term message is clear: investments in renewable energy are the guarantee of a more stable and affordable price for tomorrow’s consumers. “Any investment made now, both in the distribution segment and in the production segment, will lead to an affordable price for consumers and predictability regarding this price.”
About “WATTs Next”
“WATTs Next” is the new podcast by Energynomics dedicated to energy leaders, designed to provide a clear understanding of the people shaping the industry, their visions for the future and emerging challenges. Its main goal is to go beyond standardized answers and delve into the personal and professional perspectives of the interlocutor.
The interviews are structured in three essential directions:
- Shaping a personal and professional profile, providing an authentic picture of the career path and values of the interviewed leader.
- Analysis of the most current topics, to understand what’s next in the industry, what the implications are for companies and consumers, and what we should prepare for.
- Explanation of some essential concepts, by debunking myths and clarifying complex notions for a wider audience.
