DONG Energy provides update of bioenergy projects

By Erin Voegele | November 16, 2016

DONG Energy recently released third quarter financial results, reporting operating profit increased by 7 percent, reaching DKK 4.5 billion ($650.83 million). Profit for the period was DKK 3.3 billion, up DKK 2.9 billion when compared to the third quarter of last year.

In a statement, Henrik Poulsen, president and CEO of DONG Energy, highlighted the October inauguration of the Studstrup plant, which was converted to biomass. The facility can supply heat to 225,000 residents. “The biomass conversion at Avedøre is progressing according to plan and is expected to be finalized in Q4, while the opening of the bio-converted Skærbæk plant will take place in 2017,” Poulsen added. “The construction of the REnescience plant in the U.K. is on schedule, and we expect to inaugurate the plant in 2017.”

During an investor call, Marianne Wiinholt, executive vice president and chief financial officer of DONG Energy, explained the Studstrup conversion project has been ongoing since mid-2014 and included the reconstruction of the silo, the conveyor and boiler, allowing the plant to use wood pellets instead of coal.

Power generation in the company’s bioenergy and thermal power division increased by 182 percent, Wiinholt added, while EBITDA increased by DKK 100 million to a negative of DKK 100 million in the first quarter of 2016. “The green dark spread has improved significantly from EUR -5.6/MWh to EUR 5.4/MWh,” she said. “The improved spread combined with running a very lean business and the conversion of our thermal fleet to firing with biomass will ensure that we will regain long-term profitability of the thermal business. We expect to reach a positive free cash flow by 2018.”

“The Avedøre 1 [combined-heat-and-power (CHP)] plant is now ready for testing and we expect the conversion to be finalized in Q4 this year while the inauguration of Skærbæk will take place expectedly in the first half of 2017 and also here the testing has just begun,” Winnholt said. “The biomass conversions and the new heat contracts are expected to contribute to doubling our EBITDA from heat generation from 2015 to 2017. The construction of our REnescience plant in the U.K. is more than half way through and we are at the moment preparing for the biogas turbines to be tested. REnescience will be the first full-scale waste energy plant treating unsorted household waste with a waste treatment capacity of 120,000 tons per year.”

For the full year, DONG Energy said it expects EBITDA to reach DKK 20-23 billion, with gross investments ranging from DKK 18-21 million for the year.