ESB Group has reported a 34% decrease in operating profits for the six months to the end of June due to the continued normalisation of global energy markets after what it called the "extraordinary" volatility and peaks in pricing seen in 2022 and early 2023.
ESB said its operating profits came in at €446m for the six month period, down from €676m the same time last year. It also reported profits after tax and exceptional items of €171m, down 65% from €492m for the first six months of 2023.
The company said its half year revenue and other operating income fell to €3.733 billion from €4.903 billion the same time last year.
Revenues and profits at ESB Group had surged in 2022 - and remained buoyant last year - following a spike in global energy prices following Russia's invasion of Ukraine. But prices have been falling since last year, which have squeezed the margins of wholesale suppliers like ESB Group.
During the first half of 2024, ESB said it made "substantial" capital investments of €751m in vital energy infrastructure and network resilience projects, all of which is funded through the profits generated and additional borrowings.
It said that almost 80% of this investment is in electricity network infrastructure under agreed regulatory programmes.
ESB Networks has now connected about six GigaWatts (GW) of grid-scale renewables, including over one GW of solar PV generation, to the country's electricity grid.
ESB said it is also continuing to invest in electricity generation projects, including renewables, battery storage and flexible generation projects which enhance system flexibility and security of supply.
It said it has recognised an exceptional provision of €135m for the Neart na Gaoithe offshore wind project, a joint venture development between ESB and EDF Renewables off the east coast of Scotland due to delays to the construction programme this year.
Initially there were delays in getting the foundations installed due to the Covid pandemic, but over the last year there have been more delays in the erection of the turbines.
The company is currently is awaiting the return of a specialist large vessel used for the construction of the windfarm.
The company said it remains confident that the project will achieve full commercial operation in 2025 and will be a valuable asset for ESB, as well as reducing carbon emissions from electricity generation over the longer term.
Paul Stapleton, ESB's Chief Financial Officer, said the company's performance for the first half of 2024 is reflective of more stable global energy markets following an unprecedented period of upward volatility in energy prices.
"The significant softening of wholesale market prices has reduced the level of profitability in our generation business in both Ireland and the UK compared to the same period last year. However, increased profits from our networks' businesses, reflecting the continued substantial investment in those areas, provided resilience to the Group position and a robust overall performance," he said.
"Notwithstanding a significant decrease in ESB's operating profit, ESB continues to invest heavily in critical energy infrastructure with €751m of capital expenditure during the first six months of the year," Mr Stapleton said.
"ESB remains committed to further growth in the level of capital investment to ensure a reliable and sustainable electricity system as we transition to net zero. Maintaining the financial strength of ESB is critical in allowing us to continue to fund this investment," he added.
Electric Ireland has announced three price reductions on electricity and gas to its 1.1 million customers in the past year.
"Electric Ireland has passed on the benefit of wholesale price reductions to its customers. However, we are very mindful of the impact of continued elevated energy prices, and we remain committed to supporting our customers in so far as we can," Paul Stapleton said.
Mr Stapleton added that if wholesale prices remain more stable, retail prices should be more stable.
"There may be scope for small ups and downs as markets move, but hopefully we're through the period of extraordinary volatility in prices," said Mr Stapleton.
"Whether this is a new norm or whether it will moderate back to kind of pre crisis levels, I suppose really depends on what happens on the wholesale side."
Regarding security of supply for the winter, Mr Stapleton said that while there's always a particular risk as winter approaches, there a lot of additional capacity has been added this year.
"Everything else been equal, I think the the overall security of supply position should be more comfortable this year than it was last year," he said.
"But it really depends on events and...one or two plants tripping out anywhere in the system can can have a big impact. But overall...ESB has added a huge amount of capacity this year."
In relation to progress around the ESB's plans to install windfarms off the coast of Ireland, Mr Stapleton said a lot of progress has been made with the establishment of the Maritime Area Regulatory Authority (MARA).
He said designated marine areas for planning windfarms have been set out and it is expected that there will be an auction of power capacity in the first half next year.
"We are working with Ørsted to have a you know a good option in that process," he said.
"We expect it will be a very competitive process, but we're working to have a good option."
Beyond that he said the company wants to see the plans for the rest of the south and west coast.
He said developers like the ESB need good foresight about overall policy plans and there has been a lot of progress over that in recent years.
"But we'd like to see that momentum continuing and more certainty going forward," he said.
"The planning process then is is another challenge. A separate project we're involved in, the Oriel project off the coast of Dundalk, was the first to submit a planning application."
"That's going through the process currently and so we'll be keen to see how that progresses and hopefully it can progress through quite promptly."
