Scope Hamburg GmbH assesses the business risks for Elia Group SA / NV as low. Rating strengths include Elia Group’s regional monopolies in Belgium and Germany and its position as a national public utility and transmission system operator with own infrastructure assets and government licenses. Elia Group’s growing (supra)national importance to integrate renewable energy prosumers and its high focus on investment activities to upgrade the grid and to expand supranational transmission lines across Northwest- and Central Europe ensures, in the agency’s opinion, an improvement in grid stability and the mitigation of power grid blackouts over the long term. Furthermore Scope Hamburg GmbH believes, that regulatory grid development plans, incentive programs, the rollout of smart grids, e-mobility and power to hydrogen expansions are likely to accelerate the achievement of these targets. In this context, Scope Hamburg considers Elia Group as well prepared to provide new digital solutions for the grid-based demand side or peak-load and network management services. Nevertheless some downside risks in relation to the prevailing European economic recession or structural changes may remain in the agency’s opinion. In the agency’s view, these include grid instabilities, interconnector technology and acquisition risks or greater EU deregulation arising from adverse changes in energy policies or regulatory frameworks.
Elia Group’s financial risks are slightly elevated to moderate. The decisive rating strengths for Scope Hamburg GmbH’s valuation are Elia Group’s sufficient earning potential and financing structure, which rest on secured cash flows, the legally protected ability to recover regulatory and non-regulatory costs and adequately regulated capital returns. Overall, the actual investment budgets and business projections appear ambitious to the agency. Thanks to its preferred access to funding from public and municipal shareholders and good access to capital markets Scope Hamburg GmbH assesses Elia Group’s financial flexibility structure as good, backed by adequate cash reserves and unutilized credit facilities. However, Scope Hamburg GmbH expects that its ability to deleverage will significantly decrease looking forward. This is mainly due to Elia Group’s ongoing needs to fund large growth investments.
Due to its government-related status, Scope Hamburg GmbH adjusts Elia Group’s stand-alone rating of BBB by two notches, resulting in a rating of A-, representing the agency’s expectation for a high likelihood of extraordinary government support in situations of financial distress. The underlying factors are a combination of the generally high importance of Elia Group’s public utility role for Belgium and Germany, the strong link to Belgian municipalities, and the overall high (sub-)sovereign credit quality of Belgium, Germany and the Belgium provinces and municipalities.
Elia Group operates electricity transmission grids (TSO) in Belgium and in Germany. In 2020 the Elia Group generated revenues of € 2.3 billion with more than 2,600 employees.
The agency refers for the summary of the rating report and further information regarding Scope Hamburg GmbH to www.scopehamburg.com.
Scope Hamburg GmbH (formerly Euler Hermes Rating GmbH) was founded in 2001 as an independent European rating agency focusing on corporate issuer and issuance and project finance ratings. Scope Hamburg GmbH is registered as a credit rating agency (CRA) in accordance with Regulation (EC) No 1060/2009 of the European Parliament and Council (as amended) and is considered as an external credit assessment institution (ECAI) by the European Banking Authority (EBA). Scope Hamburg GmbH is a subsidiary of Scope Group, the leading European provider of independent credit ratings, ESG analyses and fund analyses.
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