Further, we have had all-time high construction activity, delivered strong financial results, and secured new projects for further value creating growth through 2024 and onwards. It is a privilege to lead Scatec with its commitment to accelerate the growth of renewable energy to combat climate change based on a clear business model, strong track-record and a competent and talented organisation.
During the year, we have sharpened our strategy, focusing on solar, wind, and batteries to capitalise on a significant drop in solar panel prices, batteries, and transportation costs. We concentrated on core markets to ensure we are well positioned for profitable growth while reducing operational costs. We adjusted our growth ambition to NOK 500-750 million gross equity investments annually while staying committed to delivering attractive returns of 1.2 cost of equity, D&C gross margins of 8-10%, and O&M margins of 25-30%.
Reflecting on 2023, it is with great pride that I share the solid strides made by our global team in delivering on our strategy. Power production generated 3.6 TWh of clean energy from our plants in operation, delivered an EBITDA of NOK 3.2 billion, including gains from sale of assets. The segment underscores our commitment to sustainability, resulting in the avoidance of 4.0 million tonnes of greenhouse gas emissions.
Development and Construction (D&C) achieved all-time high revenues of NOK 8.2 billion with a robust average gross margin of 12%. In our highest-ever construction programme we added a significant capacity increase of 1.2 GW. In South Africa, we started commercial operation of Kenhardt in December 2023, a unique project totalling 540 MW solar and 225 MW/1,140 MWh battery storage. As one of the world’s largest hybrid generation and storage facilities, Kenhardt successfully supplies 150 MW of dispatchable power to the grid under a 20-year PPA contract with Eskom. This project, delivered on time and within budget, not only adds value to power production but also contributes significantly to the communities it serves, showcasing Scatec’s role in positively impacting people and improving the future.
In Pakistan we completed construction and started commercial operation for the 150 MW Sukkur project in January this year. In Brazil, the 531 MW Mendubim solar plant started commercial operation in March 2024. The combined operational output from these three projects is projected to contribute NOK 750 million annually in EBITDA to Scatec within our power production segment.
During the year, we successfully secured NOK 2.7 billion in new growth funding through strategic measures such as the divestment of non-core assets, capital recycling, and platform funding via new partnerships. Divestments included four solar power plants in South Africa, Mozambique, Argentina, and Rwanda. Our newly established platform, Release, demonstrated the strength of its business model by securing USD 202 million in debt and equity funding and USD 65 million in guarantees through transactions involving our esteemed partners, Climate Fund Managers and IFC.
In 2023, our commitment to HSSE, sustainability and ESG continued. With the approval of our climate targets by the Science Based Target Initiative (SBTi), we embarked on a comprehensive climate roadmap, outlining six key initiatives that underwent assessment for cost drivers, barriers, and urgency. Our primary focus will be on electric vehicles and charging stations, SF6 leakages and supplier engagement, underscoring our dedication to a sustainable future.
In addition, our strategic reporting efforts aligned with strict ESG regulations, including the EU Taxonomy, Transparency Act, and Corporate Sustainability Reporting Directive (CSRD), recognising the positive impact of increased regulations on corporate transparency. Preparing for CSRD implementation in 2024, we conducted a thorough double materiality analysis, engaging with internal and external stakeholders to assess both impact and financial materiality. During the year, we also gained an A+ grade in ESG reporting by Position Green, a top-tier rating in the ESG100 report and an A rating from CDP, highlighting our steadfast commitment to sustainability, transparency and ESG reporting.
Looking ahead to 2024, Scatec is well-positioned for continued growth. Our pipeline has been optimised, with over 1 GW of new solar projects added in the final quarter of last year. Construction has started in South Africa and Botswana, representing NOK 350 million in equity investments and D&C revenues of NOK 2.5 billion. In terms of future profitable growth, we ended a successful year by securing additional projects for 2024, including the award of South Africa’s first battery project of 103 MW/412 MWh and a subsequent expansion in Botswana to 120 MW.
Furthermore, we addressed our upcoming 2025 debt maturities in the beginning of 2024 through a refinancing of the USD 150 million Green Term Loan and a NOK 1.75 billion green bond issue with a subsequent buy-back of EUR 136 million of outstanding bonds. These re-financing achievements significantly improves the debt maturity structure on corporate level.
We are poised for continued success in our mission to deliver affordable and clean energy, together with our team of changemakers, customers and partners. I extend my warmest regards to our employees in Ukraine, who continue to excel under challenging conditions, contributing to our achievements.
It is evident that renewable energy has reached unprecedented levels of competitiveness. To meet the challenges of climate change and address the energy trilemma, the imperative to shift towards green energy has never been more compelling. Let us collectively embrace this opportunity to lead the way towards a sustainable and resilient future.
Terje Pilskog
CEO
