Elia Group SA/NV: history, ownership, mission, how it works & makes money

A Brief History of Elia Group SA/NV

Elia Group SA/NV, based in Belgium, is a leading transmission system operator that plays a pivotal role in the energy sector. Founded in 2001, the company operates under the regulatory framework of the Belgian electricity market. It manages the high-voltage grid in Belgium, facilitating energy transmission across the nation and contributing to the integration of renewable energy sources.

In 2019, Elia Group underwent significant expansion by acquiring 100% of the shares of the German transmission system operator, 50Hertz Transmission GmbH. This strategic acquisition enhanced their footprint in the European energy market, aligning with the EU's goals for energy transition and sustainability.

As of 2022, the company reported a total revenue of €1.38 billion, a notable increase from €1.24 billion in 2021. This growth can be attributed to increased electricity demand and investments in grid modernization and expansion.

The following table illustrates Elia Group's financial performance over the last five years:

Elia Group is also known for its commitment to sustainability. The company aims to achieve 100% renewable energy share by 2025, a target aligned with the broader European Union objectives to reduce carbon emissions and enhance energy security.

By the end of 2022, Elia Group had successfully integrated approximately 5,500 MW of renewable energy capacity into its grid. This feat reflects the company’s ongoing efforts to adapt to the changing energy landscape and meet consumer demands for cleaner energy sources.

In terms of stock performance, Elia Group has demonstrated resilience in the market. As of October 2023, the share price hovered around €107, showing a year-to-date increase of approximately 12%. The company is traded on the Euronext Brussels under the ticker symbol “ELI.”

Elia Group’s comprehensive strategy focuses on enhancing grid stability, investing in innovative technologies, and ensuring customer satisfaction. The company’s ongoing projects, including the development of interconnectors and smart grid solutions, set a foundation for future growth while addressing the challenges of energy transition.

A Who Owns Elia Group SA/NV

Elia Group SA/NV is a transmission system operator based in Belgium, responsible for the high-voltage electricity grid. As of the end of 2022, the ownership structure of Elia Group was diversified among institutional investors, government entities, and individual shareholders. Below is a detailed breakdown of the current ownership composition.

The Federal Holding and Investment Company (FHIC) holds a significant stake of 25.0%, representing the Belgian government's interest in the company. This ownership reflects the strategic importance of Elia Group in national infrastructure.

Institutional investors make up a substantial portion of the ownership, accounting for 55.0%. This group includes various financial institutions and pension funds that seek stable returns from regulated utility companies, which are typically less volatile compared to other sectors.

Retail investors hold approximately 10.0% of the shares. This group comprises individual shareholders who are attracted to the company's potential for dividends and long-term growth in the utility sector.

Lastly, other private shareholders also account for about 10.0% of the shares. This category includes private entities and investment firms that have invested in Elia Group for strategic reasons or as part of diversified portfolios.

In terms of stock performance, Elia Group’s share price was around €100.50 as of October 2023, with a market capitalization of approximately €8.5 billion. The stock has shown resilience, with a year-to-date return of around 12.5%.

Elia Group’s financial performance is also noteworthy. For the fiscal year ended December 31, 2022, the company reported revenues of approximately €1.5 billion, reflecting a growth of 4.5% year-over-year. Net profit for the same period stood at €260 million, resulting in earnings per share of €3.10.

This ownership structure, along with Elia Group's solid financial results, establishes a foundation for strategic decision-making and growth in the electricity transmission market. The stability provided by the government shareholding and institutional investors contributes to a strong governance framework, enabling the company to pursue sustainable energy initiatives and infrastructure investments.

Elia Group SA/NV Mission Statement

Elia Group SA/NV, a key player in the European electricity transmission sector, emphasizes its commitment to reliable and sustainable energy solutions. The company's mission is centered on ensuring a secure energy supply while driving the transition towards renewable energy sources.

As of the latest financial reports, Elia Group operates an electricity transmission network that spans over 1,500 km in Belgium and approximately 1,600 km in Germany through its subsidiary, 50Hertz. This extensive network is pivotal for integrating renewable energy into the broader grid system.

The company aims to maintain its leadership position in the energy sector by focusing on innovation and the enhancement of its infrastructure. Elia Group's objective is to facilitate the achievement of 50% renewable energy in the Belgian energy mix by the year 2030.

Elia Group is also dedicated to transparency and regulatory compliance. The organization’s commitment to reporting and accountability is reflected in its compliance with various European regulations, particularly the Electricity Regulation (EU) 2019/943, which aims to ensure a competitive and integrated internal market for electricity.

In 2023, Elia Group invested approximately €1 billion in capital projects aimed at modernizing its infrastructure and enhancing network capacity. This investment is pivotal for supporting the anticipated increase in electricity demand and the integration of renewable energy sources. Additionally, the projected EBITDA for 2023 is around €1.05 billion, showcasing the company's healthy operational performance.

Elia Group aims to enhance its mission through strategic partnerships and collaborations in the energy sector, focusing on interconnections with neighboring grids, which is essential for energy security and stability in the region.

The group employs over 1,800 people and fosters a culture of innovation and sustainability. The company’s employee engagement initiatives have led to a significant improvement in staff retention rates, now standing at 92%.

How Elia Group SA/NV Works

Elia Group SA/NV operates as a transmission system operator (TSO) in Belgium and Germany. Its primary objective is to ensure the secure and efficient operation of the high-voltage electricity transmission grid. Elia plays a crucial role in integrating renewable energy sources and maintaining stability in the electricity supply.

The company has a total grid length of approximately 19,000 kilometers across its service areas, enabling it to manage significant electricity flows. Elia Group encompasses both Elia Transmission and 50Hertz Transmission, which operates in Germany. As of 2021, Elia Group reported a consolidated revenue of €1,709 million, exhibiting a growth of 5.4% compared to the previous year.

In 2022, Elia Group's EBITDA amounted to €1,325 million, with a net profit of €511 million, reflecting a strong performance in the energy market. The company's average return on equity (ROE) stood at 6.7%.

Elia Group is involved in various projects aimed at enhancing grid stability and facilitating the energy transition. One of the significant initiatives is the North Sea Wind Power Hub, projected to connect multiple countries and enable the integration of up to 70 GW of offshore wind capacity by 2030.

The company’s capital expenditure for 2022 was around €900 million, primarily directed towards grid modernization and expansion projects. Elia Group's funding model includes tariffs charged to users of the grid, which are regulated by the relevant authorities.

Elia Group is also a participant in regional electricity markets, and it actively engages in cross-border trading. Its market position allows it to optimize energy flows, reduce costs for consumers, and support the European Union's energy goals.

Elia Group places significant emphasis on sustainability and has set ambitious goals for reducing greenhouse gas emissions by 40% by 2030, aligning with European climate goals. The integration of new technologies, such as energy storage and smart grid solutions, is essential for achieving these objectives.

Customer engagement is another pillar of Elia Group’s strategy. The company offers services to ensure that electricity consumers, including industries and households, can access reliable and affordable energy while embracing the transition to green energy.

The regulatory framework governing Elia Group includes oversight from the Federal Agency for the Regulation of Electricity and Gas (CREG) in Belgium and the Federal Network Agency (Bundesnetzagentur) in Germany. This framework ensures that Elia's investments and operational practices adhere to strict guidelines aimed at fostering competition and sustainability in the energy sector.

As a publicly traded company, Elia Group’s stock performance is closely monitored. The stock price was approximately €57.30 at the end of September 2023, demonstrating a steady growth trajectory influenced by the company’s robust financial performance and strategic initiatives in the energy market.

Overall, Elia Group SA/NV effectively operates at the intersection of energy transmission and market facilitation, playing a pivotal role in Europe's energy landscape while striving for a sustainable future.

How Elia Group SA/NV Makes Money

Elia Group SA/NV operates as an electricity transmission system operator. The company plays a crucial role in managing the electricity grid in Belgium and is involved in various activities that generate revenue.

The primary revenue streams for Elia Group include:

• Transmission Services
• Regulated Revenue from the Federal Energy Regulatory Commission (FERC)
• International Activities
• Capacity Mechanisms
• Ancillary Services
• Revenue from Investments in Infrastructure

In 2022, Elia Group reported total revenue of €1.3 billion, up from €1.2 billion in 2021. This growth is due to increased demand for electricity and higher regulatory tariffs set by the government.

Elia Group operates under a regulated framework, where the rates they can charge for transmission services are determined by the applicable regulatory authorities. In 2022, the allowed return on equity was set at 6.4%, providing a stable revenue outlook for the company.

Moreover, Elia Group is actively involved in cross-border interconnections, which enhance their revenue potential. The company is expanding its influence through investments, such as the €450 million project to bolster interconnectivity with neighboring markets, including France and Germany.

In terms of operating expenses, Elia reported a total of €800 million in 2022, leading to an EBITDA of €500 million, up from €420 million in 2021. This increase reflects both operational efficiency and the strategic management of assets.

Elia's strategic partnerships further enhance profitability. Collaboration with European energy markets allows the company to tap into additional revenue from ancillary services, resulting in a notable increase in profitability margins.

With the transition towards renewable energy sources, Elia Group is poised for growth. Investments in grid modernization and the integration of renewable energies, coupled with government policies promoting sustainability, are expected to enhance their revenue potential in the coming years.