Mrkt BUZZ Zazz Energy: Two projects reduce uncertainty

Equity research, Zazz Energy

Yesterday (28 November 2022), Zazz Energy announced that two projects has been initiated to manufacture, install and connect a total of 2MW bio-oil energy plants. That is a clear value-adding event that reduces uncertainty around the company’s plans to scale up its connected capacity in Greece.

The company expects the plants to be operational in the third and fourth quarter of 2023. Each plant is contracted to generate annual revenue of SEK 15 million from the sale of green electricity. Thus, over the 20-year life of the PPA, the two plants will together generate revenues of SEK 600 million.

The two plants will also be able to produce heat. At present there are no contracts in place for the sale of heat. However, the company estimates that each plant can produce heat to a yearly value of SEK 5 million.

Reduced uncertainty increases fair value

We have adjusted the assumed probability for that the company will have 3MW of connected capacity by the end of 2023 to 75 per cent, from previous 50 per cent. We also increase the probability that an additional 4MW will be connected in 2024 to 50 percent, from the previous 45 percent. After these adjustments, the fair value is raised to SEK 4.6 (3.4) per share.

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