The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has today affirmed the BBB+ issuer rating of TrønderEnergi AS with a Stable Outlook. Scope has also affirmed the senior unsecured debt rating at BBB+ and the short-term debt rating at S-2.

The full list of rating actions and rated entities is at the end of this rating action release.

Key rating drivers

TrønderEnergi’s issuer rating continues to reflect the standalone credit assessment of BBB and a one-notch rating uplift for the company’s status as a government-related entity.

Business risk profile: BBB- (unchanged). TrønderEnergi’s business risk profile reflects its vertically integrated business model with operations in environmentally friendly and cost-efficient hydropower production (positive ESG factor) as well as its minority stakes exposure in grid distribution company Tensio and renewable company Aneo. Profitability remains a strength, with a Scope-adjusted EBITDA margin* of 46.5% in 2024 (excluding Tensio dividends), up from 41% in 2023, with similar levels expected in 2025–2027. The EBITDA of NOK 524m in 2024 includes dividends from Tensio but excludes the hedging losses assumed by Trønderenergi as part of the Aneo spin-off transaction, given their one-off characteristics. These losses were realised in 2022/2023, negatively affecting the company’s cash flow by NOK 198m in 2024 and NOK 142m in 2025. However, the profitability assessment is somewhat held back by the ROCE calculation. Including the non-dividend paying ANEO, profitability as measured by ROCE is below average compared to peers. The company’s business risk profile is constrained by the volatility of achievable power prices in the NO3 pricing area of Central Norway, which is also affected by limited transmission capacity relative to utility peers located in price zones in Southern Norway. Restricted geographical diversification creates vulnerability to regulatory changes, adverse weather conditions and regional electricity demand. Compared to other domestic utility companies, TrønderEnergi also has a relatively high dependence on its largest power plants. The company owns 17 hydropower plants wholly or partly, of which the three largest accounts for around 50% of total power production.

Financial risk profile: BBB+ (unchanged). TrønderEnergi’s good financial risk profile continues to support its standalone credit assessment.

However, Scope notes that the debt/EBITDA ratio increased to 3.5x in 2024 from 2.3x in 2023, primarily due to lower prices achieved for hydropower production. Cash flows and net debt levels were additionally burdened by one-off hedging losses. Scope expects an even lower average power generation price in NO3 of around NOK 230/MWh for the current year, compared to NOK 327/MWh in 2024. This translates into expected leverage of 3.7x, with net debt again burdened by the second part of one-off hedging losses. Mitigating the impact of low prices is Scope's expectation of a strong increase in total power generation volume to around 2,000 GWh for 2025, based on record-high reservoir levels (2024: 1,524 GWh), followed by a normalisation to the company's annual mean production of 1,827 GWh thereafter, while Scope also forecasts power prices to normalise to NOK 360/MWh in 2026 and beyond. These factors result in an expected deleveraging of debt/EBITDA to 2.9x in 2026 and 2.7x in 2027.

Looking ahead, capital expenditure plans are limited, primarily focusing on the maintenance of existing hydropower plants at an expected average of NOK 135m per year. Scope expects dividends received from the 40% stake in Tensio to remain stable at NOK 100m throughout the forecast period. This will ensure that the company's free operating cash flow remains positive, reflecting its solid internal financing capacity.

Finally, debt protection remains strong. EBITDA interest coverage is expected to rise again to over 10x in the forecast period, up from 7.4x in 2024.

Liquidity: adequate (unchanged). TrønderEnergi’s liquidity remains adequate. Available cash and cash equivalents at the end of 2024 amounted to NOK 558m, while the forecasted free operating cash flow for 2025 is NOK 74m. This balances the cash outflows of NOK 650m resulting from an upcoming bond maturity in September 2025. Scope therefore expects a liquidity ratio of 97%, which is manageable given good access to external financing, supported by solid credit quality and a proven ability to access diverse funding from both banks and capital markets. The liquidity ratio is projected to normalise at around the 200%+ level again in 2026 and 2027, due to expectations of increased cash generation and no significant maturities.

Supplementary rating drivers: +1 notch (unchanged). The issuer rating incorporates a one-notch uplift to the standalone credit assessment of BBB resulting in an issuer rating of BBB+. Scope continues to apply a bottom-up approach using the framework outlined in its Government Related Entities Rating Methodology. The one-notch uplift reflects the public sponsor’s ‘high’ capacity and ‘medium’ willingness to provide support. The government-related entity status is based on full public ownership by 19 municipalities in central Norway and the essential public services provided by the company, most critically power production by hydropower assets and grid distribution. The one-notch uplift is in line with all other Norwegian, regional utilities rated by Scope that are majority-owned by one or more municipalities.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s expectation that power prices in the NO3 zone will improve again above NOK 350/MWh into 2026 and beyond. Scope anticipates that this will translate into debt/EBITDA recovering to around 3.0x based on slightly decreasing debt levels, stable dividends from Tensio, no increase in shareholder remuneration, and limited capital expenditures in line with the rating agency’s base case.

The upside scenario for the ratings and Outlook is:

1. Further improvement in financial risk profile, exemplified by debt/EBITDA significantly below 2.5x on a sustained basis

The downside scenarios for the ratings and Outlook are (individually):

1. Deterioration in financial risk profile, exemplified by debt/EBITDA significantly above 3.5x on a sustained basis
    
2. Loss of government related entity status (remote)

Debt ratings

Scope has affirmed the BBB+ rating on senior unsecured debt issued by TrønderEnergi AS, in line with the issuer rating.

Scope has affirmed the rating on the short-term debt issued by TrønderEnergi at S-2. The rating is based on the underlying BBB+/Stable issuer rating and reflects better-than-adequate liquidity cover as well as adequate access to bank funding and the capital markets.

Environmental, social and governance (ESG) factors

TrønderEnergi’s core business is the production of hydroelectric power. Cost-efficient, low-emission hydropower plants are considered a credit-positive ESG factor. Along with the other renewable investments made by TrønderEnergi, hydropower has a strong position in the merit order of power generation sources and is viewed as having low transition risk in relation to stranded assets.

All rating actions and rated entities

TrønderEnergi AS

Issuer rating: BBB+/Stable, affirmation

Short-term debt rating: S-2, affirmation

Senior unsecured debt rating: BBB+, affirmation

*All credit metrics refer to Scope-adjusted figures.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodologies used for these Credit Ratings and/or Outlook, (European Utilities Rating Methodology, 17 June 2025; General Corporate Rating Methodology, 14 February 2025; Government Related Entities Rating Methodology, 10 December 2024), are available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings and/or Outlook were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Thomas Faeh, Executive Director
Person responsible for approval of the Credit Ratings: Marlen Shokhitbayev, Senior Director
The Credit Ratings/Outlook were first released by Scope Ratings on 22 June 2022. The Credit Ratings/Outlook were last updated on 27 June 2024.

Potential conflicts
See www.scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
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