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Rating action

Scope Ratings GmbH (Scope) has today affirmed the A- issuer rating of Akershus Energi AS with a Stable Outlook. Concurrently, Scope has affirmed the A- senior unsecured debt rating and the S-1 short-term debt rating.

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

Key rating drivers

The rating continues to be based on a BBB+ standalone credit assessment, with a one-notch uplift reflecting the company’s status as a government-related entity.

Business risk profile: BBB- (unchanged). Akershus Energi’s business risk profile continues to reflect its main exposure to environmentally friendly and low-cost hydropower generation (positive ESG factor), supplemented by district heating operations and a 33.4% stake in Odal Vind AS (Odal wind farm). Its operations are concentrated in southeastern Norway (AAA/Stable) within the NO1 pricing area, an economically strong service territory.

Despite being small in a European context, with recurring annual power generation volumes of around 2.5 TWh, Scope considers Akershus Energi’s hydropower generation portfolio to have a good market positioning. This is supported by a strong merit order position, which stems from low marginal generation costs as well as a clean carbon footprint that helps to secure the utilisation of power plants and strong profitability. The latter was exemplified in 2024 by a group EBITDA margin of 61% and a return on capital employed of 21% with an EBITDA of NOK 1,147m, a year when market conditions in hydropower generation were neither exceptionally strong nor weak with an average power price of NOK 487/MWh in the NO1 price zone. The district heating operations continue to dilute profitability and are volatile as the EBITDA depends on revenues tied to spot power prices and fluctuations in fuel costs.

Looking ahead, Scope expects EBITDA of around NOK 1,400m in 2025 and around NOK 1,100m in 2026-2027. This reflects supportive market conditions so far this year, with an average NO1 power price of above NOK 650/MWh, which the agency expects will moderate to around NOK 500/MWh in 2026-2027. Cash flow generation will continue to be dominated by sales from hydropower generation, with additional expected earnings contributions from district heating (EBITDA of NOK 30m-60m a year) and the Odal wind farm (dividend income at around NOK 50m a year) supporting the group.

The business risk profile remains constrained by Akershus Energi’s inherent industry risks. As most of its power generation costs are fixed, its earnings for a given volume rely largely on achievable power prices, which can fluctuate considerably from year to year. The company only hedges part of its power generation volumes, and mostly over the short to medium term. Its sustained price risk therefore remains high for all volumes. Other rating constraints include the company’s low diversification by utility segment and geography, which also increases cash flow vulnerability, as well as its weaker flexibility in hydropower generation compared to domestic peers who benefit more from reservoirs and do not rely that strongly on run-of-river hydropower plants.

Financial risk profile: A (unchanged). Akershus Energi’s financial risk profile remains the primary support of its standalone credit assessment. It continues to benefit from low debt, as exemplified by a net cash position in 2022-2023 and Scope-adjusted debt/EBITDA* of 0.1x at end-2024. This makes the company well-positioned to handle market volatility.

Scope expects debt will likely increase to around NOK 800m at end-2027, from NOK 89m at end-2024, reflecting the company’s plans for high capex and the maintenance of its dividend policy. The agency anticipates capex of around NOK 350m in 2025 and NOK 550m-600m a year in 2026-2027, mainly for upgrades and refurbishments of district heating infrastructure and hydropower plants. These capex levels are a significant step up from the yearly average of NOK 159m over 2022-2024. While aggregated free operating cash flow is expected to be relatively neutral over the forecast horizon, underpinning an ability to finance capex internally, the company is likely to increase debt to maintain its dividend policy. This is indicated by expected negative discretionary cash flows in 2026-2027.

Based on these expectations, leverage in terms of debt/EBITDA is likely to remain low in 2025 at around 0x before increasing to between 0.5x and 1.0x in 2026-2027. At the same time, EBITDA/interest cover is expected to remain very strong at far above 10x. The latter is supported by the favourable financing terms for a high share of existing debt through 2027 and the overall still low albeit increasing debt exposure.

The assessment of credit metrics remains negatively impacted by the high tax burden on hydropower generation due to the Norwegian resource rent tax, which reduces the conversion of EBITDA to free operating cash flow, and the volatility stemming from power price fluctuations.

Despite the projected weakening of credit metrics and pressure on cash flow generation, Scope still expects the financial risk profile to remain strong.

Liquidity: adequate (unchanged). Liquidity is adequate, with liquidity metrics expected at above 200% in 2025-2026. This is supported by available cash and cash equivalents of NOK 1,466m at end-2024, which compares with no major debt maturities until 2027 and relatively neutral forecasted free operating cash flow. At end-2024, maturing debt in 2025 and 2026 was NOK 109m and NOK 9m, respectively, and no new short-term debt has been obtained so far this year.

In 2027, Scope expects that the debt maturities of NOK 909m (NOK 500m bond and NOK 409m of bank loans) will require partial refinancing with new debt. The agency foresees that Akershus Energi can obtain this new debt given its overall credit quality, established access to domestic debt capital markets and adequate banking relationships.

Liquidity metrics for 2026-2027 exclude the NOK 375m back-stop facility as it matures in December 2026 as well as the NOK 375m overdraft facility as it is rolled over annually with a tenor not exceeding 12 months. At the same time, Scope notes the company has a record of maintaining available credit facilities and sees this as likely to continue.

Supplementary rating drivers: +1 notch (unchanged). The one-notch uplift is based on Scope’s assessment of Akershus Energi’s status as a government-related entity, applying a bottom-up rating approach under the framework outlined in the agency’s Government Related Entity Rating Methodology. Akershus Energi is fully owned by Akershus county (AAA/Stable), which Scope assesses to have a ‘high’ capacity and ‘medium’ willingness to provide exceptional financial support. This is rewarded through a one-notch uplift to Akershus Energi’s standalone credit assessment. The assessment is in line with other Scope-rated Norwegian utilities with majority ownership by one or more municipalities but no explicit guarantees on their debt or financial support.

Scope has not made an adjustment for financial policy. The company’s dividend policy stipulates a payout ratio of 70% of net income adjusted for material and extraordinary non-cash items or at least NOK 80m a year. The policy has remained stable and is reflected in the financial risk profile assessment through Scope’s forecast. Additionally, the company is committed to maintaining a credit rating of at least BBB, which provides reassurance against a significant deterioration in its credit quality.

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

Outlook and rating sensitivities

The Stable Outlook reflects sufficient but tightening headroom for the rating amid Akershus Energi’s plans for significant investment over the next few years, alongside the maintenance of its dividend policy. If these plans are realised, they could result in increased debt and leverage, as exemplified by the forecasted debt/EBITDA ratio rising to a weaker but still robust level of between 0.5x and 1.0x in 2026–2027, which still remains commensurate with the current rating.

The upside scenario for the ratings and Outlook is:

1. Improving business risk profile paired with the maintenance of an unchanged financial risk profile. This is deemed remote as it would require larger scale or more diversified and stable cash flow streams

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

1. Leverage (debt/EBITDA) exceeding 1.0x on a sustained basis
    
2. Loss of government-related entity status, although this is considered remote

Debt ratings

The senior unsecured debt rating has been affirmed at A-, in line with the issuer rating.

The affirmed S-1 short-term debt rating is based on the A-/Stable issuer rating and reflects better-than-adequate short-term debt coverage and adequate access to external financing.

Environmental, social and governance (ESG) factors

Akershus Energi's largest business exposure remains hydropower generation. This is a positive ESG factor considering the low transition and stranded asset risks as it ensures the high utilisation of power plants on the back of a strong merit order position and clean carbon footprint. In addition, Norwegian law requires at least two-thirds public ownership in Akershus Energi’s large hydropower plants, which underpins its government-related entity status as it limits the risk of privatisation. Scope expects that most of the company’s investments will remain directed towards sustainable energy through renewables projects as well as the development of district heating.

All rating actions and rated entities

Akershus Energi AS

Issuer rating: A-/Stable, affirmation

Short-term debt rating: S-1, affirmation

Senior unsecured debt rating: A-, 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, (General Corporate Rating Methodology, 14 February 2025; European Utilities Rating Methodology, 17 June 2025; Government Related Entity Rating Methodology, 3 September 2025), are available on 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 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 scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at 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 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: Per Haakestad, Senior Specialist
Person responsible for approval of the Credit Ratings: Sebastian Zank, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 18 January 2019. The Credit Ratings/Outlook were last updated on 13 December 2024.

Potential conflicts
See 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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