Prysmian, the renowned cable manufacturer for energy transmission, has experienced a notable upswing in its stock performance despite a slight dip of 0.33% on the Piazza Affari. The company’s shares peaked at €35.45 per share, following an initial surge of over three percentage points. The catalyst behind this renewed investor interest is the recent announcement of a substantial contract in the United States, valued at approximately €900 million. Prysmian has agreed with Clean Path New York, a public-private collaboration between Invenergy, energyRe, and New York Power Authority, to supply submarine and land-based cable systems for one of the most significant transmission infrastructure projects in the USA.
Clean Path New York: A Renewable Energy Endeavor:
Clean Path New York is an $11 billion renewable energy project encompassing over 20 new wind and solar generation projects totalling 3,800 MW and a new underground and submarine power transmission line spanning approximately 280 km. The agreement specifies that Prysmian will be responsible for the design, construction, installation, and testing of a 400 kV high-voltage direct current (HVDC) cable system with XLPE insulation, contingent upon Clean Path New York issuing its notice to proceed in the spring of 2024.
Equita analysts believe this new contract further enhances visibility into Prysmian’s Projects business segment, which accounts for 23% of the company’s adjusted EBITDA. This project potentially represents 10% of the backlog by mid-2023 and 8% of the current order intake. With this initiative, the order intake for the year is expected to reach approximately €12 billion, including projects for which the company is the “preferred bidder,” resulting in a backlog covering five years of revenue. Equita also points out that this news underscores the robust demand in the energy transmission sector and Prysmian’s strong position in North America.
Clean Path New York Timeline:
The timeline for the Clean Path New York transmission line project involves obtaining environmental certificates and permits by the autumn of 2024, with construction scheduled between 2024 and 2027. Considering the project’s characteristics, analysts anticipate attractive margins above the average for the project division.
US Department of Energy’s Initiatives:
In addition to Prysmian’s success, the US Department of Energy (DOE) has announced its intention to initiate capacity contract negotiations through the ‘Transmission Facilitation Program,’ committing up to $1.3 billion to three transmission projects spanning six states. The goal is to add 3.5 gigawatts of additional network capacity. The DOE also emphasizes the urgent need for other transmission infrastructure, focusing on interregional connections. Analysts view these announcements as steps towards reducing overall risk in large infrastructure projects within the US energy networks.
Prysmian’s recent contract with Clean Path New York not only demonstrates its continued growth in the energy transmission sector but also highlights the company’s strong presence in the North American market. The ongoing demand for energy transmission infrastructure and the US Department of Energy’s commitment to address transmission needs are positive indicators for the industry’s future. Prysmian’s strategic positioning and expertise make it well-positioned to capitalize on these opportunities, potentially driving further growth and profitability.