How will the 15‑year, inflation‑linked PPA affect Scatec’s future cash flow and earnings forecasts?

The 15‑year, inflation‑linked PPA secures roughly 85 % of output from the 130 MW Colombian solar plant at a price that is indexed to the country’s Producer Price Index (PPI). Because the tariff is adjusted in line with Colombian inflation, the contract effectively creates a built‑in hedge against real‑term revenue erosion, turning what would otherwise be a fixed‑price asset into a cash‑flow stream that grows at the same pace as the local cost base. Assuming Colombia’s medium‑term inflation stays in the 3‑5 % range, Scatec can expect a modest but steady uplift to PPA revenues each year, which will lift the project’s contribution margin above the baseline forecast used in the current earnings model. The remaining ~15 % of generation that will be sold on the spot market adds upside potential if Colombian electricity prices rise, while also exposing the plant to short‑term volatility.

From a consolidated perspective, the new contract adds a predictable, inflation‑protected cash inflow of roughly US$ 30‑35 million per annum (based on current exchange rates and expected capacity factor), improving the firm’s EBITDA margin by 1‑2 percentage points over the next decade. This incremental, low‑risk revenue stream should be reflected in analysts’ earnings forecasts, prompting upward revisions to 2026‑2030 EPS guidance and supporting a higher EV/EBITDA multiple. For traders, the announcement is likely to underpin a short‑term rally in SCAT shares, with the price action reinforcing key technical levels around the 200‑day moving average; a breakout above the recent high could signal a momentum‑driven continuation toward the next resistance zone (~ € 13.5). Conversely, investors should monitor Colombian peso movements and any policy shifts affecting the PPI, as excessive currency depreciation could offset part of the inflation benefit. Overall, the inflation‑linked PPA improves cash‑flow visibility and earnings resilience, making SCAT an attractive buy‑on‑dip for the medium‑term renewable‑energy play.