Polaris Renewable Energy (TSE:PIF) reported lower second-quarter generation and financial results compared with an exceptionally strong period a year earlier, as curtailment in the Dominican Republic, normalizing hydrological conditions and expected geothermal declines weighed on output.
Chief Financial Officer Alba Seisdedos said consolidated generation declined 7.7% from the second quarter of 2025, while year-to-date generation was down 6.4% from the first half of the prior year. The company said the performance was broadly consistent with management expectations.
Operations Reflect Expected Production Pressures
In Nicaragua, Seisdedos said the steam units performed well and production trends were in line with expectations. First-half production was affected by planned biannual major maintenance on Unit 3 during the first quarter, as well as lower binary-plant output resulting from higher-than-expected sediment in reinjection wells after the maintenance work.
Chief Executive Officer Marc Murnaghan said the company has been operating the binary unit at roughly 0.75 megawatts below its expected capacity because of sediment in two key injection wells. Polaris expects to operate at the current level for the remainder of 2026 but anticipates recovering some or all of the lost output through an acidification program in early 2027.
“We will likely have to wait until Q1 to execute that,” Murnaghan said, citing the need for specialized equipment.
Peru’s hydroelectric facilities produced below the prior year’s record levels but remained above internal expectations, according to Seisdedos. Murnaghan said output was more consistent with levels seen in 2022 through 2024 and broadly in line with the long-term average. He also noted that a May 1 price increase averaged approximately 8% across the company’s three Peruvian plants.
Dominican Republic curtailment averaged 29% during the quarter and 35% year to date, improving from 42% in the first quarter. Murnaghan said curtailment reduced output by about 5,000 megawatt-hours in the quarter, somewhat less than budgeted. He expects government initiatives, including large-scale grid storage contracted as transmission assets, to provide a more complete solution over the next 18 to 24 months.
Revenue and EBITDA Decline as Costs Rise
Seisdedos said lower production led to an 8% decline in revenue quarter-to-quarter and a 5% decline year-over-year. Adjusted EBITDA fell 11% on both a quarter-to-quarter and year-over-year basis.
Higher pricing in Peru, supported by annual consumer-price-index adjustments in power purchase agreements and favorable market conditions earlier in the year, partially offset the impact of lower output. Panama also contributed improved pricing.
For the six-month period, adjusted EBITDA was additionally affected by higher direct costs related to integrating the Punta Lima wind farm in Puerto Rico and expanding the company’s development pipeline in Mexico and Puerto Rico. Seisdedos said those expenses represent investments intended to support future earnings growth.
The company entered the quarter with nearly $100 million in cash. Polaris also reaffirmed its shareholder-return program, with a quarterly dividend of $0.15 per share scheduled for payment Aug. 21 to shareholders of record on Aug. 10.
Battery and Mexico Projects Move Toward Execution
Murnaghan said Polaris signed its contract with the Puerto Rico Electric Power Authority for the ASAP battery project on June 12 and is finalizing equipment procurement. The company is targeting a mid-2027 commercial operation date for the project.
In Mexico, Polaris was selected for 250 megawatts DC of solar capacity with approximately 30% battery-energy-storage-system coverage. The company signed a joint-venture agreement for the Mixto Project on July 3 and is advancing contracting and development milestones.
Murnaghan said the Mexican projects are expected to have approximately 25-year contracts denominated in U.S. dollars, with U.S. CPI inflators and a tolling component. He estimated the three projects could generate combined EBITDA of roughly $25 million to $30 million, though he said both capital costs and EBITDA could increase as final project figures are completed.
- The ASAP Puerto Rico battery project is structured as a 20-year, 100% tolling and capacity contract, according to management.
- Mexico battery and grid-upgrade capital expenditures would be supported by tolling fees, Murnaghan said.
- Polaris expects more clarity by the fourth quarter on additional Mexican development opportunities and on bids in the Dominican Republic and Puerto Rico.
To support the Mexican expansion, Murnaghan said Polaris expects to hire four or five employees for a small Mexico City office before the end of the quarter. The company expects its first Mexican project, Don Humberto, to be ready for construction around November, while larger projects are expected to begin later.
About Polaris Renewable Energy (TSE:PIF)
Polaris Renewable Energy Inc is a Canadian publicly traded company engaged in the acquisition, development, and operation of renewable energy projects in Latin America & the Caribbean. We are a high-performing and financially sound contributor to the energy transition. The Company’s operations include a geothermal plant (82 MW), four run-of river hydroelectric plants (39 MW), three solar (photovoltaic) projects (35 MW) and an onshore wind farm (26 MW).
