The primary driver of Alfen’s lower revenue guidance is related to Energy Storage Systems (ESS), where a significant number of large deals, that were anticipated to sign in Q2, are being postponed. As previously communicated in the Q1 update, energy storage systems costs are declining more rapidly this year than in prior years*. This has had a slowing effect on customer decision-cycles. In addition, increased lead times to obtain and realize a grid connection in countries such as the Netherlands and Sweden are causing further delays. Q2 order intake is an important period for 2024 revenue, because deals closed after Q2 will primarily contribute to 2025 revenues given the lead times of major components. Alfen expects customer decision-cycles start to shorten once battery prices stabilize as demand for EVs increase in line with battery manufacturer’s expectations, as European and national stimulation programmes build up to their energy transition commitments. Alfen is well positioned to benefit from this with its strong and increasing qualified lead pipeline and continues to be seen as a preferred supplier in the market due its high quality & service offering. Alfen expects that revenue in ESS in 2024 declines with approximately 20%.

The second, relatively smaller impact relates to Smart Grid Solutions (SGS), where resolution of the previously reported moisture issue has led to an unforeseen bottleneck in the supply of the concrete housings for Alfen installations. For our supplier, reinforced concrete housings are more difficult to scale than originally anticipated and their production is constrained by an unavoidable maintenance period over the summer. The ramp-up of Pacto substations is therefore slower than anticipated in Q3. On the demand side, Alfen is observing a continuing strong market momentum in smart grids, with a healthy backlog. The market for grid operator substations is currently supply constrained, hence Alfen expects to continue the growth trajectory in Q4. Alfen expects to grow revenue in SGS in 2024 with approximately 5%.