Welcome to this Ørsted Investor Q3 2021 Earnings Call. For this part of this call, all participants will be on a listen-only mode, and afterwards there will be a question and answer session. Today, I'm pleased to present Mr. Mads Nipper, CEO, and Marianne Wiinholt, CFO. Please go ahead.
Thank you very much, and good afternoon, everyone, and welcome to this, Q3 2021 earnings call. This third quarter was unprecedented given the European energy crunch and global supply chain pressures. Despite these unusual market conditions, I'm pleased to say that we've continued to make progress with our construction program, and we have maintained high availability rates. Also, our traders have done an excellent job in handling market volatility through an active approach to risk management and have limited impact on our financial position. Moreover, we saw exceptional performance, by our CHP plants and high earnings from our gas business, which means that we're still on track towards a full year guidance despite the lower wind speeds.
Our performance has demonstrated our company's robust business model, the strength in having a diversified portfolio like ours, and the invaluable talent of our dedicated and hardworking teams across all businesses. We've also shown strength in our business development activities this quarter, and most notably, we have further advanced towards a final investment decision for our originally fully merchant German Borkum Riffgrund 3 project by executing on two strategic milestones. First, we've signed an agreement with Glennmont Partners to farm down 50% of the 900 MW project. This deal, which is the first of its kind to Ørsted, is part of an overall de-risking towards the final investment decision, and it is our first farm-down to be signed prior to taking FID. We're very proud of the transaction and believe it demonstrates both continued interest for direct investments into our assets and high confidence in offshore wind.
It is a testament to our proven transaction model of providing contracts for full scope EPC, 20 years of O&M, and route to market. Secondly, we have now signed 450 MW of long-term fixed price corporate PPAs for Borkum Riffgrund 3, when including the most recent 100 MW long-term PPA with REWE Group. We continue to work on an advanced pipeline of additional PPAs with the aim to further reduce the remaining merchant exposure in the first 10 years as well as the later years of the project. I'll also mention that just this morning, we closed the agreement with CDPQ and Cathay Private EquityE to farm down 50% of our 600 MW Greater Changhua 1 Offshore Wind Farm in Taiwan.
Just as when we announced the transaction last year, we are delighted by the transaction partners and milestone of having applied our farm-down model in Asia-Pacific for the very first time. Recently, New Jersey issued an offshore transmission solicitation, which we see as a call to integrate upcoming offshore wind farms into the state energy grid as efficiently and cost-effective as possible. Considering our commitment to support New Jersey's ambitious clean energy targets, we submitted several strategic proposals for offshore wind transmission in New Jersey together with our longtime partner, PSEG. Our bids combine our expertise with offshore wind and transmission with PSEG's extensive experience in onshore transmission. We've also launched several additional key strategic partnerships across our geographies and technologies.
In Vietnam, we signed a memorandum of understanding with the leading cross-industry company T&T to launch a strategic collaboration on offshore wind, underlining our aspiration to establish a meaningful position in what we believe will be an attractive market in Vietnam. In the U.S, we signed an MOU with Williams, one of the largest pipeline operators in the States, to explore large-scale onshore wind energy, electrolysis, and synthetic gas-to-methanation co-development in Western Wyoming. In Germany, we signed an MOU with Uniper, one of Europe's largest electricity producers and a global gas trader. Together, we aim to install a 70 MW electrolyzer installed by 2025, with the potential to upgrade the facility to 410 MW by 2030, and the potential to source the needed electricity with Ørsted offshore wind farms.
In Poland, we have signed a letter of intent with ZE PAK, Poland's largest privately owned energy producer with ambitious renewable energy targets, to participate in the upcoming auction for seabed leases in the Polish part of the Baltic Sea. Our onshore business also continued to show momentum during the third quarter. We commissioned our second large-scale solar PV facility, Muscle Shoals, in Alabama. We continue to make progress in executing corporate PPAs, and we have started construction of the 29 MW Lisheen 3 wind farm in Ireland. All in all, these developments further demonstrate our commitment to be a leading global green energy major with a diverse set of complementary assets and offerings in the global renewable market. Lastly, in September, we announced that Neil O'Donovan will take over the role as CEO of Onshore and a member of the Ørsted Executive Committee.
Neil joined Lincoln Clean Energy in 2011 and has been the COO of Onshore since LCE was acquired by Ørsted in 2018. With his extensive experience and unique knowledge of Ørsted's onshore asset base and development portfolio, as well as his demonstrated leadership skill, we strongly believe Neil is the best person to take over as CEO of Ørsted Onshore and execute on our ambitious onshore growth strategy. Before moving forward, I'll take a moment to reflect on my recent involvement in COP26. It is ever so clear that there is an urgent need for an accelerated build-out of renewable energy and green fuels and mechanisms to support the transition and keep stakeholders accountable. We have been and continue to be very vocal on the need to accelerate global climate action, and from time to time, we do receive recognition for our efforts.
As the latest example, we are honored that our net zero target for 2040 was just approved last week by the Science Based Targets Initiative, which makes us the first and only energy company, and one of only seven companies globally, to have this net zero target approval covering the full value chain. We're very proud of this recognition as SBTI has now established science-based criteria for long-term net zero targets that are consistent with the 1.5 degree scenario. Companies must place a cap on 5%-10% of the amount of residual emissions they offset through carbon removal projects, thus requiring companies to substantiate their net zero plans with genuine long-term carbon reductions across scope one to three. Turning to slide four, where I'll give you an update on our construction projects and pipeline.
At Hornsea 2, we have now successfully installed all foundations, as well as 142 of the array cables and 116 of the 165 turbines. We expect to have first power later this year when the offshore transmission asset gets connected to the grid and to commission the wind farm during first half of 2022. At our Greater Changhua 1 and 2A project, we continue to progress on onshore-offshore construction work and have installed 11 out of 111 jacket foundations. We plan to commence installation of turbines and array cables in Q1 2022 and still expect to commission the project before the end of 2022. We continue to see Taiwan being affected by COVID-19 restrictions, which could still potentially impact the construction timeline. Turning now to our three U.S. onshore renewables projects under construction.
At Haystack Wind, we are progressing according to schedule and expect to finalize construction around the very end of this year. Meanwhile, we do expect minor delays on our U.S. solar projects. The current forced labor allegations towards a number of solar panel suppliers in China, as well as other issues related to potential increases in U.S. tariffs on Chinese goods, have caused a slowdown of solar panel deliveries into the U.S. This is likely to delay the commissioning of Old 300 Solar Centerand the solar phase of Helena Solar Center from the previously expected first half of 2022 timeline to later in 2022. We expect the current industry challenge related to Chinese panels to be of temporary nature, and we take the issue of forced labor very seriously.
We have signed up for the Solar Industry Forced Labor Prevention Pledge, which is an industry initiative that will develop a solar supply chain traceability protocol to identify the source of primary raw materials and track their incorporation into the solar modules. Based on third-party evaluations, we are confident that the panels procured for our Old 300 Solar Center and Helena Solar Center are free of polysilicon from the Xinjiang region. For future projects, we have decided to only use polysilicon-free panels until the traceability issues have been fully resolved. In Europe, the construction of the two onshore wind farms, the 62 MW Kennoxhead project in Scotland and the 29 MW Lisheen 3 project in Ireland, are progressing according to schedule, and the projects are expected to reach COD in 2022. We also continue to advance our first renewable hydrogen project under construction, H2RES.
The 2-megawatt electrolyzer project will use our two Avedøre Holme offshore wind turbines as a source and is expected to commission in first half of 2022. All of these projects together equate a 16.5 gigawatts of installed and under construction renewable capacity. While on the topic of renewable hydrogen, I would like to add that we continue to see strong momentum worldwide and progress on our early-stage projects as well. Our Green Fuels for Denmark project achieved a significant milestone in being named an Important Project of Common European Interest, or IPCEI in short, in the EU program, which opens the project up to additional funding pools. In addition, two of our other projects, Lingen Green Hydrogen and Hyscale100, are also shortlisted for IPCEI status. The development of our awarded projects continues to progress as planned.
In the U.S., we are executing on our bid commitments to bring local jobs and build out the supply chain. In New York, for example, we together with Governor Hochul and our partner Eversource, recently announced the largest single New York State offshore wind supply chain investment of $86 million, bringing construction and steel manufacturing business to the capital region and Western New York. We also continue to see the expected progress when it comes to permitting, such as in August, when the Bureau of Ocean Energy Management, or BOEM, issued Sunrise Wind's notice of intent in line with expectations. Moreover, it is encouraging to see that last month, the U.S. Department of the Interior started the process of identifying potential further seabed lease offerings in 2022 through 2024 across seven areas.
Seabed availability and robust permitting processes are essential for offshore wind developers globally, and we applaud the focus on resolving such challenges in the U.S. As I mentioned previously, we have achieved a number of milestones for the development of our German portfolio, and we expect to take a final investment decision towards the end of this year. Finally, our later-dated awarded pipeline of projects in Taiwan, Poland, and New Jersey are all progressing as planned. Let's move on to slide 5 and an update on upcoming offshore wind auctions and tenders. We continue to see numerous opportunities in the coming 15 months. With our recent awards in Poland and New Jersey, the next results we expect to see are in Maryland and Japan around the end of this year or very early next year.
In Maryland, we submitted a bid for 760 MW through our Skipjack Wind 2 project in response to the Public Service Commission's call for up to 1.2 GW of offshore wind. In Japan, we submitted three bids with our joint venture partners, one with TEPCO and Choshi, and two with Japan Wind Development Co. and Eurus in Noshiro and Yuri Honjo. The auction comprises a total capacity of 1.5 GW split between four zones. As you may have noticed, we decided to not take part in the recent auctions in Germany, France, and Massachusetts. This demonstrates our willingness to prioritize our efforts and stay financially disciplined by focusing on the opportunities that play to our strengths.
Our oversized 50+ gigawatts substantiated and opportunity pipeline provides us with the ability to be selective in terms of which auctions and tenders we participate in, seeking to optimize the development, sizing, and timing of our build-out in each region. Moreover, we are very satisfied with our 2021 auction success rate, securing 3.6 gigawatts so far this year. All in all, I remain satisfied with our progress in 2021, where we, despite the challenges related to extremely extreme energy market volatility, COVID-19, and global supply chain pressures, have been able to circumvent the challenges and shield the group from severe negative impacts. All this is thanks to our talented and ambitious teams that through active risk management, preventive and forward-looking measures, and relentless focus on execution, have made this possible. With that, I'll now hand over the word to Marianne.
Thank you, Mads, and good afternoon, everyone. Let's start with slide six, where I will go through the EBITDA for Q3 2021. We realized a group EBITDA of DKK 3 billion, a decrease on last year, driven by lower earnings from our operating wind sites, while our CHP plants and gas business contributed positively to the results. In Q3 2021, we had a positive effect of DKK 168 million from ceasing to report according to the business performance principle, while Q3 2020 included earnings of the same magnitude from our distribution, B2C and City Light businesses, which we have divested. Earnings from offshore sites were negatively impacted by wind speeds below the norm.
In Q3 2021, the wind speed came in at 7.6 meters per second compared to the normal wind of 8.3 meters per second. The difference in wind speed compared to the normal wind for the quarter translates into a negative EBITDA impact of around DKK 600 million. I will briefly mention here that when we look at our historical production levels, we see no indication of structurally lower wind speeds. Although Q3 ended 8% below the norm, we have seen wind speeds above the norm in October.
As we have known from the start of the year, and as we also reported in the previous quarters of 2021, we have had a negative impact from higher transmission tariffs following the divestment of the offshore transmission assets at Hornsea 1 in Q1 2021, as well as lower earnings from Horns Rev 2 due to the subsidy period ending in October 2020. In addition, we saw lower earnings from our power portfolio due to higher balancing costs and lower volumes. These negative effects were partly offset by the addition of the last 400 MW of Hornsea 1 receiving CFD from April 2021.
We had no significant EBITDA from our offshore partnerships in Q3 2021, while last year's partnership earnings related to the construction of Coastal Virginia Offshore Wind and construction gain on Hornsea 1, due to lower CapEx. Earnings in our onshore business increased by 34%, driven by the ramp-up of generation from the wind farms Willow Creek, Plum Creek, and Western Trail, as well as the solar PV farms Permian Energy Center and Muscle Shoals. A significant ramp-up in generation capacity was partly offset by lower wind speeds as the wind speed across the portfolio came in at 6.2 meters per second, compared to a normal wind of 6.8 meters per second. In addition, we reported higher fixed costs, M&A costs, and project development expenses related to the continued expansion of our onshore business.
In bioenergy and others, earnings significantly increased, driven by exceptional performance by our CHP plants due to higher power prices and spreads, leading to a higher generation as well as higher sale of ancillary services. Our gas markets and infrastructure activities also contributed to the significant outperformance in Q3 2021 due to the renegotiation of gas purchase contracts together with strong underlying performance in a very volatile and bullish gas market, where we were able to optimize purchase from our long-term contracts. In previous quarters, our earnings in the gas business have been positively impacted by increasing gas prices, leading to higher revaluation of gas and storages.
Despite the significant increase in gas prices during the quarter, we haven't realized a similar positive effect as the forward curve has increased more than the spot price. We have a negative impact from our mark-to-market hedges, which offset the positive revaluation effect. If we continue to slide seven, covering net profit, net debt, and credit metrics, net profit for the period totaled DKK 0.5 billion, which was significantly below last year, as Q3 2020 included the gain from the divestment of our power distribution, residential customer and Citylight businesses. Our net debt at the end of Q3 amounted to DKK 21.2 billion, an increase of DKK 9.1 billion during the quarter.
Our cash flow from operating activities reflects the EBITDA, as well as tax equity contributions from our partners as at Western Trail and Moss Landing in the U.S., offset by margin payments on hedges of DKK 2.4 billion, and a higher spend to fill the gas storages due to significant increase in gas prices during the quarter. Our gross investments totaled DKK 8.8 billion, driven by our continued investments into offshore and onshore and solar PV farms. Our key credit metric, FFO to adjusted net debt, stood at 42% for the 12-month period ending in September 2021, which is well ahead of our credit metric target.
Before moving forward, I wanted to take a moment to recognize the continual ingenuity of our finance and sustainability teams, who together created and recently signed our very first sustainability-linked revolving credit facility. The revolver has an interest margin tied directly to our ability to reduce carbon emissions and succeed with our ambitious green investment program. Let's turn to slide eight and our financial and non-financial ratios. Our return on capital employed came in at 12.9%, with the increase compared to last year being attributable to higher EBIT over the 12-month period. In the first 9 months of 2021, our taxonomy-eligible share of revenue was above 65%, while our share of EBITDA was above 90%, and the share of gross investments was above 99%.
We expect the share of taxonomy-eligible revenue to increase in the coming years as we plan to phase out coal completely in 2023. Our greenhouse gas emission intensity decreased despite of an unchanged share of renewable generation. This was due to a higher relative share of biomass-fueled heat and power generation due to colder weather and as biomass was the most cost-efficient fuel for power generation in large part of the quarter. Turning to safety, we have seen a 30% reduction in the number of injuries, and as a result, the total recordable injury rate has decreased to 3.0 in the first nine months of 2021. Finally, let's turn to slide nine and the outlook for 2021.
We again reiterate our original full year 2021 EBITDA guidance of DKK 15 billion-DKK 16 billion, excluding the effects from new partnerships. Just as in Q2, we still expect an outcome in the low end of this range. This guidance is based on an assumption of normal wind speeds in the remainder of the year. We have changed the directional guidance for our bioenergy and other to significantly higher from higher following the continued strong performance and high earnings from the CHP plants and the gas business. We expect gross investments in 2021 to amount to DKK 39 billion-DKK 41 billion, which is unchanged relative to the guidance in the first half-year report. With that, we now open up for questions. Operator, please.
This concludes our presentation, and we are now happy to answer your question. Please respect only one question per participant, and then you can go back to the queue for a second question. If you wish to ask a question, it's zero one on your telephone keypad. If you wish to remove yourself from the Q&A session, please press zero two on your telephone keypad. The first question is from Mr. Rob Pulleyn from Morgan Stanley. Sir, please go ahead.
Hi, good afternoon, and thank you. Yeah, just one question. Could we explore, please, the year-over-year delta in offshore wind sites EBITDA, where the bridge components, including the lower wind speed, seem to explain only around about half of the change year-over-year? Therefore, should we consider that the remaining, you know, DKK 700 million is the impact of hedging losses or balancing costs from buying back volume in the market? Thank you very much.
Thanks for the question. I'll elaborate on that one. If you look at the wind impact, as I said, it was DKK 600 million impact in the quarter, compared to a normal year. As we had strong wind in Q3 last year, the year-over-year impact is DKK 800 million. We have a quite limited ramp up effect from Hornsea 1 and Borssele. Because Borssele was in a way basically producing up to full last year. We have farmed down half of Borssele meanwhile. We have had an impact of over-hedging of around DKK 100 million negative. As we have reported earlier, we have these higher insurance costs, nothing new there.
What is new is that we have had around DKK 200 million on additional balancing costs due to this high balancing costs driven by the very volatile markets. Then you need to take into account, Horns Rev 2 costs and also Changhua costs, these operating costs, that we also guided in the beginning of the year. Then, Horns Rev 2 going off subsidy. So with that, in a way, in my bridge at least, it doesn't leave anything unexplained. I cannot get to this DKK 700 million unexplained, that you mentioned.
Okay. That's very clear. I think the explanation on Hornsea, Borssele, and then the two elements on hedging and balancing solves the equation. Thank you. I'll turn it over.
Thanks.
Thank you.
Thank you, sir. Next question is from Mr. Kristian Tornøe Johansen from SEB. Sir, please go ahead.
Yes, thank you. My question is regarding your farm-downs. I'll admit your farm-down of Borkum Riffgrund 3 was a slight surprise to me at this point in time. In light of that, could you update us on your farm-down process of other wind farms, whether you have anything ongoing, and then when do you plan to start the next ones?
Yeah, Kristian, I can certainly comment on that. As you know, we have farmed down Borssele 1 and 2. That's been completed also now announced with the Borkum Riffgrund 3. As announced just this morning, we have closed the Changhua 1 farm down as well. On top of that, we are in a farm down process with Hornsea 2. Those are the active farm down process that we are engaged in.
We were super happy to make the farm down of Borkum Riffgrund 3, partly because it's the first time that we have made a pre-FID farm down of a project that used to be fully merchant. Also because it is just in an uncertain period where there's a lot of uncertainty and volatility, it was just a very nice confirmation to have that the investor interest continues to be as strong in our assets as they have been.
Okay. In terms of some of your U.S. projects, which, where you own more than 50%, I mean, when do you expect to start a farm down process on those?
There's no current plans for farm-down the last 25% of Ocean Wind 1. But it might be we do it one day, but there's no ongoing process there.
Great. That's very clear. Thank you.
Thank you, sir. Next question is from Mr. Sam Perry from UBS. Sir, please go ahead.
Hi, good afternoon, everybody, and thanks for your presentation today, as always. Look, I think I just want to ask one question, which is coming back to the wind speeds topic. I know we've obviously had an abnormal quarter, but in the context of everything that's happening with weather, I think the temptation is to ask whether we still know what normal is. I know you talk to your experts about this all the time, and I'm sure at some level nobody knows the answer about what future wind speeds are going to be. I think my question is, are you changing your assumptions at all at this stage about long-term wind speeds, or do you see any risk to your assumptions on wind load factors on the-
On the kind of existing wind farms. Just really interested if you can, you know, share any insight with us about whether this recent, you know, very low wind in the North Sea is just really a random anomaly or whether we should be worried about that becoming a more regular occurrence.
Yeah. Thanks a lot. The short answer to that is we don't think any of us should be worried. We are of course, like you say, constantly doing both sort of working with experts in the area, deploying our own experts. We are making all kinds of analysis. On top of what the very helpful Bernstein report that both maps out this temperature wind speed correlation, but also digs out the different scientific research that has been made. As a matter of fact, there is a Princeton University team that has actually demonstrated that over a 40-year period, we have actually seen the wind speeds increase slightly.
We've also made simulations that if we had all of our constructed assets back from 1999, what would have actually been sort of the one-year, five-year or 10-year rolling averages, and there would actually have been a slightly increasing curve. The short answer is unless something sort of completely abnormal have started this year, which we have absolutely no reason to believe that why that should be the case based on any other indicators. We do believe it is an anomaly. We were also happy to see that we actually, as Marianne briefly mentioned, we saw October, which is a pretty big wind month, actually being slightly above average. We continue as finishing the longer version of the answer.
We continue to be quite convinced that this is something that will, over time, fully normalize to the trend we've seen for the past 20+ years.
Okay. Well, that is super helpful and a very, yeah, very useful answer in the context of today. Thank you.
Thank you, sir. Next question is from Mr. Alberto Gandolfi from Goldman Sachs. Sir, please go ahead.
Thank you and good afternoon. Thanks for taking my question. It is a question on returns, particularly on your backlog on awarded project. I just wanted to check on the basis of two aspects here. You are targeting 150-300 basis points project IRR over WACC.
Now, in light of the supply chain disruptions you are seeing right now and considering, you know, the current level of raw material prices, I was wondering if you can give us an update on the 150, 300 if we really were to take a snapshot of the situation we see today, or if you maybe tell us, "No, the situation we're seeing today is temporary, transitory, and we should completely disregard it." Maybe can you help us navigate a little bit of roadmap on returns on your awarded projects, particularly those that are due to come, you know, 2023, 2024, 2025, in the earlier part of the backlog? Thank you so much.
Yes. Thanks a lot, Alberto. I can kick it off, and Marianne can supplement. The short answer is we've not seen any changes to the picture we saw back after Q2. That is still what we call a moderate impact on the midterm pipelines. Just repeating the full context, the two under construction projects, Hornsea Two and Greater Changhua 1 and 2A, they are fully locked with very limited, if any, impact of the recent price surges on commodities. For those who are longer term, we don't need to take FID anytime soon and therefore have the flexibility to lock when that is right to do. On the...
Like you asked more specifically, the midterm here we are well-developed in, for example, the German development program, and also on the Northeast program in the in the U.S. and on Ocean Wind. We are pretty progressed. We have locked in made contracts on relatively big shares already. As we believe we mentioned before, we have already locked in 70% of the steel exposure in our U.S. projects already. Saying that the total exposure to CapEx on those midterm projects, we estimate to sort of be mid-single-digit, which we don't expect to change anything on the guidance to stay within the range of spreads to WACC that we have announced.
Thank you very much.
Thank you, sir. Next question is from Mr. Mark Freshney from Credit Suisse. Sir, please go ahead.
Hello. Thank you very much for taking my question. Regarding the gas in storage and the contract renegotiations, can you clarify there? Because it would appear that some quarters you make a positive or negative mark-to-market on the gas in storage. Other quarters, such as this one, we've seen the impact of forward hedging move against the spot market valuations. Also, you've spoken about renegotiation of a gas contract. My understanding was the legacy gas contracts were renegotiated, I think three, four years ago, and you had the positive gains. Can you talk around that piece and give us some clarity? If I may be cheeky to ask a follow on or a question 1B, what is the long-term outlook for that business?
Because evidently, housing fossil fuels is not should not be consistent with net zero. If you could talk through those bits, that would be fabulous. Thank you.
Yeah. As you have seen, Mark, we have had quite significant volatility in our gas business due to these storage impacts. That is despite the fact that it is actually a margin business where we, in a way, lock in the margins immediately when we have the exposures. We are now working on changing some of the accounting principles around the storages. And probably for next quarter, I think we'll have gone through with that. Then you will see less volatility. In this quarter in particular, we have had some good optimization gains from the gas business because we have been able to lock in a way, solid profits.
Then we have these renegotiation gains, which, according to the contracts, are not allowed to elaborate on. I don't think you can expect any more renegotiation gains going forward because, in a way, these are, in a way, legacy contracts that, in a way, will disappear over time. Therefore, I think this is the last time you see this kind of one-off gain from renegotiation. On your question on scope three and in a way having fossil fuels in our mix, yes, you're right. Now, Mads talked about this, net zero, scope one to three, confirmation that we got from Science Based Targets.
In a way, that of course means that we need to go out of gas, and we will go out of gas. These contracts are, in a way, declining and expiring over time. So it will naturally happen.
Okay. Thank you very much.
Thank you, sir. Next question is from Mr. Peter Bisztyga from Bank of America Securities. Please go ahead.
Yeah. Good afternoon. It's Peter Bisztyga here from Bank of America. We saw a big profit warning from Vestas this morning on supply chain bottlenecks and cost inflation. You know, at the same time, we're hearing from you guys that kind of everything's fine, you're managing everything very well. I'm sort of intrigued as to, you know, why you know, you and Vestas seem to be operating on different planets, different universes. You know, can we expect that at some point there's gonna be some blowback on you from the problems that Vestas are having, you know, or indeed any of your other suppliers? You know, could at some point, somebody trigger force majeure? Could somebody try and renegotiate a framework agreement or a contract?
You know, if you could just help us sort of reconcile those two different worlds, that'd be very interesting.
I think, I mean, we refrain from talking about something that is more specifically into Vestas or the other supply chain partners that we work with. Obviously, I think the nature of our business is we will typically be locked in for a longer period of time, and then only in case of sort of significantly longer periods of sustained high inflation will this start to hit us anywhere near the same extent. I think. It's simply the nature of the business short term versus slightly longer or mid-term or longer term. I think that's what explains the difference between the two companies.
Fundamentally, we as a developer and as a manufacturer, the entire business model is one that we don't think can be directly explained. Only in case of long-term, really long-term sustained inflation levels, will this be something that impacts overall. In that case, it will impact all developers. That will also mean that the bid prices that we will all come with will change. We remain confident that except sort of the midterm projects that I already spoke about that we have a moderate impact on, we think that our exposure going forward also on upcoming bids that we'll submit is limited.
Okay. You haven't had anybody try and renegotiate contracts or framework agreements. Those are all robust as far as you're concerned?
Yes.
No, we haven't had.
They are all robust.
Yeah.
Sorry. Yeah. No, we've not had anybody call us. No. Those are locked in.
Got it. Thank you.
Also remember that the OEMs, they don't take on the commodity risk on steel, for example. That's our risk. In a way, we actively go out now and have hedged some of that risk. In that respect, in a way, the OEMs are in a way, not fully exposed.
Okay. Thanks very much.
Thank you, sir. Next question is from Madame Deepa Venkateswaran from Bernstein. Madame, please go ahead.
Thank you. That's Deepa Venkateswaran from Bernstein. Thanks for calling out our report earlier. The question that I had was on your farm-down to Glennmont Partners. Obviously, as you mentioned, that you've done it earlier because it de-risks. I also see that you've guaranteed them a certain price. Just wanted to understand what's the thinking behind that, and do you generally. You'll have back-to-back PPAs, and therefore, once you complete the full 900 MW of PPA, effectively is this back-to-back, your PPA you give Glennmont versus what you've got from the corporate? If you can just highlight what's the residual risk on this project that will sit with you post FID, that would be helpful.
Yeah, good question, Deepa. It is only a portion that is secured with fixed prices towards Glennmont. You are right, the idea is that we will make back-to-back PPAs, and I think we are in a way succeeding with that so that the remaining risk will basically not be any when we are done.
Well, I can even supplement that some of those negotiations are very advanced, so we feel very confident that what Marianne describes is going to happen.
Okay. Thank you. Thank you, madam. Next question is from Mr. Dominic Nash from Barclays. Sir, please go ahead.
Thank you for taking my question. My question, please, is on your Bioenergy and Other Division. Obviously, you're guiding us to it being significantly higher in 2021 versus previous expectations. Could you give us a breakdown of that sort of big delta that we're currently seeing? How much of that is sort of trading, how much of that is underlying performance that we could see sustained into future years? How much of this gain that we see in Bioenergy is really sustainable going forward? Thank you.
Yeah. Yes. Not a lot of it is sustainable, to be honest, because there's two impacts. It is these renegotiations, which are one-off, then you have the solid performance in the underlying gas business. That in a way will vary from year to year. We could have some good years, but it's not a big deal. Where we see a significant overperformance is at the CHP, the biomass-fired CHPs. You can say that we see it actually as a very efficient hedge versus low wind, because in a way, low wind has been a contributor to high energy prices.
With high electricity prices, in a way, you will have significant earnings and high production in our CHPs. If we continue to see elevated energy prices, we will continue to earn a lot of money from the CHPs. If we, as we expect, after winter 2022, we will see prices decline again. In a way, you will see normalized earnings from our CHPs.
Thank you.
Thank you, sir. Next question is from Mr. David Paz from Wolfe Research. Sir, please go ahead.
Hello. Thank you for taking my question. Can you hear me?
Yes, we hear you.
Okay, great. Thank you. Just based on the clean energy tax credits language proposed in the U.S. Congress last month, how would passage of that legislation as written, you know, impact your business in the U.S.?
Sorry, I simply couldn't pick up your question. Could you repeat that, please?
Sorry about that. Can you hear me?
Yes. That's great.
Great. Based on the clean energy tax credits language proposed in the U.S. Congress last month, how would passage of that legislation as written impact your business in the U.S.?
Do you want me to answer?
Yeah.
Yes. You basically mean direct award if that goes through, and also the extension of the PTC and ITC. That just to clarify.
Correct.
Yeah. Yes. If I first talk about the offshore business and then about the onshore business afterwards. In the offshore business, we will have a benefit from having direct award because we don't get, in a way, the discount by having to sell the tax credits. And in a way for our business cases, we really hope so. In some of the contracts, like in New Jersey, we will have to pass some of that on to the ratepayers. But in some of the other projects, we can keep it for ourselves. When you then talk about our onshore business, the extension of the tax credits is of course an advantage to us.
Absolutely something in a way that benefits our business. All in all, in a way, the whole package in a way is something that we absolutely fully support and hope goes through the whole way.
Okay, great. Thank you. I'll get back in the queue.
Thank you, sir. Next question is from Mr. Casper Blom from Nykredit. Sir, please go ahead.
Yes. Hello. My question is about these very high power prices that we're seeing in Europe right now. My question is, how does that affect the PPA prices? Generally speaking, how does it affect the interest in making new PPA contracts? Any thoughts on that would be helpful.
Yes. Thanks a lot. I mean, obviously, I'm sure it's reminding somebody that we cannot take power price development for granted. But honestly, we still see and hear clearly that the underlying driver for making these large-scale corporate PPAs is the need to decarbonize the businesses of the corporates. So this may be a reminder, it may be something that makes them sort of speed up. But we don't see that this is something that amps up the prices significantly, because on a sort of a 10-plus year PPA, this is not something that anybody, I think, expects will be anywhere near a normal situation.
We remain convinced that it's underlying decarbonization drive that is the main reason for it, and that there's no structural price or change to the price level we can get based on the current prices. Okay, great. Thank you.
Thank you, sir. Next question is from Mr. John Musk from RBC Capital Markets. Sir, please go ahead.
Yes, good afternoon, it's John Musk. Can I just ask on the other line project development in your offshore business, which seems to be trending lower than last year. I think the guidance was for it to be above last year. What is driving that to be perhaps a little better than expectations, and where do you expect that to outturn for the year? Linked to that, it's kind of the opposite in the onshore business where overhead costs are a bit higher. What is driving those numbers higher?
Yes, when you look at offshore first, you are right, we are spending less, very much driven by the fact that last year we spent a lot in the U.S., both for Ocean Wind and for Northeast. This year it is especially in U.S. that these costs are very high. This year we don't spend the same amounts, and we don't expect to. We expect to have in a way an overperformance, or spend less cost on that. In onshore, as you say, it's completely the opposite. It's very much driven by the lifted ambitions that we announced at the CMD. We are spending more.
For example, we have spent money on the M&A activity Brookfield. We are also, in a way, ramping up on project development to meet the higher ambitions.
Okay, thank you.
Thank you, sir. Next question is from Mr. Brian Finkelstein from Key Banc. Sir, please go ahead.
Thanks for taking my question. I just had a quick one on. You discussed wind speeds and its impact on offshore, but the load factor of 27% versus the prior year of 35% appears to have a larger impact on power generation. Do you know why the load factor was down? I guess looking on a TTM basis, it remains well below the guidance of like-
Yes.
48%-50% load factor.
Yes. The short answer to that question is that there's actually not a direct correlation between the energy production or the load factor and then the wind speeds. If the wind speeds are lower, if they're lower, we actually take sort of an over proportional hit on the production. Especially, for example, in Q2, which is relatively low wind month, actually the production is proportionally lower than how much the wind is lower than normal wind speeds. Whereas if we're already at sort of higher production or higher wind levels, it actually doesn't hit quite as hard.
The explanation is that when the wind is low, and especially when it's low in some of the lower, generally seasonally lower wind months, there's an over proportional hit to the load factor. That's as untechnical as I can make it.
Yeah. It is driven by the shape of the power curve-
Yes.
If it's a little bit more technical.
Yes.
Yeah.
Okay. Got you. Okay. Okay. You have targeted over time 48%-50%?
Yeah.
Yeah.
I assume that was just one time.
Off on you, yes, yeah, you're right.
Yes.
I guess, how do you just look at that over time? Because that plays a big part of just-
Yeah. In a way, this was a target that we set at the last CMD, not this year's CMD, but the last CMD. As we grow our portfolio, we will see very different load factors in different regions. In general, you see that, except from Taiwan, where you have very high load factors, you see low wind speeds in, for example, Korea, and Japan. And that will of course reduce the load factor. And also in some other of the countries where we are entering, in a way, we are seeing lower wind speeds. We have not updated the guidance, because actually it is a bit difficult for us to foresee where we will win the next projects.
Just in the U.S, just to take that as example, it's significantly higher wind speeds up in the north. The further south you move, in a way, the lower the wind speed. Just to give a reason for why we haven't updated that.
Okay. No, that's fine. If you just take a long-term view, there's going to be a large build-out of offshore wind. How can you balance the volatility from like year-over-year basis? Just 'cause it can be just so large.
One thing, in a way, we will benefit from having a larger and more diversified portfolio. For example, if we had Changhua up and running this year, we have seen that actually the wind speeds in Asia has been significantly stronger than a normal year. We have made a lot of analysis showing in a way, the more diversified our portfolio gets, the less the deviation in the wind speeds from a portfolio point of view gets. That's something we are looking forward to.
No, I understand from a portfolio, but from like a regional basis, it just seems like it could have such a large impact if a bunch of wind farms just are all impacted at the same time, whether it's positive or negative.
Yeah, that's what we are seeing this year, basically. We are seeing that most of our wind farms are in the North Sea and therefore, in a way, we are hit by the low wind speeds in the North Sea. In a way, this is a timing impact because we basically believe that the long-term wind speeds are very constant. This is a volatility in a way that we have to live with in this industry.
Okay.
That said, in a way, this year has been extreme.
Okay. Thanks a lot.
Thank you, sir. Next question is from Mr. Mark Freshney from Credit Suisse. Sir, please go ahead.
Hello. Further question just on floating. I know that in the past, a lot of your internal R&D has been focused on fixed bottom, and we know that you've teamed up with some players to look at the Scottish leasing, which looks like it's going to be very much floating. Can you update us on the work that you've been doing internally on floating and whether you think when you think that floating will need to become mainstream, given things like seabed rights, etc., and shortages of seabed? What is your thinking around that area? Thank you.
Yes. Thanks a lot, Mark. Yeah, I can give you sort of a quick update. You're right, we did team up with BlueFloat Energy and Renantis for the floating bits in ScotWind. Likewise, we also sort of announced our interest in the Utsira part, the northern part of the Norwegian seabed made available. We are actually seeing that this year was sort of the first year where we saw at scale floating seabed starting to be made available. Probably 2021, when we look back at that's the year where floating really started to kick in. Which is also one of the reasons why this year was where we changed at our CMD.
We actually changed ourselves, and now we will engage. We are discussing with different partners, so not just partnering on projects like we do with BlueFloat Energy, but also different technology potential partners. We are engaging with the people who have most experience. We are technically investigating different floating platforms. We are mobilizing our own internal teams are saying what would make sense for us to accelerate a proprietary capability and where does it make most sense to work with partners. That has all been sort of accelerated during this year.
We feel confident that we will be sort of, once hopefully, that there will be opportunities materializing more specifically either from Scotland, Norway, could be California or some of the Asian markets, that we are confident we will be ready. In terms of when it'll be mainstream, well, by the end of the decade, it will still be a relatively small part. We expect that it is unlikely that floating will be cost competitive before earliest 2035. But there will probably or very likely also be special subsidy programs that could still make those projects interesting, which is why we also bidding in for seabed as we speak.
Thank you. Thank you very much. Very interesting. Thank you.
Thank you, sir. Next question is from Madame Jenny Ping from Citi. Madame, please go ahead.
Hi. Good afternoon. Thanks very much. Just on going back to Borkum three, given Ørsted has historically been very good in terms of providing visibility and transparency around contracts, given that we're now looking at PPAs and back-to-back hedging, how is Ørsted going to provide the same degree of transparency for some of these corporate PPA type of assets going forward to give us a better sense of what is the risk taken on by Ørsted? Then as we're going around a second time already, I'll just squeeze a second question in. Just going back to what you said, Marianne, earlier in terms of the risks around taking on steel risks and the OEMs don't take the risk Ørsted does.
Can you just elaborate a little bit around that? Because, you know, at the Capital Markets Day, I remember, there were some discussions around using derivatives, but I understand derivatives don't really sort of, they're not liquid enough to handle the risks around steel. I was under the impression that the OEM took some of these risks. Any further clarity around that would be great. Thank you.
Yes. I'll answer the first one first, on the corporate PPAs. We are of course very transparent on anything but the price for these PPAs.
In a way, the credit, potential credit risk, in a way you know exactly who's the counterparty, you know the term of the PPAs, but in a way, revealing the price is not something we will be able to do, because that is so commercially sensitive. I think for example, through we have shared this slide on the Borkum three farm-down with estimating the gain from the transaction, et cetera. I think we are as transparent as we can be, but unfortunately we cannot be more transparent than that.
On your next question on steel. I am talking now about offshore. Just to make that clear. At the CMD, we said that we had locked in quite a significant part of the steel exposure for our next projects. We said in Northeast Cluster we had locked in around 70%. We also locked in a significant part of Borkum Riffgrund. We did that before steel prices increased. To be honest, in a way, we didn't even foresee at that time that prices would increase, but we were, in a way, lucky to have done that. On the hedging, yes, you are right.
The way we have locked it in is not through hedging, it's through direct agreements with the supplier. Going forward, in a way, we are working on being able to hedge the steel, and we will do that through proxy hedging, meaning locking in the iron ore, the coking coal, et cetera, so that we get what we consider a very efficient hedge. We are very, very close to, in a way, already starting to be ready to execute on that.
Thank you. Sorry, does that mean that you've got warehouses of steel somewhere?
No, it is at the supplier. We have made a purchase agreement at fixed prices, but we are not keeping the warehouse.
Perfect. Thank you very much.
Thank you, Madam. Next question is from Madam Deepa Venkateswaran from Bernstein. Madam, please go ahead.
Thank you. My question was about the overall 2040 net zero target. I just wanted to ask a bit more about how you are planning to reduce the Scope 3. Most of your Scope 3 right now either comes from the gas supply division or it's the emissions in the supply chain for wind turbines and so on. So could you talk about that? Generally, is the idea that once your gas contracts expire, you're just shutting that business and it wouldn't exist in 2040? Or is it that you're going to move into hydrogen contracts or something else?
Yes. Thanks a lot, Deepa. The answer is that in order to live up to the SBTI requirements, we need to do both. It is both not having our gas business at the time. Yes, there will be a renewable hydrogen business, but that will be renewable. And therefore that will be net zero. But we will expectedly get. When these heritage contracts run out, that is when we will also over time phase out, and by 2040 not have any gas business. We do have a very sort of a very ambitious plan for supply chain decarbonization that is absolutely necessary.
We are taking short-term measures already now, engaging with our top partners and requiring them to use green power within the next relatively limited number of years. More importantly, we are also engaging structurally. For example, in the First Movers Coalition, there are initiatives such as SteelZero, where we are a founding member, where we are engaging in the steel industry, so we can also structurally help, not just overall help the individual supplier or partner we have, but also structurally help decarbonize the hard-to-abate sectors that we buy a lot from. Those are the plans that we are coming up with. Phasing out gas, but very importantly, also engaging deeply both with individual suppliers and at an industry level for those areas that will be hardest to engage with.
Okay, thank you.
Thank you, madam. Next question is from Mr. Ingo Becker. Sir, please go ahead.
Yes. Good afternoon. Thank you. I have two questions. The first is on your slide 14, the offshore build out plan. It's been asked before, this Gromit. I try another way. I mean, this build out plan, and particularly the one after Hornsea two and Greater Changhua, you've been showing this for quite a while, and apparently the market, we are kind of worrying, you know, what to do with all those pending FIDs. You keep emphasizing that you are confident on supply chain issues and that you can manage it over time and you're not in a rush. That is understood. Still, it looks like the worries judged by your share price just keep coming back.
At the same time, seemingly the demand for PPAs is rising and you successfully continue concluding those. You say that the underlying trend is decarbonization, which probably is understandable why people wanna have a PPA, but the pricing of PPAs must have an offsetting impact on the whole process. Given the rising uncertainties in the supply chain on the pricing, there seems to be an offset on the sales price side. I'm wondering if you could help us understand, if we look at the pending FIDs on the right-hand part of the slide, how did that, for you, subjectively change, taking all those factors into account, like over the last year?
Is the probability that you take FID, subjectively speaking, for you the same, or has it changed in either direction, it being higher or lower? I guess generally the market would expect those projects to be FID. Secondly, my question would be please on your bioenergy other segment, where I think we've been struggling to get the forecast right this year, given all those many changes. You had the scope change. Now we have
Gains in the power market that we might not wanna extrapolate. You've renegotiated your gas procurement contracts. My understanding would be that some of those gains might be recurring, some are not. I was wondering if you could help us a little beyond this year, where we should be seeing EBITDA progressing for this segment. Thanks very much.
Yeah. Perhaps starting with your first question. If you look at this slide 14, the U.S. projects is in a way upcoming for FID. U.S. is very different from all the other markets since we take FID quite late due to the permits process that in a way takes a long time. While we are awaiting the permits, and now with the NOIs in place, we are in a way have much more predictability on the timeline. A lot of work to mature these projects have been going on for the last year. We have a quite firm CapEx budget on those.
No doubt in a way we will take FID, but it is the permit process that keeps us back. On the German project, I think that's actually a good example on exactly what you're referring to. We have seen marginal impacts from cost inflation, but we have also seen at the same time that we have been able to close these CPPAs at higher levels than what we just thought a year ago. Actually when we look at our business case now when we very soon expect to take FID, and a year back, in a way that it is neutral to the NPV because these two effects in a way is a wash.
In a way for us, no challenges on this awarded pipeline. In a way, it's a matter of timing. The FIDs will come, as the projects in a way mature and get permits and progress. On the other question on bioenergy, as I say, you should look at 2021 as a very special year due to the elevated power prices. If you see power prices coming back again, you will go back to, in a way, an earnings picture like you saw in 2020. Most of it is in a way one-offs all driven by the very, very high power prices, yeah.
Thank you. Can I just inquire, you are probably referring to the underlying DKK 1.2 billion for 2020, not the declared figure for that year, right? Which was a different total.
Yes. The underlying number for 2020, yes.
Which was DKK 1.2 billion.
Bioenergy and other. Well, I will say this is still. Just a second, I'll just find it.
Mm-hmm.
Yes, yeah, 1.5 it is actually.
1.5.
Yeah.
Excellent. Thank you very much.
You need to deduct the divested business, the distribution.
Right.
Yeah. So.
Thank you, sir. Next question is from Mr. Rob Pulleyn from Morgan Stanley. Sir, please go ahead.
Marianne, as we try and understand your exposure to these power prices. For the part of the portfolio where you financially hedge, would you be willing to provide how much of the book is filled for 2022 and 2023? How much that perhaps has changed since half year? I.e., how much of this sort of extraordinary power market have you been able to get into the hedge book where you financially hedge some of your production? Thank you.
Yes. The way you typically should look at it is that we are more or less fully hedged for the two first years. For 2021, in a way, we have been fully hedged, and we are also fully hedged for 2022. We, in a way, roll in quarters as we move forward. 2023 is hedged, I think it's around 7%-47%, so around 50%. Of the last part of that, in a way, we get some benefit from the higher prices.
Yes, it was 80%.
Eighty, sorry, eighty percent. Sorry, sorry. Eight-
81%.
81%. Sorry for that. Fully, more or less in a way, hedged for two years and then 80% hedged in 2023. We don't benefit a lot from these high power prices in our offshore and onshore business.
Okay. Thank you. I'll turn it over.
Thank you, sir. Next question is from Mr. Alberto Gandolfi from Goldman Sachs. Sir, please go ahead.
Thank you. I'll be super brief here. Question is, can you maybe elaborate, please, why you decided not to participate in Germany, France, and Massachusetts auctions? I understand the idea of staying clear from maybe what could be competitive vendors, but I wonder why isn't that the strategy. You know, some of your competitors in other segments are basically trying to bid everywhere, keeping discipline, and if there is someone not disciplined, then they're losing the auction. That's what I was expecting you to see. Is it because you need to ramp up further the organization before you can bid everywhere, and therefore you don't want to spread too thin? Or why would you say before seeing the outcome of the auction that those tenders will be particularly competitive?
If I can ask you maybe, you know, obviously, I'm overstepping here, so feel free please to say no, but when it comes to your hedges on iron ore steel, you know we're talking about hedging billions of exposure for years to come. What would be the costing expressed in basis points of hedging? Have you always done it, or is this something new in reaction to the recent backdrop? Thank you so much.
Yeah. Thanks, Alberto. I can take the first question. Well, there are a number of answers to it. The first one is that with the sheer number of solicitations coming out, we do need to be prioritized because it is hard work to prepare a qualified bid, and we want to ensure that whenever we do that, we do it where we can be both very well prepared, so we know that we have sort of firm ground under our feet when we do it. We want to ensure that it's something that plays to our strengths, so we have a very good chance of actually being awarded.
If you take the two specific examples you mentioned of Germany and Massachusetts, there are actually two very distinctively different reasons why we chose not to. The one is that in Germany, there are these I think well-known step-in rights, where it was highly unlikely that those who had the step-in rights would actually not do that. Therefore, we thought, and I believe rightly so, that it would simply be a risk of being a waste of time to bid in, and it turned out that these were also exercised.
For Massachusetts, it was because of the cap, the price cap, which meant that even though we have the lease Lease Area 500, we simply did not evaluate that this was a sufficiently financially attractive opportunity for us compared to the alternatives we have at hand. It's a combination of staying focused on where we have the best chances, always ensuring that we remain financially disciplined and can make investable projects, and we play to our strengths where we have the highest chances of winning. That's sort of the slightly longer answer.
On the last question on the cost of hedging. Actually, we don't look at, in a way, hedging as a cost. We have a business model where we seek to be 90% covered on the merchant exposure over the long term. We hedge a very significant portion in the first years also to have very stable earnings. Also, in a way, for rating purposes, this is an advantage to us. You can always argue there is a bid-ask spread when you hedge further out. As I said, we are hedging mostly within the next three years, and we are also using proxy hedges to eliminate or reduce the bid-ask spreads.
For us, in a way, this is actually not something we see as a cost. You can always, in a way, go back and said, "Should you have hedged at that time?" We have from time to time made this kind of analysis, and we have actually shown that, over time, it has been a good thing for us, to use this hedging policy that we have.
Alberto, if I may just very quickly swing back by the first question again. I actually think a side benefit of not participating is also that, for example, in the case of Massachusetts, I don't know honestly if it's finally confirmed that it. But it seems to be very likely that the price cap will actually be removed because it was a surprise that we did not bid in. We also think that there is some merit in us as a clear global market leader when we choose not to. That is also a signal to some, in this case, the regulators, to ensure that financial discipline is something that is actually not a benefit just to the individual company.
It's an absolute prerequisite for this, for developers to be able to build out on a sustainable basis over time. We were actually very happy we didn't bid in, and we hope it'll force some structural change that will mean.
It has forced. It has gone-
It has been.
It has gone through.
It has been confirmed.
Yeah.
Which was a sort of side benefit of not participating, which we were very happy about.
That's very clear. Thank you. Marianne, forgive me. Actually, I meant hedges on raw material, not on power for sale.
Oh, you mean on—
on cost.
on raw material. I would actually
Sorry.
Take the same view in a way. For me, locking in a price, in a way, whether that's a good idea or a bad idea, depends on how prices develop. And it's not any cost as such. It's more in a way, the timing on when you do your hedging.
Thank you, and thank you for your patience. Thank you.
Thank you, sir. Next question is from Mr. Dominic Nash from Barclays. Sir, please go ahead.
Thank you for taking my second question. Hopefully a very brief one. The sell down in the Borkum Riffgrund three pre FID, what sort of delta are you seeing or do you think there is in the risk and the associated sort of cost of capital for partners between selling down earlier rather than selling down now at FID or indeed at commissioning? Is there any delta at all and what's the spread? Thank you.
We have actually seen that the delta, if there is any at all, it is at least very, very low. Because when we give this EPC wrap, there's so much, in a way, trust in us, as the EPC provider. We actually see that, in a way, people pay the same, even if it's pre-construction.
I presume, sort of following up from that, is that this selling down earlier in the life cycle of your offshore wind farm is likely to be an increasing trend if that delta between commissioning and early, you know, trends to zero. Is that correct?
Yeah. That is correct. In some cases, there can be some tax consideration that means that we will do it otherwise. In general, yes, you're right.
Thank you very much.
Thank you, sir. We have no other questions. Back to you for the conclusion.
Yes. I'll just say thank you very much for very good questions to an unusual quarter, but one that I'll just repeat, we are very happy to have steered through in a good way. Thanks a lot for engaging. Thanks for your trust.