Good morning, and welcome to Capsol's update for Q1 2026. My name is Jacob Clausen Krøvel, Senior Vice President Investment and Strategy at Capsol. Today's presenters are CEO Wendy Lam and CFO Bjørn Kristian Røed. We will be taking questions at the end, so submit your questions anytime during the presentation using the chat function. With that, I'll hand the word to Wendy to get us started.
Thank you, Jacob. Good morning, and welcome everybody to Capsol's Q1 update. At Capsol, we believe we are operating at the center of two major global trends, rapidly rising demand for power, particularly driven by AI and data centers in the U.S., and accelerating industrial decarbonization in Europe. Both trends require scalable, cost-efficient, low-carbon solutions that can be deployed easily, and that is where Capsol is positioned. In the U.S., our platform enables dispatchable low-carbon power on gas infrastructure, helping utilities and data centers respond to growing electricity demand under tighter emissions requirements. In Europe, we are focused on hard-to-abate sectors such as cement, bioenergy with carbon capture, and energy from waste, where CCUS is increasingly becoming one of the few viable pathways to deep decarbonization.
What makes Capsol unique is our technology platform based on HPC, or hot potassium carbonate, which can increase power and heat output, integrate efficiently with existing facilities, and is non-hazardous. Turning to our Q1 highlights, we have started the year with steady commercial momentum, a sharper industry focus, and continued discipline in our financial positioning. Commercially, the U.S. project remains on track toward FEED in the fourth quarter, and the demonstration campaign at Dyckerhoff cement plant was successfully launched. We're also seeing customer inquiries continue to increase despite slower industry decision-making due to macroeconomic uncertainty. Strategically, our industry focus continues to sharpen. In cement, our multi-project engagement approach with European cement manufacturers is continuing to mature. We're also seeing strong momentum from the U.S. in utilities and data centers seeking low-carbon power solutions.
As a result, we are advancing discussions with commercial partners to expand our project presence in these markets. At the same time, we continue to focus on BECCS in Europe, where construction of the Stockholm Exergi project is progressing together with our industrial partners, Saipem and Everlens. Financially, we refinanced our credit facility to better align with company priorities and reduce near-term liquidity outflows. We also maintained strong cost discipline, reducing operating expenses by 44% year-over-year, with Q1 EBITDA of negative NOK 18 million. Now let's focus on the low-carbon power opportunity in the U.S. When evaluating power solutions that can deliver low-carbon electricity quickly, gas with CCS stands out as one of the most attractive options. This is driven by speed to deployment, competitive economics, proven technology, scalability, regulatory alignment, and strong low-carbon performance, a combination few alternatives can match today.
This is particularly relevant in the current U.S. market, where utilities and data centers urgently need dispatchable low-carbon power delivered quickly and at scale. This analysis is from BCG, but we have expanded on how gas and CCUS is represented. In the table, you can see two main categories of gas with CCUS, open cycle gas turbines, or OCGTs, and combined cycle gas turbines, or CCGTs. Capsol's solution is focused on OCGTs, where we believe we can deliver a lower levelized cost of electricity than conventional amine-based carbon capture on CCGTs. Our advantage comes from the ability to generate additional power from waste heat while capturing CO2 at the same time. Our focus is on smaller OCGTs, typically below 100 MW. These smaller units, along with reciprocating engines, are being deployed more rapidly in the near term, and we believe they will become an important early market for decarbonization.
A closer look at gas turbines show that they are used across a wide range of applications. At Capsol, we are focusing on the segments where we see the strongest market potential and the best fit for our technology. First, within utilities, we see a large brownfield opportunity for low-carbon baseload power. As electricity demand grows rapidly, utilities have the opportunity to upgrade existing turbines from peaker operation to baseload generation. In many of these utility cases, emissions reductions are required due to state regulations, corporate climate targets, or stakeholder expectations. We estimate conservatively around 300 turbine units could be upgraded to low-carbon baseload power with CapsolGT. This is based on known transport and storage possibilities, this is roughly around 50 million tons of annual CO2 emissions that could be captured and is a significant near-term market opportunity for Capsol.
Second, rapid growth in data centers is driving strong demand for greenfield gas power projects. Many of these projects involve smaller turbines or engines where carbon capture may be driven by corporate climate mandates and community expectations. Third, within oil and gas, we also see strong potential among midstream pipeline operators, where emissions reductions from compressor stations powered by open cycle turbines are becoming increasingly important. In summary, we see our strongest opportunities in brownfield utility turbines, greenfield data center power projects, and pipeline infrastructure in oil and gas. Across these segments, Capsol solution stands out because it can reuse the turbine's high temperature exhaust to power the carbon capture cycle, while also generating additional power within one integrated system.
To illustrate 1 of these key advantages of Capsol solution for gas turbines, I want to highlight the additional power that can be generated from the high temperature turbine exhaust. As you can see, even for a single turbine configuration, shown in the two examples on the left, the additional output is significant, with up to around 15% more power generation, while still achieving CO₂ capture rates of 90% or higher. When scaled across multiple turbines, the impact becomes even more meaningful, reaching more than 20-90 MW of incremental net power generation. Part of this additional power can be used for CO₂ compression and transport. Where the opportunity becomes especially compelling is the ability to deliver net additional low carbon power to the data center or the grid.
This incremental power output, combined with the lower CapEx of a leaner system design, is a reason why Capsol can achieve a lower levelized cost of electricity compared with incumbent amine-based solutions in combined cycle applications. In a market increasingly constrained by power availability, Capsol's ability to increase power while simultaneously reducing emissions represents an attractive value proposition for our customers. I will want to move on to our U.S. project. Late last year, we announced how CapsolGT, our solution for gas turbines, is currently under development for a commercial project at a U.S. utility. The project is progressing according to plan following verification of commercial attractiveness through ongoing pre-FEED work. This project is being driven by three key factors for the customer. First, the utility is looking to respond to rapidly growing power demand from data centers.
Second, existing Open Cycle Gas Turbines are becoming increasingly constrained by emissions limits, creating a compelling retrofit opportunity. Third, Capsol solution provides an opportunity for low carbon baseload power generation while making the most use of the asset, reducing asset risk. Over the past several months, we have also continued to strengthen the project consortium. Capsol secured exclusivity on the project in December. Siemens Energy joined the consortium in January, and Black & Veatch was appointed EPC contractor to begin the pre-FEED phase in March. The project remains on track toward FEED in the fourth quarter of 2026, with Final Investment Decision targeted for 2027. Now let's shift focus to decarbonizing industry in Europe. First, I'd like to highlight cement. Cement remains one of the most important long-term decarbonization markets for Capsol.
Europe is particularly attractive due to its concentrated market structure, where a limited number of large producers control significant production capacity and emissions volumes. Around two-thirds of cement production emissions come directly from the production process itself and cannot be addressed through electrification alone. This makes cement a truly hard to abate sector and positions CCUS as one of the few scalable pathways for deep decarbonization. Regulation is also increasing pressure on the industry. For Europe, the EU ETS and CBAM are raising the expected costs of emissions, making it increasingly difficult for cement producers to remain competitive without decarbonization strategies in place. As a result, the industry is being pushed toward action. At the same time, cement production volumes and associated emissions have remained relatively stable over time due to limited decarbonization alternatives available.
To be able to reduce these emissions, lower cost CCUS solutions are needed, such as Capsol. Overall, we believe cement represents a large, concentrated, and regulation-driven market with strong long-term potential for Capsol. Next, I also wanted to highlight how some of the more innovative cement producers are increasingly viewing decarbonization as a way to strengthen competitiveness in their markets. The companies that succeed will be those that can meet growing demand for low-carbon cement while expanding margins. On the left, you see an example of how Holcim views this opportunity. The potential margin expansion is driven by three key factors. First, producers may be able to charge premium pricing for low-carbon cement enabled by CCUS. In Europe, this can be supported by public procurement policies, regulation, and demand from customers who are themselves seeking lower emissions products and are willing to pay a premium for them.
Second, margin expansion can be achieved if the cost of implementing CCUS is lower than the cost of emitting CO₂ or purchasing carbon allowances under the EU ETS. This is why the lowest cost CCUS solution is critical. Capsol's technology can significantly reduce energy consumption and therefore operating costs, resulting in a clear advantage compared with alternative capture solutions. Third, margin expansion may also come from the capture of biogenic CO₂. Since many cement plants use fossil fuel alternatives such as biomass and waste, part of the captured CO₂ can qualify as biogenic. This creates the potential to generate carbon removal credits that can be sold in voluntary carbon markets to buyers such as Microsoft and others. In summary, Capsol helps our customers become more competitive by delivering one of the lowest cost capture solutions available, making decarbonization more financially viable for the cement industry.
Next, I want to highlight an example of our ongoing work in cement. This is the demonstration campaign at Dyckerhoff's Geseke cement plant in Germany. The six-month campaign includes liquefaction and is generating valuable operational data. We are also very proud to have successfully produced liquefied CO2 during the campaign, which was recently publicized by the customer. Strategically, this is an important project for Capsol to be working with such an innovative and forward-leaning cement producer. Dyckerhoff is owned by Buzzi Unicem, the fourth largest cement producer in Europe, and this campaign marks Capsol's tenth demonstration campaign overall and our fourth consecutive campaign in the cement sector, further validating the strength of our positioning in this market. Our portfolio of active projects in the cement sector is also progressing steadily. This growth is increasingly supported by strategic validation from leading European cement producers.
Our outlook on cement is also strengthening on the back of validation from Holcim and their investment in Capsol in Q1. Another important development is our shift towards a multi-project approach. Rather than evaluating a single asset in isolation, cement producers are looking to scale carbon capture through repetition and learning from other projects in the industry. This will enable lower costs and improve quality and timelines as projects get deployed. We will continue to promote cross-project learning and best practice sharing in our multi-project approach with customers. Shifting a bit and looking at our achievements in BECCS, we are very proud to see the Stockholm Exergi project coming to life with Capsol's technology.
On the left are images of the future plant, and in the top picture, you can see that the future capture facility will be located at the seaside for easy access to ships transporting the captured CO2 for permanent storage at Northern Lights, making this one of the largest BECCS projects in the world. You can also see the pipe bridge that will transport the flue gas from the biomass heat and power plant to the capture plant. It was just a few weeks ago, when this pipe bridge was successfully installed over a major road in Stockholm. The project continues to progress according to plan with targeted startup expected in late 2028. Capsol's technology will enable the removal of approximately 800,000 tons of CO2 annually. This is equivalent to roughly all road traffic emissions in Stockholm. Our partners are playing important roles in the project.
Saipem, with whom we signed an industrial collaboration in Q1, is leading project execution as EPC contractor. Everlens, another Capsol partner, is supplying the core compression package, supporting efficient flue gas handling and energy recovery at industrial scale. Finally, zooming out, we see a significant wave of CCUS projects emerging globally. In this forecast from Rystad, operational CO2 capture capacity is expected to grow substantially toward 2030, reflecting the large number of projects currently advancing through engineering and construction. While timelines for many large-scale CCUS projects have shifted to the right, overall project momentum is remaining steady. Capsol has positioned itself for this upcoming market through focused commercialization efforts through the past several years, including paid customer engineering studies and demonstration campaigns. Our positioning has been further strengthened by the milestone achieved by the Stockholm Exergi project, which reached final investment decision last year.
I need to highlight that this project was one of only four major publicly announced post-combustion carbon capture projects globally to achieve FID in 2025, and it is also the first project of its size ever to use a non-amine-based capture solution. We are so proud that Capsol and its HPC solution was selected for this landmark project. With our successes, Capsol is establishing a growing lead in low carbon power and industrial decarbonization. Now I want to hand the word over to our CFO, Bjørn Kristian Røed, for the financials.
Thank you, Wendy. Turning first, then to the P&L. The quarter continued to reflect a slower market environment and longer commercial decision processes that has previously been communicated by Wendy. The company did not generate revenues from any CapsolGo campaigns apart from a smaller prepayment, which naturally impacted the financial results, given this is our biggest revenue stream as of today. Going forward, the start of the CapsolGo unit at Dyckerhoff successfully launched into the early parts of the second quarter. That means that the gross profit from this demonstration campaign will therefore become more visible into our second quarter results and into the third quarter as well.
In response to the slower decision making, Capsol has proactively adjusted the company's cost base during the quarter to better align with current market activity and also to preserve financial strength. Adjusted for the positive impact of Skattefunn in the previous quarter, that was at roughly 3 million NOK with no cash effects. Operating expenses in the first quarter was down by 3 million NOK. And further on to that, we should expect to see further effects of these cost reductions into the second quarter as our cost base continue to be closely monitored on a daily basis.
To conclude, reported EBITDA of minus NOK 80 million, which was fairly in line with the previous quarter, where the lower revenues was in large counted by lower cost levels as well. Turning to the balance sheet, I could say that the protecting and strengthening the balance sheet has been a key focus for the company over the last six months in light of the slowdown in customer decision-making. Cash position ended at NOK 65 million in the first quarter, and the cash position was improved by our first proactive measurement by successfully raising NOK 45 million of equity in late January. This transaction shows strong support from both existing and new shareholders in Capsol.
The second measurement concluded occurred after quarter end, where we concluded a refinancing of the company's debt structure. As shown on the balance sheet, a significant portion of the company's debt facilities was previously maturing in 2026, which created a necessary short-term pressure on liquidity and our financial flexibility. The refinancing materially improves the liquidity position through lower near-term amortization requirements, significantly increased liquidity flexibility and an extended debt maturity profile. Going forward, in light of the revolving credit facility, available cash in our balance sheet will, as a consequence, be lower going forward. Overall, we believe the company now has a substantially stronger and more balanced financial platform going forward. In the weight of the inflection point for greater revenue contributions, this will at all time be a focus and be properly addressed by the company.
Diving a little bit further into the details on the refinancing. The refinancing simplifies the company's debt structure by consolidating three existing facilities into one revolving credit facility, and this is then combined or alongside the existing InvestEU backed loan that was that was concluded last summer, meaning that we now have two separate facilities instead of four. As a result of this refi, debt amortization in 2026, as highlighted on the on the graph to the left, is significantly reduced, and the same goes for the company's minimum liquidity covenant. Amortization and covenant improvements combined unlocks meaningful liquidity for Capsol through the slower market environment seen so far in 2026. The revolving credit facility also provides improved flexibility through repayable and withdrawable commitments, allowing the company to manage liquidity and financing costs more efficiently over time.
Consequently, the company has repaid the RCF in full, which means average interest costs will come down as long as the RCF is not utilized. We believe this refinancing represents an important strengthening of the company's long-term financial flexibility, and it reflects continued support from a leading financial institution. To continue on the U.S. opportunities we see. I'm pivoting then basically from protecting the downside, which has been a focus on the previous slides, to a key driver for what we see as commercial upside from a financial perspective. Wendy walked through the demand backdrop and the structural shifts we're seeing in the U.S., particularly driven by utilities and data centers and its need for immediate low-carbon power.
What I'll show here is how that translates into the financial incentives for utilities and large power buyers to actually deploy Capsol's technology. This is a simplified example of a 62 MW gas turbine at a utility, illustrating the revenue stack that can be unlocked when you combine high utilization with carbon capture. The key point is that this is just not a decarbonization solution, it's a way to materially increase revenue per asset for the utilities. First, we have the 45Q tax credit, which today provides around $85 per ton of CO2 captured and permanently stored. For a turbine of this size, that translates into roughly $24 million-$26 million annually, showing this as a range of, obviously because there are different outcomes from different facilities. Second, and equally important, is the electricity revenue.
By enabling baseload operation, you significantly increase utilization. Here, illustrated at around 90% capacity factor, that drives $30 million-$45 million in power sales on the typical PPA assumptions. On top of that, we're increasingly seeing a premium for dispatchable low-carbon power, particularly from data center operators. That can add another $5 million-$50 million annually. These are significant numbers and adds to the business case for these utilities. In total, you're looking at a revenue stack in the range of roughly $60 million-$85 million per year for a single asset. Typically, utilities have a portfolio of these simple cycle turbines, where stopping at one turbine rarely makes economic sense given the operational economics, but also from a CapEx synergy perspective.
This shows that the driver is not just compliance or ESG for that matter, it's pure economics. Utilities can increase utilization, stay within emission constraints, and significantly expand revenue from existing infrastructure. To summarize the financial section, before handing the word back to Wendy for concluding remarks, the first quarter was eventful, also from a financial perspective. I think we can say that Capsol proactively adapted to strengthen the balance sheet and also continued its dedicated work to position the company for commercialization in the times ahead. Over to you, Wendy.
Thanks, Bjørn Kristian. In closing, Capsol is continuing to strengthen its position in two highly attractive long-term markets, low carbon power and industrial decarbonization. During the quarter, our first commercial CapsolGT project in the U.S. continued to progress according to plan. Our multi-project approach in cement gained further traction, and Stockholm Exergi moved further into execution as a landmark industry project. At the same time, the refinancing strengthened our long-term capital structure, while we maintained financial discipline. Overall, the quarter reflects continued commercial momentum and growing market validation of Capsol's technology platform. We're just at the beginning. The opportunity for us to serve the CCUS market keeps growing, and we are proud to be growing along with it. I want to thank every one of the Capsol team who work with passion serving our customers. I also want to thank our partners.
Together, we are building for the future. Thanks to our investors for your continued commitment to Capsol. I will now pass back over to you, Jacob .
Thank you, Wendy. A reminder to submit your questions using the Q&A function. The first question is best answered by you, Wendy. You mentioned the large opportunity set for simple cycle gas turbines at utilities in the U.S., and a conservative estimate of around 300 turbines. How do you go from that large opportunity set to the 300 turbines?
You know, that's a great question. We were trying to illustrate, even with a conservative view of that market, we still have a substantial opportunity of 50 million tons of CO2 emissions that could be captured per year. We've basically taken that conservative view by looking more closely at where the transport and storage infrastructure for CO2 is available and would be ready for projects in the nearer term. This sizing of the market or this estimate of the market can certainly increase as storage and transport continues to develop in the U.S., and we do see positive signs for that. But we're just trying to illustrate that we can be realistic in our market outlook for the simple cycle gas turbines in the U.S.
Yeah. We have a question, best directed at Bjørn Kristian. What was the head count at the end of Q1?
At end of Q1, we had 38 FTEs. Of course, as you, as we pointed out in the presentation, we also did some short-term layoffs as well. That number is expected to come down the coming quarters. We'll see if we are, you know, welcoming these colleagues back if activity picks up. 38 is the short answer.
Thank you. Next question is for Wendy. Do you provide a solution for CCGTs?
CCGTs as in Combined Cycle Gas Turbines. We have a solution that actually takes high temperature exhaust from simple cycle gas turbines. On a CCGT, the heat is already being reused in what's called the combined cycle plant. Typically for those types of plants, you'll the solutions you see out there are amine-based, and this is not an area that we are focusing on. You know, I think what is really important to highlight is that as power is being deployed now, the most quick deployment of power for data centers and the utilities is now smaller aeroderivative turbines, the simple cycle turbines as we've highlighted, and gas engines. The bigger combined cycle plants, even though we're not providing a solution for them, are ones that will take longer to build.
This is why we've also ranked the ability to get this power to the market more quickly. It's a higher ranked on the one analysis that you saw in the presentation. In short, we focus in on being able to provide more power on simple cycle turbines with our solution while decarbonizing that gas power.
Thank you, Wendy. Next question is for Bjørn Kristian . How much debt did you pay down in connection with the refinancing, if any?
We did not pay down any debts in connection with the refinancing. What is, you know, valuable to maybe take a look at that this was concluded after quarter end, meaning that the facility size represents, you know, roughly 4 million of higher debt outstanding compared to what we paid down in the first quarter, where we basically recouped the amortization on these three facilities that was refinanced into a higher level compared to what you see in our balance sheet and the debt repayment in the first quarter that you can see in the cash flow.
Thank you. Next question is for Wendy. What other solutions are being used to capture CO2 on gas turbines?
Yeah. It's a great question. There actually are not very many solutions out there that can do this well today, and that's because the CO2 level in the exhaust of a gas turbine is very low concentration, so it takes a lot of energy. There are some projects out there that have been announced using amine-based solvents for capture of the CO2. This is the reason why Capsol sees a big opportunity in the gas turbine space is that we are providing a unique solution where we can actually take the high temperature exhaust and use that energy to power the carbon capture cycle. As shown in the economics presented by Bjørn Kristian Røed, we can generate extra power that is value additive for the customer.
We are not just providing a capture solution, we're providing a low carbon power solution that is quite unique in the industry. We are really well-placed to benefit from that opportunity in the U.S.
Thank you, Wendy. With that, there's no more questions. We end on that note. Thank you all for listening in and showing your interest in Capsol. Enjoy the rest of your day. Thank you. Goodbye.