Hi, everyone, and welcome to Cloudberry's third quarter 2021 presentation. Please, everyone, use the mute when you're listening in, and we will start in just a short time. Thank you for attending this presentation. My name is Anders Lenborg. I'm the CEO of Cloudberry, and together with me here I have our CVO, Christian Helland. We have prepared a short presentation for you that we would like to run through. I will start off by giving an overview of Cloudberry and the latest highlights from the last quarter. Also a short update on our operations.
Christian will take over and run through the numbers and the financials, and then we will end up with a short presentation of the outlook for Cloudberry and the sector. All in all, I think we will be through this in the next 20 minutes or so. Starting off with giving you an overview of the company. Cloudberry has some special features. As you can see here on the right side, Cloudberry is both a development company, develops renewable project, but it's also a owner of producing assets and renewable assets. We do believe that a combination of both development and owning the asset is a positive combination for the company.
We can have the growth in the development company, and we have also the long-term cash flow in the production portfolio coming into the company and funding also new development projects in our pipeline. We believe in being a local independent power producer, being focused and lean, and we do have a development team in-house. We think it's important to have full control over our own development and pipeline. We also think it's important to keep the assets also to have a long-term cash flow funding the company. We do also have a special feature in being a listed company. We listed last year on Euronext Growth, and we're uplisted to the fully regulated market at Oslo Stock Exchange earlier this year. I will now show you the status of our portfolio.
Anders, just that we hear a lot of noise, so thank you everyone for muting if possible.
Thank you. Perfect. This is one of my favorite slides. It says a lot about Cloudberry and the drive we have and what we have been accomplishing over the last couple of years. You see here on the left side, the production portfolio. The production portfolio is the dark blue and light blue dots. Today, we have 20 power plants in that portfolio. 21 of them is currently producing, and five of them are under construction. The ones under construction is two wind farms, one in Norway and one in Sweden, and we have three hydropower plants under construction in Norway. They will all come into production later this year or over the next year.
On the development side, we have a diversified portfolio. It's diversified on both, hydro and wind, both in Norway and Sweden. We have also a portfolio with different maturity. We have project that we are currently working on the procurement phase, and with concession construction permits. We have also greenfield early stage projects in our backlog. Our backlog is the project that we have exclusivity to, where we have entered into land lease agreements or hydro agreements and so forth. On top of the production and development portfolio, we have a pipeline of projects. Here we show the offshore pipeline. We have also onshore pipeline of project that we are always looking at. We will see probably project coming in from the pipeline also into the backlog or on the production side. We are quite active also in the M&A market, and we are also currently looking at structural possibilities in the markets.
Moving on to the highlights. We are very happy to be able to present our first positive EBITDA result for the third quarter. That is much driven by the numbers you see on the right side. You can see that we have had a significant ramp-up of our production portfolio. From last year, only 3 MW, to today, 53 MW. With the project we have under construction, that will more than double by third quarter 2022. At the same time, we are happy to be able to deliver all our plan. We have been through some difficult times. We have had some issues, some COVID issues also all our projects. We have been able to solve all them. We are now currently delivering the projects according to our plan and what we have communicated earlier.
What is new is that we have decided to establish a new business area. We have had a onshore and offshore development team in Sweden, but what we have now decided and also have started to build is this new business area, Cloudberry Offshore Wind. We are very happy to have signed Charlotte Bergqvist as head of this new business area. Charlotte has a long experience with offshore wind and is well known in the Swedish energy and renewable markets. We will hear more about this going forward. One of the projects that we have in our offshore portfolio is the Stenkalles project in the lake of Vänern. We were a very early mover into shallow water in Sweden, and this is a project with concession. We will hear more about this going forward. We are hoping to have a FID on this project next summer.
This is our portfolio as we speak. I think this overview on the left side here gives you a good impression of what we are doing. We see the producing assets here in dark blue, mainly hydropower. We have the ones under construction in light blue, where we have the two wind farms and then two hydropower plants. You see on the light red we have the construction permit project that we are currently working on getting into FID. The first one would be our shallow water project at Lake Vänern, 100 MW. We are awaiting grid capacity for the Duvheden project of 60 MW. We hope that this capacity issue is out of the way during next year, and we can then start to the procurement phase. Duvheden and the Vänern project, they're both in SE3, which is a price area in the south of Sweden.
Yeah. A little bit more about the Cloudberry Offshore Wind. You see here on the right side, we are at the Lake Vänern. We are looking at the wind farm that is already in production in Vänern. Our project will be next to this, and we will be able to use some of the infrastructure also from this wind farm. We see that it's a good time to boost the offshore portfolio.
It is finally things are happening in the Baltic Sea. With our Stenkalles project, we think we are perfectly positioned to be able to take much of this knowhow and knowledge we have from this shallow water in Vänern into the Swedish sector of the Baltic Sea. We will find many of the same-
Characteristics.
-characters as in Vänern. With us, we have Ventolines, which is a Dutch company who have been assisting on the Fryslân project, one of the largest shallow water projects in the world. We have, as I said, we plan for an investment decision next year, probably around the summer. The Baltic Sea is interesting for us because you have a lot of shallow water potential in the Baltics. We have a potential there of over 90 GW and around 20-25 GW in the Swedish sector. Out of this, we see a pipeline of around 2.5 GW for Cloudberry.
In all we do, we integrate our ESG and sustainability focus. We have a sustainability report that came out last year, and we are currently working on implementing our sustainability goals in the organization and throughout the company and in our decision-making. We will also see our new ESG report will be out with our annual report next year. We do focus on local value creation, and we will see example of that when we come out with our ESG report. We are currently working on the project where we do involve a lot of local stakeholders and try to develop these projects as sustainable as possible. I give the word to Christian, who will take us through the financials.
Thank you, everyone. Before jumping into the details, I only have three slides, but I will just step back one year and remind what we said a year ago that we were gonna focus on three things for 2021. It was scaling our asset base and scaling our production. It was to remain with a strong balance sheet to be able to grow and have maneuverability in the local Nordic area. The third one was profitability. This first slide shows the first two ones that we've been able to do to scale our asset base. The project has been delivered more or less according to plan.
We got all the, as Anders showed, the hydro project has been delivered. They're now also producing. We also took over the Usma asset here in July. Strong development in asset base and also the Odal project is now under construction and part of the assets. At the same time, we've been strengthening our balance sheet significantly. As Anders said, moving on to the main list in June, where we raised about NOK 1.1 billion of equity. We're well-funded for the portfolio. As we've written here, we are fully funded for more than 220 MW.
We also have a strong cash position. We did the last investment in Odal in July, the financial close there. We're partnered there with Norway's main pension fund, KLP and also Akershus Energi. This will be coming on stream. First power is expected before year-end and full operation before the 30th of June next year. At the same time, we always had a focus on strong balance, and as you see, very low debt. As of now, we have strong flexibility to draw down debt. We have a good facility with SR-Bank, which we also hope will be extended going forward. As you see, a lot of flexibility to draw down debt with our new assets coming into production.
The profit and loss. For us, it's very important to show both consolidated financial IFRS and proportionate financials. Proportionate is for us very important and is the internal tool for us decision-making and also shows investors much more what's going on in the company. Odal and Forte are our two largest investments. There you see we own them 33% and 34%, so it's important to see the relative revenue we get from these two investments. When we talk now, we always talk proportionate financials, including these assets. As you see, significant growth in the revenue. Yes, prices in the Nordics have been up strong prices. On the other hand, it's been a quite dry quarter. We again see how important it is to have hydro and wind over time, where you can have very difference in regional rain and also wind.
When we get our production up, we'll also see a much more robust production over the year. Hydro normally producing better in the summer, fall, winter, and wind normally producing better in the winter season. Yes, and a milestone for us in delivering the first EBITDA positive black numbers also was a big milestone for us. As you see, production coming up, going from 3 GWh last quarter in 2020, or in Q3 2020, to 35 GWh in Q3 this quarter. A tenfold in production.
This is to show the main segment, which is the production segment. Again, more into details here, but revenue obviously scaling up significantly from last year, both the revenue and the EBITDA, and we're also showing more on the 12-month running. It's easier to see how this looks on a yearly basis. We're mostly exposed to spot market or spot electricity prices. We have about 28% in fixed during Q3. For us, it's important to have a balance between spot exposure and PPAs. Again, the banks has been. We have very good flexibility with them, so there's no obligations for us to fix prices. This one's very static.
Yeah.
Maybe someone needs to mute. Thank you everyone for checking your muting. There we go. Thank you. Again, for us scaling production so far this year, 70 GWh, and we all want to remind you that when Odal now, the first lifting with the Siemens has taken place. We're starting to get closer to production there. That project alone will add about 176 GWh for Cloudberry's share now over the next year, and Horn's expected to give 74 GWh . Again, we're significantly scaling this over the next year. Others maybe you want to take some words about the market before we conclude.
Thank you, Christian. Just have to start with this power plant that we are currently constructing. It's almost full. This is the next hydropower plant coming into our portfolio, hopefully later this year. We have already started commissioning, and this is a power plant where you have a reservoir upstream, and you will have a production profile that covers the whole year. We are very excited about this project. As you can see, it has three turbines, and it is currently on plan. As Christian said, yes, we have seen some changes in the market.
If you see the picture here on the left side, this is from the Norwegian Water Resources and Energy Directorate, and they have made a long-term price forecast. That is well up from the last forecast, basically up EUR 10 from the last forecast. We see also other players in the market there. The long-term Nordic price forecasts are up quite significantly. We can also see here the different price areas in Norway and Sweden where we have our projects. We see that the prices are highest in the south of Norway and south of Sweden, and that's due to many things.
There you have the consumption, and we have also the interconnectors out of both Sweden and Norway. The interconnectors have now removed the bottlenecks that we have had historically towards the continent and towards the U.K. It's going to be exciting to see how this will further influence the price level in the Nordics. The cable to the U.K. just came into production the first of October, and then will be scaled up towards maximum of 1,400 MW over the next six months. This is very positive news of course for us.
We also see a growth in new power-intensive industry, both in Sweden and Norway. We see that it's mainly driven by new hydrogen projects, battery, data centers, and so forth. This is all good news for a power producer. It's also, of course, the general electrification of the society that will be important to follow going forward. Here you see our Odal wind farm that Christian mentioned. The first turbine should be producing the electricity later this year, and all 34 turbines producing electricity by summer next year. This is a project that is in the price area of south of Norway, NO1, and that generates higher energy prices because of the lack of new renewable energy.
We are very happy to be able to deliver on our goals. We have delivered on both on the positive EBITDA, but also to bring the projects further and into production. You will see that over the next year, that there will come in more hydropower, but also more wind power in the mix. We are looking forward to see more of our offshore wind portfolio and establishing the team in Sweden there and further develop the projects. All in all, we see it's positive outlook for Cloudberry. Of course, we have some issues with higher commodity prices. We see also supply and capacity constraints. There has been some COVID- 19 issues. All in all, with the positive development of the power prices and the increasing demand for new renewable power, we have a positive view on the future, both for Cloudberry and the sector. That was it from us, and thank you for attending this presentation, and have a nice day.
Should we do some questions, maybe others?
I know there are three questions in the chat, but also please everyone feel free to unmute your mic and ask the question if you have one. We could probably start with the ones in the chat. If you can bring up the chat.
Mm-hmm.
If there are any questions from the audience, please feel free to unmute your microphone and ask.
Oh, it's the most silence it's been for the whole presentation. Yeah. Please elaborate on your PPA strategy.
Yeah.
Yes, I can take that. Yeah, as mentioned, we have secured 28% today. For us, it's very natural with the larger wind projects in Stenungslid and possibly also Odal to do some hedging to also lower financing costs. We're not obligated to do it, but we said to the market that over time we will have a balance between spot pricing and fixed pricing. Normally we see significant increase from corporates looking at securing green energy for the next decades. With these larger projects both in Odal, in Stenungslid, and Horn, it's obviously interesting times for us to discuss with corporates for long-term offtake agreements. We haven't been public with any of these dialogues yet, but we'll- i t's just expected when we get closer to production of the larger projects.
What we can say is that the quotes are going one direction. We do want to have flexibility, as Christian said, to be able to use the market when we feel that it's right for Cloudberry. That has also to do with having the strong balance sheet as we have. Gives us flexibility when we want to and when or how much we want to secure with PPAs.
I saw there also, Anders, it came up, M&A activity.
Yeah.
It came down again.
Yeah.
The question was, how do you see the M&A market for hydro assets?
I think it's. I mean, hydro assets, we do focus on Norway. We have all our hydro assets in Norway. We have some hydro assets, of course, we see some hydro assets that could be interesting also in Sweden, but for the time being we are in Norway. The market is quite active. We do see a lot of hydro projects, some in operation, but also development projects that with and without concessions. We are looking at many of these. On the producing assets, I would say that the competition is quite strong.
We have one more question about supply chain issues, and can you please elaborate around this and how or if it affects your business?
I think it's in Odal, one has obviously seen some with Siemens with shipments out to China. I think it's the project's been running well and obviously good control, but some components delayed. We believe it will have minimal effect on our equity IRR. Obviously power price is significantly higher than expected, so in total it's most likely a significant plus, but we'll get back to it when it's up and running. We also see obviously turbine suppliers. We were very. With the Horn project, we were very had a little time in June to make sure we got the turbines with the old price, and we secured those turbines. So that was, w e were very pleased that we did the fundraising, so we were able to do that project and fully finance that project in June.
Going forward, prices are up. Copper, aluminum prices are up, so we can expect, for example, cables could be an issue, which we're thinking a lot about and also planning very far ahead for Stenkalles with installation in 2023, 2024. We take, obviously working closely with Ventolines, so it's been also in the market to take down project risk significantly with good planning up front to take away supply chain risk. Yeah, it's a complex picture, but things are starting to move again and you're getting the components for Odal out of China. It's more some delays on certain parts than a problem as of now.
As Christian said on the new project coming into the construction phase, we know that the lead time for several components such as substations and so on are up and close to two years. This is something that's solvable with a good planning of the projects.
We have one follow-up question on the hedging strategy. Do you use derivatives or insurance products to mitigate weather risk?
For us, we are, as we say, a KISS company, keep it simple. It's an internal strategy we always have. Obviously we see its variations in weather, but for us, we balance this risk by having a good balance sheet. We know that the standard deviation of wind over time is about 8%-9%. We know it's higher for hydro, but this is the reason why we have different regions. We have wind, we have hydro there, and we have different regions. For us it's a cost to do these hedgings. Rather we have a stronger balance sheet, so we're able to control this risk and return better returns to our shareholders over time.
Okay, there are no further questions in the chat. I guess maybe we can wrap this up.
Yeah. All right.
Yeah.
Thank you everyone.
Thank you so much for attending our presentation, and have a nice day.