Welcome. Our dear audience, welcome to HydrogenPro's First Quarter Presentation today, and thank you for your participation. My name is Elling Nygaard, and I'm the CEO in HydrogenPro, and I will work through this presentation together with my good colleague and CFO, Martin Holtet. This is the agenda for today. I will start to introduce HydrogenPro and talk about the market outlook. Martin will continue, talk about the first quarter business updates, about the figures first quarter, and the finance. I will continue with the strategy to HydrogenPro and talk about how we will become number one provider in this market. I will end up to summarize, give you some takeaways from the presentations before the Q&A. I will start to talk about some of HydrogenPro's core advantages, then talk about the tremendous market we are entering into.
First of all, HydrogenPro is delivering large scale hydrogen production plants to the global market. We have moved from a distributor position to a full-fledged OEM supplier in the global market. With leading electrolysis technology, our vision is to become number one provider in this large scale hydrogen production plant market and to accelerate global decarbonization by rolling out our technology and system solutions into the global market. This is our four major strategic focus areas. Technology leadership by concept and technology improvement and innovation. Global footprint together with large industrial players in the market. Scalability, easy to scale, standardized and off-the-shelf solution. Of course, full-fledged life cycle partnering, building recurring revenue. Hydrogen market today is mainly fossil hydrogen or gray hydrogen. HydrogenPro is delivering green hydrogen.
This is simple process, splitting water into two gases, hydrogen and oxygen, by renewable energy. The market, main market today is industry sector like refineries, fertilizer industry, steel production, chemical, et cetera, and we have large market, Power-to-Gas. Today, natural gas transforming to first step, blending in hydrogen, and second step, only clean hydrogen in the whole pipeline. We have the transport sector, from fossil fuel to synthetic fuel, to hydrogen, and to ammonia. We have the largest market is hydrogen to balancing the grid. Hydrogen as a energy carrier, balancing the grid together with renewable energy like solar and wind. Use hydrogen to equalize the difference between production, energy production and energy demand, and this is a large market where hydrogen will be the storage in the energy mix system.
The demand of hydrogen for in 2020 was 80 million tons. In 2030, this will be more than 200 million tons. In 2050, it's more than 50 million tons. Out of this, 60% will be green hydrogen in 2050. This means that 20% of the carbon abatement will be by hydrogen, and 22% of the global energy mix will be hydrogen. This is a huge amount. In gigawatts, to produce all this hydrogen, you need 3,600 GW production capacity have to be built until 2050. This means 120 GW every year from now until 2050. In investment, this is $2,500 billion will be invested in this market from now until 2050.
This means more than $300 million every working day from today until 2050. HydrogenPro will take a strong leading position in this market.
We have business update. Please, Martin, take the floor.
Thank you, Elling.
Martin, this has really been an exciting start of this year.
What a great start to the year. We have now matured on the technology, operationally, and not the least, the award of the large purchase orders in April. A fantastic start.
Yes. Right. An insane market potential is in front of us now.
No question about it, and that's why I look forward now to walk you through the business update. Because today I have a lot of great news I want to share with you. The highlights of the business update during the first quarter. Our financials, we have a low cash burn rate and a well-capitalized balance sheet. In it's the start of April, we were awarded a purchase order which has an initial value in excess of $50 million. This is one of the largest electrolyzer contracts ever recorded. In addition to that, we have also signed a long-term service and support agreement. Later in April, we entered into a purchase order with Mitsubishi for a large electrolyzer with an amount of $3 million to be located in Japan.
We have now run a successful initial verification test results of our advanced electrode technology at our technology center at Herøya. This technology significantly reduces the cost of producing green hydrogen. It's my pleasure also to say that now we have completed the fabrication of the largest electrolyzer in China that will now be shipped to Norway. The active sales pipeline as of end of the quarter stood at 12.7 GW, which equates to a total bid value of $6.6 billion. Let me walk you through the Q1 financials in more detail. During the quarter, we recorded revenues of NOK 8.8 million. Those revenues are then mainly related to the fabrication and the delivery of the electrolyzer being fabricated in China and a couple of ongoing FEED studies.
The adjusted EBITDA, meaning excluding non-cash operating expenses, ended at NOK -15.4 million during the quarter. The reported EBITDA came in at NOK -18.3 million, and the net loss was NOK 22.6 million. We have a low cash burn. The cash balance ended at NOK 368.7 million, as of 31st of March. During the quarter, we have had a cash burn of only NOK 13.6 million, and we have no interest bearing debt. Of course, the financials will now dramatically change when we start to deliver on the recently awarded purchase orders. Elling briefly presented the strategic pillars of the company, and he will walk through those in more detail in the next section. Our growth plan is very, very clear.
We want to grow this company through a partnership approach in combination with a very focused capital deployment plan. The capital deployment plan may consist of four main components. Number one being supply chain and fabrication together with large reputable industrial players. Our investment in China has enabled us to roll out a global fabrication setup. Number two, technology and innovation. We want to take the role as a technology front-runner and continue to invest in innovation and technology. Number three, organization. We will also continue, of course, to scale up the organization in line with anticipated steep growth in this market. Number four, there is likely to be some working capital need on execution of the larger scale projects. Now, the landmark purchase order entered into with Mitsubishi.
On 4th of April, we signed a purchase order with Mitsubishi for 40 electrolyzer systems with a total value then of in excess of $50 million. This will be fabricated at our fabrication facility in China. The plant will be located in the U.S., and the main use of the green hydrogen will be for power generation. Very important to bear in mind, on top of this, we have also signed a long-term service and support agreement with a duration of 10 years. Why is that important?
It's because, as Elling presented, it's one of our strategic focus areas to be part of offering life cycle services to the customers to generate recurring revenues. Later in April, on the 19th of April, we signed the purchase order for a large electrolyzer approximately the same size as we have fabricated now in China. Contract value of $3 million, and that will be located at the Takasago hydrogen plant in Japan. This is a breakthrough for us as well because Japan is a very, very promising market as well. Some more great news I want to share with you today.
We have now run successfully initial verification result test runs of our advanced electrode technology on our technology center at Herøya. The efficiency that has previously been simulated in the labs, we can now say that they have proved that with the initial test runs. Now the next phase is to do longer term testing of this technology. Of course, bringing the cost of producing green hydrogen down to outcompete fossil fuels is very, very important. Even more great news. We have now finally fabricated the world's largest electrolyzer in China. Of course, the year started with the COVID-19 restrictions with a lockdown at the fabrication facility.
During the last few weeks we have reopened, and now we have finalized the fabrication of the electrolyzer. That will now be shipped to our headquarters at Herøya, Norway, where it will be installed and commissioned. When this is completed in China, we will now start to prepare for the delivery of the two recently signed purchase orders. On the picture you can see, on the left you see the cell stacking process. On the right side you see the final electrolyzer. With regards to the establishment of the legal entity in China, the paperwork is now signed and done, and we're now waiting for the approval process from the Chinese governments.
The plan now is to have that legal entity up and running in June or by July latest. When we have full production capacity in China, we will employ approximately 100 people at the factory site. The active sales pipeline was at 12.7 GW at end of the first quarter, which equates to a total bid value of $6.6 billion. This is then spread over a total of 97 projects. On top of this, we are now doing FEED studies, because now we see a clear trend with large energy majors entering into this market. It's definitely important for us to position ourselves for these type of players. These are typically the.
Of course, they are large companies, but they also have very robust balance sheets and not that dependent on the funding schemes as many of the early movers, typically smaller companies, were. My last slide on the business update. Of course, public commitments is an important driver for green hydrogen. Going three years back, there were only three countries with a developed hydrogen strategy. Now, we have more than 40 countries with a developed hydrogen strategy countrywide. Last week we saw a big step up in terms of public commitments when the European Commission announced the REPowerEU Plan, where it will be committed EUR 300 billion to invest into renewable projects, 10 million tons and 10 million tons of hydrogen by 2030.
One thing is sort of the total market size and for renewables and for green hydrogen in particular, but also the speed. The EU now has accelerated the permit process in order to speed up the process to build more green hydrogen faster. That sums up my section, and now back to Elling to walk us through the strategy section.
Thank you, Martin. Interesting figures you are showing. I will talk about HydrogenPro's strategy today and the next years. How to become a number one provider in this large market. I will start to talk about the strategy, four core elements I started in my first presentation. This, that we are technology leader through our high pressure alkaline technology and the world's most efficient electrode technology. We are scaling up together with large players in the global market, scaling up production capacity, and we are scaling up engineering capacity. Our concept is highly scalable, off-the-shelf products, standardized and modularized, easy to scale according to the plant size and easy to scale according to market requirements, volume in the market, and to take market shares.
The fourth is full-fledged life cycle partnering, where we are focusing on targeting recurring revenue together with customers of the whole installed base. Yeah. I will start to talk about this electrode technology, advanced electrode technology. This gives us 14% energy savings during operation. On the left picture, upper left picture, you see this electrode technology in a microscope. So, a special nickel coating doing this efficiency. On the curve below, on the curves below, you see the highest curves is without this nickel coating technology, and the lowest curves is with this coating technology. The delta between these curves is energy savings. That means 14% energy savings.
On the lowest picture, you see long-term testing of this technology in an electrolyzer, where we have this nickel coating installed and is running for long time period. Electricity is by far the largest cost in a Levelized Cost of Hydrogen perspective. You see this pie on the left side, where electricity is between 70% and 90% of the total cost of the plant, life cycle plant. The investment cost and other OPEX cost is between 10% and 30%. This is depending on the electricity prices, the size of these pies. On the right side, you see some examples. In the middle, by $50 per megawatt hour, you will have 100% investment savings. That means over 12 years you will save all the cost, investment cost through operation and reduced energy costs during operation.
On the right side of this, you see $80 per MWh. That means you will save 1.6 the investment costs or, you will have a payback time of seven to eight years. The electricity prices in Norway for the time being is about $65-$70 per MWh for a long-term contract as 10 years contract. We are in between this $50 and $80. As Martin mentioned, our fabrication factories in China and Denmark is running. They are operating, and we will have 300 MW production capacity within June, July this year. Now we are looking into the next step. The next step will be more than 1 GW production capacity and engineering capacity. This scaling we are doing together with large industrial players in the global market.
We are working with partners in North America, in Europe, and in Asia. This gives us global footprint, local presence and direct access to the customers and direct relation to the customers through the partnerships. We are focusing on standardization and scaling. On the left side, you see the core business to HydrogenPro, the core deliveries in all projects. This is a electrolysis cell stack itself and the gas separation skid. Both components is fully standardized, modularized, off-the-shelf solutions. On the right side, you see EPCs, auxiliary systems and electro systems, which we are doing together with large partners, like ABB, like Mitsubishi, like L&T and so on. This makes a efficient production and lower the costs, and easy to scale according to the plant size and to get market shares in the global market. HydrogenPro will build recurring revenue through long-term service agreements.
Services like digital cloud services, remote monitoring, operation and maintenance support, local maintenance and overall services will be in our portfolio. This will create accumulated revenue for the whole installed base, and it will be a huge part of our recurring revenue in the future and we are preparing this in these days. Sustainability is at the core in our business model and strategy. We have set clear goals within three dimension, people, planet and prosperity. We have made our first sustainable report for 2021, delivered together with the annual report this year. Yeah. I will summarize, give you some takeaways from this presentation. First of all, I will say this large purchase order we have got with Mitsubishi, more than $50 million and 40 electrolyzer trains. In addition, 10-year long-term service agreement, in addition to the project.
The sales pipeline is growing. It's almost 13 GW or $6.6 billion. The electrode technology reduced the energy cost by 14%. We have completed the fabrication on the world's largest electrolysis cell stack in our factory in Tianjin, and this will be shipped to Herøya this summer. We're expanding our factory and engineering capacity globally with large global partners, industrial players in the market in North America, in Europe and in Asia. EU have committed to invest EUR 300 billion by 2030 in the renewable energy industry, and they will accelerate their permit process. Thank you. Now we start Q&A. Martin, will you please participate?
Yes. Okay, let's start the Q&A session. One question for you, Elling, is related to the status on the H2V Dunkirk project. What could you tell us about that?
Yeah. First of all, we have finalized all engineering and we have done everything to fulfill our contract obligations, and now we are waiting for a final investment decision that we expect will come up second half this year, and we expect and hope that we start this project the end of this year.
Good. I guess this might be for you, Martin. What is the status of the process with the DG Fuels?
Yeah. On the DG Fuels project, the engineering study named FEL2 study has now or will be completed now during the next few days. Now they will enter into then a FEL3 study, even more detailed study in conjunction and with starting the financing process and the final investment decision is also planned before end of the year. They're making great progress on several of the key contracts including offtake and energy and feedstock.
Okay. Elling, I think this might be for you as well. You mentioned that an initial delivery of 40 electrolyzers. Does this mean that the project is bigger?
Yes. This is a first step, so the full step or the whole size of the plant is much larger. We don't disclose the total project for the time being, but yes, it's much larger.
Elling, we also talked about the fabrication plans, going forward. Where do you plan to go first? The U.S., Europe or in India?
All these markets is very important. It's very important. We are working very close with in all the territories for the time being, and we expect and plan to finalize this during this year so we can start building next year.
back to you, Martin. What do you foresee with regard to the capital need and the plans to raise funds going forward?
Okay. As you saw in the presentation, this quarter we had a cash burn of NOK 13.6 million, with a cash position of then close to NOK 370 million. Of course, if you extrapolate that, you would end up with a very long lead time. Of course, now we start to deliver on the projects, of course, with a margin. At the same time, of course, we want to grow this company. We have chosen a strategic path of vertically integrate into becoming an OEM player, which is of course a bit more capital heavy than our previous value chain position. We are doing this then in conjunction with large industrial players, meaning that we have a more asset light approach.
Okay. Another question for you, Martin, and that is, with regard to the contract with Mitsubishi, or this $50 million contract. When will you start booking revenues from that, in your books?
Yeah. We will start to deliver on those projects now. Of course, the main production upscaling will be during the second half of this year. The remaining impact will be from third quarter and onwards.
A question related to the efficiency of the electrodes. You mentioned that the efficiency was some 93% of the theoretical maximum. What does that mean actually?
Should I go with that one, Elling? I think just to simplify the answer to that is, of course, you can say the remaining 7% is basically the loss, the energy that you're not able to convert into.
Mm.
Into hydrogen.
Mm-hmm.
With sort of the current technology being hovering around 80%, we can lift that with an additional 14% with this technology.
Mm.
We are at 80% today. We are basically closing the gap then from, say, the energy loss, which is today approximately 20%, only down to then 7% with this technology.
A question related to your technology. The new electrolyzer technology you are researching, who is the owner of the technology? That is one question. How did you get hold of that technology?
Mm.
The second one. If you can answer on this one, how many people work with the technology development in the company?
Yeah. First question was about who owns the technology and the IP, who have the IP right, and that's HydrogenPro. HydrogenPro Norway owns the whole technology and all the IP rights. That's for sure. This is not patented technology, so we have to keep this secure, all the drawings and all what we are doing and to keep this secure, of course. In addition, we work with new patents for new development and new innovation. What was the third question, hey?
The third question was related to how many people does actually work with technology development in the company.
Yeah. Internally, we have some people internal in Norway working with technology development, R&D, our technology innovation department in the Norwegian organization. We have a large lab in Denmark and advanced surface plating technology factory. We have a large lab working with electrode technology, and there it's included, students from the university in addition to our employees. The third, we have some working for us in the Chinese office, working for the Norwegian technology and innovation department. Yeah.
Thank you for that. For how long have you been running the field test on the electrolyzer that proves the higher efficiency? Could one of you-
Yeah
Give some comments on that?
We have done lab test over a period of almost one year, or we started even before that. We installed this technology in an electrolyzer at Herøya in this spring, and we have started long-term testing. This has started, so we don't have this long-term. I mean, electrolyzer will run over years, and new development don't have this verification test over long period before or after many years.
Thank you. Then I think we are heading for the last question of this Q&A, and that is related to the operations in India. What is the timeline for the operations in India? Wesenberg.
Yeah. Our plan is to finalize all agreements and get all in place during this year, and this autumn, in fact. Then the plan is to build up the capacity, follow up after this agreement, everything in the agreement is in place. Next year, sometime we should have some production capacity in the area.
Okay. I think we have concluded the Q&A session.
Okay. Thank you.
Thank you.