Good morning. My name is Jarle Dragvik. I'm the CEO of HydrogenPro. Today I'm all by myself here in the studio. We are in the flu season, so unfortunately, we have some sick leave. I will present the whole presentation by myself today. HydrogenPro has stated for some time, and I would like to take some time to repeat it again, that we are a global provider of a market-leading, large-scale, green hydrogen technology and systems provider. It has been mentioned before, but I would like to take a little bit of time to explain a little bit further, why are we stating this? Why is this important in terms of positioning HydrogenPro?
Well, first of all, I think we can all agree that hydrogen production, compared to energy production, where you don't go via hydrogen, is a costly process. And because of its costly process, you need to have a large-scale production in order to gain the scale of economy. And we have the largest single-stack electrolyzer, which is suitable for the new renewable energy input. Most industrial applications for hydrogen, they would need pressurized gas. And if we compare our electrolyzer, which is high pressure, excuse me, if you compare with an atmospheric electrolyzer, it would need additional CapEx for pressurizing the gas, and which then again require higher energy costs, meaning higher OpEx.
In addition, the physics is on our side, where the efficiency of atmospheric will be lower, simply because the gas bubbles are much larger on the electrodes, and it basically takes more room, more space on the anodes and the cathodes. So with smaller bubbles, you get more gas out of the electrolyzer. So we already there, we have an advantage. In addition, our third generation electrode provides a 14% efficiency gain in the energy consumption. And I would also add to that, that an alkaline electrolyzer does not need or is not dependent on any rare metals. And that puts HydrogenPro in a market-leading levelized cost of hydrogen. HydrogenPro also targets industry, industrial applications and hard-to-abate sectors, enabling the energy transition through hydrogen.
What we are set up for is basically to enable the quality swings in energy production from renewable energy. Why can we do that? Well, first of all, the fact that we are high-pressure builds a stronger body of the electrolyzer, which means that, again, that it can take instant changes of power input from, as I mentioned, example, wind and solar. The operating range is also much wider and can be from 20%-100% over very short periods. For a long-term load, 40% can easily be achieved. If we look at the industry space that we are targeting and operating in, we are focusing on large-scale industrial applications.
Example for this is Power-to-X and grid balancing, which ACES contract, we will come back to, is a good example of. We have synthetic fuel for the airline industry, as example, with DG Fuels. And we have steel production, decarbonization of steel production, which the agreement with Andritz and Salzgitter is an example of. Looking back at the quarter that we just have behind us, first of all, we received a 100-megawatt purchase order from Andritz for 18 electrolyzer stacks. This order has now been confirmed as a confirmed order. Our revenue was up NOK 20 million, staggering 14 times the Q3 revenue. The ACES delivery is progressing very, very well.
We have already delivered the first 15 electrolyzers, which are in installation on site at the moment. The next 15 are on high seas, and the remaining 10 ready to be shipped in some weeks' time. The HydrogenPro partner, DG Fuels, entered into a strategic partnership with Airbus, strengthening the position of DG Fuels. Our 5.5 megawatt electrolyzer has been validated by Mitsubishi through various press releases, both in Takasago and at Herøya, the test electrolyzer we installed there. Last but not least, Terje Mikalsen was appointed chair of the board from October 4 on. As mentioned, the revenue was posted at NOK 220 million. Revenue growth is running well in line with the ACES delivery.
We had some increase in COGS, which has impacted the gross margin compared to last quarter. We achieved 10.2% gross margin. So I will come back to that further in a more detailed explanation. The adjusted EBITDA is also impacted by some production costs and warranties. And the gross margin and the adjusted EBITDA, both obviously impacted by revenue recognition. We had a cash position at the end of the quarter of NOK 133 million, but here it's worth also to mention that we already, at the end of October, had a cash position of NOK 235 million. So basically, the invoicing towards ACES is now coming back as cash.
Our order backlog at the end of the quarter was NOK 322 million. If we now include the Andritz, which was confirmed today, the order backlog is NOK 548 million. We also have ongoing several FEED studies. We are not listing these and cannot disclose all of those. But we have FEED studies ongoing, which are summarizing to a total capacity size of more than 1,200 MW. The FEED studies are expected to be completed by mid-2024, which is also expected FIDs. So a little bit more explanation to the numbers and headlines that we just went through.
So as mentioned, NOK 220 million in revenue during the Q3, which is NOK 83 million or higher than Q2, up 60%, more than 60%, and NOK 205 million higher than the same period in 2022. The group revenue was year to date NOK 440 million, compared to NOK 31.1 million year to date of 2022. As I mentioned, the gross profit has been impacted by some incidents that we had during the quarter. One related to the production and, without being too technical about it, but with an extremely hot summer in China, combined with some anti-corrosion measures.
This impacted some of the steel plates that we had, and we had to make provisions for those. That impacted then negatively the production cost. We also had. So we had some obsolescences, and also we had some warranties that we needed to provide for, which impacting the EBITDA. This, as a matter of accounting principle, the warranty provisions was NOK 11.5 million, ending the result with a negative then of NOK 19 million. This, together with some of the items below on the net profit, has a limited cash effect. And a few words to the net profit. Four point five million was offset against incentive programs and payroll payroll settlements.
The group also made other provisions, which are totaling NOK 6.7 million. These are mainly related to settlement with customer to buy back an electrolyzer unit. This has also, as mentioned, limited cash effect on the account. Cash flow ended at NOK 133 million. But again, just to illustrate, how the situation looks end of October, we ended at NOK 235 million. We reiterate, as we have done in the last quarterly reports, that ACES project is expected to be cash flow positive in second half. I also would like to mention that HydrogenPro is not actively commencing preparation for listing at the Nasdaq Stock Exchange, but we are continuously considering this as a possibility.
I will also comment a little bit more on that, towards or later in the presentation, when I'm focusing also on the U.S. operation. Yes, so Andritz confirmed that with a firm order for 18 electrolyzer. The contract value is about EUR 18 million, basically considering the delivery scope. The confirmed purchase order is then 18 MW, 18 electrolyzer out of the 5.5 MW cell stack, so totally 100 MW. Andritz will actually assemble the electrolyzer. We are providing all the parts, all the elements. We are supervising and assisting in the assembly, and Andritz is then delivering the electrolyzer to the final customer.
We will start production of this order towards the end of next quarter, quarter one. For those who are following Mitsubishi in the press and social media, you have probably already observed several press announcements during the last quarter, where Mitsubishi has confirmed the validation of the Herøya electrolyzer. They have also confirmed the validation of what we call the T-Point, the Takasago electrolyzer, which is now operating on a regular basis for a hydrogen conversion plant, and a grid connected to what's called a JAC gas turbine. This is now running constantly on a 24/7 basis and producing the gas that it's supposed to produce according to the spec. I already mentioned that the ACES delivery is going according to plan.
The ACES project is the world's largest green hydrogen energy hub. It's a $50 million contract for 220-megawatt electrolyzer. We also have an agreement with ACES of a 10-year service and support arrangement. And the plant was, is, as I mentioned initially, based on the high-pressure alkaline electrolyzer from HydrogenPro, which is then well-suited for the renewable energy input, which is based on a solar plant adjacent to the hydrogen plant. Also, during the quarter, Chevron announced that they have now acquired the majority in the ACES plant. DG Fuels, where HydrogenPro is an exclusive supplier for the 800-megawatt electrolyzers, which is for a sustainable aviation fuel plant located in Louisiana.
Air France, Delta, and General Electric has already confirmed their attendance in it. So the FEED studies are fully financed, and the whole project is about full financing. We have gone through the FEL studies. We are now in the FEL-3 study with an FID, which we expect now in the first half of 2024. DG Fuels was also announced that Airbus came in as a partner in the project. And also in a press release, the CEO of Airbus states here his strong belief in hydrogen as a future in the airline industry, and his confidence with DG Fuels.
I will encourage all of you, if you haven't done it already, to go into YouTube, where there is an interview with the CEO of Airbus, and where he is talking about the future of the airline industry and the hydrogen use in the airline, and his confidence and belief, both in the hydrogen as well as in DG fuel. We are picking up momentum in the U.S. But first to mention, in October, the Biden administration announced the selected regional clean hydrogen hubs. Several regional clean hydrogen hubs will receive grant up to $7 billion in government funding, accelerating production and use of low-carbon hydrogen. Five of the seven hubs accounts for two-thirds of the funding, will include green hydrogen based on water electrolysis.
The White House expects the seven hubs to catalyst more than $40 billion in private investments. These investments and these incentives will drive demand for electrolysis large projects. At the same time, right now, the companies which have been submitting their attendance in the hubs, they are now in the specification phase, also in specifying the CapEx and the investment details. That will now go through a DOE approval, and after the approval, they will go into a final round. At the same time, it is definitely a strong driver for the hydrogen industry, but it will still take some 18 to maybe 24 months before we see the actual money in action.
Then for HydrogenPro, I'm very pleased to announce that, Jeff Spethmann has accepted the offer as, CEO of, US Inc., our subsidiary in, in the US. Jeff has a very strong acumen, as an entrepreneurial executive and in business development, having grown businesses and business areas in, both large scale and also, small to mid-size, companies. Jeff will start, at the beginning of 2024 and excel further our activities in the US. We previously announced, the focus on the US, and then now again, to emphasize it's progressing with full force. We will get back to more details on this, but now it is about making the right analysis, identifying the opportunities, verifying CapEx required and the CapEx level, and excellent execution also on the current projects that we have ongoing and running.
We are conscious about managing our shareholders' investments in the best possible way, and we will invest as needed and raise cash when needed. What does this mean? Well, it means that the previously announced plan to build manufacturing facility in Texas is being reevaluated. It's still a valid option, but as I mentioned, to the point, making the right analysis and verifying the CapEx level, this is now reevaluated. We have also learned during our deliveries that shipping large equipment as electrolyzers and gas separator is a logistic challenge. Sea and train transport, as we have, adds additional complexity. And we also build it on life cycle partnership, which requires, as I mentioned, with ACES for service agreement, you need to have a operation close to the customer sites.
So it might not just be a matter of a large, full-scale production unit. It's more related to close proximity to our customers. We also need more visibility on the U.S. legislative framework and also the funding schemes, which we are now working on and looking further into. And the announced hubs announcements that I referred to is also expected to impact the demand and will impact the presence of the hydrogen producers. And the decision on requirement of local U.S. content is imminent. HydrogenPro's priority, then, for a U.S. expansion is, first of all, to have a flexible setup and then closer to our customer localization.
We will maintain our OEM position, but it doesn't mean that we need to have a full-scale production at every place or every site. We will simplify the transportation, particularly on the electrolyzers, and that we can ship it containerized. We will possibly source also from HydrogenPro China. Obviously, initially, we will do that, but we also know that there is a growing request for local partners and local content, which is then connected to the incentive schemes that I presented for you. So we are then also looking at, as I said, more flexible smaller units, which will require lower initial investment, and thereby shorter payback time. We will also reuse smaller units as maintenance and service installation.
And we are now also in discussions and setting up partnerships with EPC and engineering companies in the U.S. So conclusively, HydrogenPro aims to establish a delivering capacity in the U.S. in 2024. But I want to come back and present an update on further on this strategy for the U.S. expansion, as an extended presentation during the Q4 next year... for the next year. If that was, sorry, misunderstood, a Q4 2023 presentation, next year. So thank you very much, and then I open for questions.
Yes, Jarle, we have some, a few questions for you, and, let's start out with the France. According to your partner, H2V, all permits for the Dunkirk project has been obtained. Is still the supplier for this project, HydrogenPro? And why did, you not receive an order for this project?
We still have that arrangement. There was an order earlier with another H2V project, which was in partnership with another supplier. There's dialogue with H2V, but it's not an active project at the moment.
There's also a follow-up question related to this, and that is, is HydrogenPro still a partner for all other H2V projects in France?
We have our partnership arrangement in place, but it's not a partnership which is in active stage at the moment.
A few days ago, Fortum announced that they could not find a commercial agreement with SSAB. Is HydrogenPro still working on this project alone with Fortum?
HydrogenPro is working on the FID. So the FID will be completed and it's being paid for. And this is also something that Fortum will use as a basis for further their further development. Unfortunately, the agreement between the two partners weren't able to reach a common understanding. But I think it's give a good basis for Fortum to continue to exploit the hydrogen sector in the industry.
Where and when will the next factory be built?
I can just refer to what I mentioned in the in my U.S. summing up. We are exploiting in the U.S. the possibilities. It's a question of the size of the... not in terms of megawatt, but in terms of a scope of it. As I said, we will maintain our OEM position, so we will have a factory. Do we need to do all the detail fabrication ourselves? We come back to this, but the question is that our focus is on the U.S., North America.
There are some questions related to your potential listing in the U.S. Ellen Hanetho, who is an expert in investment banking, notably in New York, has left the board. How is this in line with the company's goal to get listed on a U.S. stock exchange?
As I mentioned already, we are not actively seeking a listing short-term. It is always a possibility, but we want to, together with our U.S. strategy, which I explained, obviously, the funding of it is part of it. And I will come back to that. Yeah, I think in terms of contact at Wall Street and so forth, that's something that also several other people in the organization have. So I don't think it has any connection to the departure of the chairman. But again, not actively pursued right now, but definitely an option that we will get back to.
Can you comment on the provisions of NOK 6.7 million for the buyback of the electrolyzer unit from a customer? What was the reason for the buyback?
Yeah. This is specifically the electrolyzer that we have in Porsgrunn, Herøya. It's not practical to ship that to the U.S. as it was initially planned for. So, we have made an arrangement with the customer. We're buying that electrolyzer. But, in exchange, the customer order two additional electrolyzers for the ACES plant. So, I guess we have said earlier that we are supplying 40 electrolyzers. In fact, it will be 42 electrolyzers.
You talked about the operating range of your electrolyzer, well, and that was in the range over 20%-100%. Isn't that inferior to the PEM electrolyzers that typically can operate at a partial load as low as 5%?
They can. But as I mentioned, they will. Well, maybe I didn't mention it, but there will be a higher operating cost. I will also add to that, if we look at the future demand for electrolyzers, and we also look at what you need of input in a PEM electrolyzer, you're very, very dependent on rare earth metals. I don't know if anybody follows the rare metal prices, but you can basically follow the rare metal prices, how they are swinging with large PEM orders. And then you have the limitation. I have experience for working in the Norwegian company, Orkla, which was basically a mining company.
One of the first thing we did in Orkla was go up to Løkken mines. The reason for that was to learn that a mine has only one end, and that it, one day it will run empty.
Related to DG Fuels, you changed your comments around timing of the FID for the DG Fuels project from early 2024 to first half of 2024. Could you elaborate on the status on development?
This is a complex FEED study. It's natural that with the complexity, there is also some shall we say, call it, I wouldn't call it slack maybe, but there is some postponement. It's nothing major as far as I can see. But having said before early 2024, it's probably be some adjustment to it.
Also related to the US, what is the likely CapEx levels for going the assembly way versus the previously announced 500-MW plant in the US?
Yeah. Let me just emphasize that I haven't explicitly said either/or. Could be a combination or it could be only one of them. But again, this is what I want to come back with. I don't want to give an approximate figure. When I come back and talk about the CapEx, I want to be certain about it. And, it's also that, talking about DG Fuels is a complex project. This is also complex, and I want to avoid any, as much as possible, uncertainty on the CapEx level. So today, I'm not able to give you an exact figure.
Also related to the U.S., do you believe that you still will be able to classify as a U.S.-produced goods if you don't build out manufacturing capacity in the U.S.?
If it's all shipped from China, obviously we are not a U.S. manufacturing. But as we build up the capacity, we will start qualifying as a U.S. supplier. We also have to remember that there are certain parts of the electrolyzer that you simply cannot source in the U.S. And if you also look at, for instance, whether it's the IRA or it's the hydrogen hubs, it does say preference to U.S. local content, but it's not specified how much and how you calculate it. Is it on a specific electrolyzer, for instance, or is it for the whole plant, including all the equipment in a factory?
Could you give us more color on the maturing decisions for DG Fuels, Kvina Energy, et cetera? How is Mitsubishi's interest going upon its North American GridStab project?
Gridstab project. I'm sorry, I would have to come back to that. I'm not able to answer that. I would have to study that.
Related to your financials, could you come back on what happened to your gross margin in the Q3? What kind of level do you expect going forward?
As I mentioned, there were some incidents that we had in the China plant in the summer. Obviously, I do not expect that to be repeated. We have we have found a root cause for it. We have rectified the issues. So, by and large, I would say, probably using the word that it's a one-time effect. So basically, I do not expect these to be repeated.
Could you comment on the backlog? And, in the presentation, you talked only about pipeline. Well, here is the question: if it has changed with regards to the previous quarter, and then about the backlog.
Well, the backlog has changed with being reduced according to the ACES delivery, but increased due to the Andritz order. We do not comment on the pipeline as such. I mentioned that we have several FEED studies. They in itself making up 1.2 gigawatt as I mentioned. A FEED study is not a signed contract in terms of delivery. It's not a guarantee. It's a very good position to be in a delivery position. The study is based on HydrogenPro's specifications, HydrogenPro's equipment, and it's both costly and difficult if some other supplier should be chosen. It is possible, but you basically have to go back and do the FEED study again. So what it then depends on is when are the...
When is the customer taking the FID decision? Again, as with DG Fuels, these are huge projects. It's big money in terms of CapEx, and it takes a good consideration, thorough consideration for decision-making. We have seen that the project that we have been engaged with and the negotiations we are in, they do take time. So it's not an overnight issue. I cannot say more than the expected FID on the FEED studies we are currently engaging. We do expect towards the mid of next year. Yeah.
And then we're in for the two last questions. Then do you expect gross margin levels in twenties for the Andritz order, as you have had for ACES?
I don't think I want to comment on that now. We are protecting our margins when we are doing contracts. This is a different setup where we are providing all the parts to the electrolyzer. Andritz is doing the assembly. So you could say that although the scope is lower, also the cost side, on the other hand, is lower. I do not want to go into predicting and specific gross margin, well, basically, other than saying that we have margins in mind when we are negotiating our contracts.
Is there any update on the Kvina Energy project? Is this project still in development?
It's still in development. There are no, I would say, major news. Kvina Energy Park has submitted their application for the grid access, which is at starts in its, I would call it, consideration or, or, for their decision.
Okay, and then it popped up our last question, and then, then we just through the line. With a plant in China, why are you not chasing more Chinese orders? In the Chinese market is expected to grow a lot in the years to come. So why don't you focus on China?
Chinese market is expected to grow considerably. There are many Chinese suppliers basically focusing on the domestic market. I've lived myself five years in China. China is an extremely competitive market. It's very difficult, I would say, for a Western company to compete with local players. That has to do with could be compliance definitely certain cost factors, et cetera. So but what you often see is that Western companies established in China will be an opportunity. Right now we don't see that in the hydrogen. So I think the focus is right, that we have a low CapEx facility. It's probably one of the lowest CapEx per megawatt capacity that you would see. We have a low operating cost low cost production operation, which is well-suited for export.
Thank you for your answers, and this concludes the Q&A session.
Thank you.