Scatec ASA (OSL:SCATC)

Investor Day 2019

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Sep 18, 2019

Good morning. It's 9 Wednesday morning. I have to say I'm extremely happy to see so many people here on early Wednesday morning to attend our Capital Markets update. It's about 15 months since the last time, and the world is moving extremely fast, and we are following suit. I think we have an interesting program today. I start out talking about our platform and how we intend to expand that into something that is projecting itself as a growth into the future. Then Tagrid Gilsgaard will dive more into the markets, let you know where we see the opportunities, where the growth opportunities are so that you really get some meat on the bone on what's sort of behind our revised growth target. And then we have something extremely interesting, I think, something we call release or re lease that if I well, I may put too many words into my mouth now, but I mean it could revolutionize a part of the market, particularly in the emerging world. And then Mikael will provide you with an insight into the numbers, how we'll finance the future, where we are today, and then we will have an open session at the end. I'm sure that you have a lot of questions, comments to share with us. So we're looking forward to that too. So we call this expanding our platform for increased growth, and I hope that will cover well the review that we're doing today. Now there is no change. We are expanding our platform based on the four foundations that we shared with you a couple of years back. For us, I mean, we generate profits, revenues, contributions when we execute. And if you're not executing well, we're not doing a good job. Now when you're doing that on 4 continents, you need a system that works, people that understand what you're doing that can interface with the 60% to 70% up to 90% new people that are joining our projects when we're doing a project at a place where we haven't been before. Are in emerging markets. We will continue to be in emerging markets, and you will see why later on. We and you see that today, we will broaden our commercial and technological scope and then finally optimize the assets that we have and also the way that we conduct our business will be essential. I mean, I think you see everywhere that the market is growing tremendously. People have different projections towards 2,050. I think DNB GL talked about up to 90% renewables in 2,050 the other day. Bloomberg is a bit more conservative, but still everybody is talking about a tremendous market growth. In fact, we are in the middle of an energy revolution. It has a major impact not only on the energy companies, not only on the renewable companies, but also on the established oil and gas industry around the world. As a function of this growth, we, of course, have raised our targets, and we will introduce you to the projects and the markets that support this revision. From the very beginning, we have interfaced with local communities. So, environmental and social government is an integrated part of our business and how we work every day. We have as a consequence of the markets, but not only that, as a consequence of the pipeline actually becoming stronger, improved along with an increased pipeline. We have increased the target for projects to be completed in our operation by end of 2021, up by 28% to 30% to 4,500 megawatt. So that means that we will keep the pace that we have at the moment with a slight adjustment upwards. And then we also talk about a bit about the growth beyond 2021. And then we're saying 1.5 gigawatt yearly plus. So it will start at 1.5 maybe higher and then we'll continue upwards as the market continue to expand. Now these are some headlines. I've covered some of them now. But you see there is growth everywhere, but not so much in the OECD countries. In fact, almost 90% to 95% of the growth will be in the emerging markets where they need new energy, not replace old dirty energy with renewable energy. So the market is really nice. And you can see here from 2% to 22% up to 2,050, while the consumption of electricity or the need for electricity goes up by almost a little bit more than 62%. Now if you take a look at us just now, a snapshot, we have almost 2 gigawatts in operation around the construction at the moment, extremely busy at 4 continents. We have increased our backlog and pipeline, as I said on the previous slide. The quality of the pipeline is better than before. In fact, we removed some of the projects that have been there for a long time, some markets, and replaced them with new ones with a greater chance of success. You can see also that we are spread around the emerging markets. We have if you added all the opportunities and pipeline, of course, it will be much, much even more distributed along the emerging market belt. Here you can see the projects that we have in operation. I I mean, it's not 10 projects because in Egypt, we have 5. 325 is actually 5 projects at the moment. The last one will be connected within 2 to 3 weeks. So then we're done more or less with the 6 projects in Egypt. Malaysia is 3 projects, East Coast, 2 on the West Coast. South Africa, been around for a long time, 3 projects performing extremely well. Brazil, Honduras, 2 projects. Ukraine, That was a market 2 years ago that we saw as interesting. We weren't sure. We did our research. And as we approach summer last year, we really decided that we need to go ahead. And a lot of things have happened in Ukraine. Right now, we are producing or building 5 projects. We have built an organization from scratch to 70 people in the office in Kyiv. I think is a very good example on how we operate. We spot an opportunity. We assess it. We look at the risks. We look at the opportunities. We look at how our model can be applied. And then if we decide to go, we go for it. And we have our own formula on how to do that. I think we have proven that in a good way. South Africa is another example. Egypt is another example. And looking ahead, hopefully, Vietnam will be the 4th example. So how have we performed? Well, those that joined us in Q14, I think, have enjoyed an uphill ride, so to speak, in terms of the stock price anyways. I think we have been doing quite well. But more importantly, I think the figure to the right there shows you the big change only from 2017 in the plans in operation, what's in operation under construction and backlog and pipeline. So it reflects the way that we're moving at the moment. We are in growth mode, and we expect to be here for the years to come. Only 15 months ago, and this is some of the things we have done. We have expanded the global footprint quite well here. We have and I'll show you some more slides on the sustainability in a couple of minutes. We have a lot of programs that we're working on. And as you can see, this also manifests itself into an improved bottom line. Almost 870 megawatts is in operation as you can see here. And then we decided I mean, I'm an old oil and gas guy, and I appreciate quality. But of course, you can have a mindset of having a quality execution. It's always good to have somebody externally test you. We had DNV GL, and they traveled around the world, checked all our procedures, interviewed our people, and we got our ISO certification in, I think it was in February, both quality and HSSE. And they will reinspect us later in the year to see if we actually have improved on some of the points where we need to improve. Ukraine, I mentioned, tremendous opportunity. And it's a place where they have highly qualified people. And I think they will be an asset to Skatexular, not only in Ukraine, but also for our operations outside of Ukraine. Now what does our organization look like? This is an old slide, not that old, but I think it's sort of tried to capture the essence of our company. It's the business model and that hasn't changed since 2010. We develop, we build, we operate and we are majority shareholder and we are in operational and transactional control. So we are in a good way controlling our destiny. We do the structuring and financing. We invite partners into our projects. And it's very nice to see that a lot of our partners that we started working with many years ago ago regularly come back and said, we have projects that we can participate in. I think we have shown financial discipline. There are a few, and I'm not going to mention names, that got overexcited with the development of the market and did not really have a proper financial discipline. I think we have shown that and we will continue, as Mikkel would underline, that to really use financial discipline when assessing the opportunities and when we're expanding the business. And then again, one of our values is collaboration, partnerships working together. We wouldn't have been where we are today unless we had strong partners, and we will also continue to do that. But of course, it's about people. So how do you design an organization when 3 months after you have established a detailed strategy plan, you have to revise it? That has been sort of the tune or the tone since the very beginning. Well, you have to have a flexible organization. You have to have people that are more comfortable with change than a company not changing because if you not change, you will be left behind. So this is how we have put the people together in an entrepreneurial culture where they are passionate and empowered. And I think you will see on the next slide also or a later slide that this is not done in by accident, so to speak. We have people right now working with us from almost 50 countries. That includes short term people, high end people. For us, when we move into Vietnam, it's not efficient to know where Vietnam is on the map. I mean, you have to have people that can decipher, decode the culture to understand what is going on. So we have Vietnamese working for us at the moment. Of course, we have a lot of Ukrainians in Ukraine. In fact, we have a Pakistani lawyer that's worked for us for 4 or 5 years. That helps us to seek advice, to understand what we're doing in a better way. I think to the right there, you see that in 2017, we didn't have a lot of projects under execution. And you can see that because the higher in weren't that many. Now we are extremely active and almost 40% or a little bit more than 40% are people that are not fixed employees of Skate XLR, but are there on a temporary basis. This is how we flex the resources to match the requirements for resources that we have at all times. Health, safety and environment. If you have good focus on health, safety and environment, you will get automatically a product that is of higher quality. I know that from my past. If you're sloppy about the health and the safety, the product and what you produce is not as good as it should be. We over the past 12 months, we have had people working under our direct control around 13,000,000 hours. And if you look at the numbers to the right there, 0.8 per million workman hours, meaning that a person has been away from work, not only a whole day in 1,000,000 man hours. That's an extremely good number. And we measure this around the world on our projects. Sickly, what is it in Norway? It's higher than 0.4%, I believe. So, this is also remarkable. People want to be at work. Maybe they shouldn't sometimes because they have a cold or something. But nevertheless, I think this tells a lot about the way that we are watching our people, and it's a good number. We are also extremely focused on creating local jobs. And not only when they work for us on a project, but that they have lasting skills developed and sometimes we also provide diplomas so that they have something to show for when they look for a job later. Now, we're about to finish Egypt. We have worked 7,500,000 man hours. We have one LTI, one guy that has been away from work during that period. It's actually SEK 7,000,000 because it's SEK 7,500,000. But that's a tremendous, I think, statistic. There are some benefits in addition to creating value at the different sectors of our business, development, construction on them and sale. I mean, we are also our own customer, so to speak. So we then allow ourselves sometimes to deploy new technology in situations where probably a customer would be a little reluctant because we say LFCs will be a fast follower. Maybe somebody else will test it out first. Now Egypt, we had a bit of a fight with the banks, but they I shouldn't say they caved in, but we harmonized our view over time so that we decided that let's make the project in Egypt the largest bifacial installation ever. And that's what it came. So, we're producing electricity from the front side and also from the back side. The indirect solar night, we are picking up from when it's being reflected in the desert, and we will have a boost of almost 15%. In fact, it is confirmed that this is 15% in the initial measurements after we have started the plans. I was in Cape Town 3 weeks ago. It was World Economic Forum. We were invited there. And of course, our offices are just down the road from the conference area. So I took the opportunity to invite a lot of people to our control room. And it was really nice to be with those guys because they were impressed. This is manned 20 fourseven. We get signals from all over the world in the control room. So next time you are in Cape Town, stop by to see it because it gives you a good feeling and you can see all the plans now. It's not only the oil companies that produce revenues 24 hours, we do too. I mean, when the sun is down, both places up somewhere else. So we are producing electricity from renewable energy around the clock. If you look at where this 4.5 gigawatts are going to come from, well, the backbone of our industry or the backbone of this goal is the utility scale. So, most of the 4.5% will be from large utility scale opportunities that is in our pipeline already. And then we have talked about this a few times before. We're seeing that the corporate power purchase agreements are more frequently entered into. Why? Well, the companies I mean, the large industrial companies are becoming more clean, but maybe even more importantly, those decisions to go ahead with makes commercially sense. I mentioned release. And What is release? I think it's a good name actually. In Africa, in South Asia, Southeast Asia, Central, South America, there's a huge market. The market in between sort of the small rooftop installations to the utility scale, non recourse type of financing that takes a year or 2 to finance, to contract opportunities where the customers probably want maybe 5 years or 3 years or shorter periods, Where they today rely on diesel? In Africa, well, it depends upon how you count it. I mean, you have 2 50 gigawatts we installed at these generating plants. The available market maybe for us, if you look at that, is 50 to 100 gigawatts. Now what does this new concept do? Well, we offer reliable, flexible and low cost solar power with shorter contract periods from 1 to 3 to 4 to 5 years. And we're not looking for non recourse financing. We will finance this through a lease arrangement, a different structure for financing. I believe that this can and hopefully will revolutionize this market. It is a tremendous market that is waiting for this type of solution. So, if the contract runs out after 3 years, the customer run out of whatever they are mining or they want to do something else, then we can take this concept as Hans Ulla will tell you more about and redeploy it, put it somewhere else. Look forward to that presentation. Sustainability, I mean, it has become more than a buzzword. Over the past year and a half, particularly Norway, but now everywhere and everywhere, I mean around the world, ESG, Maybe even before people start looking at our business plans and our numbers, they would like to know how we fare on the ESG arena. And we have been working with this for a long time, the past 10 years. We have become smarter and smarter, so to speak, meaning that we have learned from other people that are doing well. The sustainability goals from the UN has sort of entered the scene a couple of years back, and this has been all it's been embraced by us and implemented into our operating procedures. But we see that I mean, this is somebody something that is on everybody's agenda at the moment. And it's not only PowerPoint presentations. It's being operationalized like we have done, like others are doing. We have right now, we have 35 programs that we are managing. We have embraced 4 of the United Nations Sustainability goals. And right now, the projects that we're doing has a budget of about $50,000,000 There's a lot more to come down the road because remember, we're not there only to construct our plants. We are long term partners. We are around on the projects for up to 25 years and maybe even longer because the plant doesn't fall over and die after 25 years. In fact, it has a lifetime of 35 years and longer. The key programs areas are Health, Education and Energy and Small and Medium Enterprise Development, creating their own business, lasting jobs. I think I'm very proud of the example to the right. For 2 years now, we have been working in Honduras. We have 2 plants in operation there. We have I've been supporting a medical brigade. We have had 8,500 people visiting the 40 medical specialists, and I've actually done that in some of them for the first time. So there is tremendous need for assistance, especially medical assistance, also helping people with and we have done that in South Africa to get spectacles, glasses, so they can read and be more efficient at school. Yes, it says 4.5%. So that's a revision from the last time you saw something similar to this slide. 1.1 percent add in backlog and then what's under construction, 2.2 percent. And then from the 5.6 percent we have in the pipeline, we will then have another 2.3% added, so we reach 4.5%. Very little of the 4.5% is from the release concept. We are saying as bullet point number 3 here that we will reach a level 3 to 500,000,000 in 2022. So I mean you may add some of that to the 4.5, but I don't want to be too exact. I think it's important also you see some adjustments, some small adjustments to the returns to the right. But I will confirm to you right now that we will continue to deliver high returns on our projects. That will go on. And that means that we will be very particular about the projects that we enter into so that we see that we will really create value for our company and for our shareholders. And we have a lot of programs, and I don't have time to go into that in this presentation. We'll be happy to do it later. We have a lot of programs that goes into developing our organization. We have a leadership program right now where we're developing new leaders. We have training in all aspects of constructing plants, becoming more efficient. We are emphasizing the values so that they are being rolled out into every corner of the organization. So rest assured, HR is a strategic element in our success also going forward. So I think I'm just about to have spent my 25 minutes. And then, Tanja, I'm very much looking forward to your presentation. So we'll see you a bit later. That was on the minute. Raymond? Thank you, Ramon. Hello. My name is Terry Pilsborg. I'm responsible for project development and product finance in Skatek Solhej. I have been with the company since 2013, and I've been in the industry since 2000 and 5. So that's almost 15 years. In that period of time, the cost of equipment in the industry has come down by 90%, and the installed capacity on an annual basis has increased by 100 times. It is a mind boggling development that we've seen in the industry. And I think that this development is going to continue, obviously not at the same rate. I mean, that would be impossible. But we're going to continue to see technological advancements, new markets opening up, and we're going to see further attractive growth in the industry. So even after 15 years in the industry, I'm still very excited. I'm seeing that we are now really starting to have impact. We're starting to make a difference in the power generation landscape globally. So Raimond started off by introducing new targets, and I will continue to elaborate on that and give you a bit more background in terms of why we are comfortable with increasing our targets. I will talk about our perspective on how the market will develop. I will share with you our perspectives on new markets, on new segments. I will talk about our pipeline and elaborate on more details with regards to our pipeline and share with you how we work through examples in some of these markets to develop our projects. So starting out on this story, the best way to start is to talk about the cost situation of solar. We are currently seeing now that solar is the most competitive source of energy in the sun rich parts of the world. And luckily, we are focusing on emerging markets and it's a significant overlap between emerging markets and the sun rich parts of the world. So in our markets, in most of our markets, solar is the most competitive source of energy. And over the last 10 years or at least since 2010, the levelized cost of energy in these markets have for SORI have come down by 85%. This is through scale efficiencies, technological advancements, innovations and evolution, and we see that this is going to continue. In addition to this, we also see that related technologies are also coming down in costs, which is further opening up new markets, new segments and new applications for solar. This can, for instance, be technologies like solar. In addition, I would also like to say that with solar becoming cheaper and cheaper, it is also opening up flexibility in terms of what we can offer, which can also open up new segments. Historically, it was all about securing 20 to 25 year PPAs on fixed prices, and that was what you needed to do to be competitive. Now we see that we can offer more flexibility. Hansoula will talk a bit about that. But we can accept flexibility on contract linked tenors and on certain price elements and still be competitive with alternative sources of energy. So against this cost backdrop, Bloomberg New Energy Finance, they are forecasting a significant continued growth in the solar energy market, forecasting about 50% increase from last year 2018 until 2021. Historically, we have seen that 50% of this market is U. S, India, China, so the really big markets. But we see that as emerging markets grow, we see that the importance of these markets in total are decreasing. Further, utility scale solar has typically also been above 50% of the top market. And here we see that this share of the top market is likely to continue to be more or less the same, and utility scale is going to continue to be a very important part of the market. Obviously, we work in emerging markets, And our experience in emerging market is that it's not only the low cost of solar, this is contributing to the growth. In our experience with discussions and interactions with governments, authorities, regulators, we typically see that they also put a lot of emphasis on other factors when it comes to solar. And we've depicted some of them here up on this screen. And to name a few, time to market is very important because many of these emerging markets are growing. They have economic growth in the range of 7%, 8% and they need new energy rapidly in order to fuel that growth. So then they're looking for sources that can be brought into the market relatively quickly. And solar and to some extent also wind is a good match for that. Another element here is energy security. Many emerging markets are either importing their energy directly from neighboring countries or they are importing a lot of the fuel they need in order to generate that energy. And also here, by bringing in solar, you take control over strategic infrastructure, which energy is, and you make sure that you become less dependent on neighboring countries and the rest of the world, and this is also important for many of these countries. So in terms of forecast, and this is still Bloomberg New Energy Finance figures, we see a continued significant growth or increased growth actually in terms of the market potential in emerging markets. And then diving a bit deeper and looking at for a selected number of emerging markets, the current installed capacity and forecasted installed capacity, we see that now the emerging markets have grown into becoming gigawatt markets. So these are no longer small markets, but they are significant and large markets. And we will continue to focus on the large and scalable markets where we can have a long term perspective and we can build significant portfolios. Obviously, we are still going to be flexible and capture opportunities where we see that there are opportunities emerging. But in terms of the overall focus, we will continue to look for the big markets. In most of these markets, we are already present. And for the other ones, we are watching the development closely so that we are able to step in if there are opportunities opening up for us. So in the context of this market, we have been continuing to develop our pipeline. And since the last couple of markets update about 15 months ago, we have increased the pipeline by about 1.5 gigawatts. If you take a closer look at those figures, you will see that during this period, some projects have been moved into construction. Some other projects have moved out due to that certain markets we have abandoned. So on a gross basis, we have actually added over this period about 2.7 gigawatts of new projects into the pipeline. And we also believe, as Ramon said, that the quality now of the pipeline is improving as we continue to mature it and we continue to work on it. And all in all, this is what gives us the comfort of increasing our targets to the new level of 4.5 gigawatts. So let's then go and have a closer look at the markets that we're working on and what segments that we are targeting. Also as Ramon said, we are working across 3, I would say, relatively distinct segments. The first one, utility scale PV, is our is and will continue to be our Workhorse segment. This is the regulated market where there is a single buyer of energy, a state owned utility typically, and you enter into long term fixed price PPAs with that utility. That gives you the bankability of the project, and you can finance it on a non recourse basis. In this market, we have continued to add to the pipeline, and the pipeline is consisting to a large share of these kinds of projects. Then we are increasingly focusing on corporate PPAs. The corporate PPA market is typically also based on relatively large projects, long term fixed price PPAs. But the offtaker is obviously a corporation. You've seen most of this so far in OECD countries with offstakers like Hydro and Google and other well known names. But we're also seeing that this is increasing in emerging markets, and we're working on opportunities and have pipeline related to these kind of projects in countries like Brazil, in South Africa and in Egypt, to mention a few. And then lastly, we have the release concept. This is typically smaller projects, smaller off takers. They require more flexibility. And here, as Hans Ular will come back to, we have developed a commercial and a technical offering, which fits very well to this segment. And Hanssen Willard will come back and talk more about that a bit later. So I will then continue to talk about the utility scale segment, which is our workhorse segment, so to speak. And it's important to understand that in this segment, when it comes to securing new projects, securing contracts, we are working basically across 4 different arenas of competition. So the state owned utilities, they are sourcing contracts through different procurement mechanisms. And these 4 ones are the main procurement mechanisms. So we have bilateral negotiations where we work closely with the authorities. We have feed in tariffs, which I think most of you know, which is a set tariff for all projects that are brought online. We have project tenders, where the competition is about how you develop projects and how good the project you have developed is and how low you can bid it. And you have price tenders where in principle, it is the government authorities, state owned utilities that develop the projects. And you compete only on price, that is your CapEx and your financing costs. So these are the different items. And on the one hand side, you have the bilateral type of markets where you have to take a long term perspective. There is more unpredictability, but there is also then less competition and a potential for higher reward. And then on the other side, you have price tenders. Here, there is more predictability in terms of the process. Processes are typically shorter, but the reward, if you succeed here, is typically also lower than in some of the other areas. We have been working across all these segments. I think our share of pipeline across these types of arenas are more or less stable since the last Capital Markets update we had 15 months ago. But we believe that our business model is applicable to all of these segments, and we believe that we have shown that we can compete across these different competitive arenas. And in terms of our business model, I think there are 5 principles that are important and that I would like to highlight here. And then I will go through some examples of different markets and show how we use these principles to generate new opportunities and new projects. So we as I've said, we prioritize growth markets. We focus on the market where we think there is scalability and where we get credit from the investments we do in order to understand the markets. That gives us the comfort that we can spend resources and we can capture and create a deep understanding of these markets. So in order to do that, we work closely with authorities, with regulators, with governments, and we spend time to really understand what the intentions of those countries are in terms of moving forward on the renewable energy side. Then partnerships are crucial for us, and we typically originate projects through our partnerships, either local partnerships with local developers, the ones that are out on the ground and really developing the project from scratch. We spend time identifying, qualifying, screening those partners and making sure that they work according to our principles. And we also work with larger global partners on the development side. That could be companies like Nordfern, Africa 50, Equinor in Latin America to have a broader perspective on the development. The 4th principle is our integrated approach, and that means that we control all the input to the project. We understand the development side, the financing side, the economics, the construction side and operations and maintenance side. And through that, both the understanding and controlling the input, we are able to optimize the projects and make sure that the projects we put forward are of good quality and are competitive whatever the competitive dynamics are. And finally, important for us is to manage development risk. Obviously, we now have a pipeline of 5.6 gigawatts. It's a big pipeline, and it takes resources to move that pipeline forward. So then it's important for us to collaborate, to partner up with other institutions that are able to share the development risk together with us so that we can manage and push that pipeline forward with a limited exposure on our own balance sheet. So those are the 5 principles that I would like to highlight now. And now I will go in to talk a bit through some examples of how we are applying these in a selected number of markets. The first market is Ukraine. Raimo spent some time on that. So I will touch a bit lightly on this. Obviously, we've been in Ukraine for quite some time, but we really pushed the button and started going actively after many of these projects around the last capital markets update. We've secured a portfolio of 3 36 megawatts, and that represents a total CapEx of SEK 4,700,000,000. The approach we took here that we was that we started relatively early. We understood the market. At some time, the market had certain deficiencies in terms of the regulations for us to be comfortable to move forward. But when we saw that those parts were fixed in the regulation, we were ready to move forward. We were relatively quickly secured 5 projects that we were willing to move forward with. It was a time window, so we said these 5 projects are what we can take from an organizational capacity, but also in Ukraine from an availability of financing because financing has been the key missing link in Ukraine. And what we managed to do was to bring a number of new financing institutions into Ukraine to support us in financing these projects. And you will see when here we list all the different financing partners that we have for this project that it's not as standardized that we would have liked to see. But it means that we've been able to bring in many new financing partners, and we'll open up this market for many of these players. And at the end, we have been able to raise NOK 2.3 1,000,000,000 in financing for the market. So the first project is already in operation, and the next project will come into operation over the next 3 to 6 months approximately. Another market, which is quite similar to Ukraine that we are now looking at is Vietnam. Vietnam is a big economy. It's a population of about 100,000,000. It's growing at 7%, and it has a huge need for new power generation. It is expected that it needs to double its power generation between now and 2,030 to continue its economic growth. Currently, the generation mix is a lot related to coal and gas and hydro. So Vietnam, they have established a master plan for how they are going to provide new power generation and the capacity into the country. That master plan is heavily oriented towards coal currently. They are looking to add 30 gigawatts of coal to the 30 gigawatts they already have. The implementation of this new capacity is a bit delayed, partly due to the fact that there is a lot of local resistance towards coal because of air pollution, lower air quality in the country. And there's also a lot of resistance from international financing institutions, so it's difficult to finance these projects and move them forward. In the current master plan, in Vietnam, they have all only they are only foreseeing in the range of plusminus 15 gigawatts of renewable energy, so wind and solar. On the other hand, McKinsey has taken on the task to do a lease cost analysis of Vietnam to see if you based on current understanding of costs of different generation sources, try to come up with the lease cost development of the power generation sector. And this is what we have depicted on this chart. And on this lease cost basis, you will see that coal is constant at today's level of 30 gigawatts, while renewable energy, solar and wind increased from a very low base today to about 100 gigawatts in 2,030. So this renewable sled plan that has been developed by McKinsey is cheaper on costs. It provides better energy security because Vietnam will have to can significantly reduce their importation of coal and it significantly reduces CO2 emissions from the power sector. It reduces CO2 emissions from the power sector by about 30% relative to the current master plan. That is 1,100,000,000 tons of CO2. Well, that's a big number, and I don't know if you can relate to it. Norway, on an annual basis, emits about 50,000,000 tons of CO2. So over a period of 12 to 13 years, which is until 2,030, well, it's a bit less, 11 years, the reduction of CO2 emissions from the renewables led plan is more than twice the expected emissions from Norway over the same period. And that's assuming that our emissions are flat. Now the government has committed to reducing our emissions by 40% by 2,030. So then it will be even more than 2x our emissions over this period. So this is the basis for the Vietnam markets. It might not develop exactly like this renewable sled plan that McKinsey has developed. But I think it will be a market with significantly bigger potential than what is currently in their approved master plan. So we have been working in this market for some time. We have been working to identify and qualify local developers as we typically do. And we have also lately started to engaging quite closely with the authorities. The Prime Minister was on a state visit here just before the summer, and we met with him then. And in August, we were back in Vietnam, Linda Raymond also meeting the Deputy Prime Minister, talking about our plans and our ambitions for Vietnam and getting good feedback on that. So through our work in Vietnam, we have now secured more than 1 gigawatt of pipeline in this market, and we continue to see significant opportunities to grow the market opportunities further. Obviously, in Vietnam, there are also complexities on the development side. But it's important to say that these are development complexities that we are seeing in most of the markets that we are working in. So these are the things that we and our business model is set up to manage and to handle. Some of these complexities are land acquisition processes, regulatory approval processes, PPA documents that are maybe not 100% up to standards, lack of capital to bring these projects forward as well as uncertainties on the grid side, which is to be expected when the economy is growing as quickly as it is. So we believe that our integrated approach, our focus on partnerships, our capabilities on the financing side and in general our approach to emerging markets puts us in a very good position to succeed in Vietnam. Another market I'm going to touch quickly upon is Bangladesh. And Bangladesh is a country which is not that different from Vietnam, but it's not as developed. Population wise, it's obviously significantly larger, closer to SEK 200,000,000. It enjoys the same level of growth, and it is also expected to increase power generation by 2x over the next decade. So here from 16 gigawatts, a significantly lower level to 32 gigawatts in 10 years. So the interesting thing from Bangladesh in this context is that Bangladesh is a bilateral market. Here we have to take a longer term perspective on our development activities. We've been in the market for quite some years. And already from the start, we're focused on working together with partners, local partners that are able to participate in funding the development costs. Then we have brought in grant institutions, like for instance, Murad to help us support the development. And now lately, we have also brought on FMO, the Dutch Development Bank, as a co developer that will also share the development costs. So this is the way that we're working where we have to take a long term perspective in less predictable markets. So in terms of the status here, we have the Nilfamari project. Here, we have secured land, finalized tariff negotiations, mandated lenders and brought in co developers. So this is a project which is moving forward. And then on the back of that, we have developed another 300 megawatts of product opportunities in the countries. And then I would like to take an example of a market which is on the completely other end of the scale, and this is Tunisia. This is a market that moves. It's a price tender type of market. It is a market that can move very quickly. We qualified for participating in the tender late last year. The tender was this summer, and they immediately announced their tender prices of all the participants. As Ramon said, we are selective in terms of what tenders we are participating in. And we decided to participate in this tender due to the fact that there are multiple opportunities to win. There's no one single player that can take all the volume. There are significant hurdles to participate. You need to have a certain track record. You need to have a certain balance sheet. We knew that international financing institutions had been involved in structuring the tender in a way so we knew that the documents, the contracts and everything was of a bankable structure. And finally, through the process, we knew the competition. We knew the companies and we knew what their typical behavior in tenders are. So based on all that information, we decided that this is a tender that we will participate in. And obviously, when we participate, we participate to win. And in this tender, we had lowest prices on 4 out of the 5 projects. The award is still pending, but it's expected to come by the end of this year. Maximum award to 1 player is 300 megawatts AC. So that is in the range of 3.50 megawatts and 3.60 megawatts DC. So now I've been through some examples and to summarize a bit. We see still significant opportunities to build good portfolios in emerging markets, and we see larger and larger potentials in selected emerging markets. This is a summary of many of the markets I've been through. In addition, on this slide, I have South Africa, where we have a significant portfolio, and we're waiting for the integrated resource plan to be announced and the next round to be tender round to be issued. And the other one is Brazil, where we have one big project and where we have a good pipeline of additional projects where we are seeking rather corporate offtakers, large corporate offtakers than participating in the state tenders. So with this backdrop of the opportunities of how we have developed the pipeline, getting the pipeline up to about 5.6 gigawatts, we are comfortable again to increase our targets to 4.5 gigawatts by the end of 2021. So with that, I thank you for your attention. I think we will now have a break, And we will reconvene back here at 10:15 for Hans Olar's presentation on release. Thank you very much. Welcome back, everybody. I'm Hans Olag Fallwag. I've worked in this fine company for 4 years. I've previously been responsible for our responsible for developing the projects we have in Brazil, where we eventually partnered with Equinor. Some time ago, I was given a task by management to look into new business models for our company where we could add and complement our existing business and further leverage our great team. What I'm going to introduce to you now is, in many ways, our teams responds to that challenge. I'm super excited. I think it's going to make a big difference for Skatek Solar. But even as importantly, I think it can be a change maker in providing clean power to some of the most polluting consumers out there. I'm a lawyer, so please bear with me when I'm going through some of the technical details here. Release offers affordable, clean, reliable and flexible solar power for rent to large consumers. That's the idea. Rental or lease is a key word here because it entails an offering of both a technical solution and a finance solution based on our proven track record, our financing capabilities and our presence in the market. It's an energy as a service. The market we're addressing is large. We've spent quite a bit of time on thinking of how can we make small scale projects or at least smaller scale projects in scale? How can we use our large scale experience and capabilities to build meaningful volumes? With our new value proposition, we believe that this can contribute as much as 300 megawatts to 500 megawatts per year in the not so distant future. We believe partnerships are important to be able to build the business model and scale to create opportunities and speed to opportunities. Therefore, we are putting up a separate entity for this business where we also invite other investors in. We've chosen the name Release because it both captures obviously the renewable energy lease, but also it captured the release of the customer from the dirty power and into the sunlight. Reimann already showed this slide. So what's new? This is essentially about standardizing and simplifying. It's about using equipment that is suitable for all but every location. It's about reducing layers and complexity and execution. It's about building in volumes to get economies of scale. We want to increase availability and reduce barriers for using solar. The concept is built around what I truly believe is the biggest benefit of solar compared to any other power generation source, its modularity. We're essentially here using exactly the same equipment as we do for our 400 Megawatt plant in Egypt. It's the same 1x2 meter panel. We can build it exactly to the size and the need of each and every customer based on the equipment that I'm going to tell you about afterwards. Again, it's about a complete offering, both technically and financially, built on our great experience and team. We have spoken to a lot of customers to work on our value proposition. The great thing here is obviously that many of these customers, but most, really, truly want the transition into renewables. We have carefully listened to their concerns and their thinking how we're used to running on OpEx, how can we continue to do that when solar is primarily CapEx? How can we reduce our balance sheet exposure while continue to have power supply that we're in control of? How can we take a stepwise approach to installing solar, ensuring that it's not interrupting our day to day operations. We know that these consumers will, at some point in time at any rate change to solar simply because it's cheaper and will have an impact on their bottom line. The release offering is going to be a change maker that responds to their key concerns. So who are those customers? We have grouped them into 4 main categories. It's the mining. They operate in remote areas. The price for electricity is very, very high either for diesel or for a grid supply into these very remote locations. They're concerned with energy independence and being self supplied as blackouts are very critical to their operations. It's also very good potential for batteries and for storage since alternative cost of electricity is very high. There's obviously a great variation in the size of these different mining miners, but some of them can be up to 100 megawatts of baseload consumption. Then we have the NGOs, the U. Van primarily. This is obviously a small share of the overall market, but it's very interesting because their power cost is extreme. Also, the UN is operating on an annual budget from their donors, which makes short contract durations essential to deploy solar. We are installing a small project in South Sudan for the IOM, which is a UN organization. This will be completed in November. The UN has committed to being climate neutral by next year. So we expect that there will be more of these projects to come. Then we have the utilities. Some, and I would say many, utilities struggled with the long term commitments under traditional PPA even though the price of power is very attractive. The long term PPAs require, in most cases, state guarantees and puts burdens on the government and the budgeting that they do. In addition, several utilities actually prefer multiple smaller projects in various parts of the grid, in the end of grid to better distribute their power generation rather than only the largest scale projects. Also, many of the utilities already operate through leasing today. They lease their diesel generators. All over Africa, but maybe even more importantly in Ireland states. In Indonesia, for example, utility, Pelan, operates diesel generators on most of the 13,000 islands. Then the last one is the on grid users. The grid connected power is very expensive in many countries as well. I think yesterday or the day before, I read in the news that here in Norway, we had a record low $0.07 per kilowatt hour on Norpul. Many of these countries operate with grid prices of $0.20 to $0.25 per kilowatt hour. In addition, the grid power is very unreliable, so it makes a lot of sense to have captive power. In addition, these are the cement factories, the manufacturing plants, the steel mills, the agricultural operations in many countries. There are obviously additional user groups for this concept, but for now, we will start with off takers within those 4 categories that are solid and large. Now we are just now launching a new web page for release. It's going to give the customers the ability to familiarize with the offering and with our technical specifications and equipment. We are also introducing a build your own hybrid plant concept, a bit similar to configuring your new car these days, where you can build and put in batteries and solar capacity and see how it fits with your needs. I think it's interesting for you have to remember that most of the counterparts here are engineers, and I think they all like it. It's not doesn't give a totally accurate result, but it gives a pretty good indication of how this could look like on their end. In addition, we have made a new video, and we would like to show it to you here. Pretty cool, I think. The first redeployable and containerized tracker solution, some of you may ask what exactly is a tracker. It's essentially the rack that we place the panels on. And it tracks the sun from east to west, giving a much higher efficiency and performance or and production than you otherwise would have. In combination with the bifacial tracker bifacial modules that Raymond previously explained about, this gives an extreme and the best output you could possibly get from solar plants. You may also ask why does it need to be movable, redeployable? Well, it actually makes a big difference. If we can move it away, the contract can be shorter. The customer gets less balance sheet exposure. He needs to put up less guarantees. And the contracts and that's this is actually important. The contracts can be signed by the operational team rather than the management in each of these companies. For us, it's also extremely important because even if we believe that we will install and that the equipment will stay there for the lifetime, which can be 30 years, we always have a fallback option. If the contract ends or if the customer does not pay, we can move this out and use it somewhere else, and it will continue to operate just as it did elsewhere, producing the cleanest commodity in the world, kilowatt hours. Now the technical solution. We have entered into a partnership with Cambridge Energy Partners because we believe they currently offer the best and actually the only technical solution available. The tracker design is optimal for our offering. With R being Skatek Solaris Corporation and Purchasing Power, we think that we can get purchasing power for the components. We can get to the cost level and quality required to succeed. The truckers or the come in containers prefabricated and preassembled with inverters, with panels, with cables and ground anchors to fix them to the ground. For these smaller scale projects, we think we can drastically reduce the installation time and costs at site. Transport density is also actually a key matrix in this model. Stacking as much power as possible into each and every container is key because we're talking about remote sites where this part of the overall cost is large. The transport density of the Cambridge solution is actually more efficient than shipping each of the containers components separately. Now the pictures you've seen in the movie and elsewhere is from our operational pilot plant that is currently running in Spain. We're testing performance. We also do training of installation and demobilization. We have installed trackers with bifacial models and without to test effects and performance. This will be cost competitive for smaller scale projects. I tend to think 10 to 15 megawatts at least. Today, when this matures, it's going to be increasingly competitive. So what does the customer think? We present here a mature case, a live case that we are working on that we are about to sign with a customer, and I think this is a minor. It's very comparable to many of the other projects that we are looking at currently. It's a Western listed mining company operating in Africa. It relies on diesel. The life it has a mining license with the government of only 5 years. However, the life of mine is potentially 20 to 25 years, and they hope to extend. This is not a large energy consumer compared to many other mines, but still they're buying power today or diesel power today for approximately more than $10,000,000 a year. So it's not your average winter cabin. They will get when they get our equipment in place, they will get significant savings in both CO2 and obviously in cost. We will get our feedback our payback within the length of the contract. And clearly, what happens after that if it is extended or we use the equipment somewhere else will provide good returns for our company. This is great news, But and I don't want to kill the vibe in my own presentation, but there's always a but. This there is actually a flaw to solar. And the flaw is despite what I've told you so far. The problem is obviously that we cannot provide baseload. The supply of solar is only during daytime. We can cover 28%. His savings on that is 50%. It's the cost for the customer of the power we provide compared to the diesel power is about 50%. So in totality, he saves 14% on his overall power cost. And obviously, with these great savings, he thinks how can we how can I save more? What can be done to save in ore? And this is where storage comes into the equation. As I said, solar can only replace parts of the diesel consumption today, unfortunately. With batteries, a larger portion can be replaced. And in many cases, it makes a lot of sense to install a small battery to optimize the way diesels run today, reducing spinning reserve and consequently reducing diesel consumption. But to really boost the renewable penetration above 30% to 40%, you need to install significant additional solar and batteries. I present the curve here, which is I'll give an example of a mine or any operation that has a constant need for 10 megawatt power. To get to a 65% solarization, you actually need to put in 25 megawatts of solar and a large battery. Then you get to 65% renewable penetration and potentially good saving. Using batteries and additional solar increases CapEx obviously. Unfortunately, the cost per kilowatt hour for the power supplied at night compared to the power supplied at playtime is going to be higher because you have additional solar, you have batteries and you have losses in the battery. For some customers, however, today, it makes a lot of sense to do exactly that. It depends heavily on the alternative power cost cost of power. So in our the UN example I mentioned, we actually have installed a big battery, and it makes full economic sense. We have a 90% renewal penetration. Also for this customer that I mentioned previously, it makes sense to install some batteries. However, currently, he is thinking I will only install solar to get comfortable, and then I will move further afterwards. And this, I think, is a tremendous opportunity for us. With our concept, we know that as we are everyone is comfortable that battery prices will drop. And as battery prices drop, more and more people will be willing to put in more batteries and add solar because it simply makes sense. So when we talk about the market here, the market is actually much higher than the baseload consumption because solar and batteries is going to be cheaper and cheaper. Therefore, bringing good products to the customer today and retention of those customers is important as we can add business and add capacity to these customers as we move forward, and they will. Now before I leave the storage section, I also wanted to talk about our partners. We are working with solid partners that share the same desire and vision and enthusiasm about building modular and standardized solutions for these type of customers. DAIF is a Danish company that has been around for about 100 years. They have been working on control systems for diesel generators on ships and on land for ages. They are reputable in all of our markets. They have the 10 for the 10, 15 last years, been working on controller systems for integration of wind, solar and batteries throughout the world. Then we have Tesla. It's obviously known to all of us for their electric vehicles and also for some of their giant storage projects in Australia and in Hawaii, amongst others. They have a gigawatt factory. They are a front runner in the industry. There are obviously a lot of new ventures coming into this market. And as the costs come down, and we will be open to look into good alternatives. But for now, Tesla is by far delivering the best mobile solution that fits our offering. And therefore, we work with them, and they, I believe, also like to work with us. What I want you to take from this slide is basically that this market is substantial. It comes in addition and is complementary to our traditional business. It's clearly fragmented. There's a lot of hidden numbers. There's diesel. There's heavy fuel oil. There's baseload. There's backup power. There's various purposes. But if we also reduce the size here from 3 megawatts as a threshold to 300 to 500 kilowatts, the market would probably double. And it's also important to emphasize that this is not diesel is not the only market for release. It can be used also for many other purposes. And also remember, it's much bigger with storage. This concept can also be used, as I mentioned, to we are looking at 700,000,000 people that lacks access to electricity. It's not the primary target of our concept, and we're not going to focus on it today, but it's a potential for the future. We have just started building our pipeline, and it's actually only now that we have a product that we can truly say is available. We find tremendous interest, and we have built a huge pipeline. It's now about turning these into signed contracts. We focus on the most attractive customers and straightforward situations first with international companies that have the ability to provide solid payment guarantees. And we are in advanced stages with many opportunities. This is our current thinking on the structure where we start with Africa simply because we are the largest investor and developer of solar in Africa already, And it's a market where the potential for this solution is tremendous. We're setting up a separate company, building a platform that can evolve over time. The overarching idea here is that smaller projects, these type of projects will not it doesn't make sense to finance them through the traditional project finance structure. It's too expensive and too time consuming. We are rather building a portfolio of projects with the same equipment, with the same structure that can be operated efficiently. Scothic Solar will take lead as an investor, but also in operating and driving the business. Engineering and design, dedicated installation team, fleet management, global monitoring from our operation room in Cape Town, dedicated team. Once has reached a certain size, we think the potential for good and attractive debt is clearly there. Nordfeldt has been a great and important partner to Skatek Solal in many projects so far, and they will provide credibility and solidity to this venture as well. We are in dialogue with other potential investors in early phases that can also provide such credibility but also create business and opportunities for the concept. We plan to develop similar structures, replicating the model, as Ramon mentioned, Southeast Asia and Latin America. Now I started out talking about this being a business concept with significant potential for Skatek Helix Helix. It's complementary to our traditional business in emerging markets. It opens up new and additional revenue streams, which will be meaningful in the not so distant future. Our ambition is clearly that this will provide attractive returns and high cash yield. It's a scalable business model. We start in Africa targeting the easily identified and attractive customers. We increase the geographical market and expand on that and also on the customer base. Release is about providing energy as a service from a trustworthy partner. We bring experience, predictability and presence. We have great team. We have a great track record. We have great partners, and we have a great product. That will make a difference in bringing the green shift market. I think I'll stop there and hand the word to Mikael. Thanks, Anzola. So again, great to see so many of you here, and there's a lot of familiar faces, but also quite a few new ones. So that's exciting. So my name is Mikael Tourer. I joined Skatex Solar 5 years ago as CFO just prior to the IPO. And I must say, it's really been a great journey. It's and we've just seen the beginning as you hear here today. We talked about the solar market, how we see that developing. We've talked about our growth targets and the pipeline, and Hans Ul has just introduced you to our new business concept. So I will cover 3 topics in my part of this presentation. I will talk about how we create value through the integrated business model and how this model is also creating a basis for funding the growth that we have ahead of us. Secondly, I want to talk about how we work with our partners and how we work with mitigating risk. Risk mitigation is obviously important here. And thirdly, I will give you some perspectives on the long term value of our asset portfolio. And as we are expanding and growing, the approach and principles we have for investments is really staying unchanged. We continue to stay selective. We focus on value. We believe that these investments that we are presenting to you today is continuing to offer superior returns, attractive returns for U. S. Investors. Secondly, we strongly believe in the integrated business model. Thadija has talked about this when it comes to the development approach, how we access new markets. But also from a value perspective, we optimize value across the project life cycle. We are able to provide all the inputs to the financial models with our in house capabilities. And we want to be in operational and transactional control. We want to control our own destiny. That's important in our model. We will continue to bring in debt and equity partner into our business, into the projects, into the new initiatives, And the partners bring value. They bring capital, competence and risk mitigation. When it comes to our capital structure, we expect that to remain fairly unchanged. We will maximize leverage on the project level, on the utility scale side of our business, and we'll keep debt at a moderate level when it comes to the group debt. Finally, our dividend policy stays firm. We introduced this at the IPO 5 years ago now. So we pay 50% of the operating cash flows from the power plants as a direct return to our shareholders, and we'll continue to do so. Now we created substantial value over the last few years. EBITDA is up 4 times since 2017. And over the last 12 months, revenues reached SEK 6,100,000,000 and EBITDA SEK 1,300,000,000 and free cash flow back to Skatek Solis equity was SEK 700,000,000. Power production has increased and reached close to 1 terawatt hour over the last 12 months. And in fact, now in 2019, the daily production is up 2.5 times since the beginning of this year. And when 1.9 gigawatt is in operation, we expect that to produce about 3.7 terawatt hours of power every year. We established a solid development and construction business, delivering about half of the current EBITDA, and both revenues and margins have stayed within the guidance that we have provided in the past. We continue to have a strong focus on operation and maintenance and also asset management of our assets, making sure we have stable operations and deliver the volumes that we should. And the O and M business have delivered EBITDA margins in the range of 35% to 40 percent. When it comes to our financial position, it's solid. It's been financial discipline has been important for us all the way. At the end of the second quarter, total assets, consolidated assets stood at SEK 17,500,000,000. It's up SEK 2,600,000,000 from the beginning of this year, and that's, of course, reflecting then the CapEx investments we made in this time frame. And the consolidated cash in the group was SEK 2,400,000,000, while the group level book equity ended at SEK 3,300,000,000 at the end of the second quarter. Now let's look at the cash flow in the group. I think this is an important slide, really summarizing all the movements of cash across our various business activities. This is how we manage cash in our company. You can see how we generate cash and how we use cash and really mainly for new investments. Over the last 2 years, we've generated SEK 1,300,000,000 from our development and construction business as well as received distributions operating cash flow from the assets that are in operation. We have, at the same time, invested about SEK 2,500,000,000 of equity in the 1.6 gigawatts of new plants that we have constructed in this time period. We haven't completed all of that construction yet, so there will be more development and construction margins also throughout this year and into next year from that part of our portfolio. In addition, we have invested about SEK 200,000,000 in our backlog and pipeline. We capitalize project development expenses when the project reaches certain level of maturity, And I'm really happy that we have not had a lot of impairments of that those development CapEx. That's a sign of the good work being done by our project development team that most of the projects that we are working on are actually being realized. We paid about SEK 190,000,000 of dividends to our shareholders in this time period, and we raised about SEK 800,000,000 of equity and bonds over the last couple of years. Now we also had a positive net working capital movement, which then gave us this SEK 560,000,000 as ending balance cash at the end of second quarter. We report on this every quarter, so we can track the same movements. So I think that's an important graph to follow. So I want to move on then from being somewhat backward looking to look ahead. And with a 4.5 gigawatt target, our financial growth capacity is, of course, very important. And first of all, our asset portfolio will continue to grow at a high rate and generate more cash, more operating cash back to us at the group level available for new investments. We're in the middle of completing the 2 gigawatts at the moment. Now the integrated business model is also important here, and you have seen this graph before, many of you. And we are using the development construction margin to fund growth. This is a 100 megawatt illustration. The CapEx is about $100,000,000 We raised debt at the project level of 75,000,000 and we and our partners are investing equity of about SEK 25,000,000. Our share of that is typically SEK15 1,000,000. It varies. We can take different ownership positions in our projects. And then at the same time, for the same project, we generate about SEK 11,000,000 give or take as a margin from developing and constructing the same project. So it enables us to fund a large portion of this equity through our own business activities. Now the accelerated growth and the new initiatives that we've talked about will most likely require additional funding at the group level. Our funding need is depending on several factors. We talked about these also in the past. It includes the size and the timing of new projects, obviously, what type of ownership stake we're taking, the debt leverage of these projects. And for us, it's important to maintain flexibility around our funding and how we approach that, and I think we've been able to manage that also in the past. So I want to move on to talk a bit more about partnerships. And we are partnering both with governments and with banks. And I want to explain a bit more about who these partners are and how the partnership works. We're partnering with multilateral development banks and government institutions for both debt and equity in our projects. These institutions have been established by governments and mandated to provide financing for infrastructure across emerging markets, And they haven't been established just recently. These have lots of experience, a track record from these markets over the last 50 years. It's IFC, it's EBRD, it's FMO, there's a lot of abbreviations here, but it's Multilateral Development Banks. And they have for many years provided this funding for infrastructure, and they have a lot of experience from the country. They know the governments. They know the legal framework, and they know how to operate in the markets. And we discussed with them at the early stage when Thadry and the team is out in Vietnam. We talk to these banks what are their experience, what advice can they give us in addition to, of course, the other partners that Thade mentioned. And since these institutions already are important partners for the governments, they also have leverage and influence on the authorities. And that's where the risk mitigation comes in, where we as a small private Norwegian company would have limited leverage on governments. These institutions really have truly a lot of influence. And of course, finally, we put in place the nonrecourse project finance debt. It's a very comprehensive process, time consuming process, but it's meant to cover all basis, to cover all the risks, the technology risk, execution risk in the project because the banks are only relying on the cash flow generated by each individual power plant. It's a very thorough process, a lot of due diligence that goes into this. And through that, we also take risk down when we finally put our equity into the projects. And in fact, certificates are showing that the default rates of infrastructure energy based contracts across emerging markets is really low. We have seen very limited defaults around us. We have never had any issues in our portfolio. Now these partners are also, I would say, supporting us in the ESG area. We are doing a lot in collaboration with our financing partners, And we, of course, aim to keep a holistic and integrated approach to ESG and sustainability. We touched upon it earlier. It's really a buzzword these days, ESG. And we've seen a lot of increased interest from ESG focused investors as well over the last 12 months. And I would say we've obviously been focusing on this for more than the last 12 months. We've been working on this for many years. And we also improved our reporting, and I believe we're getting good feedback now on our sustainability report from many of our stakeholders. And on this slide, you see our sustainability framework. So we're capturing the E, the environment the S, the social aspects and the G, governance. It's easy for us to cover the E. As we grow our business, we provide more clean energy to the world. The objective is very clear. But it's not enough to do that. We need to build our plants in a way that protects the environment. We are doing the environmental and social impact assessments for each individual power plant. And in the process, we need to engage the community and our other stakeholders and we need to manage the social and environmental aspects of our operations. It's a resource demanding and complex process. We have met challenges here in several years, but we've been able to manage those together with our partners. Now being a trusted business partner is really about our license to operate, and I want to talk a bit more about that. We need to constantly focus on compliance, safety and integrity in the way we approach our business. We want to be in the forefront when it comes to combating corruption and any unwanted practices in our operations. And we have a compliance program based on risk assessments. It's important for us to map out all award processes, all regulatory processes, so we understand that these things are happening in the right way, that there are no gaps. We are also performing full integrity due diligence of all the relevant stakeholders involved in our projects. When we have done our assessments, the banks and project lenders are also doing the same. They're doing their same independent due diligence. Here we, of course, follow the Equator Principles and the IFC performance standards. These are well known standards within the financial industry for how to approach these topics. Our anti corruption program is embedded into our operating system, meaning that we need to identify compliance risk. We need to understand the risk and how to mitigate it before we can create projects. And obviously, our 0 tolerance principle is the foundation of our code of conduct, our partner conduct principles as well, our supplier conduct principles. And it's part of our onboarding process to give training, and we also have quarterly training for our employees within these policies and do dilemma training and so on. So how we conduct ourselves in these areas are really vital for our business. And if it's done well, we believe it's creating competitive advantage for us, and we believe this has and continue to create competitive advantage for us as long as we're able to perform well within this area. So let me move on then to talk a bit more about how we work on the more traditional financial risk management. The project cash flows are stable based on long term power purchase agreements. We have fixed tariffs for 20, 25 years. We have a take or pay obligation, So the customer takes whatever we produce and needs to pay for that power. We are not taking on power market in our portfolio. And that enables us also to leverage these projects up to 75%, as I mentioned. For the release offering, we have a slightly different structure, shorter contract tenants, you heard about that today, but we mitigate risk here through guarantees from the customer, but also the fact that the installations are redeployable. When it comes to counterparty risk, the government that we work with and the state owned utilities, they are backed by government guarantees. These are, in some cases, challenges challenging, and that's where this other concept is also coming into play, as Hans Ole mentioned. In some cases, we also sign up project risk insurance from the World Bank or others to further protect our investments. Interest rates are hedged for at least 10 years, so we lock in that part of the equation as well. And when it comes to currency, a lot of the projects that we do are in dollars and euros. So if we move on then to talk a bit more about our portfolio, we are completing 1.9 gigawatts, and it's a long term power purchase agreement with total value about NOK 60,000,000,000 the next 20 years. And we've seen a solid diversification, I would say, of the portfolio over the last 2, 3 years. You can here see the split of currencies and countries that we are involved in. So if you look at currencies first, more than half of the portfolio is pegged to dollars and euros. So a lot of the smaller emerging markets are offering tariffs in hard currencies. When it comes to South African Rand and Brazilian reais, which are other important components of this, here the tariffs is inflation adjusted with a local inflation. It's providing extra protection in these somewhat more volatile currencies. And according to the textbook at least, there is a correlation between inflation and currency movements. When it comes to countries, we're now active in 11 countries with operating assets. And from an EBITDA and cash flow perspective, South Africa, Ukraine and Egypt are the most important countries with more than a bit more than half of the cash generation. As I mentioned, 20 years is the average remaining contract tenure. So we've just recently connected quite a lot of new capacity and will do so over the next 6 months. So it's a really young fleet of plants that we are operating as you can see here. So let me also touch upon a topic that I've been believe is really important and that we see equity analysts at least seldom really put a lot of emphasis on the residual value or the post PPA value of the asset portfolio. Technical life of a plant is at least 35 years. So there should be 15 years of additional production from these power plants also after the end of the PPA period. In the graph to the right, you can see we have calculated the equity value of this 1.9 gigawatt portfolio based on 3 different power price levels and 3 different levels of cost of equity. You can, of course, do your own calculations. But I just want to highlight that in most of the markets that we operate in, there's not really a truly they're not really deregulated. So there's not a wholesale price, there's a market price reference available. So that's a bit of a challenge. But if you study the cost of various technologies, you can still and look at the supply and demand curves. You can do some assessments. And we believe we've been fairly prudent here in the assumptions we made, looking at $45 to $65 per megawatt hours as the cost of power as a reference price for what we can sell the power at after the end of the PPA period. So with this approach, we're estimating the residual value of somewhere between NOK 2,000,000,000 and NOK 4,000,000,000 of the 1.9 gigawatts. And obviously, as the portfolio grows and as we move closer to this time period, this value will increase. So let me end my section also by just repeating some of our financial and operational targets. 4.5 gigawatts clear, 1.5 gigawatts plus per year from 2022 onwards. Development and construction margin of 12% to 14%, average equity IRR of 12% to 14%. This is a slight adjustments from the previous guidance of 15%. And finally, we aim to grow the release products to 300 to 500 megawatts per year from 2022 onwards. So with that, I will give the word back to Raymond for a summary. I think you summed it up quite well, Mikael. It's I mean, when you've been in business for some time like I have, you base a lot of your decisions on facts that you collect. But sometimes, it's blended with many years of exposure to different parameters that allows you to build confidence or the opposite about certain markets. And we are active, as you know, in many, many markets. But I'll just share with you. I mean, I was in Vietnam first time in 1991. I mean, they still had the old American hangars when I landed in Uximin. I found it's a very difficult country to do business in. We did some business, but we continue to work. And then I mean so nice, so long time afterwards to visit the country again. We recognize some of the same things. I mean, how do you understand how business is actually developed, how decisions are being made from sort of the local level, the people that we're dealing with at the community level through the People Committee that have a major influence on decision making up to Hanoi where the garment is. How do you understand that? How do they make decisions? And of course, as you heard previously, we had the Prime Minister visiting Oslo in May. It was a very nice event for us as well because he came back to Uximin and they had recognized that Skatex Solar sort of had publicized that they're going to invest $500,000,000 So it was about 100 articles about us in Vietnam. So I said to the Prime Minister that we have planned to visit your country in the beginning of July, and I hope to be able to meet some of your people there. I said, well, maybe we can meet, he said. Of course, we didn't meet when I came back or came back to Vietnam in the beginning of July. But then you look at the country, it's growing between 7% to 8% on almost 100,000,000 people. You see the drive of opportunities that due to the international trade war from China to Vietnam, You know that they are in desperate need, I mean, to support 7% growth. They need at least 10%, 15% growth in the electricity sector. In fact, from now until 2,030, they are going to add as much power as we have in the UK altogether or in Thailand. They have to do it to create continue to create jobs. And then you talk to different people, you collect information and then you feel that there is a developed sense of urgency by the governmental officials. You meet that in every office. So that was when I left Hanoi in June sorry, being in July. And of course, we came back, as Terje said, in just in the second half of August, met with the Vice Premier and the same thing. So for us, I mean, it fits as Thierry said, it fits our ability to decode different markets. We're there. And when we are and you should probably appreciate that, we're not there to take only market shares. We're there to develop the industry together with the government. So when we talked to the government officials there, we said, okay, you have a tremendous opportunity. You need to build an industry on the back of all the renewable projects that you will have in the country. So we will I'm saying we're going to copy, we're going to further refine and do the same thing we have done in South Africa. We will develop a renewal program with some of the universities in South Vietnam or in North Vietnam or in Vietnam, so that they can actually develop we will also because we are looking at the largest floating solar ever in the world. He hasn't put everything into his pipeline, but I mean there is an opportunity there. If we succeed, we're not there yet. There we will build local competence around that. Also the floating units, we floating units we will build there not only for our project if we succeed but also for export. So I think that's why we're very enthusiastic about Vietnam and all the other markets that we have covered today. So I'll invite the rest of the team up here, and we're open for questions or comments or anything you might want to discuss with us. Jurgen Broussel from MediaMarkets. So on the outlook and the slightly lower RRR than what you had at the previous Capital Markets Day, obviously, that's offset by higher growth. But could you give us some comments on whether that also implies reduced risk attached to the growth you see in terms of what we had reflected in your RRR? That's my first question. Yes. Could you just repeat the question? It was a bit difficult to hear you. Sorry. So your IRR is guided slightly lower than what you had in your previous guidance. With the capacity you have assumed for the growth ahead, do you see any changes to the operational or execution risk in that capacity in your new target so that your IRR that's slowed is also combined with lower execution risk? Yes. I think in terms of the I mean, you talked about execution risk, but I think we also have to focus on development risk and the exposure we take there. If you look at the pipeline, I think we have a more diversified pipeline currently. We are moving into new markets where maybe the underlying risk of those countries are lower than what we had historically. And a lot of the countries we are currently focused on are countries where we have already done business. So in totality, I definitely think that we have lowered the risk on the development side as well as on the operational and execution side into the pipeline. Okay, perfect. Thank you. And also just a quick question on release. Are you able to say anything more about the economics of release in terms of payback time? Will you depreciate these assets over the lifetime of the first contract? How many contracts do you need to breakeven? Or just any color on the economics of this? Or is it too early to say? So yes, to answer that, Hans Ola had this on his slide. We are expecting on the release to be higher than the average on the utility scale, so above the 12% to 14% basically. And yes, so that's the guidance we can provide at this stage. I think we will need to go get back to you with more details around economics later. But we also said in the material that when it comes to growth and funding, we expect this concept to be cash flow neutral around 300 megawatts to 400 megawatts. So when we have aggregated the portfolio up to that level, that should be a self sustaining business. Okay, perfect. Thank you. Yes. Eivind Bedding, DNB Markets. I was wondering if you could elaborate on the financing of your increased target to 4.5 gigawatts and also the 1.5 gigawatts target thereafter because previously we've said that we had cash flow to finance 800 to 1200 megawatts with 3.5 gigawatts in operation. So basically back of the envelope here, I get to SEK 1,000,000,000 funding gap. Yes. I think as you would appreciate, it's difficult for me to be specific and answer these questions more specifically than I've done. I think what we've said before and say now is that for us to have flexibility around funding on a group level is important. The factors that will influence this is, as you know, the projects, the timing of them, the size of them, the ownership that we take. So we're not able to be more specific in that. Okay. Thank you. And just following up on the previous question on the IRR targets that's taken down slightly. Is it fair to assume that, that is driven by a more competitive environment as more and more of the markets are moving to tenders? Or are you deferring some of your returns to accelerate your growth? Yes. Again, I think it's partly related to the last question. I mean, we do develop a broader portfolio. We have obviously, in some of the markets, we are facing more competition than what we've done previously. But I think you will also see from the presentation I had that on a broader scale, you have more or less the same pipeline diversification as we had previously. But I would also say that we are now moving into and getting larger pipeline portfolios in countries with lower risk than we had previously. So even though sort of the equity IRR of the project might go down slightly, it doesn't necessarily mean that we take down the value creation from those projects. Maybe I just want to point out one thing that I guess you're aware of, but I'll say it anyways. If you're going to look at the overall profitability of our little company, you have to add the D and C margin to the profitability on sale of electricity and the O and M margin. And then you're not at 14% to 15 percent, as you know, if you do your math. I mean, you're approaching 2018, 20, 21. So there is flexibility there, of course, to be a little more flexible with regards to the specific returns we have had. And in fact, some of the investors have told us that. I mean, they said to me, well, we wouldn't mind you guys taking a project of 12% because that's also a good product. Well, yes, but we would like to be very picky still. But I think not a very big portion of the increased volume is linked to is in the lower band. And of course, if you blend this in with the growth on the release side, I think it's going to be yes, we're going to be quite okay going forward. Just following up on the pipeline first. You say that in addition to size increase, you're also looking at better quality. Are you then discussing lower risk markets, as you alluded to, or that they are further ahead in terms of maturity? Yes. I think it's both of the aspects that you're mentioning and it's also obviously a consequence of the fact that we are continuously working on our pipeline maturing the project. And some of the projects with lower quality might fall out of the pipeline, and they might put in better quality projects. So I think this is the work we do on a day to day basis continuing to mature and improve the quality of our pipeline. Thanks. And a specific question on the Tunisia pipeline. You obviously had a very, very strong win there in terms of the lowest bid, dollars 24.4 per megawatt hour, which is, I guess, the lowest in Africa. Will this project be within the current KPI guidelines in terms of project IRR, D and T margin? I don't think we're going to comment specifically on the equity IRR of the Tunisia project, but I think that fits well into the total portfolio, and the portfolio will still meet the requirements that we are communicating. Thanks. And just a small question on release. Will you be growing the portfolio of assets sort of project by project? Or will you kind of invest in a portfolio as you just kind of generalize and then lease it out? If I understand your question, whether we would invest in the fleet before we have customers, then we would ramp up the fleet as we grow our portfolio of customers. That's the idea. And then final follow-up on that. Will you be or how will you handle the different type of counterparties' requests for storage for the solar? How will you determine the mix of the asset base as you build it up between batteries and solar? So if one client requests a big a project with big battery support and then the client leasing next will have requirement for lower percentage storage, if you get my question. If I understand your question, you are asking whether we will size the battery to the specific customer needs? Yes. We'll at some point be concerned with that particular asset being a mismatch to the next owner? Well, this is again coming back to the modularity. We're building out basically also the battery packs we have are modular. So if you size one project for 10 megawatt hours at one site and the contract ends, you can go back and use that battery for 10 projects if you need to. Okay. So it's not Jovia as well? Okay. Thanks. From May. One question. I guess we all accept that this market is exploding. The question is what's happening to the margin, right? What happens to the competition? So if you compare yourself to, say, your best competitor, what would you argue is the reason that you still will be able to protect your margin and make sure that barriers to entry by so low that what looks like a wonderful thing will just be killed by competition? This is a tough question, but I think it's this is what it's all about, at least to me. Yes, if I may. Just after we listened in 2014, we sort of talked about 15%. And the first question I was, was similar to yours. I mean, how can you protect your margins? The competition is going to increase. And I think we have proven that we are able to deliver on what we've said in the past. And your question now is also why is that and will that continue. We have grown tremendously. Previously, the projects we used to develop our projects ourselves. Now projects come to us in an abundance. We are able to actually be more selective. Number 2, we have a tremendous, as somebody said, Hans Holag, purchasing power. So we are getting the best module prices, the best inverter prices in the world. And then we have a business proposition that goes beyond just equipment supply. I mean, a business proposition that gives the buyer or the country for that sake a different perspective, value added that you will that you can sort of bring in addition to just being there for commercial reasons. South Africa was like that. I would say partially Egypt, and we hope that Vietnam will be like that. So we are trying to be the different guy on the block providing a business proposition that allows us to be different from the pack and gives and they deserve this. They deserve additional opportunities. In fact, I met with Professor Eberhard in June. He is the advisor of Ramaphosa, the President of South Africa. He is a well known guy for those who travel frequently to South Africa. And he said, Remen, I know what they have done in South Africa. This is the best story for South Africa and what South Africa can do with renewable energy, building the plants, creating export, we're exporting, educating students and having them do research on your plant that you're actually utilizing on your plants around the world. So, this is a very good example. And it was his words about us. That's how we would like to be portrayed and understood as a partner to the utilities, to the countries, and I think that's winning us some additional orders. That was a long answer to a short question. Sorry about that. Okay. I don't think I see any further hands here. So I think we can end it there. So thank you all for your attendance. Thank you very much.

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