Good morning. It's 9:00 A.M., Wednesday morning. I have to say, I'm extremely happy to see so many people here on an early Wednesday morning to attend our capital markets update. It's about 15 months since the last time. The world is moving extremely fast. 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. Terje Pilskog 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. Then we have something extremely interesting, I think, something we call Release or Re-lease.
Well, I may put too many words into my mouth now, but it could revolutionize a part of the market, particularly, in the emerging world. Mikkel 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. 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, we generate profits, revenues, contributions when we execute, and if you're not executing well, we're not doing a good job.
When you're doing that on four continents, you need a system that works, people that understand what they're doing, that can interface with the 60%-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. We 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 then finally optimize the assets that we have and also the way that we conduct our business will be essential. I think you see everywhere that the market is growing tremendously. People have different projections towards 2050. I think DNV GL talked about up to 90% renewables in 2050 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, 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 megawatts. That means that we will keep the pace that we have at the moment with a slight adjustment upwards. We also talk a bit about the growth beyond 2021, we're saying 1.5 yearly plus. It will start at 1.5, maybe higher, and will continue upwards as the market continue to expand. These are some headlines. I've covered some of them now. You see there is growth everywhere, but not so much in the OECD countries.
Almost 90%-95% of the growth will be in the emerging markets where they need new energy, not replace old, dirty energy with renewable energy. The market is really nice, and you can see here from 2%-22% up to 2050, while the consumption of electricity or the need for electricity goes up by a little bit more than 62%. If you take a look at us just now, a snapshot, we have almost two gigawatts in operation or under 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. 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. If you added all the opportunities and pipeline, of course, it will be much even more distributed along the emerging market belt. You can see the projects that we have in operation. It's not 10 projects, because in Egypt we have five. 3.5 is actually five projects at the moment. The last one will be connected within two to three weeks. We're done, more or less, with the six projects in Egypt. Malaysia is three projects, East Coast, two on the West Coast. South Africa, been around for a long time, three projects performing extremely well. Brazil, Honduras, two projects. Ukraine. That was a market two years ago that we saw as interesting. We weren't sure.
We did our research, as we approached summer last year, we really decided that we need to go ahead. A lot of things have happened in Ukraine. Right now, we are producing or building five projects. We have built an organization from scratch to 70 people in the office in Kiev. I think it's 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. 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 fourth example. How have we performed?
Those that joined us in 2014, 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. 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 and under construction, and backlog and pipeline. 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. 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.
You can see this also manifests itself into an improved bottom line. Almost 760 MW is in operation, as you can see here. We decided, I'm an old oil and gas guy, and I appreciate quality. 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. They checked all our procedures, interviewed our people, and we got our ISO certification in, I think it was in February. Both quality and HSSE. They will re-inspect 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.
It's a place where they have highly qualified people, and I think they will be an asset to Scatec Solar, not only in Ukraine, but also for our operations outside of Ukraine. What does our organization look like? This is an old slide. Not that old, but I think it 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. We are, in a good way, controlling our destiny. We do the structuring and financing. We invite partners into our projects.
It's very nice to see that a lot of our partners that we started working with many years ago regularly come back to us and say, "Do you 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 proper financial discipline. I think we have shown that, and we will continue, as Mikkel will underline, to really use financial discipline when we're assessing the opportunities and when we're expanding the business. 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. We will also continue to do that. Of course, it's about people.
How do you design an organization when three 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. You have to have a flexible organization. You have to have people that are more comfortable with change than a company not changing. If you're not change, you will be left behind. This is how we have put the people together in an entrepreneurial culture, where they are passionate, impassioned, and empowered. I think you will see on the next slide also, or a later slide, that this is not done by accident, so to speak. We have people right now working with us from almost 50 countries.
That includes short-term people, hired-in people. For us, when we move into Vietnam, it's not sufficient to know where Vietnam is on a map. You have to have people that can decipher, decode the culture to understand what is going on. 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 four or five 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. You can see that because the hiring 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 Scatec Solar, 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. Over the past 12 months, we have had people working under our direct control around 13 million hours.
If you look at the numbers to the right there, 0.8 per million worked man-hours, meaning that a person has been away from work not only a whole day in 1 million man-hours. That's an extremely good number, and we measure this around the world on our projects. Sick leave. What is it in Norway? It's higher than 0.4, I believe. This is also remarkable. People want to be at work. Maybe they shouldn't sometimes because they have a cold or something. 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, 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. We're about to finish Egypt. We have worked 7.5 million man-hours. We have one LTI, one guy that has been away from work during that period. It's actually seven because it's 7.5 million. 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 of them, and sale. We are also our own customer, so to speak. We allow ourselves sometimes to deploy new technology in situations where probably a customer would be a little reluctant because we say, "We'll 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, That's what it became. We're producing electricity from the front side and also from the back side. The indirect solar light we're picking up from when it's being reflected in the desert, We will have a boost almost 15%. In fact, it is confirmed that this is 15% in the initial measurements after we have started the plant. I was in Cape Town three weeks ago. It was World Economic Forum. We were invited there. Of course, our offices are just down the road from the conference area.
I took the opportunity to invite a lot of people to our control room. That was really nice to be with those guys because they were impressed. This is manned 24/7. We get signals from all over the world in the control room. 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. When the sun is down in one place, it's up somewhere else. We are producing electricity from renewable energy around the clock. If you look at where these 4.5 GW are going to come from. Well, the backbone of our industry or the backbone of this goal is the utility scale.
Most of the 4.5 will be from large utility scale opportunities that is in our pipeline already. 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 large industrial companies are becoming more clean, but maybe even more importantly, those decisions to go ahead with renewables is easy because it's cheaper than diesel. It makes commercial sense. I mentioned Release. What is Release? I think it's a good name, actually. In Africa, South Asia, Southeast Asia, Central and South America, there's a huge market.
The market in between 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, it depends upon how you count it, you have 250 GW of installed diesel generating plants. The available market maybe for us, if you look at that, is 50-100 GW. 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. 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. If the contract runs out after three years, the customer run out of whatever they're mining or they want to do something else, then we can take this concept, as Hans Olav will tell you more about, and redeploy it, put it somewhere else. Look forward to that presentation. Sustainability. It has become more than a buzzword. Over the past year and a half, particularly in Norway, but now everywhere. Everywhere, I'm meaning 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. 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. This has been embraced by us and implemented into our operating procedures. This is 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. Right now, we have 35 programs that we are managing. We have embraced four of the United Nations sustainability goals. Right now the projects that we're doing has a budget of about $50 million. 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, energy, and small and medium enterprise development, creating their own business, lasting jobs. I'm very proud of the example to the right. For two years now, we have been working in Honduras. We have two plants in operation there. We have been supporting a medical brigade. We have had 8,500 people visiting the 40 medical specialists, and have actually done that, some of them for the first time. 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.
Yeah, it says 4.5. That's a revision from the last time you saw something similar to this slide. 1.1, add in backlog and then what's under construction, 2.2, and then from the 5.6 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 300 to 500 in 2022. 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. I will confirm to you right now that we will continue to deliver high returns on our projects.
That will go on, 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. We have a lot of programs, 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. Rest assured, HR is a strategic element in our success also going forward.
I think I'm just about to have spent my 25 minutes, and then, Terje, I'm very much looking forward to your presentation. We'll see you a bit later.
Well, that was on the minute, Raymond. Thank you, Raymond. Hello, my name is Terje Pilskog. I'm responsible for product development and product finance in Scatec Solar. I have been with the company since 2013, and I've been in the industry since 2005, 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. I think that this development is going to continue. Obviously not at the same rate. That would be impossible. 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. 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. Raymond 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. 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. Luckily, we are focusing on emerging markets, and it's a significant overlap between emerging markets and the sun-rich parts of the world. In most of our markets, solar is the most competitive source of energy. Over the last 10 years, or at least since 2010, the levelized cost of energy in these markets for solar 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. Hans Olav will talk a bit about that. We can accept flexibility on contract lengths, tenors, and on certain price elements, and still be competitive with alternative sources of energy. 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.
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 about 50% of the total market. Here we see that this share of the total 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. Our experience in emerging market is that it's not only the low cost of solar which 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. We've depicted some of them here up on this screen.
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. They are 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. 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.
In terms of forecast, and this is still BloombergNEF figures, we see a continued significant growth or increased growth actually, in terms of the market potential in emerging markets. 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. These are no longer small markets, but they are significant and large markets. 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. In terms of the overall focus, we will continue to look for the big markets.
In most of these markets, we are already present. 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. In the context of this market, we have been continuing to develop our pipeline. Since the last capital markets update about 15 months ago, we have increased the pipeline by about 1.5 GW. 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 there are certain markets we have abandoned. On a growth basis, we have actually added over this period, about 2.7 GW of new projects into the pipeline.
We also believe, as Raymond said, that the quality now of the pipeline is improving as we continue to mature it and we continue to work on it. All in all, this is what gives us the comfort of increasing our targets to the new level of 4.5 GW. 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 Raymond said, we are working across three, I would say, relatively distinct segments. The first one, utility scale PV, 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 large share of these kinds of projects. 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 offtakers like Hydro and Google and other well-known names. We are also seeing that this is increasing in emerging markets, and we are 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. Lastly, we have the Release concept. This is typically smaller projects, smaller offtakers. They require more flexibility.
Here, as Hans Olav will come back to, we have developed a commercial and a technical offering, which fits very well to this segment. Hans Olav will come back and talk more about that a bit later. I will continue to talk about the utility scale segment, which is our workhorse segment, so to speak. 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. The state-owned utilities, they are sourcing contracts through different procurement mechanisms. These 4 ones are the main procurement mechanisms. We have bilateral negotiations where we work closely with the authorities. You have feed-in tariffs, which I think most of you know, which is a set tariff for all projects that are brought online.
You 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. 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. These are the different items. On the one hand side, you have the bilateral type of markets, where you have to take a longer-term perspective. There is more unpredictability, but there is also then less competition and a potential for higher reward. On the other side, you have price tenders. Here, there is more predictability in terms of the process. Processes are typically shorter. 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. 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. In terms of our business model, I think there are five principles that are important and that I would like to highlight here. Then I will go through some examples of different markets, and show how we use these principles to generate new opportunities and new projects. 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. 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. 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. We also work with larger global partners on the development side. That could be companies like Norfund, Africa50, Equinor in Latin America, to have a broader perspective on the development.
The fourth principle is our integrated approach. That means that we control all the input to the project. We understand the development side, the financing side, economics, the construction side, and operations and maintenance side. 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. Finally, important for us is to manage development risk. Obviously, we now have a pipeline of 5.6 GW. It's a big pipeline, and it takes resources to move that pipeline forward. 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.
Those are the five principles that I would like to highlight now. 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. Raymond 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 over 336 MW, and that represents a total CapEx of NOK 4.7 billion. The approach we took here 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.
When we saw that those parts were fixed in the regulation, we were ready to move forward. We relatively quickly secured five projects that we were willing to move forward with. It was a time window, so we said these five projects are what we can take from an organizational capacity, but also in Ukraine from 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. We will see when, here we list all the different financing partners that we've had for this project, that it's not as standardized that we would have liked to see. It means that we've been able to bring in many new financing partners, and we've opened up this market for many of these players.
At the end, we have been able to raise NOK 2.3 billion in financing for the market. The first project is already in operation, and the next projects will come into operation over the next three to six months, approximately. Another market that is quite similar to Ukraine that we're now looking at is Vietnam. Vietnam is a big economy. It's a population of about 200 million, is 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 2030 to continue its economic growth. Currently, the generation mix is a lot related to coal and gas and hydro. Vietnam, they have established a master plan for how they're 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 GW of coal to the 30 GW they already have. The implementation of this new capacity is a bit delayed, partly due to the fact that there's a lot of local resistance towards coal because of air pollution, low air quality in the country. There is 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 are only foreseeing in the range of ±15 GW of renewable energy, so wind and solar. On the other hand, McKinsey has taken on the task to do a least cost analysis of Vietnam to see if you, based on current understanding of costs of different generation sources, try to come up with the least cost development of the power generation sector.
This is what we have depicted on this chart. On this least cost basis, you will see that coal is constant at today's level of 30 GW. While renewable energy, solar and wind increase from a very low base today to about 100 GW in 2030. This renewables-led plan that has been developed by McKinsey is cheaper on costs. It provides better energy security because Vietnam 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 1.1 billion tons of CO2. That's a big number, and I don't know if you can relate to it. Norway, on an annual basis, emits about 50 million tons of CO2.
Over a period of 12-13 years, which is until 2030, 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. That's assuming that our emissions are flat. The government has committed to reducing our emissions by 40% by 2030, it will be even more than 2x our emissions over this period. This is the basis for the Vietnam markets. It might not develop exactly like this renewables-led 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. We have been working in this market for some time. We've been working to identify and qualify local developers, as we typically do.
We have also lately started to engage in quite closely with the authorities. The Prime Minister was on a state visit here just before the summer, and we met with him then. In August, we were back in Vietnam with Raymond also meeting the Deputy Prime Minister, talking about our plans and our visions for Vietnam, and getting good feedback on that. Through our work in Vietnam, we have now secured more than 1 GW 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. It's important to say that these are development complexities that we are seeing in most of the markets that we are working in. 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. 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. 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 200 million. It enjoys the same level of growth, and it is also expected to increase power generation by two times over the next decade.
Here from 16 GW, a significantly lower level, to 32 GW in 10 years. 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've focused on working together with local partners that are able to participate in funding the development costs. We have brought in grant institutions like, for instance, Norad, to help us support the development. Now lately, we have also brought on FMO, the Dutch Development Bank, as a co-developer that will also share the development costs. This is the way that we're working, where we have to take a long-term perspective in less predictable markets. In terms of the status here, we have the Nilphamari project.
Here we have secured the land, finalized tariff negotiations, mandated lenders, and brought in co-developers. This is a project which is moving forward. Then on the back of that, we have developed another 300 MW of product opportunities in the country. 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 Raymond said, we are selective in terms of what tenders we are participating in.
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. Finally, through the process, we knew the competition, we knew the companies, and we knew what their typical behavior in tenders are. Based on all that information, we decided that this is a tender that we will participate in. Obviously, when we participate, we participate to win. In this tender, we had lowest prices on four out of the five projects.
The award is still pending, but it's expected to come by the end of this year. Maximum award to one player is 300 MW AC. That is in the range of 350 MW and 360 MW DC. Now we'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 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 tender round to be issued.
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 larger corporate off-takers than participating in the state tenders. 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. With that, I thank you for your attention. I think we will now have a break. We will reconvene back here at 10:15 for Hans Olav's presentation on Release. Thank you very much.
Welcome back, everybody. I'm Hans Olav Kvalvaag. I've worked in this fine company for four years. I've previously been responsible for our activities in the Americas. Amongst others, sold off the U.S. portfolio to Macquarie. I've also been 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 team's response to that challenge. I'm super excited. I think it's going to make a big difference for Scatec 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 financial 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 300-500 MW 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. 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, also it capture the release of the customer from the dirty power and into the sunlight. Raymond already showed this slide. 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.
It's modularity. We're essentially here using exactly the same equipment as we do for our 400 MW plant in Egypt. It's the same one times two 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 they're 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. 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 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 is obviously a great variation in the size of these different miners, but some of them can be up to 100 MW of base load consumption. We have the NGOs, the UN 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. We have the utilities.
Some, I would say many utilities struggle with the long-term commitments under a 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. Many of the utilities already operate through leasing today. They lease their diesel generators all over Africa, maybe even more importantly in island states. In Indonesia, for example, utility PLN operates diesel generators on most of the 13,000 islands. No. 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 $0.007 per kilowatt hour on Nord Pool. 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 four categories that are solid and large. Now, we are just now launching a new webpage 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. We have to remember that most of the counterparts here are engineers, and I think they'll like it. It 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.
It tracks the sun from east to west, giving a much higher efficiency and production than you otherwise would have. In combination with the 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. It needs to put up less guarantees, and the contracts, and 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. 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. Their tracker design is optimal for our offering. With our, being Scatec Solar's, 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 trackers 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 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 modules and without, to test effects and performance.
This will be cost competitive for smaller scale projects. I tend to think 10-15 MW at least today. When this matures, it's going to be increasingly competitive. 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're looking at currently. It's a Western-listed mining company operating in Africa. It relies on diesel. It has a mining license with the government of only five years. However, the life of mine is potentially 20-25 years, and they hope to extend. This is not a large energy consumer compared to many other mines. Still, they're buying power today, or diesel power today, for approximately more than $10 million a year.
It's not your average winter cabin. When they get our equipment in place, they will get significant savings in both CO2 and obviously in cost. We will get our payback within the length of the contract. 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. I don't want to kill the vibe in my own presentation, but there's always a but. There is actually a flaw to solar. The flaw is that despite what I've told you so far, the problem is obviously that we cannot provide base load. The supply of solar is only during daytime. We can cover 28%. His savings on that is 50%. The cost for the customer of the power we provide compared to the diesel power is about 50%.
In totality, he saves 14% on his overall power cost. Obviously, with these great savings, he thinks, "How can I save more? What can be done to save even more?" 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. In many cases, it makes a lot of sense to install a small battery to optimize the way diesel is run today, reducing spinning reserve and consequently reducing diesel consumption. To really boost the renewable penetration above 30%-40%, you need to install significant additional solar and batteries. I present the curve here, which is a given example of mine or any operation that has a constant need for 10 MW power.
To get to a 65% solarization, you actually need to put in 25 MW of solar and a large battery. 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 daytime 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 cost of power. In the UN example I mentioned, we actually have installed a big battery, and it makes full economic sense. We have a 90% renewable penetration. Also for this customer that I mentioned previously, it makes sense to install some batteries.
Currently he is thinking, "I will only install solar to get comfortable, and then I will move further afterwards." This, I think, is a tremendous opportunity for us. With our concept, we know that as everyone is comfortable that battery prices will drop. As battery prices drop, more and more people will be willing to put in more batteries and add solar because it simply makes sense. When we talk about the market here, the market is actually much higher than the base load 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. 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. DEIF 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, for the 10, 15 last years, been working on controller systems for integration of wind, solar, and batteries throughout the world. 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 entries coming into this market as the costs come down, and we will be open to look into good alternatives. For now, Tesla is by far delivering the best mobile solution that fits our offering. 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 base load, there's backup power, there's various purposes. If we also reduce the size here from three MW as a threshold to 300 to 500 kW, the market would probably double. It's also important to emphasize that diesel is not the only market for Release.
It can be used also for many other purposes. Also remember, it's much bigger with storage. This concept can also be used, as I mentioned. We are looking at 700 million people that lack access to electricity. It's not the primary target of our concept. We're not going to focus on it today, but it's a potential for the future. We have just started building our pipeline. It's actually only now that we have a product that we can truly say is available. We find tremendous interest. 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. 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, 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. Scatec 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 firm has reached a certain size, we think the potential for good and attractive debt is clearly there. Norfund has been a great and important partner to Scatec Solar 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 Raymond mentioned, Southeast Asia and America. I started out talking about this being a business concept with significant potential for Scatec Solar. 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 a 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 Mikkel.
Thanks, Hans Olav. Again, great to see so many of you here, and there's a lot of familiar faces, but also quite a few new ones. That's exciting. My name is Mikkel Tørud. I joined Scatec Solar five years ago as CFO just prior to the IPO. I must say it's really been a great journey. We've just seen the beginning, as you heard 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 Olav just introduced you to our new business concept. I will cover three 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. Thirdly, I will give you some perspectives on the long-term value of our asset portfolio. 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 you as investors. Secondly, we strongly believe in the integrated business model. Terje have talked about this when it comes to the development approach, how we access new markets. 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.
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 project, into the new initiatives. 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 five years ago now. We pay 50% of the operating cash flows from the power plants, as a direct return to our shareholders, and will continue to do so.
We created substantial value over the last few years. EBITDA is up four times since 2017. Over the last 12 months, revenues reached NOK 6.1 billion in EBITDA, NOK 1.3 billion. Free cash flow back to Scatec Solar's equity was NOK 700 million. Power production has increased and reached close to one terawatt hour over the last 12 months. In fact, now in 2019, the daily production is up two and a half times since the beginning of this year. 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 maintenance and also asset management of our assets, making sure we have stable operations and deliver the volumes that we should. The O&M business have delivered EBITDA margins in the range of 35% to 40%. When it comes to our financial position, it's solid. Financial discipline has been important for us all the way. At the end of the second quarter, total assets, consolidated assets stood at NOK 17.5 billion. It's up NOK 2.6 billion from the beginning of this year, that's, of course, reflecting then the CapEx investments we made in this timeframe. The consolidated cash in the group was NOK 2.4 billion, while the group level book equity ended at NOK 3.3 billion 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 two years, we've generated NOK 1.3 billion 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 NOK 2.5 billion of equity in the 1.6 GW 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 NOK 200 million in our backlog and pipeline.
We capitalize project development expenses when the project reaches a certain level of maturity, and I'm really happy that we have not had a lot of impairments of 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 NOK 190 million of dividends to our shareholders in this time period and raised about NOK 800 million of equity and bonds over the last couple of years. We also had a positive net working capital movement, which then gave us this NOK 516 million as an ending balance cash at the end of second quarter. We report on this every quarter so we can track the same movements. I think that's an important graph to follow.
I want to move on from being somewhat backward-looking to look ahead. With a 4.5 GW targets, our financial growth capacity is, of course, very important. 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 GW at the moment. The integrated business model is also important here, you have seen this graph before, many of you. We are using the development construction margin to fund growth. This is a 100 MW illustration. The CapEx is about $100 million. We raise debt at the project level of $75 million, we and our partners are investing equity of about $25 million. Our share of that is typically $15 million. It varies.
We can take different ownership positions in our projects. At the same time, for the same project, we generate about NOK 11 million, give or take, as a margin from developing and constructing the same project. 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, and 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. 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.
I want to move on to talk a bit more about partnerships. We are partnering both with governments and with banks. I want to explain a bit more about who these partners are and how the partnership works. We are 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. They haven't been established just recently. These have a lot of experience, a track record from these markets over the last 50 years. It's IFC, it's EBRD, it's FMO. It's a lot of abbreviations here, but it's multilateral development banks. 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. We discuss with them at the early stage when Terje 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 Terje mentioned. Since these institutions already are important partners for the governments, they also have leverage and influence on the authorities. That's where the risk mitigation comes in, where we, as a small private Norwegian company, we have limited leverage on governments. These institutions really have truly a lot of influence. Of course, finally, we put in place the non-recourse project finance debt.
It's a very comprehensive process, time-consuming process, but it's meant to cover all bases, to cover all the risks, the technology risk, the 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. Through that, we also take risk down when we finally put our equity into the projects. In fact, statistics 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. We've seen a lot of increased interest from ESG-focused investors as well over the last 12 months. 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. We also improved our reporting, and I believe we're getting good feedback now on our sustainability report from many of our stakeholders. On this slide, you see our sustainability framework. 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. 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. 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 places, but we've been able to manage those together with our partners. 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. 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 and 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 projects. Obviously, our zero 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. We also have quarterly training for our employees within these policies and do dilemma training and so on. How we conduct ourselves in these areas are really vital for our business. 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.
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 to 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. 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 tenors, you've heard about that today. 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, challenging, that's where this other concept is also coming into play, as Hans Olav mentioned. In some cases, we also sign a project risk insurance from the World Bank or others to further protect our investments. Interest rates are hedged for at least 10 years, we lock in that part of the equation as well. When it comes to currency, a lot of the projects that we do are in dollars and euros. If we move on then to talk a bit more about our portfolio, we are completing 1.9 GW, it's a long-term power purchase agreements with total value about NOK 60 billion the next 20 years. We've seen a solid diversification, I would say, of the portfolio over the last two, three years. You can here see the split of currencies and countries that we're involved in.
If you look at currencies first, more than half of the portfolio is pegged to USD and EUR. A lot of the smaller emerging markets are offering tariffs in hard currencies. When it comes to ZAR and BRL, which are other important components of this, here the tariffs is inflation adjusted with the local inflation. It's providing extra protection in these somewhat more volatile currencies. According to the textbook at least, there is a correlation between inflation and currency movements. When it comes to countries, we are now active in 11 countries with operating assets. From an EBITDA and cash flow perspective, South Africa, Ukraine, and Egypt are the most important countries with a bit more than half of the cash generation.
As I mentioned, 20 years is the average remaining contract tenure, we've just recently connected quite a lot of new capacity, and will do so over the next 6 months. It's a really young fleet of plants that we are operating, as you can see here. Let me also touch upon a topic that I 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, there should be 15 years of additional production from these power plants also after the end of the PPA period.
In the graph there to the right, you can see we have calculated the equity value of this 1.9 GW 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, they're not really deregulated, so there's not a wholesale price as a market price reference available. That's a bit of a challenge, but if you study the cost of various technologies, you can still look at the supply and demand curves.
You can do some assessments, we believe we've been fairly prudent here in the assumptions we've made, looking at $45 to $65 per MWh as the cost of power, as a reference price for what we can sell the power at after the end of the PPA period. With this approach, we're estimating the residual value of somewhere between NOK 2 billion-NOK 4 billion of the 1.9 GW. Obviously, as the portfolio grows, and as we move closer to this time period, this value will increase. Let me end my section also by just repeating some of our financial and operational targets. 4.5 GW clear, 1.5 GW plus per year from 2022 onwards. Development and construction margin of 12%-14%. Average equity IRR of 12%-14%. This is a slight adjustment from the previous guidance of 15%.
Finally, we aim to grow the Release products to 300-500 MW per year from 2022 onwards. With that, I will give the word back to Raymond for a summary.
I think you summed it up quite well, Mikkel. When you've been in business for some time like I have, you base a lot of your decisions on facts that you collect. Sometimes it's blended with many years of exposure to different parameters that allows you to build confidence or the opposite about certain markets. We are active, as you know, in many markets. I'll just share with you. I was in Vietnam first time in 1991. They still had the old American hangars when I landed in Ho Chi Minh. I found it's very difficult country to do business in, and we did some business, but continue to work. Then, it's so nice so long time afterwards to visit the country again. You recognize some of the same things.
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's committee that have a major influence on decision-making up to Hanoi, where the government is. How do you understand that? How do they make decisions? 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 Ho Chi Minh, and they had recognized that Scatec Solar sort of had publicized that they're going to invest $500 million.
It was about 100 articles about us in Vietnam. 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. He 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. You look at the country, it's growing between 7% to 8% on almost 100 million 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. To support 7% growth, they need at least 10%-15% growth in the electricity sector.
In fact from now until 2030, they are going to add as much power as you have in the U.K. altogether or in Thailand. They have to do it to continue to create jobs. 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. That was when I left Hanoi in June, sorry, beginning of July. Of course, we came back, as Terje said, in just the second half of August, met with the Vice Premier and the same thing. For us, it fits, as Terje said, it fits our ability to decode different markets. We're there and when we are. 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.
When we talk 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." We will, I'm saying we're going to copy and we're going to further refine and do the same thing we have done in South Africa. We will develop a renewable 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. Terje Pilskog hasn't put everything into his pipeline, but there is an opportunity there if we succeed. We're not there yet. There we will build local competence around that.
The floating units, we will build there, not only for our project if it succeed, but also for export. I think that's why we're very enthusiastic about Vietnam and all the other markets that we have covered today. 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.
Rebecca? Okay. Sir.
Thank you, Jørgen Brøset from Nordea Markets. On the outlook and the slightly lower IRR 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 you had reflected in your IRR? That's my first question.
Could you just repeat the question? It was a bit difficult to hear you.
Sorry. 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? That your IRR that's lowered is also combined with lower execution risk.
Yeah, I think You talked about execution risk, but I think we also have to focus on development risk and the exposure we take there. I think 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. A lot of the countries we have currently focus on are countries where we have already done business. In totality, I definitely think that we have lowered the risk on the development side as well as on the operational and execution side linked to the pipeline.
Okay, perfect. Thank you. 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 break even? Just any color on the economics of this? Is it too early to say?
Yes, to answer that, Hans Olav had this on his slide. We are expecting the returns on the Release to be higher than the average on the utility scale, so above the 12%-14%, basically. That's the guidance we can provide at this stage. I think we will need to get back to you with more details around the economics later. 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 MW to 400 MW. When we have aggregated the portfolio up to that level, that should be a self-sustaining business.
Okay, perfect. Thank you.
Yes. Eivind Vedeng, DNB Markets. I was wondering if you could elaborate on the financing of your increased target to 4.5 GW, and also the 1.5 GW target thereafter. Previously you've said that you had cash flow to finance 800-1,200 MW with the 3.5 GW in operation. Basically back of the envelope here, I get to NOK 1 billion funding gap.
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 the group level is important. The factors that will influence this is, as you would know, the projects, the timing of them, the size of them, the ownership that we take. We are not able to be more specific than that.
Okay. Thank you. Just following up on the previous question, on the IRR targets that's taken down slightly. Is it fair to assume 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?
Again, I think it's partly related to the last question. We do develop a broader portfolio. Obviously in some of the markets, we are facing more competition than what we've done previously. I think you will also see from the presentation I had that on a broader scale, we have more or less the same pipeline diversification as we had previously. I will also say that we are now moving into and getting larger pipeline portfolios in countries with lower risk than we had previously. Even though sort of the equity IRR of the project might go down slightly, it doesn't necessarily mean that we take down the allocation 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&C margin to the profitability on sale of electricity and the O&M margin. Then you're not at 14%-15%, as you know. If you do your math, you're approaching 18%, 20%, 21%. There is flexibility there, of course, to be a little more flexible with regards to the specific returns we have had. In fact, some of your investors have told us that, have said to me, "Well, we wouldn't mind you guys taking a project at 12%, because that's also a good project." Well, yeah, but we would like to be very picky still.
I think not a very big portion of the increased volume is linked to is in the lower band. Of course, if you blend this in with the growth on the Release side, I think it's going to be quite okay going forward.
Thank you.
Another question.
Just following up on the pipeline first. You say that in addition to size increase, you are 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?
Yeah, 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 we might put in better quality projects. 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. A specific question on the Tunisia pipeline. You obviously had a very strong win there in terms of the lowest bid, $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&C margin?
I don't think we're going to comment specifically on the equity IRR on 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. 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 which is kind of generalized and then lease it out?
If I understand the question, whether we would invest in the fleet before we have customers?
Yeah.
We would ramp up the fleet as we grow our portfolio of customers. That's the idea.
A final follow-up on that. How will you handle the different type of counterparties' requests for storage with solar? How will you determine the mix of the asset base as you build it up between batteries and solar? If one client requests a project with big battery support, and then the client leasing next will have a 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?
Yeah.
Yes. It's not a one-size-fits-all on that one, yeah.
Will there at some point be concern with that particular asset being mismatched to the next owner?
Well, this is again coming back to the modularity. We're building up basically also the battery packs we have are modular. 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. It's modular as well?
Okay, thanks.
Øyvind Møllen from ABG. I have one question. I guess we all accept that this market is exploding. The question is what's happening to the margin? What happens to the competition? 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 are so low that what looks like a wonderful thing will just be killed by competition? This is a tough question, but I think this is what it's all about, at least to me.
Yes. If I may.
You may.
Just after we listed 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. I think we have proven that we are able to deliver on what we have said in the past. Your question now is, why is that? 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 two, we have a tremendous, as somebody said, Hans Olav, purchasing power. We are getting the best module prices, the best inverted prices, in the world. 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 can sort of bring in addition to just being there for commercial reasons. South Africa was like that, I would say partially Egypt. We hope that Vietnam will be like that. We are trying to be the different guy on the block providing a business proposition that allows us to be different from the pack. They deserve this. They deserve additional opportunities. In fact, I met with Professor Eberhard in June. He's the advisor of Ramaphosa, the President of South Africa. He is a well-known guy for those who travel frequently to South Africa. He said, "Raymond, I know what they've 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. 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. I'm sorry about that.
Okay. I don't think I see any further hands here, so I think we can end it there. Thank you all for your attendance.
Thank you very much. Thank you.