Good morning, everybody. I have to say it's extremely nice to be here and not only talking to the screen. It's nearly two years, well, a year and three quarters, since we last met. Well, it's a tremendous pleasure to be, you know, seeing you all. It's also a pleasure to present you the third quarter results 2021. It'll be handled by myself and Mikkel, as usual. I start out, Mikkel goes through the numbers, and I'll provide a short summary. If you look at the bullets for the past three months, it's manifested, I think, in good performance in terms of power production.
If you compare it to last year, we have an increase of almost 2.5 x, up from 430 GWh to 1,065 GWh. The proportionate revenues is NOK 1.25 million, and the EBITDA is NOK 767. We have reviewed our project pipeline, and I'll have a separate slide on that to go into the details of the various projects as they stand today. The good news, I follow this directly on YouTube, actually last night, there was a presentation by Minister Mantashe in South Africa, of Round 5. We were awarded three projects totaling 273 MW. That's another manifestation of our position in South Africa, a market that we consider a home market.
I'll return on a separate slide to a bit more details about South Africa. A couple of weeks ago, I was visiting Cairo. Well, I've been there a few times over the past few months, and we signed an agreement with Fertiglobe, a large fertilizer producer in Egypt. I'll return with more information on that, too. I think that is, I believe for us it's an extremely important milestone. Now, everybody is experiencing cost increases. I mean, it's not only within our industry. Everybody sees it, and you wonder, where is this gonna end? In spite of these cost increases that we've seen on the panels, on some of the equipment, our industry is actually stronger than ever.
I'll spend a bit of time to explain that, to put that into a perspective on a later slide. On the projects that have been in our backlog that we earlier in the year were hoping to put into financial closure and start construction of this year, we have had to make some adjustment to the time schedule, and I'll explain why that is. In Pakistan, the government is responsible for providing land. Land in countries like Pakistan is a fairly complex issue and the authorities informed us that it will have to be some delays because of demarcation, actually, you know, fencing in the land. That process has taken much longer than we anticipated. Of course, we're not running the authorities.
The authorities are running this process by themselves. We have decided to optimize the schedule, to move the construction start into 2022. South Africa, this was a part of a separate press release earlier this fall, where financial closure is pushed towards this, you know, the last part of January or in the beginning of Q1. Minister Mantashe yesterday reiterated and confirmed that that is the plan. The reason for this taking a bit longer is that, you know, there are. I mean, it may not appear clear to everybody, but the processes around getting the approval for this project, and especially when there are many projects, takes long. This delay, I have to admit, is not the first time it has happened in South Africa.
It has happened before, too. They need extra time to make sure that everything comes out correct. Now over to an important market for us now and in the future, India. We have been working with ACME for almost a year now, closer to 15 months, to develop a project in the northern part, northern central part of India. This is 900 MW, so it's a huge project. Of course, when you develop a project, there are many elements that need to be taken into place. Environmental impact assessments will have to be run. I mean, we do that on all our projects and, you know, that is not done in a week. Actually, you need up to a year sometimes.
Anyway, we were hoping to place, or ACME is doing that, place the order for the modules, you know, sort of in the middle of the third quarter. That didn't happen. At the same time, the authorities have decided to implement a duty on importation of modules from India, sorry, from China and other places. We see now that, you know, there's. You're sort of caught between a rock and a hard place. I mean, it's not enough time to have delivered the modules before the potential duty is coming into effect, starting, you know, in April 1 next year. The industry, we're not the only project, there are many other projects that are in a similar situation, they're not getting the modules delivered on time.
The idea by the Indian government was to actually get a manufacturing line on modules up and running. They are doing that, but it's taking longer. The industry is in place, the signals of the industry is supporting this. The authorities are giving positive signals about, you know, moving the importation duty out in time, and also the COD out in time. As a consequence, together with our partner in India, we have decided to move the construction start and financial closure prior to that into next year. Tunisia, those of you that follow Tunisian politics knows that the government was you know resolved or dissolved towards the last half of or at the end of July this year. A new government is still not in place.
We have a comprehensive package of documents that needs to be ratified, approved by the government, and that has not yet happened. I mean, we're getting signals now that things are sort of approaching a more normalized situation, so they can move the projects ahead. Again, we think it's wise to move it out in time. Brazil, that is not in our backlog. That is a pipeline project. This is a project that we have been developing together with Equinor. The off-taker here is Norsk Hydro joint venture. In fact, we have also invited Norsk Hydro into the project, so it's Hydro, Equinor and us. It's taken a bit longer to conclude on the agreements, but I hope that will happen soon. That is the situation on the backlog.
I mean, these projects don't disappear. I mean, they are moved out in time for good reasons. Once they have been constructed, they will then start the long journey of 20-25 years production and revenues. I think, you know, just to reiterate this, and I think you understand it, this is, you know, the setting of the projects. I can also say that the projects that are in operation have remaining production time with concrete contracts of almost 19 years. It's short-term important, but also long-term is equally as important. We, when looking a bit ahead, I mean, where are we? I mean, it's a tendency sometimes to look at the near things, and that's important when you are in project execution.
We are building a company that is looking ahead, that is understanding the market, that is trying to apply the business model into taking advantage, you know, enjoying the opportunities that present themselves to us. We have, from being a pure solar provider over the past 15 months only, of course, we started much before that, but when you saw this happening, we acquired SN Power, a bit more than a year ago. We moved into wind, storage with a large project that we have in South Africa, other bits out there as well. Then finally now, hydrogen. This is important for us. It has been a part of a plan, and I'll explain to you a bit later why we are doing this. We will continue to focus on high growth markets.
I mean, not only sort of replacing dirty electricity, if you may call it that, into looking at markets that need additional growth energy. That will be our core markets going ahead, and I'll also move into a more precise explanation of that on a later slide. It is, you know, it's a pleasure to sort of register that our business model is resilient and adaptable. I mean, we can use the same business model, develop, construct, own, and operate also by expanding the technology sphere with these technologies on the left-hand side there. Looking at our pipeline, we have a strong pipeline. It has also grown since July when we last had the presentation. It is, if you look at the totality, it's now almost 1.4 GW.
If you look at the distribution of technologies, you will see that almost half is PV, I mean, our traditional business. You'll see that wind has grown quite a lot, 28%. Then you have hydro. Of course, it takes a bit longer to develop hydro. Hydro is, of course, very different from solar. Solar operates 20%-25% out of the year, while hydro operates 100% of the time. So they're different technologies, different attributes, but they also fit very well together in some instances. Then we have Release and hybrid solutions. I'll talk a bit more about that.
If you look at the project, if you sort of, you know, were inside our company and looked at the development on the project, you will see that, you know, they have matured over the past few months, moving closer to, you know, to be realized. There are also a bunch of projects that have actually not entered into the pipeline yet. It's not like we're only working on 14 GW. We're working on a huge set of projects within the market areas that we prioritize. We also prioritize long-term PPAs, long contracts, and the market is willing to enter into long-term contracts. We see a growth of short-term contracts that are being addressed by our Release concept as well.
It's, I mean, and that is also, you know, important for us to sort of recognize. Now, what about returns? We are again just repeating that the projects, when we are looking at the pipeline, the projects that are in this pipeline in a broad brush, averaging out, falls within the IRR goal of 12%-16%. In fact, there are some of them that are higher than that, but there will be some that are a bit lower than that too. Most of the projects fall within that range. The value creation, I mean, origination, where you create the project development and construction will remain in between 10%-12%.
That of course, you know, also talks about our capacity to generate cash before we start the projects or start production of electricity. If you look at the, you know, these six markets, they represent 11 GW That is almost around 70% our backlog and pipeline. It's a good indicator of where we're heading and what projects that we are focusing on. South Africa is the eighth most polluting country in the world. They have now publicized, decided by themselves, but of course also assisted by other countries that are stimulating them to remove dirty energy production to really, you know, further enhance you know, investment into renewable projects. Eskom is doing it, the main operating electricity company in South Africa.
They have actually now also opened up for up to 100 MW of PPAs that you can enter into directly without any governmental approval. The Minister talked about that yesterday. He gave the award yesterday. It was a pleasure to be among the winners. Again, RMIPPPP financial closure first quarter next year. Then he also talked about Round 6 that will also be launched, that's like Round 5, but Round 6 in the first quarter next year. It'll be a high level of activity, and it's good because we have a very professional company in South Africa. If you look at the backlog, it's solid. It contains solar. It contains wind, and we are developing it, and we have very good partners.
Vietnam, a market that is fundamentally on a growth path towards 2030. I've mentioned this a few times before. We have 40 MW in operation at the wind farm. Very good operational statistics on that one. We have a good pipeline. An important part of this pipeline is offshore wind or nearshore wind. It's not that far away on the shores of Vietnam, but it is at the best location that you can imagine. I mean, if you study this, you will see that, you know, some of the bigger offshore wind companies are also looking at the same area. This will be developed over the next couple of years and at the appropriate time, we will invite partners to join us there and on other offshore wind projects.
Brazil, also, an important market for us. Here we are working together with Equinor on the solar side. We are actually discussing whether we should include more technologies, but it's still too early to confirm exactly when that will happen. Mendubim is important project, but of course we are developing a pipeline of projects. We are talking to the market. There is a large market for corporate PPAs. Energy prices there right now, like we experience many places in the world, are also on the high side, which makes people more interested in entering into corporate PPAs. Philippines, I'll have a separate slide on. On India, for us, India is interesting. I mean, they have a lot of dirty power. They have a growing population. They have a growing need for electricity.
For us, being a multi-technology company, we find a lot of outlets for our propositions, not only solar, but also wind, and also in the north, both in India and if you move a bit further into Nepal, there are some very interesting hydropower opportunities that is being matured as we speak. We're gonna build up our organization in India to really entertain these opportunities, and we think this is gonna be an important market for Scatec moving into the future. Egypt, I mean, 380 MW is, you know, it's the largest solar installation in Egypt. It is nearby the Aswan Dam. We have developed Scatec into an important energy company in Egypt.
I've spent a lot of time in Egypt, together with our organization there, and the agreement with Fertiglobe didn't come by itself. I'll have a separate slide, as I mentioned a bit later, to dive into that. Egypt is determined to become a hydrogen hub in the world. They are determined to export electricity. If those of you that follow the Egyptian news saw that they entered into an MoU with Greece a week and a half ago for an export cable. If you look at the ability that Egypt has to tap into the solar resources they have, like Aswan, it's tremendous. I mean, it's a lot of desert there and cheap, competitive energy. Good for the energy itself, but also for the X, you know, Power-to-X.
That's a snapshot of what we're focusing on. Of course, there are another 30% of projects too that are there that are very interesting that are within our core markets. That was last night. These three projects are located next to each other. You may consider them one project, but they're actually three different SPVs or special purpose vehicles as they were bid because we could maximum bid 75 MW AC, which is a bit more on DC. That's why it's 273. They will produce until 2041. From when we finish in 2023, it'll be producing electricity until 2043. We have 51% ownership. We will do as usual.
I mean, this is our integrated business model. We have developed, that's why we bid them. We will do the EPC, we will do the operation maintenance. In fact, they will be added to the central control room or, you know, global central control room that we have in Cape Town, optimizing the plants around the world, and then we will do the asset management on behalf of the partners. The financial closure is expected first half 2022. South Africa will be very, very busy for the solutions organization. I mean, the people that, you know, manage EPC projects next year, particularly in South Africa. Yeah, let's dwell a bit on the Philippines. I mean, Philippines is a deregulated market. It's one of the few markets in Asia or Southeast Asia that are deregulated, maybe the only one.
If you look at the power mix at, you know, last year, I mean, it's dominated by coal. It's a lot of coal. The power needs in the Philippines are growing. It's a growing economy. It's not stable. It grows at a reasonable percentage, so they will have growth towards 2030. You see some oil-based, you see a little bit of natural gas, and there are, you know, there are things hiding behind these numbers because we look at the natural gas. This has basically been harvested from their own fields. Malampaya field, I used to work on that, was an oil and gas 25 years ago. That is depleting now, so they need to find a replacement.
Hydro is limited, but it's stable and good, and we have a very strong position there. Then you have the growth opportunities within wind and solar. If you try to look towards 2030, and we do these studies in several markets, you have to have an opinion about the market development. You'll see that there will be a growth and more need for electricity. Coal is gonna be phased out, or there will be no new coal being connected. In fact, they made a statement just a couple of weeks ago that they are gonna go to 50% renewables by 2040. That comes on top. For us, this is extremely important or very interesting, because we have a position in hydro.
We are participating in ancillary services, not only selling electricity by the kilowatt hour price, but also providing services. If the grid is down or some plants are down, we can pump in more hydropower. If there is, you know, a stabilizing, I mean, you need to have power to be stable, not for the light to flicker. I mean, that's also a service that we're doing there. For us, based on our 640+ MW installation, we have a strong position. We will add more renewable energy to this platform together with Aboitiz, a very prominent company and energy company in the Philippines over the next two years, a strong drive.
We have also been using that position to see, okay, what other sources of renewable energy would be interesting, where we can position ourselves based on our knowledge. Of course, we did like we have done in Vietnam, we started scouting, you know, the seas around the islands of the Philippines. This was actually being assisted by DNV. They helped us. They have done a lot of that. We found some very, very good locations. You know, pretty shallow water. The yield, you know, the wind speeds throughout the year, and this is statistics collected over many years, were excellent. We have been ahead of the pack, at least in the front of the pack, and secured 1,750 GW or 1.75 GW of project.
These will be developed. Of course, we have acquired these projects without having to, excuse me, to bid for us. We spotted it, we talked to the authorities, and we got the award. Last one just two to three weeks back. These projects we developed, we will put up a mast that will measure and confirm the wind speeds. We will, you know, develop them further in terms of environmental impact assessments and so on. At the appropriate time, we will invite in partners, you know, for financial reasons, but maybe also for execution reasons. I mean, we are not in a rush to do that. We would like to reach a good mature stage before we do that, so that we can capture the value that are being generated.
Those that know the difference between developing the project yourself from start compared to buying into the project know that there is a lot of value to be captured when you do that. For us, Philippines will approach, or is I think on the level of South Africa for us in terms of considering a whole market. Egypt, I think is gonna go there too. Now, if you look at us, having been a solar company, and it's good to be a solar company. I mean, we have that that fares well. Of course, you always have to keep an eye on the market. How is the market developing? You know, in the beginning, they said, "I want solar at the cheapest possible price." Then the attitude changes a bit. "Well, I like to have electricity.
I like to have green electricity, and it should be be delivered to me as I need it throughout, you know, the 24 hours, seven days a week. Of course, you as a company have to think a bit differently. That is what led us to expand our technology range because, you know, we have to have more technologies in our toolbox to be able to offer stable electricity. Now internally, we're sort of, you know, I said this externally too, we're saying, "Well, to the customer, they should look at us as a solution provider, a provider of clean, green energy, stable at a very competitive price. To the right here, you can see some of the elements and some of the points that allows us to go to the customers and propose that.
Firm renewable power, well, that's exactly the answer and what I described. Where you combine different technologies, you may even buy a bit of electricity to top it up, you know, or, you know, sprinkle it with some batteries to make sure that the electricity is stable. Hybridizing PV and hydro. I didn't imagine that there were that many opportunities combining hydro and PV. I've talked about this before, and we see that you can optimize the reservoir utilization by actually, you know, using the sun during the day. You know, when the peak is high, you just, instead of you know, reducing the water level on the reservoir, you use the sun to actually compensate for the variation. Again, understanding how the grid works.
There are areas where you need to conserve the water during the day or as much as possible because there are dry seasons. In Africa, many places where solar on top of a reservoir makes good sense. Release, a different way of thinking about the customer because not everybody wants to move into long-term contracts. They say, "Oh, okay, my mine will run out in five to seven years. You know, how can we handle that?" Well, at the moment, I mean, they are paying, you know, I'm not saying $1, but maybe half a dollar per kWh. Here we can use Release. I mean, that's a containerized PV system. You get the order, you ship it out, you have it installed and producing after three months. We have talked about it for a while. Market has been a bit slower than anticipated.
We see now as a function of the very, very I mean, $85 per barrel, right? Diesel, you know, this is being you know, further accelerated. We also talked about Power-to-X. I mean, when you produce electricity from solar, for example, in Tunisia or in Egypt at $0.025 per kWh, I mean, what are we paying right now in Norway? One, yeah, one kroner and DKK 0.50. We can produce this for DKK 0.25 or DKK 0.20 per kWh. I mean, and it's fuel independent. I mean, all the other technologies are dependent upon fuel. Not hydropower in Norway or elsewhere, not PV, not wind, but all the other technologies. I've talked about, I mean, just to reiterate something I should have, I've touched on.
I mean, what the world is experiencing now is something they will experience over the next decades because they are dependent upon fuel, whether that is gas, oil, or diesel, or other fuels. That will cause volatility in the market, and that is gonna be a strong push for those that look for stability to go into renewables. We are fuel independent. So when we give a price, we say, "This is gonna be the price until 2040. Don't worry about it, you know. You can plan differently. Focus on other things." That's why, you know, out of this energy crisis at the moment, renewable is gonna be emerging as an even stronger candidate, and it's gonna, you know, accelerate the green shift, which I think is good for everybody.
People may say to us, "Okay, we are concerned about, you know, the cost inflation." Yeah, we are. I mean, the panel prices goes a bit up. The steel prices goes a bit up. For us, even with those cost levels we see at the moment, we are way below all the other technologies on levelized cost of energy. I mean, it doesn't really have a dent. It just reiterate that the business case around renewables is actually being made stronger even that we are experiencing some cost inflation at the moment. It's a bit uncomfortable for us as also. It has basically only impact on where we cannot sort of push the projects a bit out in time or not optimize the schedule and that kind of thing. Back to the slide, Power-to-X.
I mean, it's X one, X two, X three. I mean, let's talk about X one. What we signed in front of the Prime Minister, and a whole bunch of other ministers in Egypt, in Cairo, a week and a half ago, was an important milestone for us. I'm not saying it's transformational because it isn't, but it is important because an extension of our business model where we use cost competitive renewable energy to actually generate hydrogen and then ammonia. In this case, we stop at the hydrogen, but it's not that far to go from hydrogen to ammonia. President Sisi has on many occasions said that, you know, due to the strategic location of Egypt, we want to be a hydrogen hub for the world, or at least for this part of the world.
That means that they're already focused on how to assist, you know, initiatives that are being taken now. The agreement that we entered into was a C2C, a Company-to-Company agreement with Fertiglobe. Fertiglobe is a large fertilizer producer in Egypt. They are being majority owned by OCI, a large fertilizer producer. They're up around sort of the Yara type of size. Yara is, you know, world leading. They have ADNOC out of Abu Dhabi as a minority interested party. Of course, we went through how should I put it? A prequalification document where we competed with, you know, all the, you know, the usual suspects.
We were selected as the company that they wanted to work with. The reason for that is, of course, our position in Egypt as a trusted renewable company. But it's also our ability to structure the projects, to implement new technologies, to financially simulate and actually provide a price that is cost competitive. I cannot reveal the pricing now, but that will of course, you know, hit the market at the appropriate time, but it will be competitive, otherwise, it wouldn't been in this position. For us, we have a group of very qualified people now looking at how to expand this market.
I mean, I'm not sure if you've been to this area, but of course, you know, you obviously saw this container ship that was stuck in the Suez Canal a few months back. Well, this is at the rim or at the end or next to the Suez Canal. The ships pass by there. There are a lot of ship owners that are moving from, you know, dirty diesel, dirty oil to renewables. They will actually use ammonia as the fuel. Of course, strategic positioning of the plant that we're building, that we will majority control is key. Of course, we are hopeful that this will, you know, be much bigger at the end of the day.
Of course, we need to prove the concept. The idea here is to, we have started the feasibility study, financial closure next year, operational 2024. I think it's time for you, Mikkel.
Thank you. A bit of numbers then. Let's then go back to the quarter and look at the numbers, the proportionate financials as you see here. Q3 revenues of NOK 1.3 billion and EBITDA of NOK 767 million, and cash flow to equity of NOK 300 million. The EBITDA increased about 28% from the previous quarter, and this was mainly explained by the improved hydrology in the Philippines, and I will get back to that also in a bit more detail. Compared to last year, obviously, you see the impact of the acquisition of the SN Power assets with the large contributions into the power production segment this year.
Over the last 12 months, revenues reached close to NOK 3.9 billion and EBITDA of NOK 2.2 billion, and then cash flow generated from these plants after debt service a bit more than NOK 1 billion. Power production. Again, very positive trend when it comes to growth and production and EBITDA generation. Obviously, looking at it compared to last year, again, the SN Power assets contributed, but also quarter-on-quarter, we've seen grid connection of new plants in Argentina and Ukraine and increased production in the Philippines. The hydro assets represented an EBITDA of NOK 383 million now in the third quarter.
While the solar assets have been fairly stable in terms of revenues and EBITDA generation now year on year, so compared to the last third quarter last year. We thought that we should also you know dwell a bit on power production since it has grown quite a lot. We had some questions around the hydro assets and wanted to explain that a bit more at this quarter. First of all, you can here see to the right a graph of the distribution of EBITDA year to date. This is certainly a well-diversified portfolio with a number of markets where we operate. This also is reflected in the you know the number of currencies and technologies as well that we operate in.
When it comes to, you know, variability and seasonality for solar and wind, we are used to fairly stable resource as a basis for production, right? Both on an annual basis, also within the year and through the quarters. The power prices here are secured, as you know, through long-term PPAs and feed-in tariffs. When it comes to hydro, we see a bit more of annual variability and certainly also more seasonality through the quarters of a year. Again, Uganda, one of the assets here, is different in terms of getting fixed capacity payments regardless of the dispatch and the hydrology of the plants.
While in Laos, 90% of the offtake is sold under a PPA with EGAT in Thailand, and the storage capacity of this plant reduces seasonal volatility. That's a different pattern. While Philippines, as you can see here, representing 27% of the year-to-date EBITDA, is operating in a power market. Also you see more reliance on hydrology at the Philippines. That's you know what we've seen also this year, and we wanted to just explain that a bit more. To the right, again, you can see a graph showing the five-year average production on a quarterly basis. That's the dark blue left bar in this graph.
You can see Q1, Q2 being, you know, a bit lower and then much higher production in the second half of the year. We touched upon this in the second quarter, where there were some questions around the second quarter performance. As you can see, second quarter this year was not really that far off what we saw as a five-year average of the production. Now we're also selling a large portion of the energy that we produce, either through ancillary services or through bilateral contracts. 80% of the available production year ahead is sold under bilateral contracts one year ahead. That represents a hedge on the pricing towards the more volatile spot prices that you will see in this market as in the Nordics.
The hedging ratio is then lower if you go two years out or three years out. As we move forward, the hedging ratio increases to become one, you know, up to 80% one year ahead. There's a dynamic there that is good to, you know, keep in mind. The result of this is that it's really mostly about the production profile and hydrology that is driving the revenues and EBITDA for the Philippines. The prices are secured, at least in the near term. Longer term, of course, we are exposed to the long-term trends of the power prices in the country. We also wanted to highlight that the bilateral contracts in terms of what we are obliged to deliver is matching this profile when it comes to production.
It will always be a need to balance the portfolio in shorter time periods. Again, that will vary over time and also, you know, across quarters. That's a limited exposure, but some balancing is needed. Then in certain time periods where you have, you know, strong hydrology, we would have surplus production available to sell in the spot market. Then depending on the market and the market prices, we can either use that capacity to sell at high prices in a spot market or sell more ancillary services, grid stability services. So there is an optimization exercise being done by the team in SN Aboitiz Power, the JV we have with AboitizPower.
This is a JV with about 200 employees, about 40-50 people focusing on market analysis, you know, selling of power and optimizing these power plants. It's a very experienced team operating these plants. Then lastly, ancillary services, as also Raymond touched upon, represent a stable base of the net revenues. These revenues are not always, you know, backed by production. When you analyze the results, you need to keep that in mind because we get paid for having that plant available to be called upon when needed for grid stabilization. It's not always a production volume behind the revenues that are part of what we report from the Philippines. Okay. Services is much smaller a part of our business.
Stable results, NOK 69 million of revenues, NOK 22 million of EBITDA now in the third quarter. Development and construction, Raymond have explained the short-term delays in Pakistan that continue to impact construction revenues, basically being very moderate, NOK 43 million in the quarter. On the other side, a very high activity on project development, also, I think, highlighted by Raymond in his part of the presentation. We have also impaired a NOK 50 million related to discontinued projects under development in Ukraine and Brazil. We pre-announced this also in a separate release October 1. Balance sheet, a very stable, I would say, position in terms of cash compared to last quarter.
We continue to have undrawn credit facilities of NOK 1.6 billion and group equity at NOK 11 billion. Yeah, you can see the consolidated assets stood at NOK 33.3 billion. When it comes to cash and cash movements, we received NOK 328 million of distributions from the operating power plants in the third quarter, and we have spent NOK 130 million on developing our projects through development CapEx. As I say, the cash position overall has then been fairly stable compared to the end of last quarter. A bit on the short-term guidance. Power production in the fourth quarter expected to end between 1,000 GWh and 1,100 GWh , broadly in line with the third quarter.
We are also highlighting that, as I already touched upon, that in the Philippines, we expect slightly higher production compared to five-year average. But we will also want to remind you that there will be higher than normal maintenance costs and OpEx on the Philippines in the fourth quarter. Also maybe good to mention that in Ukraine, there's a strong seasonality. There's winter now, we're moving into winter in Ukraine, and that impacts production.
I encourage you to have a look at the previous quarters and how that effect was on Ukraine, but now we have more production in operation in Ukraine. On the D&C side, we basically expect Q4 to be in line with the third quarter, and with that, you know, as a consequence of us pushing these projects out in time and that Pakistan also have this delay that Raymond touched upon. There's no changes then to guidance on services and corporates versus what we have mentioned before. Okay?
Thank you very much, Mikkel. This time around, I've decided only to have one slide at the end because I think I covered a lot of turf before Mikkel shared the numbers. I think, I mean, I'm eating a bit into your schedule, so I'll be quick, and then we'll open up for questions. I mean, it's good to see that the cash generation of the company is continuing to be good. We of course expect that to continue. It gives a very solid floor for us in our growth ambitions that I talked about a bit later on. I mean, I don't need to repeat myself.
The market as I think everybody appreciate now is gonna be strong. Maybe not everybody understood that the cost inflation or the increased cost somewhere doesn't have an impact or have very limited impact at least on the long term or, you know, the pipeline that we have. It may have some short-term impacts. Yeah, I'm optimistic about the future. There are a lot of things that are moving in the right direction. Of course, like in every business there are some things to be tackled, but that's should be business as usual as well. I suggest that I end with that.
since we're all here, you know, there's a lot of people present, I think it's appropriate to let you all ask questions before we let the people watching on the web load their questions in. Mikkel, if you wanna join us or, and Andreas, I don't know.
Andreas will take the questions.
Yeah. Okay.
Yeah. We start with a question from the audience, and Nina will give you a microphone. Hello?
Thank you. Liv Grønsberg from Nordea. Sit down. Maybe following up on your comments regarding growth frame, and obviously you have some ambitions for 2025, which you communicated previously. Do you think that at some point in time you would be quantifying the more near-term ambitions in terms of a target? Or if not, are you able to say anything about how you think the road towards 2025 will look like in terms of being front-end loaded, back-end loaded or more linear? The reason for asking is obviously that a linear growth is probably easier to digest from a funding perspective, while more lumpiness obviously adds some other dynamics to it. Thank you.
Yeah. I mean, if you sort of look at the history of the company, you have seen that it has been a bit lumpy at times. You know, a couple years back or in 2018, 2019, we had the biggest revenues ever on the execution side. This is not by design, but by nature, because some of the projects, I mean, they have delays that are not anticipated. Then you may say, well, I mean, you should have the experience now. Yes, we do. That's why we're actually increasing the pipeline that we have so that we have a bigger funnel of projects so that, you know, you will have a more stable situation.
I think what is happening at the moment is unprecedented, not only with us, but for everybody in the market. That is very hard to predict. We think there will be volatility also going forward. I mean the long-term goal stands. Of course, you know, the 15 GW is 15 GW of installed power. I think you know, you have to keep in mind as well that you know, in addition to this there will be storage opportunities. There will be other things that are also part of the equation. There has been a delay now. I regret that. I wish we could have you know, done something to limit the impact, which we are.
Of course, you know, the good thing now, or the smart thing to do is to be sensible and adjust the timelines to what makes sense.
Thank you. On the favorite topic of cost inflation.
Yeah.
If we look at what you put into your budgeting process, let's say 12 months ago, and if we index that CapEx per megawatt to 100, where do you see the cost inflation leaving that index now? I mean, obviously we've seen the raw material prices development. We see different sources quoting different numbers in terms of CapEx increases. Are you able to share something about when you do your sourcing on your contracts with your partners, how you see that cost inflation being indexed?
I mean, what we do, and this is how I've done in my past life too, I mean, you do not wanna commit to a fixed price unless you know your cost base. Most of the times you go out and you send out inquiries with a scope. You get prices back from your subcontractors, which may experience the same. Then you see where you are. We don't use that for everything. We have a very close relationship with some of our larger suppliers, especially the module suppliers if you look at solar. We have a spreadsheet that is actually, you know, we have a bunch of different types of module on the Y-axis.
On the other axis you have time. Then you put in the price anticipation of where you are from now until when you are expected to have delivery. That is being updated generally, but that is how we're pricing. We're seeing that, you know, there is a trend, a reducing trend on the modules, but that may come quicker than anticipated. We're using to our best ability our understanding and deciphering the market when we are pricing it. When we're giving the prices then, it reflects, you know, the costing plus the guidance, I mean, the margins that we anticipate. I think it's
I'm not sure if I remember mentioned it or not, but if you look at the last auction in Spain, the prices for the PPAs went up 20%, which means that the market is now starting to accept that it will be higher pricing. There's always a lag on that, you know, because you think, oh, this is gonna go over in two or three weeks or two or three months. I mean, future projects will take into themselves the costing that we see it, and we're gonna price this to the best of our ability.
Thank you. Last question from my side, on the pipeline development and trying to understand a bit on the movements there with respect to the announcement from South Africa.
Mm.
Yesterday. You're announcing awards of 273 MW. If we look at what you communicated on your Q2 report, I think that the wording was that you added 1.2 GW to your pipeline, where the majority of that was preparations for Round 5 in South Africa.
Mm.
Is it fair to assume that the 273 MW awarded yesterday represents roughly a 50% conversion ratio of what you put into the pipeline? Or do you have any comments on what the total megawatts you entered into the Round 5 with was versus what you were awarded?
I'm not sure if we want to go out with the you know the total volume what we bid. I mean, it's you know we bid more than what we won. I think that's clear.
Yeah.
I think also you saw on the solar side that we were, you know, at the high end of the price range when it comes to the winning bids and tariffs. I think we're fairly satisfied with that.
I mean, it's a bit of strategic bidding here. I mean, we knew that Round 6 was down the road, and you would like to. I mean, this is always difficult. I mean, where do you price it? We wanna win, but we don't wanna win with the lowest price. We wanna win with the highest price that we're awarded. That means that some three projects fell inside, some projects fell outside, but they are now ready for the next round, Round 6.
Thank you very much.
Hi. Thomas from SpareBank 1 Markets. I guess some of my questions already have been touched upon. First of all, congratulations with a good quarter. On cost again, on cost inflation, when will we have to see a decline in module prices and freight costs in order for you to deliver on the now currently announced adjusted timeline? Will we have to see a decline, or is that firm? The new timeline was just published today?
I mean, the adjustment to the schedule has taken into account the pricing that we see in the market at the moment. This is basically other reasons for that adjustment to the schedule. We would welcome a reduction in prices because you know, it's a fact that some of the margins on the projects have been reduced to what they could have been with the lower module price. That doesn't mean that you know, the projects are not unprofitable and do not meet you know, the return targets that we're looking for. I mean, historically, some of the projects have been way above you know, what we have guided on.
I mean, I study, I follow the logistics side, I mean, container ships, container pricing, 10 x higher than they were a year ago. I mean, that affects us and everybody else. I don't think that's gonna come down. I don't know this, I'm just reading up on this information myself very soon. There are too many constraints around the world. I mean, look at the container, you know, congestion outside of California. It impacts the world. That is taken into account. I don't think it's gonna go further up. That's our view. We don't believe either that if you look at the solar side, I mean, the wind has similar issues. I don't think it's gonna go further up.
New capacity is being added both on the silicon side. Silicon price is very high, but also on the module side. I mean, India has an ambition to add, you know, 6 GW, 7 GW, or 8 GW , but you don't have to do that overnight.
You mentioned the 20% higher PPA price in Spain. How is the willingness to adjust those PPA prices back, considering the fact that most offtakers will probably assume that CapEx will be reduced within the next two, three years?
I mean, it all depends. I mean, if you have won a project bidding, I mean, I think it's very difficult to go back and ask for adjustments. Where that is possible, we will do it. I don't think that's many projects in sort of the backlog. With those that have not been bid, I mean, you're free to do whatever you want. The interesting thing is that, you know, even with a slightly higher price, where it is 20% up, you're still way below the other technologies. It makes sense. It's actually much cheaper to pay 20% more, compared to history for renewables than actually go the other way, you know, through traditional energy. I mean, it makes sense.
Okay, thank you.
Okay. Time flies. I mean, do we have two, three questions from the web maybe?
Yes, we have a couple of questions from Eivind Garvik, Carnegie. Asking us to comment with regards to the Mainstream awards. I'm not sure if we can comment on that. Congratulations on the 273 MW in South Africa. Aker Horizons with Mainstream was awarded 1.27 GW of capacity. Why were they so successful? Do they have a lower return requirement?
Well, I, you know, I think you have to do the math, you know, yourself. We're not doing the math. We're doing the math on our own project. We were in the upper range, and that was the plan.
Another question from Eivind Garvik. How much solar/wind in megawatts is needed for the 50 MW-100 MW hydrogen facility?
It's, if I remember correctly, I think it's 150 MW of wind and 30 MW-40 MW of solar. That was what we proposed. We are discussing actually with Fertiglobe now and the Egyptian authorities for an acceleration where we'll get the COD on the first plant, certified green energy that is available in Egypt as we speak.
Last question from Eivind Garvik. How much percent of the Philippine revenues are from ancillary services?
Yeah. I think we've indicated that before, around 40% is a number to have in mind. That will vary through the quarters in a year as well. You know, that's just also one thing to keep in mind. That is a revenue stream independent of hydrology, so obviously we'll see that fluctuate. Again, when you look at average selling prices, as I know some of you are looking at that, keep this in mind because you cannot just deduct the average selling price from revenues and production here.
Okay. We have one from Magnus Solheim. Will Scatec consider to stop paying out dividends to shareholders in order to conserve this cash and instead invest in new projects?
Yeah. I mean, we have a policy that has been, you know, sanctioned by the board and, you know, that's what it is.
Yeah. Yeah, I mean, just to reiterate, I mean, the policy is to pay minimum 25% of the dividends received from the operating assets as dividends to our shareholders, right? That is our current policy.
Okay. Couple questions from Manuel Palomo from Exane BNP Paribas. Could you give us some more specific guidance about the assets you expect to put into operation in full year 2022?
Well, I think with what we said today, you know, the timelines have been, you know, adjusted, and I don't think it's realistic to assume any significant contribution from new power plants in 2022.
Of course, a lot of plants will be in construction, that's for sure.
Okay. Another one from Manuel. It's a question regarding inflation. I think we have touched upon that. Could you explain what is the company policy regarding the hedging of installation cost for those assets already awarded but yet in the pipeline or under construction?
Yeah. We place orders. We typically place orders for all key components once we have reached financial close and made investment decision on projects. We're not you know placing any orders until we get to that point. That is where we lock in all the CapEx and for a project.
Maybe we should round off.
Yeah, I think that's. We could take the rest of the questions separately, I think. Yeah.
Okay.
Okay.
Thank you very much.
Thank you all.
It was nice seeing you all. See you next time.