Ladies and gentlemen, dear investors, dear analysts, welcome to Meyer Burger's webcast on the occasion of today's publication of the H1 financial results. My name is Gunter Erfurt. I'm the CEO of the company, and with me is Mr. Moritz Borgmann, our Chief Commercial Officer. We wanna discuss and present today financial figures and give you as well an update on our business environment, on the market. Of course, we will also give you information on today's announced agreement for an offtake with the U.S. headquartered D. E. Shaw Renewable Investments. Let's start with an update on our manufacturing and where we stand in production.
We had reported end of year 2021, 30 MW of production, which was a pretty small number due to our reported delays with the ramp up last year. In the meantime and in H1, we have produced 108 MW, of which we have been able to sales recognize 87 MW. This gives you also an indication later on when we speak about the sales contribution of the module sales, where we stand with our ASPs and Moritz will give us further information on this. We have until August 15th produced almost 150 MW. We already see that we have an increased throughput or reduced takt time to use this technical term. In essence, we are able now to run the line at the highest speed possible.
We still see some impacts on the full throughput caused by our three product variants we are producing currently on the same line. That means whenever we switch our products, our black, white, and glass, we have to empty the line, put some new materials in, and restart the line. This is at the expense of the throughput. In addition to that, as we are currently increasing our manufacturing capacity in the same factory, we have to once in a while stop the line in order to embed new equipment to connect the tools to start software debugging, and things like this in order to be ready to start the ramp as planned in September.
Overall, we are very happy with the achievements in manufacturing, both in terms of the throughput, but also in terms of our yield and of course, the quality. I already mentioned that I can confirm what we have earlier communicated on August 2nd, that we expect the ramp-up of the additional capacity to begin effectively in September. Supply chains is a big topic nowadays, and supply chain risks are continuously reviewed, and we are taking action to balance this as good as we can. So far, I can report that we have not seen any issues from non-availability of direct materials that we need for the manufacturing.
Yes, we've been suffering from delayed deliveries of some components for the equipment, but these components have been delivered in the meantime. Again, I can confirm that we will start the ramp of the additional capacity in September. We are also continuously de-risking our supply chain. We have just earlier this week published a deal, an agreement with Norwegian wafer maker Norwegian Crystals for first deliveries of European-made low carbon footprint wafers. We are also in discussions with this specific vendor to increase these volumes as we grow also Meyer Burger's business. With the wafer, that's worth mentioning, we have also closed the last gap that we were facing in terms of a fully European supply chain.
All the other components we are already able to source, at least partly in Europe. It's not our goal to source entirely from Europe. This I can make clear here as well, but we want at least to have a critical volume that we can source outside of Asia or in Europe in order to make sure that we have also the leverage when we negotiate our contracts. On the financial figures we see compared to the H1 numbers, of course, the effect of increased sales and our growing business as well as a decline in the legacy business. We have sales recognized for the module business of CHF 42 million. Again, I mentioned the sales volume, 87, which gives you the indication on where we stand with the sales prices.
Comparing them with last week, we see an increase of about CHF 0.04 per watt-peak. EBITDA is of course still affected by the low volume and the ongoing ramp up. So are the other financial results because we are, for instance, already paying interest rate for our syndicated loan facility and this is reflected in our results. FTE numbers have, of course, increased. Because of the growth in our manufacturing capacity, we have, in the meantime, in July, exceeded the 1,000 people number in Meyer Burger. We, of course, will continue growing our workforce as we grow our capacities.
Our cash and cash equivalents, of course, are reduced comparing end of last year due to our CapEx, ongoing CapEx investment and the ongoing business, the OpEx. PP&E increased, of course, because of the investments and equity reduced because of the drawdown of additional of the syndicated loan facility. The investment part, this chart is known from our last conference. We have showing here the total investment required to achieve the 1.4 GW capacity, which we are building right now in Germany. We have spent in H1 another CHF 70 million on CapEx and expect until the project is completed, another about CHF 130 million for the 1.4 GW capacity.
For next year, I can also reiterate and confirm the earlier published production guidance of achieving 1 up to 1.2 GW in production for next year. The financial liabilities, of course, have increased because of the drawdown of the outstanding amount of our syndicated loan facilities, or the 55 million we have in euro shown. We have drawn down. This is the full amount now of the syndicated loan facility. We have a factoring facility which is being used already. On the cash side, last year we stood at CHF 231 million net cash.
We have a reduction caused by the ongoing business, here shown as EBITDA and of course also a change in the net working capital. If you look into our balance sheet, you see that our inventories have grown to CHF 61 million, which reflects the ongoing business, the increase in business, but also shows that we have to cope with longer lead times for our materials with higher prices. This has also an enormous impact on our cash balance. CapEx, we spoke already about with CHF 71 million and the increase in financial liabilities. Ending H1 at CHF 167 million net cash. We have restricted cash, pledged cash in the bank, and in total CHF 186.
With this quick update, I would like to hand over to Moritz to speak about the sales and marketing and of course also the DESRI deal which was announced today. Please.
Great. Thank you very much, Gunter. I would like to give you an update on our sales and marketing activities and some recent developments. First of all, the obligatory market forecast update from the advisory firm Apricum. What we see here is that we can expect a continuous rapid growth of the renewable energy and particular solar build-out in years to come. Of course, we have a very challenging global situation on the back of the COVID crisis and the still ongoing global supply chain crisis. We're now also facing a very dire energy crisis and in particular here in Europe due to the imperative to wean ourselves off of the Russian gas.
We already had a very strong demand for solar before, of course, due to the climate imperative, and the general realization that solar and wind are essentially the most inexpensive forms of generating electricity. Now it has become even more urgent. This has now fueled a vast variety of policy measures and policy announcements, and also a huge demand from the private sector and also developers. We are seeing this in our business. The demand is so high that supply currently cannot catch up with demand. This of course also leads to, and this is also against the backdrop of the continuing global supply chain crisis. Materials prices are still at a very high level. For example, polysilicon continues to be at a ten-year high.
These are figures that we haven't seen in a long time in our industry. These are, of course, continuing challenges. In terms of the demand for our industry, the outlook is very, very positive. Also, what is being increasingly realized is that beyond the simple fact that we need more supply globally, there's also the lingering question of supply diversity. There is an increasing realization that this almost exclusive dependency on Asian manufacturers of solar components is not necessarily a healthy situation. Customers are increasingly looking to diversify their supply portfolio. This is also why we see a lot of support for European and US solar manufacturing from policymakers, but also from our customers. We're very happy to report today a landmark milestone for Meyer Burger.
From the beginning of our transition in 2020, we had communicated that our technology is ready and will be able to deliver, to support all market segments in the solar industry, i.e. the residential, the commercial industrial, and also the utility scale segment. Of course, we started our journey in the highest value segment, the residential solar sector. At the same time, we had to already prepare our market entry into the larger project business, in order to prepare our growth. The Meyer Burger team, and thanks again to everyone involved here, this was a tremendous achievement over the past couple of months. We've worked very hard, to secure our entry into the utility scale sector and, have reached an agreement with, the major U.S. developer, owner, and operator of renewable energy plants, DESRI, that's D. E.
Shaw Renewable Investments. It's a subsidiary of the investment group D. E. Shaw. They have around 60 billion of assets under management and committed capital, so it's a very large major player in the U.S. We have now closed an agreement with them for volume of 3.75 GW to be taken off in a period between 2024 and 2029, with a right of first refusal to extend this volume to 5 GW and also potentially the option to extend the relationship beyond the five-year period. Very importantly for us, this agreement comes with a very substantial recurring annual down payment, which helps us to finance our working capital and purchase the materials ahead of time.
What this means for us, as I said, this basically secures our entry into the utility scale sector and enable us to kick off our growth further into this decade. On a short-term basis, on the back of this deal, we expect to be able to reach 3 GW of production capacity in Germany and in the U.S. around mid-2024. This is contingent upon successful completion of financing, and we'll talk about that later. Very importantly, this agreement allows us to reach bankability for our product. That is very important and will then allow us to also scale our utility scale business with other customers in the future. In the short term, we believe that we will have a very healthy segment mix, about two-thirds residential, one-third utility.
Of course, residential has stronger margins, but we need the utility scale segment to scale. Also the annual down payments allow us, and the security and the visibility that we get with this deal allow us to further optimize our supply chain and further optimize costs. I would also like to mention that we are in discussions with a number of players, both in the U.S. and in Europe, on further offtake relationships. I'm very happy to report that the interest from the market continues to be very, very strong. Next slide, please. One more very important thing happened in the U.S. The already believed to be dead legislation around support for renewable energy manufacturing, clean energy manufacturing in the U.S. has actually been revived in recent weeks.
Thanks to the efforts of Senator Schumer and Senator Manchin, the so-called Inflation Reduction Act passed the Senate, then eventually passed the House and was signed into law by President Joe Biden on Tuesday of this week. This very comprehensive bill contains many provisions, but for our industry, very importantly, it contains provisions designed to support the domestic manufacturing of clean energy components. Very importantly, it provides not only, it doesn't provide for CapEx support in setting up new manufacturing facilities, but it provides for OpEx support, i.e., a continuous tax credit for every module or cell or wafer manufactured in the U.S.
Concretely speaking, since we are planning to start and launch module manufacturing at our Goodyear, Arizona site, this means that for every watt-peak produced in our site, we expect to be eligible for a CHF 0.07 per watt-peak tax credit, which can actually be paid out directly in cash. That is our current expectation. Just to give you an example, if we produce at 1 GW capacity in our facility, this means that we will be eligible for CHF 70 million of annual tax credits. You can do the math, how that scales with further capacity and over time. The provisions are scheduled to start phasing out in 2029 and end in 2032. Overall, a 10-year duration of the legislation could, of course, possibly be extended beyond that.
We're very happy to see this support from the policymaker side in the U.S. , and we believe that this of course confirms our earlier commitment to manufacturing in the U.S. , and we firmly believe that this first step of filling the Goodyear site in the U.S. will not be the last step in the U.S. An update on our current sales and marketing activities here in Europe and in the U.S. is also in order. As I said before, the demand in the solar market by far outstrips the supply, and this also affects us and it in particular affects us. We're very happy to support that the demand for our product is extremely high , and it is in fact so high that we have decided to no longer take proactive orders from our customers.
We have switched to an allocation mode where we are allocating products in a fair manner to our existing customers. We're no longer onboarding new customers at this time. At this time currently, we are already allocating our volumes for Q2 of 2023. This is unprecedented in the residential distribution business. Normally, the visibility in the order book is on the order of about one quarter. We're also very happy with the pricing. We're consistently achieving premium pricing, and through two price increases since the introduction of our product to the market, we have been able to essentially pass through cost increases that we unfortunately had to suffer on the procurement side. Also due to the high demand, we're able to almost exclusively focus on the higher margin residential business.
Of course, in due course, we will also enter the commercial industrial and then, as I said before, through the offtake deal in the U.S., the utility scale sector and we have, for example, already entered into some , but very limited iconic projects. For example, the SC Freiburg stadium project, which was recently inaugurated. Very importantly also for our sales operations, we have started shipping and also selling in the U.S. First Meyer Burger modules are with customers in the U.S., and the feedback is great. The only complaint is the lack of product, so we are working very hard to ship as much as we can to our European and US customers.
Of course now in hindsight, given that there is this extreme imbalance between the demand and supply, technically speaking, you could say why do you even have this large sales team? Of course it is very important to have established the presence in the markets. Our basic premise and principle is to be close to our customers, meaning our installers in the market. We have used our time very well to establish the relationships to our installer customers. We have also used the time to establish the presence in a broad set of markets so that we are ready to scale once our production volumes go up, toward the end of this year and also then in the next year. With this, I would like to hand back to Gunter.
Thank you, Moritz, for the update. Let's now close with an outlook. We believe we have now with the aforementioned elements both the pretty strong growth in the residential sector in Europe and in the U.S. and as well fueled by this benchmark deal with DESRI for the utility product. We have now a unique opportunity to accelerate our growth. What we would like to do and to entertain is that we grow our capacities on the back of these expected capacities to 3 GW nameplate capacity as soon as we can. Reaching this capacity by mid-year 2024. Starting also shipments in 2024 to DESRI.
In detail, what we are doing or what we are planning to do is to increase the cell capacity in Germany. The plan is to do that in the Solar Valley to add another 1.5 GW in cell manufacturing , and do the entire additional module expansion in the U.S. One GW for dedicated production of utility products and 0.5 GW for the US residential market. That will help also to ease the situation that Moritz has described, that the market needs product and producing it directly in the U.S. does help the lead times. Plus it also, going back to the tax credits, also increase the tax credits potentially for Meyer Burger, running the factory at full capacity, 1.5 GW per annum.
You can run the numbers yourself. It equals $105 million on an annual basis. In order to execute this project, we are contemplating potential capital increase. In the next months, we are in the planning phase. The necessity to consider this capital increase comes from the facts that on the one hand, we are accelerating the growth. We have so far not planned to increase capacity throughout 2023. The plan was to simply utilize the existing 1.4 GW production, generate cash flow and then eventually invest in the growth. This is now expedited and accelerated. In addition to that, I already mentioned working capital requirements. We have increased prices.
In fact, today, there was a new announcement coming from China that polysilicon prices may go up again due to power shortages in China. We believe we have to deal with these constraints for a while. That all needs to be well prepared. Also in all transparency, we have communicated earlier this year and already last year that we've been facing a delay in our ramp up, which is resulting in also increased OpEx for our ramp-up costs. In order to now take the opportunity on the back of this agreement signed with DESRI and the strong demand in the market, we are now preparing a potential capital increase of CHF 250 million.
I apologize that I will not be able to give further details on this capital increase today. It will be communicated in the next few weeks and months. All right. With this, we end the presentation and are now happy to take your questions via the chat. I already see we have a number received. If we are unable, just as another housekeeping advice, to answer all questions, we will follow up with you by email. We start at the bottom. First questions first. Yes. There is a housekeeping question where the presentation download is. It's on our website.
We uploaded the presentation basically at the beginning of this webcast. It should be available in the meantime. Let's go with the first question on the topic. Can you please update us on the current production ramp-up following the guidance downgrade? I mentioned this already, so I can reconfirm what we have communicated on August the 2nd. We believe, and you can also run the numbers yourself with 150 MW that we have achieved or produced until August the 15th. Assuming that we will also increase our throughput or reduce takt time as we now taking the additional capacity into operations, we believe we can also increase the existing lines throughput, which is already on a very good level. This one from today's perspective looks very positive.
With the capacity now being built in the U.S. and operational from mid-2024, how should we think about the CHF 0.07 subsidy included in the IRA? I think Moritz explained that is, I believe answered.
Well, the question there is, will you be eligible from the point the line is operational?
Starting with sales of the product.
Yeah. Obviously we cannot make a definitive statement yet. The law was signed two days ago, three days ago. We are currently checking this from a legal perspective, but we have reasons to believe that we will be eligible from the very start.
Yep. You haven't mentioned your 2023 guidance. How should we think about the negative impact of the delays on the 2023 margin targets? As you could see today, we have decided to continue with the production guidance, but we are refraining from guiding on financials simply due to the fact that we have a very, very volatile environment in terms of the supply chains. I already mentioned that just today the breaking news came in that very likely Chinese polysilicon makers are increasing prices again. These are news coming in like every week, and I believe it's fair to say that it's important before you provide a guidance that we have to have the clarity also on external factors, which is currently very, very critical.
What I can say though is, we have been able until so far to pass on these increased material prices to our customers, pretty much one-on-one, which is also of course, keeping us very optimistic on, what Meyer Burger can achieve with our products and the sales behind. On the long-term agreement, why didn't you receive a lump sum ahead of building capacity instead of prepayments in the future? I do admit that in March we had communicated also the option that potential offtakers would contribute to the CapEx portion of the to be added capacities. This is obviously not the case in this agreement.
Nevertheless, without stating the exact amount, I can assure you that the down payment we are going to receive on an annual basis is, I would say exceeding normal market conditions. It's a very substantial amount. This alone is a large contribution to the business, and we are very thankful to DESRI that they have with us agreed on this. We decided to use this part of the financing, which is also very important, especially nowadays as prices have increased and longer lead times are to be expected for the materials.
For the additional CapEx needed, we believe that a capital increase can be the right tool on the back of this binding offtake agreement with DESRI, which secures the volume we are selling through the capacities we are expanding. Can you maybe also shine some additional color on the recently signed agreement with Norwegian Crystals? I can to some extent. In order not to provide too many details with regards to ongoing negotiations also with other suppliers for wafers, we decided not to communicate the amount, but it is already a substantial part of our next year's volume we are sourcing in wafers. What's more important to us are three facts.
Number one, we already see that wafers made in Europe can be manufactured very competitively. Number two, we have a super low carbon footprint with these wafers, which is a big advantage also in some sales regions. Number three, we believe jointly with Norwegian Crystals that this relationship can be grown and expanded as Meyer Burger is also planning to increase its capacity. We believe it's super important that we have an agreement that we are sourcing these wafers and that we can grow from there. Another question, how should we think about the potential ramp-up of the wafer capacity? That's something we don't wanna disclose for the time being because this is still under discussion with Norwegian Crystals as a partner.
Do we expect to still have to import wafers in the next 3-5 years? As I said earlier, we do not aim at sourcing all materials in Europe. That would be a wrong decision. We still believe in global supply chains or the power of global supply chains, but we believe it's super important that we have a critical mass of volume of critical materials also secured in Europe. Today's announcement about potentially increased polysilicon prices due to power shutdowns in China gives more reason to put more effort into this, at least partly, or independence from sourcing in Asia.
I also can tell that the wafers we are sourcing in China from renowned companies, very good quality, has been now since we've signed the Norwegian Crystals supply agreement the only component which we weren't able to source in Europe. We have pretty substantial volumes for our materials coming already from Germany, from Austria, from Belgium, from other regions. We have started to already build a supply chain in the U.S. as we are now going there to produce in Arizona.
This is all on the way, and luckily, we were able to start this process already two years ago and do not need to rush now, because of the very recent geopolitical development.
I can take that one.
Okay.
The next question is the agreement with DESRI part of the US Solar Buyer Consortium in which DESRI is a member. For background, there is an initiative that was launched in the U.S. quite recently, basically a consortium from a number of developers, including AES, Clearway, Cypress Creek. They formed this consortium to source domestically manufactured solar components. We were aware of this initiative, but we agreed with DESRI that we would negotiate bilaterally, so this is a deal that stands outside of that initiative. Yeah, it's a separate deal.
Take the next one.
I can also take the next one.
Yes.
The question is, why are you not providing any indication about the purchase prices which DESRI will pay for the 3.75 GW , and the down payments DESRI will make? Any figures about this contract would be very helpful. Obviously, these are commercially highly sensitive figures, and we have agreed to not disclose commercial details with our customer.
The next-
The next one is for you, Gunter.
Yes, I can take. Why are we conducting a CapEx hike when DESRI is making substantial upfront payments? Your cash burn looks much higher than initially expected when presenting the initial strategy. On the first one, as I explained, the down payment on an annual basis is very substantial. Nevertheless, it starts not immediately, but in advance of the first deliveries, i.e., not now. In order to move fast and to use the opportunity, we need other sources of funding. The question related to the cash burn, I already answered. Yes, there is a contribution, or the need for funding is partly coming also from our delays in the ramp up that has cost a bit more than originally expected.
Primarily it's the acceleration of our growth. Again, in 2023, we were not planning on doing any additions to our capacity. Plus the fact that materials costs have gone up and lead times are now longer. That needs all to be tailored in, and that's also why we are reworking our financial planning as we speak.
This one we have already answered. I can take that one.
This one we have also already answered.
Yeah. Just to clarify a misunderstanding. There's a question on the impact of the CHF 7 per watt-peak Advanced Manufacturing Production Credit. Just to clarify, the example I made was on a per 1 GW basis, so I said CHF 70 million per 1 GW.
Mm-hmm.
Gunter made the example for 1.5 GW, so that's then of course $105 million correspondingly, and you can do the math for any other capacities.
Helping you with this, maybe if you take into account the ramp or the volume produced in that factory, the total tax credit during the term of the law until end of 2023 amounts to approximately $700 million. Next question again on guidance. In March, you announced that you would provide investors with a guidance for 2022 for revenue and EBITDA. Why aren't you providing any guidance for these two metrics? The March announcement happened on March 24th. It was exactly a month after the invasion, the Russian invasion of Ukraine started. In the meantime, I would say the supply chain world has changed dramatically with impacts everywhere on logistics, on availability, on pricing, as we know.
With other factors we have now to deal with, in growing geopolitical tensions in China and Taiwan, just to name one example. The uncertainty out there, we believe, that it's pretty tough, if not impossible to provide a guidance based on facts and figures we do know about external circumstances. Nevertheless, again, I can confirm that we are remaining very optimistic here because we, until so far, have been able to pass on increased prices. We see a strong demand in the market, and we also see the effects of a growing capacity in our factories, diluting fixed costs, increasing our margin.
I believe we are on a very good way here, and I again ask you for understanding that it's currently impossible to provide a very, very firm guidance in these times. This one we have already answered. There are some double questions in here, so we just need to walk through this one. Long-term agreement.
Yeah. So there's a question on margins in regards to the long-term agreement, whether that is positive or negative with regards to our long-term profitability targets. Again, we currently are not communicating any margin guidance due to the circumstances that Gunter mentioned. However, I think it's fair to say that we are very happy with the commercial terms of the DESRI agreement. Of course, we had also potentially the opportunity to not expand into utility, but expand into residential first and then only do utility later. In the overall balance of factors, we believe that this was an economically very attractive agreement to enter into. We're very happy with that. The next question is, can you provide any figures about order entries and order backlog in H1?
Yes, I have implicitly already answered that question. Effectively, the concept of an order book has more or less lost its meaning in the current market situation. We are in allocation mode, so we're no longer taking orders, sort of proactive orders from our customers. In fact, we are allocating our supply volume, and we are doing this basically one quarter after another. Currently, we are allocating the volumes for the second quarter of 2023. That effectively tells you where our order book technically stands, but again, it has effectively lost its operational meaning in these very extraordinary times.
There's another question on how valid still our volume guidance or nameplate capacity guidance is that we presented at the beginning of our strategy change, suggesting that we would reach 4.2 GW by 2025 as a nameplate capacity. Comparing now and two years ago, I think alone with the DESRI deal, we can show that we can now turn a pure planning approach into reality. As Moritz mentioned, we are in talks with other potential partners in the offtake arena, both in the U.S. and in Europe. I believe it's very, very likely that we will see continued growth. 4.2 GW, I would say yes, we stick to the plan and potentially there can even be more.
Depending on real deals instead of a planning approach we've been using in the past, the market demand is there, and we are working hard on securing real orders, on which basis we can increase our capacities in the future. There's a question on the capital raise and the use of proceeds. Again, I apologize that I can, for the time being, not give further details. We will inform the market, as soon as we are ready with the preparation here.
Duplicate.
A duplicate question which we already answered.
Also duplicate.
Many questions on why we are not providing a guidance. We answered this. How much capacity can be installed in existing factories, Germany and U.S., before new factories have to be built? We have executed on a pretty successful strategy to go brownfield. We have not yet spent money on concrete that much because we could use existing buildings, existing factories with our Freiburg site for the module and also the factory we are sitting in right now for the solar cell manufacturing. The plan still is to increase capacities for the solar cell manufacturing here in the Solar Valley. There is, we believe, enough real estate available to grow big. We have also planned for this growth.
We have communicated earlier this year that we could secure a second building, which is adjacent to the existing one. The solar cell part is, for the time being, assumed to take place in the Solar Valley. Whereas we would like to erect additional module factories once we go beyond the 3 GW in our respective markets. That makes total sense also from a supply chain and also lead time perspective to be close, in closer proximity to end customers. We have now real estate enough to do the 3 GW, and if we have to go beyond the 3 GW, which we are working on, we will go into other sites and ideally brownfield. Which components in the supply chain are missing that prevent you from ramping up production faster?
That's a very good question, and it also ties back into the financing discussion. We have until so far worked on our expansions such that we did the planning for what do we need in terms of equipment, in terms of components. We placed the orders, built the tools, and when they were built in our German factory in Hohenstein-Ernstthal, we moved them into the production and started the ramp. We've been facing issues as communicated from non-availabilities of certain components. The problem, unlike in the module production and cell production, if you're missing 30% of your wafer volume, then you produce 30% less modules. If you're missing certain components for your manufacturing, you can switch on the line.
That can be very much gating and also defines the critical path along the anticipated capacity growth. What we are now looking into to accelerate also the build-out of new capacities is that we have identified the long lead time items. We would like to entertain a system in our procurement process where we are purchasing these long lead time items, put them in our warehouse in order to act as fast as possible as soon as we have the ability to continue our growth.
The volumes we are talking here are, they are not small, but, I think, this is an approach we would like to use in the future also in order to reduce the risk of, or to reduce the lead time for a factory build-out. Under the current circumstances, we have to work from an assumption that, starting from zero to having the factory ready is gonna take about 18 months. If you would have asked us two years ago, we would have answered it's 12 months. That's due to longer lead times and, restrictions in the availability of material.
Again, I believe we can entertain a system where we are ordering long lead time items long enough that we can again shorten these 18 months. The components which are most critical are semiconductor components, so equipment controllers, PLCs, and elements like this, which are currently critical in terms of the availability. I think the next one, Moritz, goes to you.
Yes. So the next question, you mentioned strong interest from other utilities to potentially get a similar agreement as D. E. Shaw. Would you need a further CapEx increase for such further agreements? Thank you. Obviously, we're not going to comment on future financing plans specifically, but it is safe to say that there are, of course, multiple sources of funding for future CapEx requirements. The most important one, of course, operational cash flows that we can reinvest. But we also believe that we can maintain a healthy and reasonable balance sheet structure. And of course, debt will be available, et cetera, et cetera. Again, not making any concrete statements, but we believe that we will have many options to finance our growth going forward.
The next question is on the impact of higher silicon prices on our cost per watt.
The question is, what's the impact of higher silicon prices on your cost per watt peak? The answer is very simple. As a rough order of magnitude, you need about 3 g of polysilicon per watt peak, and then you can do the math, run the numbers. Currently, polysilicon is slightly north of 40 per kilogram, and so you can compute what it means.
The next one goes to you.
Next question is, how much of the 87 MW sold in H1 2022 were already produced in 2021? That's, of course, a good question, and we can answer that with the figures that we gave in our March presentation. We had produced 30 MW in 2021 but only sold 20. The remaining 10 have obviously been sold in the meantime for all practical purposes.
We have a question on specific CapEx per gigawatt. Previously meaning the 2020 original guidance said that we would need CHF 165 million-CHF 175 million CapEx. This was in fact the long-term CapEx guidance, so it was not the short-term one. Taking into account that we are improving also on the CapEx per gigawatt figure with our own equipment developments, I can report here two things. Number one, we are very, very well on track with these new tools and systems also for our next upcoming technology generation, which is our interdigitated back contact, abbreviated IBC, heterojunction technology.
It's again a proprietary approach using SmartWire, and we have been able to design first and then build the first pilot tools for the module part. We are just about to build the last missing piece of cell equipment which is needed, which then will go to our Hauterive research site in Switzerland to be tested in a pilot. We can, with these developments, not only increase the performance of our products, but we can also further reduce the CapEx per throughput. Nevertheless, the second mention I wanna make here is that due to inflation, higher input costs, the specific number for CapEx per gigawatt has gone up.
We are expecting this number to currently stand at around 200, 210, 215, let's say between CHF 200 million and CHF 220 million per gigawatt for cell and module.
I can take the next one. So what does the DESRI contract say about the potential delay of delivery? Again, we're not in a position to comment on specific commercial provisions of the agreement. Then next one, I can also take that one. Did you have to make any concessions on price, other terms in order to get DESRI into this agreement? Again, I can report that we are very happy with the terms of that agreement. They are attractive and, I think reflective of the current market environment.
The next one is, I have a very simple answer for that one. Is there a reason there is no press release on D.E. Shaw Renewable Investments DESRI webpage regarding the deal? The answer is that's a private company. They are non-public. I don't think that they usually report or publish these type of deals. The CapEx guidance, we have already answered. We are not providing specific numbers for the U.S. even though I think it's transparent and honest to mention that U.S. not the equipment itself but facility utility installations tend to be slightly more expensive than in Europe, in the U.S. Are you gonna take the next one?
Yeah. Next one is, can you elaborate on the still low gross margins and why this is? We can only comment that obviously we in 2021 and also still in 2022, in the first half of the year, we were still heavily impacted by the ramp-up condition, i.e. underutilization, and of our lines and so our gross margins are reflective of that situation.
You take the next one?
Yeah. How much more efficient is your current product compared to other Western competitors? Do you have a real differentiation once the market becomes normal? Yes. I mean, I think we've elaborated on that quite extensively already in 2020 when we announced the strategic transformation. We believe that we currently have a top of the market product, and we keep innovating and firmly plan to continue being at the top of the market with our product.
Maybe if I may add on this one, what we see or what we've seen in H1, basically also continuing the development we saw in 2021 is that competitors are basically leaving the market with Panasonic and LG. Heterojunction products are very rare, I would say in our markets, in the EU and in the U.S. Unlike or despite the massive and bullish announcements from China, we are not seeing heterojunction products other than REC and Meyer Burger in the market. We believe I already elaborated on what's going to be next with our IBC technology, which again, is a proprietary one. We believe that we can continue leading the market here.
We have also presented a new upgraded or improved product, a generation two product, if you will, of our module product. We are selling since a year with highest efficiencies reaching above 22% in the market. If we compare them one-on-one with the same wafer sizes, the same module sizes, we can still confirm the 1.5% gap between us and mainstream products, and we believe we can continue to do so. In fact, also maybe a comment on the generation of the IBC technology. We still and strongly believe in a potential future of tandem technologies. Nevertheless, this technology has still to provide the proof that it can be commercialized. The industry is not yet there.
One of our main partners in the R&D world, the Swiss based CSEM Institute in Neuchâtel, has just recently broken the world record by far, I would say, now reaching 31.25% on a tandem perovskite on heterojunction tandem solar cell. It's not a secret that Meyer Burger is working very, very closely with the CSEM team since more than a decade. I think this one we have already answered.
It's redundant.
This one we answered.
Yeah. No further comments.
Yeah. There's a question when exactly we are expecting to hold the extraordinary general meeting. I think I answered this. There are no further comments or information as of today. On the technology pathway, I already mentioned a few things. Maybe something else that might be interesting for you is that also the close collaboration with European and US partners. I'm on purpose not saying suppliers. Partners. Does also help to increase the products. We've very recently seen new companies starting businesses in Europe developing very interesting technologies to be applied in solar cell and module technology.
Due to the very close proximity between us and them, we have also in various details of our product design started new developments, which we will hopefully present to the market very shortly. Again, a question on the mid/long-term nameplate capacity guidance. How is the goal of 7 GW in 2027 affected by the updated expansion plans? We stick to that plan, but there's clearly an upside to it also, provided the fact that we see strong demand in the market. A tendency also to diversify supply chains, as Moritz has elaborated on already.
Yeah. I can take the next one.
Yeah.
Has this capital increase also the potential to serve not only for the DESRI deal, but for potential further deals with other large scale utility buyers? That's a good question, but again, we're not going to comment specifically on the use of proceeds at this time.
Another question on EBITDA. Break-even to be expected around year-end. That's what we communicated.
Yes, too.
The answer is yes. We stick to that statement. We expect this to happen around year-end 2022. Any update on your roof tile business? That's a question I was waiting for. Thank you for this one. We have at Intersolar in Munich presented an updated version of the solar roof tile. We have received hundreds of inquiries for the product, and we are in the process to select first pilot customer projects as we have explained from the very beginning. The first project is gonna be executed physically in this quarter. That's the third quarter. Yes, right. In this quarter. We are doing a few projects this year, and are preparing to sell the product from 2023. That's the current plan.
Good. I can take the next one. You mentioned that you have shifted to allocation mode for your products. How have existing customers reacted to this, and what is the risk customers might be walking away from Meyer Burger once supply of other OEMs is improving? That's an excellent question. The situation is of course very unsatisfactory for us and also for our customers. That's clear. It also needs to be mentioned that the supply shortage is by far not unique to Meyer Burger. It affects the entire industry, the entire module industry, or many parts of the module industry, and also all other key components. For example, racking systems and inverters are also heavily impacted by supply shortages and delivery delays currently.
This is basically the daily reality of our customers, the distributors, and it certainly is a very, very tough job to manage because one order for us can be potentially hundreds of orders for our customers. That is indeed a very, very difficult situation. The basic principle, and this is has been our principle from day one, is we want to be as transparent as possible, and we want to work jointly with our customers to solve problems. Yes, this is a problem to solve. We can only attack it jointly. The reason why we have so aggressively gone into allocation mode is that we wanted to preserve long-term visibility for our customers.
We also wanted to make sure that there's a fair share of product reaching all of the customers that had put trust into Meyer Burger, many of them very early on. What I can report is that, yes, of course, customers are not happy about the situation. They would like to get more product from Meyer Burger. I think overall there is a level of understanding why the situation is as it is, and there's also an appreciation for the way we are dealing with this situation. In this same spirit, we will continue working with our customers going forward, and I believe that this is actually also a competitive advantage going forward that we remain this.
That we keep being very close to the customers and keep working with the customers and solving the problems together. The loyalty of our customers so far, we feel is great and we look forward to working with them in the future when we have more product to supply.
Next one goes to me. Why do you still believe that your SmartWire technology offers a competitive advantage? We see more and more competitors offering solutions to reduce silver too. First of all, we do not still believe that, our SmartWire technology offers a competitive advantage. It does, and it's being rewarded by customers. We set the benchmark with our technology in terms of lowest silver consumption in the market. Yes, there are many announcements out there of other silver-saving technologies, but none of it is yet available. Ours is at Technology Readiness Level 9. What's super important to be understood in the market, whenever we hear about R&D announcements, that is not automatically telling that this is an available technology in manufacturing.
We have a technology that needed a decade at least to become production worthy. Now we can build on that, on that basis and foundation. Maybe to give you a bit of a preview where Meyer Burger might be trending, I think we may leave the silver topic behind us because there are other ways to get rid of silver entirely and also helping to switch to less expensive components in the future, which may even provide a potential performance increase. The other important element is I also strongly, or we strongly believe that our concept of doing it captively so that the product we present to the market is a module.
Our technology behind has proven to be a great success because we are also much, much quicker able to debottleneck tools doing this pretty much in-house. We don't need to deal with third parties and aligning on service level agreements and elements like this. We do the opposite. We can align our solar module product roadmap with our production equipment and production technology roadmap. This has proven to increase the pace of what we can do on the performance increase side. The next one goes to you.
Yeah. I guess again, a variation on the same theme. It seems like you are very happy with the amount and the margins on the DESRI deal. Why did they agree to the deal at such terms? I can only give a very generic answer. First of all, it is a binding agreement for both sides. As you know, as a necessity when two parties enter into agreement, it is attractive for both parties to enter that agreement.
I think if I may add the rationale here should not be that one party is unhappy and the other is happy, but that both are happy. I think these are the best deals, and I believe we have achieved exactly this one. The technology roadmap we have done already. What's left in here? Give us a second, please. There's a question on that we mentioned the $7 million per gigawatt tax credit for US for any US module manufacturing, not only for Meyer Burger. Where on the Meyer Burger P&L statement will we find these $7 million in the future? This we will see in the future. First of all, let's get there.
Our capable accounting department will find a solution for that. I'm sure.
That's it. Yeah. Interesting question related to U.S., EU politics. US Inflation Reduction Act has been passed in the U.S. What do you hope to see in the EU in this area politically, especially on the back of the visit of Robert Habeck at Meyer Burger? Any color on that? We know from experience that whenever there's reason to act quickly, the U.S. has proven to usually be a bit faster than the European Union. This has, I think, two reasons in it. Number one, EU needs to align anything they do with all member states, which can be quite a lengthy process.
Second, there is also a bit of a longer history in the U.S. in terms of reshoring supply chains and tackling dependencies from Asian suppliers or Chinese suppliers in particular. I think the U.S. had a head start because they started a bit earlier. We are in talks with politicians. That's public knowledge that Robert Habeck visited us. I think for the time being, we don't want to.
Comment further.
Comment further.
Need I know-
There is maybe not to leave you fully in the dark. There is, I think, a growing understanding that what Meyer Burger does, and what the solar industry does or can do in Europe is something of very strategic importance because we are part of the energy business. We build energy infrastructure. That's exactly the debate we are having on dependency from Russian gas, and it's not at all different with solar modules. I think there's a growing understanding that parts of the supply chain reaching a critical level of volume has to be in Europe and in the U.S. I strongly believe that there will be solutions found also in the political arena to support the industry.
Yeah. Take that one.
Mm-hmm.
There's an accounting question. Given just CHF 3 million of intersegment photovoltaic sales, it seems almost all capitalized goods and services is related to personnel expenses. Is this a correct assumption? The answer is no. Not every capitalization directly leads to an intercompany sale. There's often a time delay until full assembly, so you simply cannot infer that statement.
I know you're taking.
Can't read this one now. Again, on the DESRI commercial terms, while it is understandable that you cannot disclose the commercial terms of the specific contracts, can you comment on how we should think of the spread between sourcing versus commercial sales terms, i.e., what's the risk of being squeezed as has happened to the German solar industry in the first decade of the 21st century after having entered take or pay poly contracts while product ASPs were collapsing? I think this is a great question. Of course, we all have these precedents in mind, and some of us had personal experiences with the potential fallout from such agreements.
We believe that we have actually found very robust , and also innovative ways to come to a pricing mechanism which is in all likelihood going to be equitable for both sides and will in all likelihood not lead into this kind of a squeeze situation. Again, we're very happy with absolute levels, but also with the mechanism behind it.
This was the last question, so we answered all of them. Thank you for joining this webcast, and thank you for your interest in Meyer Burger. I'm sure we will see one or the other during next week's roadshows or, in one-on-one calls, which you may schedule via our investor relations team. Thank you so much and have a great day.
Thank you.