Welcome to the Hexicon Q4 2023 report presentation. Now I will hand the conference over to the CEO Marcus Thor. Please go ahead.
Hello and good morning, everyone. This is an opportunity here for me to provide an update of our business and the market. Typically, we do this from a studio in Stockholm where we also have video. At the moment I'm actually currently in South Korea, with some activities related to our project here, so I couldn't be in Stockholm and therefore we took the safer bets and have no video here to ensure that at least you can hear me loud and clear. There won't be any video, but I'll obviously go through the slides, and talk through. My name is Marcus Thor, and I'm the CEO of Hexicon, and let's get to it. I'll provide an update of the floating offshore wind market as we look at it today, followed by a brief of Hexicon.
I've done this before, but wanted to provide an update of that as well as the ongoing and most recent business updates ending with looking at our focuses in the near-term months. And if we start with floating offshore wind, and our view of this being the third generation of wind power, followed by after the first generation as we've called it, which is onshore wind, followed by offshore on the seabed, and now we're into the third generation which is planned across the globe in several gigawatt-scale projects. And three key arguments from our perspective if we look at floating wind. First of all, and the key one, is the unlimited potential. So approximately 80% of accessible waters around the globe is in deep water, so it's a huge, virtually unlimited potential.
Secondly, if you look at the floating systems compared to fixed, the flexibility is a lot greater to site such projects where it suits best, both from a wind power potential to avoid conflict, and not the least to get out of site, which is a key aspect in the objection of wind projects. And lastly, industrialization. So again, the independence of water depth enables the same foundation design across large-scale wind farms. This is not the case for bottom-fixed where it's every to every foundation or every second foundation is a unique design due to variations in water depth and soil conditions. And reflecting a little bit back on 2023, I want to point out that I don't think comes as a surprise to anyone. It has been a challenging year. We've seen it driven by interest rates, inflation, and also for our industry supply chain bottlenecks.
So, definitely, a market global market sentiment that have struck our industry as well. I'll give you an example. We've seen, as an example, offshore wind turbines that have increased over the last 24 months or so in cost somewhere 30%-40%. So it has been a challenging year. With that said, there have been various results, and announcements. What we've in general seen is across projects, certain projects that have been delayed, some that have even been canceled. And we've seen if you look at policy and global auctions, we've seen both some that have been disappointing in terms of participation. We have seen some, mainly for bottom-fixed, that have shown very good results. So it's been a bit of good and bad announcements, results, etc. In general, it has very much been a challenging year for the industry.
What we have seen, though, towards the end of last year are some announcements and indications that provide tailwind to the industry. So all in all, I would say that if I were to look at the recent period that has been very challenging, my long-term view of the number of turbines that will be in waters around the globe hasn't changed, but I do think we're looking at certain delays, and a bit of a trough here and now.
Some initiatives that have been very comforting very recently, have been, for example, the European Wind Action Plan, where the EU, as a consequence to the global market sentiment, have put together quite a strong package which includes a lot of aspects, two of the key ones being easier and greater access to funding through EU, as well as strong action to reduce lead times for wind developments, not the least linked to permitting. We also see quite the shift upwards when we look at the CfD program in the U.K. So this is the U.K. scheme of Contracts for Difference , which basically locked in or sort of locks in a price for the electricity that renewable generation receives.
The announcement just the end of last year for the round that is taking place in this year saw quite a substantial increase of around 50% in the ceiling for the CfD prices. So if we look ahead at the market being both offshore wind and floating wind, I think that they're all, you know, looking at a delay and a reduced deployment of turbines here and now, but it's very much unaffected, sorry, in the medium to long term. So two examples here, Global Wind Energy Council, expected to be some 380 GW offshore wind that will be added during the next decade. This is, obviously including fixed bottom as well. For floating wind, that forecast is almost 11 GW by 2030. So we're still going from today's very small numbers to very big numbers over the next few years.
Although perhaps some of these projects being delayed, we're really it's a transition point ongoing at the moment with several gigawatt projects in plan to hit construction start over the next one, two, three, and so on years. As a quick look into our own business model, as a reminder perhaps for a few, we've got a model where we're both a project developer and a technology provider. That allows us to have two independent revenue streams that are not in conflict by the sense that you can achieve one independently from the other. At the same time, they are synergetic. So one opens doors for the others. So they commercially reinforce each other, you could say. In developments, our focused skill sets and our core competence lies in the development phase of deep waters of floating wind projects.
On the technology, it's really a matter of providing a foundation design that is cutting edge. I'll come back to this a bit later. The revenue models are on the project development side linked to the value increase of projects. So by maintaining starting them, maintaining ownerships, those can be divested over time at higher valuations. On the technology side, it's a licensed revenue model. So when our IP is used, we can make money out of that. Looking at where our project portfolio lies today, where we are at a portfolio of gross around 23 GW, including both projects and prospects. They're located in Europe, Asia, and a bit smaller in South Africa, where we've got projects across all three of these areas, Europe and Asia.
We've had for some time a growing portfolio, and in South Africa, so very recently, have defined our prospect into a project after having entered the EIA phase. I just wanted to show this slide. It's not intended to be read, every line, and it's also available on both the quarterly report and on our web page. We are taking steps now to provide other details, so broken down to a lot more detail across our portfolio. We'll continue to do this, and provide more and more details into our portfolio. This is just to show what this will starting to look like, and this can already be visible on our web page and in the report.
Providing a lot more details into the projects, not per portfolio, but actually per project as well, and how we define them and what the reasoning is behind these definitions. Looking forward, we've kept this. We're now sort of moving in or on towards 2023. Our targets remain the same. So first and foremost, I wanted to mention the various steps here in our development phase of the company's development stages, where we are in stage two here, which, as opposed to the first one where we focused on only investing and developing and growing the business, we're continuing to do that, scaling it, not the least, but also divesting. I'll definitely come back to that as well. We're in that phase right now, and we are in talks across several projects about certain divestments.
That will be followed by a last and final stage, if you will, where we continue to do our activities within stage one and two, but at a point where we've also reached verification of our foundation technology that allows the technology to be commercialized as well. As for our vision to achieve by next year, it remains to have ongoing revenues from operations in our three continents we're active. For the TwinWind design to be verified and to the extent where it's externally investable and we can decide on construction and on the financial front to be positive in terms of EBITDA. A few highlights or where efforts have been placed during quarter four. Most of our efforts have gone into the development of our key and largest projects.
that have been the case for quite some time, and they're really growing and hitting new milestones requiring more resources and more focus. That continues to be the primary focal point for the majority of our staff. We're more specifically handling a third permit application for the project Dyning on the Swedish market. This one we're doing in the joint venture Freja Offshore, 50/50 with Mainstream Renewable Power. I'll get back to this in a second as well. And also continue with intensified dialogues on project divestments. I'll also come back to this. And looking a bit more specifically on Freja Offshore, so that's the joint venture, as said, 50/50 with Mainstream Renewable Power, where all our projects in Sweden are handled through. So we did during the quarter submit a third permit application to the Swedish government. This one is for Dyning.
As you can see on this map, it lies south of Stockholm, east of Oxelösund. And that one is, as well as the others, strategically located for, from two perspectives. One is to avoid conflict, so suitable location to not conflict with other stakeholders at sea, to not be visible from shore, but also to be close to need in terms of power. So we are here in the southern part of Sweden with the high demand and not the least the proximity to industry as well that is electrifying. And I've shown the small picture there on the bottom left, a little bit smaller this time around. I've shown it before, but it's really a key point, not the least. In Sweden, where these allow them to not be visible from shore.
Technology now is available with floating foundations, our own, but also others, to deploy such projects. So there's no need anymore to see big walls on massive towers and turbines from the coastline. And this one is a key one in our selection. Developments, we make sure that this is the case. Looking across some of our key projects, I just wanted to provide an update. If we start over in South Korea with the MunmuBaram project that we're working with together with Shell, where Shell owns 80% and we own 20%. That's now in late stage of developments. We have the electricity business licenses in place. We have a turbine supplier agreement in place and working heavily with Vestas. And a very recent big milestone was that we, as of fairly recently, submitted the EIA application to the Korean authorities.
That's a result after a bit over two years of work that was just now submitted, and we do expect a response on that during the year. If we look at Italy, we've selected out of our portfolio of seven sites. We are progressing four of these onwards into the next stage, and two of them are currently in the EIA stage. So that means that we have still maintained to have and actively progress about 4.7 GW of secured seabed. And adding to that, about 4 GW of prospects. So what we're doing here in this market is to obviously prioritize the list of prospects and all areas, looking at which makes most sense from a commercial perspective, from a consenting perspective, etc., and progressing them in series rather than all at once.
So we're progressing around half of that opportunity onwards into the EIA phase and keeping a few more as a series subject to how market develops, how those first projects develop, not only to be mindful of market conditions that may change. So it's from a risk perspective, but it's also from a learning perspective to capture learnings through some of the first ones into subsequent ones. In Sweden, I did mention, that we had just submitted the permit application for Dyning, so the third project. That means that we've in total submitted the EIA for the approvals to government for 7 GW potential projects, keeping a 2.5 GW project that is still in the prospect phase that is yet to be submitted to the government. So if we look ahead here, I guess, you know, key milestones looking forward is the approval.
The first one is expected to be the Mareld project on the West Coast. That was the first one we submitted to the government almost a year ago. TwinHub, which is a technology demonstrator project using our own technology in the southwest part of England of Cornwall. This is, call it, a technology demonstrator project or a pre-commercial project. That will consist of two versions of our TwinWind foundation. So that's in total four turbines, 8 MW each, so a total project of 32 MW. Here FEED is ongoing and not the least part of FEED's integrated engineering work with suppliers. And not the least, perhaps the most important one, the so-called Integrated Load Analysis. So integrated engineering work with the turbine supplier, which for this project is Mingyang.
So here we're looking at construction, start to be planned from about a year from now and thereon deployment the year after that. Over to South Africa, it's been a very positive market development, which is also why we've decided to ramp up some efforts there and rename this from a prospect to a project for one of our sites there in 800 MW, area of Richards Bay on the northeast side of the country, where we have, as of a few months ago, entered the environmental impact assessment stage as well. So there we're in full speed ahead now in that phase, and we'll ramp up such activities and also look at additional sites within the area. So wrapping up, what are we doing and what are we focusing on over the next few months?
Definitely a remaining focus and a continued discussion that we're having around divestment of certain projects. So it is a fact that we are, we are at a stage where we think for a lot of our assets, it makes sense to now also look at divestment. Divestment does not mean at all that we have to exit projects completely, of course, but to start looking at divestments. And there are some serious discussions ongoing that I do hope to be able to get back to you within short. Second is to continue the integrated engineering work within the TwinHub project for our foundation technology TwinWind with certain key suppliers, not the least the turbine supplier, which is a key one in terms of making sure that the foundation technology will work. So there's—let's remember the foundation technology has one purpose only.
Phase II turbines for the lifetime of the turbines. So to ensure that we are within the maximum requirements, accelerations, motions, etc., from turbine suppliers is a key responsibility of us as a foundation supplier. And this we're in now really the detailed works. And second, or sorry, thirdly, we'll be looking at both from an aspect of looking into divestments, from an aspect of where the global market sentiment is, and the higher maturity grade of certain of our projects. We are reflecting upon all that, making sure that we have the optimum setup of all our projects. So we'll be looking at maybe certain restructuring of some of our key projects in the near future. And if so, we'll get back to you on that as well.
Okay, thank you, Marcus, for the presentation.
We have now received a few questions from our listeners, and I will start with the first one. You have mentioned in several reports that divestments are a priority for Hexicon. How come Hexicon has not realized any divestments yet?
Very valid question. So, as I mentioned, I think we're definitely seeing that it is taking longer than expected given where the global market is currently. And that's not to say because I do remain optimistic in the value of our assets, but timelines are certainly shifted. And that's also something we did see quite a while back where, you know, where the general market was going and the appetite. And I guess the resources available to look into investments, which is why a while back we put in part, this Glennmont loan facility as well.
So part of the reason was definitely to be able to be more flexible in terms of timing, not to ever needing to fire sale anything or, you know, to lose any positions or projects. So, it's an ongoing ambition. It's an ongoing activity. We will see divestments in the near future. But timelines have definitely shifted as a consequence of the market we're in.
Okay, thank you. Next question. How would you describe your financial position going into 2024, also taking your credit agreements into account?
Well, again, a good question. So following our plan, as we are, you know, continuing to grow our business, making sure that our positions and value of projects continue to grow, that's on the one hand, we also, of course, need to continue keeping a close eye on future capital needs.
Such plan today consists of project divestments that are being planned and that we'll hope to be able to get back to you shortly. But we're, of course, at all times also considering at what points in time in the future do we need to action backup plans that might be in other forms than project divestments. There aren't any that we've actioned as of yet, but we're monitoring a close eye on that when at future timings we do need to act on those. So we're definitely progressing and hope to, as I said, be able to get back to you on project divestments, which remains a key track and a priority at Hexicon.
Thank you. Let me see here. Over to next one. There are several players on the market developing floating wind. Where do you position Hexicon's TwinWind solution and when do you expect to put a demo in the water?
Yes, there are many players developing floating wind. So assuming this means the technology part of it, so the foundation. I think I've probably seen somewhere 60-70 different proposals in various stages. I think there's, you know, up to a handful that have been in the water already. So there's very few of them that have achieved that. So Hexicon's TwinWind from two perspectives. If you look at maturity, I think that with the TwinHub project ongoing, we're still in the sort of most mature 5%-10% of those proposed solutions and designs. From a competition perspective, I think we're very much in the top. And that should be looked upon.
What our TwinWind foundation allows us to do with two turbines on the same platform is to ensure that we're cost competitive with the best in class, but at the same time, we have the USP and the additional benefit of being able to squeeze in more turbines per given water area. That in itself has some direct cost benefits, but it also very much ensures additional flexibility in terms of avoiding conflict. So if you look at developments and the risk associated with development, that's linked to not getting permits, which typically in itself is linked to objections by stakeholders. So the less of an area you need to occupy for a certain capacity, the easier you are to ensure you're out of conflicts and ensure coexistence with other stakeholders.
To the last point on when in timing, so we're looking within the TwinHub project to install the technology in 2026. Okay, thank you. We should have time for one more question. In the report you write that the Swedish government has given the concerned counties for Dyning and Cirrus the task of reviewing the conditions for the offshore wind farms. What does that mean and will this delay the timeline for possible approved permits? So the timelines thing is always a bit of an uncertainty, of course, that I can't really speak on behalf, but we haven't seen any delays as a consequence of that. These now have been handed over to the counties. So that's a typical process-wise. That's how it's done. So our locations of projects are out in the Swedish Economic Zone.
So they're outside the territorial line, which is 12 nautical miles from the coast. That means that the application goes to government. We're out of the municipality veto. It's a government, this central government decision. However, what the government does up in Stockholm is to hand that down for the review and recommendation by the counties. So that's a formal step in the process that have now also happened for Dyning and Cirrus. It has quite a while ago already. It happened for the Mareld project on the West Coast.
Okay, that's it for now. Time is running out. Thank you, Marcus, for the presentation and for answering the questions. And for those of you who submitted questions that we did not have time to answer, we will do our best to come back by email shortly. And now back to you, Marcus. Thank you very much.
And with that said, also thank you everyone for listening. Look forward to speaking again on next update. And between that, I'm sure we'll have every reason to get back to you with new announcements. Thank you very much, everyone, and have a good day.