Good morning, everyone, and thank you for taking the time to listen in today. My name is Marcus Thor. I'm the CEO of Hexicon, and I'll be now, over the next 20 or so minutes, providing an update to our business at Hexicon, as well as providing an insight to the world of floating offshore wind and any related development. So let me get to it. The agenda for the day is to, I'll start very briefly on floating offshore winds, give a bit of an view of where the market is today and where it's been very recently. Going into some key insights of Hexicon, and ending up with some highlights of our business during the last period. So let's get to it. And I'll start off with just a slide to summarize floating offshore wind.
Many of you have listened to me before, and I'm, for those, repeating myself, but it's worthwhile just to frame this in. Floating offshore wind, which Hexicon has been dedicated to for about 15 years, is where you place turbines on floating foundations, which provides a lot of opportunities, not the least, the fact that on a global scale, 80% of waters accessible for offshore wind are in deep water. So from a global perspective, to really increase the part of the renewables energy mix that comes from offshore wind, it needs to be a significant part that is floating. What are the advantages then? Well, I've summarized them here in four words. One, is environmentally friendly. It's less intrusion on the seabed, and you're more flexible in where you site these projects.
It means that you can avoid things like nature preserved areas, avoid conflicting with other marine mammals, birds, and whatnot. Second is reliable. So out further off the coast, winds are stronger and winds are more stable. Additionally, the flexibility of not being constrained by water depth allows you to find the best wind locations. Third, is scalable. So again, not constrained by patches of shallow water areas, allows projects to be really big. It also allows projects to utilize one and the same foundation. So it's literally a blueprint copy across all the foundations in a really large wind farm. Which is not the case if you consider bottom-fixed projects, where every or every second foundation needs to be a specific design because there are variations in water depth and seabed.
This is a true driver to reach cost reductions: to make projects really big and industrialize across the complete supply chain. The last one is adaptable. So the ability to adapt to market conditions, the ability to place them where the demand is. And the fact of the matter is, as I said, around 80% of waters across the globe are deep, and the vast majority of the power demand across the globe are in coastal areas. So with these four words, we're summarizing floating offshore wind, which can be seen as the third generation of wind power, started onshore, then went into water, so offshore, in shallower waters, and then went deeper and deeper and deeper as the demand grew. And now we're at the transition, going from fixed bottom into also floating offshore wind.
It hasn't been built in commercial scale yet, but there are multiple projects across the globe, some that we are engaged in, that will start construction over the next few years when it comes to floating technology. Looking at the market as such and where we are today, if we look back at last year, it was a challenging year for the industry. We did see a lot of projects being affected, we did see delays, and it was very much related to interest rates going up, inflation, and also supply chain bottlenecks. So a lot of late-stage projects that were closing in on needing to make hardware decisions and investments were put on hold, or even abandoned in some cases.
With that said, we're seeing a lot of the earlier or mid-stage projects where a lot of our portfolio is not significantly affected here and now from a cost perspective, at least, but certainly the general market sentiment have, or was, I should say, across 2023, weak. We are seeing signals on the more positive front at the moment, markets starting to stabilize, and there's clear signals related to, to, again, the general, general global, economy, looking a little bit brighter when it comes to inflation rates and whatnot. We, we are seeing some positive signals also in projects, but it hasn't really come back yet to where we were a few years ago. So for Hexicon-...
That means that we have seen somewhat of longer lead times in any discussions that are related to transactions and investments into projects, et cetera. We are seeing a lot of consolidations across the market. So, both the various type of companies merging, bigger players coming in and taking over smaller players, and whatnot. So there's definitely some market consolidations being seen. Lastly, it's good to note, though, that there's a lot of political initiatives that are increased and have continued to increase during last year to support floating offshore wind. Both seeing that across the EU, we're seeing it in the U.K., and we're seeing it over in the U.S. It's related to things as speeding up permitting processes, it's relating to increasing ceilings where there are subsidy schemes, such as the U.K., and so on.
So all in all, a challenging year behind us, looking brighter ahead. How quickly markets will come back and stabilize, that is, of course, very hard to say, but certainly we're seeing it a lot brighter looking forward than looking back at last year. A few key insights of Hexicon, just to summarize, in four bullets. Number one, Hexicon has been working dedicatedly to floating offshore wind for 15 years, and that is very unique to have that experience, and that's taught us a lot across the years, both on technology and project developments. Number two, having our own fully owned IP for a competitive technology for the TwinWind, which is a dual turbine floating foundation, I'll come back to that in a few slides, is also very unique, and having that combined with the project development expertise. Number three is a diversified portfolio.
So we've purposely gone out for projects in markets that have certain prerequisites that makes them very good for the specifics of floating offshore wind, rather than being in a certain region. So that means today that we're both diversified across the globe, so geographically, but also in terms of maturity. And lastly, our whole fundamental business model and growth plan over the last six-seven years have been very linked to solid partnerships. So partnerships with both local and industrial players, and not the least, to obtain the local competence in various markets that we are active, have been a key ingredient in our growth, and will continue to play a significant part going forward.
Just as a reminder, probably for some of you, but it is worthwhile mentioning, that Hexicon operates with a dual business model in the sense that we're both a project developer and a technology provider. And these truly commercially reinforce one another, but they're also independently, and we run them independently at this stage. So until our technology, the floating foundation, which is called TwinWind, is verified and demonstrated, we are treating and developing all projects on a technology neutral basis. And the reason for that are a few, but fundamentally, any project developments, you want to ensure that the project chooses whatever ingredients when it comes to technical components or any of the supply chain, that is fit for purpose for this specific project.
That may vary because they're, you know, different parts of the world, different environment, different waves, water depths, et cetera. And also the fact to allow projects to grow with maximum value increase and to allow investments to happen also during the development phase, you don't want to lock in project to a specific technology too early. So that's how we operate these two parallel, you know, legs of the business model, if you will. But the learnings across the two and the opportunities they provide one another are substantial. So we are using the fact of having our own IP, both to get into markets and certain partnerships. And one slide on the technology.
We are focusing a lot on the technology, and I'll come back to in a few slides, where we are revisiting or restructuring the TwinHub project, which is a demonstration project in the U.K. for our technology. But that doesn't mean that we're down prioritizing the technology as such. So what we are doing is both generic technology developments, as well as specific engineering work with the key partners and suppliers for the TwinHub project. When it comes to the generic technical developments, we've carried out over the last eight-nine months, a significant technologies assessment across a handful of different topics to ensure competitiveness. The market is growing very quickly, and there's probably over 70 different foundation technologies out there today. So we need to, at all times, assure ourselves that we're keeping this technology cutting edge and competitive.
Some of those areas for our technology are related to things like the control system, not only control system of the individual turbines, but the control system of the overall system. So the two turbines on the same foundation, how that rotates, how that aligns with the wind. If it's misaligned with the wind, how long? What does that mean? It's related to the fabrication of it all, how to scale that, how to serial fabricate. It's related to the foundation weight, and it's related to the mooring system. So there's a few key and big aspects of this whole system that we carried out quite a significant assessment, that makes us count, you know, as, as confident as we've ever been that we're on the right track.
As a reminder, a key part or the driver for this technology has been to offer something that is truly long-term competitive. Placing two turbines on the same foundation is not gonna yield the first installation of a floating foundation, but we're out for the truly long-term play here. And why we're saying that, is that with two turbines on the same foundation, you're able to install more turbines in a given area. That entails certain direct cost benefits, but it also allows a higher degree of coexistence with other stakeholders. So not occupying the same area allows it to be easier to avoid such conflicts. And also, if you look at it, waters are not endless, at least not the ones that are suitable for power production.
So when you start laying different stakeholders and their interested areas on top of each other, you've got an area over there and one area here, and so on, that are suitable. So to make most use of that area is key. That's going to be more and more important over time as more turbines are installed offshore. So that's where we're in for, to really provide something that is meaningful over time, not just the ability to install the first floating wind turbine, but to install the competitive, long-term, scalable solution. When it comes to the TwinHub works, all by reorganizing that development, and there will be some scheduling impacts for TwinHub that I'll come back to in a second. It's certainly so that some of the key areas, especially the engineering work streams with suppliers, including the turbine supplier, contracts or certification are ongoing.
To that integrated work with a turbine supplier and a foundation supplier, that is key, and that's ongoing right now, and it's truly exciting for our whole engineering team to ensure that the whole system works as one system confirmed by a turbine supplier. So that's a key step for any foundation supplier, and it's one that very few have crossed to date. Very quickly on the project developments as well. So this is just in, you know, visualizing our three steps through the product development, process and life cycle, if you will.
To start by, in identifying, investing into projects, very often we originate, so we start projects ourselves, grow them through project developments, and then during the development phase, somewhere between sort of the end of the early stage phase and up towards FID, when fabrication starts, is where we divest, sometimes through steps and sometimes in bigger chunks. This is ongoing right now, across several projects and several discussions. Looking at our portfolio, they're spread between early stage, mid stage, and late stage. Currently, with our active projects, we've got nine that are in the early stage, none in mid stage, and three in late stage. This shows on this slide as well, where we are spread out geographically.
So looking at the overall portfolio of projects where we have a participation interest, that's in total around 23 GW, and the net holding for Hexicon, so that's Hexicon's ownership across these projects, are just shy of 13 GW today. So that's a substantial portfolio, especially considering the force and the size of Hexicon. And the main projects, I would say, that are most advanced and in the largest scale, are in the three countries, being Sweden, Italy, and South Korea. And if we talk about Korea specifically for a moment, we've announced previously the SPA that was signed with Shell to take over their shares in the late stage project in South Korea called Munmu Baram. And there are many aspects to this.
First and foremost, it's a project that is well-positioned, a mature, healthy, sound project that is in one of the most promising floating offshore wind markets in the world. And why I say this, as you know, Korea as a market, are both because there's a government-backed subsidy scheme for offshore wind that pays a premium that is higher the further off the coast you are, also pays an additional premium the deeper the water is. So this is, you know, a really sweet spot scheme for floating offshore wind. Why does the Korean authorities offer this? Well, it's their way to avoid conflicts. If you look at other users of the sea, any of whatever that is, if it's a fishing industry, if it's shipping-...
If it's leisure boating and whatnot, those activities are higher in their activity closer to shore. So to incentivize projects to be further off the coast, you minimize such conflicts. So that fits perfectly for floating offshore wind. Additionally, it's a market that has a really significant shipyard industry. So three out of the top six or seven shipyards in the world are located in South Korea, and they are very suited to build floating structures, as well as what they've typically done, of course, shipping or oil and gas. But having the ability to—for really high local content when it comes to jobs, makes the political push to increase floating offshore wind more reliable long term, and that it will be seen through regardless of political changes, when it comes to the government.
So the Munmu Baram project is not only the right way to go forward when it comes to the commercial aspects or the potential to actually gain revenue from it, but it's also a learning. So across some of these projects, South Korea and Munmu Baram is the most advanced large-scale project that we have. And the ability to continue that and to control and run it, even though we won't be 100% owner of it over time, of course, so we are in process to look at new shareholding structure for it. We are really steering the developments right now, and we'll continue, regardless of the ownership structure, to have meaningful roles in the operations and developments of it.
That can be translated to a lot of the other projects that are of significant scale, but behind in terms of the development timeline, including Sweden, Italy, and South Africa. This knowledge and learning experience through Munmu Baram, that we've been active in for over 6 years now, how we're able to translate that to the rest of our portfolio is going to be a one key ingredient why we're making this move. Looking at the last quarter and some significant events, a key one was in the middle of the quarter where we signed the sales and purchase agreement to acquire 80% of the shares in the Munmu Baram project. As of that, we've also immediately initiated the process to establish a new ownership structure.
So I wanna make that clear, that our ambition is not in any way to own a late-stage large project like this ourselves. But the opportunity, for various reasons, to acquire these shares for a price that, in our view, is very favorable, calls for an opportunity that is substantial. It is now ongoing still, the regulatory approval process, and I'll come back to that, in a bit as well, which is a key priority to close. But again, emphasizing that regulatory approval process is ongoing, as well as in parallel, to set that new ownership structure. Hopefully, we'll be able to announce that in the, you know, near future, over the next few months.
With that agreement and the choice we made to prioritize Munmu Baram for all the right reasons, this is also partially a reason for us needing to reprioritize and slow down the development pace of the TwinHub project in the U.K. So as I said before, some of the heavier engineering works within that project are still run. We're still actively maturing the TwinWind technology as such, but the parts of that project that are related to the supply chain and the finalizations of the construction, those are right now reorganized, and we're revisiting all of that, not only in light of us putting, placing a lot of efforts towards Korea, but also reflecting the markets and where that is.
So we need to make sure that we're able to see through the construction of that project as well, and that's needed to that's forced us, I should say, to reorganize and restructure parts of that project. So you, there will be some effects when it comes to the schedule of that project, and exactly what that means, we'll have to get back to you with. So after the quarter, the 1.5 months since the end of Q1, I think it's fair to say that the main focus have been on the regulatory approval for the Munmu Baram project. There's a lot of documentation and material needed for us to get that over the line, and not only Munmu Baram, but we are also, for, additional projects, having discussions for partial divestments.
And it's on a similar theme, want to just end by looking ahead as well. Where are our priorities? Sorry. Well, in the short term, it's absolutely crystal clear that it's to get Munmu Baram both over the line, get the regulatory approval in place, that all shares are transferred, and then as a second step, to establish that new ownership structure for the project, the long-term ownership structure. So again, these go in parallel at the moment. They're not closed, and we will be looking forward to coming back with new announcements over the next few months. In addition to that, we're of course not pausing everything else. So, so Munmu Baram is not everything we do, although it's near term now very much the priority. So we are having dialogues with additional projects for divestments.
We will continue some of key projects to mature such, not the least, looking at Sweden, where we have three projects where we've applied for permits to the government. So we're waiting for decisions on all three of those large-scale projects, one on the West Coast and two on the East Coast. But also, we'll of course continue to grow. So this is not the utmost priority at the moment, but as divestments are also put in place and closed, we will look to secure additional projects and continue to develop such. Both new projects being added to the portfolio, but significant developments within some of these bigger projects that are already ongoing. So with that said, thank you very much for listening. And now, I believe we've gotten some questions in, that my colleague here, Pernilla, will read to me.
Yes. Thank you, Marcus, for the presentation. We have received quite a few questions, so I start with the first one and see how many we have time for today. How is it going with the regulatory approval process? When can we expect an answer on the outcome? And if Hexicon does not receive needed approval, how will you proceed?
So this is, of course, assumed then to be related to Munmu Baram in South Korea. And, well, the process is going well so far. It's slightly difficult to say when the answer will come. Our expectations, not the least in guidance from our legal counsel in Korea, is that we expect that answer in anything between two-four months from now. Now, if Hexicon does not receive that approval, that's a very good question. Our priority is right now to ensure that we get the outcome we need so that we have all the approvals in place. However, that approval is very much linked to the licenses that the project holds, the so-called, in Korea, electricity business licenses.
So without that approval, you would not be able to continue to have such licenses with a new main ownership of the project that Hexicon is applying for. But that's not-- It's a key ingredient of the project, don't get me wrong, but it's not the entire project. So if we don't get that, how will we restructure and organize that project? That we don't know yet. But the focus is now to achieve that. When we get a bit further in time here, we'll also, of course, look into and investigate different scenarios and see what that means for Hexicon.
Thank you. Next question. I read the report, and as far as I can see, your revolving credit facility will expire in July. What is your plan for financing moving forward?
So that is correct. So that credit facility will expire in July. When it comes to the financing moving forward, we're having discussions on multiple fronts, both, of course, related to projects and divestments, which is key ingredient in the future financing of Hexicon, but there are several others as well. So we are having talks on other ways, and we're definitely also, of course, in close discussion with the lenders within this credit facility. So I think that's all I can say for now, but there will be news as we go forward. And of course, want to restate that the project part and the divestments of projects that we will see across the year is a key ingredient of this.
Okay, next question. When can we expect any divestments, and what is the project that you will divest first?
Good question with potentially not a crystal clear answer at this stage. But first of all, Munmu Baram, as we've announced already, we are in process to set that new ownership structure. So what that means is that what we've agreed for Munmu Baram with Shell is to take over 100% of the shares. That is the regulatory approval process as well, that now is, you know, the authorities are looking through all the documentation to prove that. Once that's confirmed, Hexicon will sit with 100% of the shares. What we're doing in parallel is to prepare for the long-term ownership structure to be, you know, ready to execute upon once that change of control is approved, so once the regulatory approval process is closed.
So that's if that becomes the first one, we'll see, but it's a clear one and top priority, but we are having additional discussions for additional projects to at least divest partially. Which of these comes first, we'll see. But when it comes to the when aspect, it is during the year.
Okay. So how is the competitive landscape for floating offshore wind at the moment? There are a lot of floating technologies out there. What talks in your favor, and why do you think your technology will be selected?
Well, it's definitely a really competitive environment out there. There's a lot, I think I mentioned, there's over 70 different foundation technologies that we know of. They're very different in the maturity of such. But again, I think what talks in our favor and what we really are set out to do that I think will be a clear game changer over time is the ability, through having two turbines on the same platform, the ability to squeeze in more turbines in a given area. And that is something that we're already seeing a change from five years ago to today, where, you know, maximizing coexistence, avoiding conflict, these things really become more and more important. They'll continue to grow in importance as more turbines are installed.
Oh, of course, on top of that, it always and at all times needs to be competitive on an LCOE basis, so the cost of energy. But the real game changer, compared to the competition, is related to the ability to install more turbines in a given area.
Okay, thank you for that. Two more questions before we finish. Are Hexicon's projects only focused on floating offshore wind, or could bottom-fixed wind power also be considered?
It could be considered. And in fact, there is one project in our portfolio across the globe that is bottom fixed. It's like fairly deep water, but still probably be using bottom fixed technology, and that's in Sweden. So the project called Cirrus in southeast of Sweden, outside of Blekinge, is bottom fixed. And that was a, you know, from a portfolio risk perspective in a market like Sweden, it fitted well, we thought. And there we're obviously developing that in collaboration with Mainstream Renewable Power. But in general, no, we won't focus on it, we won't prioritize bottom fixed. Where we are truly credible and where our key skill sets is, is within floating offshore wind.
If then it makes sense from a market or portfolio perspective to have a bottom-fixed project, we can definitely consider this because it's a lot of overlapping competencies, but our focus is floating.
Okay. Thank you. Last question, do you think offshore wind could be subsidized in the future? I don't know what market the question referred to, but in general.
Yes, I think that, you know, with any new technology and little bit depending on where you are in the world, new technologies being subsidized is not unusual, regardless of what type of technology that is. Over time, subsidies will reduce and go away. I'm absolutely convinced. What I however think, is that, and we're already seeing this in a lot of markets, offshore wind is subsidy-free already today in several markets. Offshore wind, that's bottom fixed, of course, has been, you know, developed for some 20 years till today to reach that point. Will floating wind get there as well? Absolutely. I'm certainly and absolutely convinced that it will get there. Does it need subsidies in certain markets to grow and get to that point where it becomes subsidy-free? Yes, I think so, but not over time.
Okay, perfect. Thank you, Marcus. These are all the questions that we have time for today, and back to you.
Just want to end then by saying thank you, everybody, for listening in, and we'll be in touch and communicate as we go onwards. Thank you very much.