Good morning. I'm here today to provide an update to our activities during the second quarter of this year, as well as an update of the industry, which is floating offshore wind. My name is Marcus Thor, and I'm the CEO of Hexicon. Welcome. I'll quickly go through the offshore wind market, where there has been quite a lot of happenings over the last period. Going into a few slides on Hexicon, who we are and what we do, and obviously provide some updates as to the period. And to start off with, and I've deliberately, I've typically previously had a few slides here on floating offshore wind in general.
Now, I do believe that there's quite a lot of returning folks here in the audience, so I'm not going to deliberately spend too much time on floating offshore wind per se, and what it is, and why we believe in it. But what I do want, which I think is particularly of relevance for this period, is to provide an update as to the offshore wind market. What we are seeing and what we have been seeing for a few years is a weak market when it comes to offshore wind, floating offshore wind, driven by inflation, interest rates, supply chain bottlenecks, and a few other factors. Now, with a fairly weak 2022, potentially even weaker 2023, what we are seeing now is quite a lot of signals for this starting to turn around, and I'll give you a few examples.
In the U.K., the authorities have increased the budget for offshore wind, including such earmarked for floating offshore wind. And this is particularly of relevance for the Pentland project in Scotland, where we own a 10% stake, together with CIP, where they're participating in this year's auction. So increased budget for such auctions. In Italy, after a good year and a half or potentially even two years of waiting, a new decree was just recently out over the last few weeks, which stipulates the rule, the capacity, as well as the rule when it comes to the ceiling price, et cetera, for an auction, an offtake auction for Italy. And this is now, as far as I know, the only market in Europe where there is an offtake auction without the need to, at the inception, pay for seabed through a lease auction.
Finally, over in Korea as well, where we have a lot of our own activities, there was recently an update to the roadmap, where the government decided two very positive things. One is to extend some of the, the very tight deadlines within their auction scheme, but also to separate floating offshore wind with fixed-bottom wind. A clear signal that floating offshore wind is particularly needed to meet the targets over in South Korea. In general, yes, macroeconomic factors still impact our industry. It isn't back to where it was a few years ago. We are starting to see signals now. These political pushes in certain key markets are certainly a first step in the right way. Markets tend to follow after that. How long that will take, that's very difficult to see, but we are seeing positive trends right now.
Secondly, I also want to emphasize that I think what we'll see is what is happening over the last, say, two years a bit more. We will see a dip in the deployment of new offshore wind and, in particular, new floating offshore wind. Longer term, those numbers and forecasts are pretty much unchanged. There will be a lot of turbines out at sea, and there needs to be a lot of turbines on floating foundations. There's just simply no other way. Now, if you look at Hexicon, just a slide here to characterize Hexicon across four themes. One is experience. Hexicon has been around for about 15 years, which is very long in the industry that is floating offshore wind. We are one of the very few with a decade and a half of experience in this industry. Two, our technology.
We hold a patented and very unique technology, which is, in our opinion, the long-term competitive solution, having two turbines on the same foundation, which enables you to install more turbines for a given area. And this is going to become more and more important for every turbine that is installed. When you've got an area that is suitable, out of conflict, permitted, you want to make sure that you maximize that area. Three, our big and diversified project portfolio. So given the size of Hexicon, this is a substantial portfolio that we have developed across countries in Africa, Asia, and Europe. Some markets with just one project, other with a complete portfolio, but all in all, a diversified and mature portfolio. And lastly, our partnerships. We've developed both projects and technology from the very outset in a partnership model. We believe that's very relevant for two reasons.
One is the local content. Any developments is a local discipline to a large extent. So you need that local competence, you need that network and that understanding. This is the case for every market we operate in, and secondly, it's industrial partners. So our core skill set lies in the early development, from origination throughout the development phases, earlier years. As projects mature, as they become bigger, closer to FID, we of course have the plan to solidify our developments in partnerships with industrial players as well. Our business model is twofold, or standing on two legs, you can say. On the one hand, we're a project developer, focusing on early stage across many geographies for risk diversification, and on the other hand, we're a technology provider, and these two separate disciplines are certainly synergetic. They commercially reinforce one another.
Typical example, and easy to understand, is, of course, you can use technology for projects. Projects you know, paves the way and a platform for the technology to be used. But also, they are separate, and they provide independent revenue streams. One faltering does not necessarily affect the other. So while project developments are very much here and now, holds a value right now, the shares of projects, technology is a bit longer term. We need to go through the activities to deploy it in full scale before it can actually be used and sold, and for us to gain revenue through a license fee model in bigger wind farms. Regardless of a project or technology, of course, project cycles, technology developments, typical life cycles across projects in our industry are long-term, and there's no way to get out of that.
Looking at our current project development, project portfolio, it's spread across projects and prospects, where it's a maturity of a project that defines it to be a project rather than a prospect. We're right now working through 12 active projects and six active prospects. We've got a bunch of earlier potential opportunities as well, that might make their way into the projects portfolio. Right now, our focus is on these key projects that are active. Where do we have them? They're mainly, if you look at the bigger projects, and especially where we've got portfolio of several projects in a single market, they are in Italy, Sweden, and South Korea. We are looking at South Africa as well. We have one project to increase that to additional ones, because that market is starting to show signals to now take off.
So our early bet in that market is looking like it was a good one. It's a total portfolio of around 23 gigawatts. That's gross numbers, so net, the part of that, that is in Hexicon's direct ownership, is around 13 gigawatts out of 7.5, which is projects. And a quick one on the technology. So we're continuing to move forward in the TwinHub project. We are, and I'll come back to that a bit later as well, so with the market conditions and changes over the last two years, since the TwinHub project winning the CfD, so the revenue scheme for 15 years in the U.K., markets have changed quite drastically. So project as such, including supply chain, we are going through and reviewing in detail across the whole project, to be able to cope in this new environment.
But what we are doing in parallel, that we're making good progress in, are some of the key engineering work streams, not the least, the integrated work between the floating foundation, so our technology, our IP, and the turbine supplier. And this is a key work stream that any technology supplier need to go through a lot of integrated work with the turbine supplier to ensure that the turbine and the foundation, mooring system and everything, you know, meets all the requirements, withstands all external forces on it in every possible environmental condition. Separately, I want to add as well, relating to the technology, out of our two patent families, one is the main patent of the foundation and the orientation of it, including two turbines.
The other one is a TLP, so a tension leg mooring system, which is an application to the main patent that is applicable in certain jurisdictions, certain environments, but not all. But that one, we've during the year managed to spread across more countries. So, across this year, it's been recently approved as well in Japan, in India, South Korea, and also Brazil. Some potential long-term key markets. I also want to mention that during the period on June 14th, the Swedish Patent and Market Court decided to maintain our Swedish patent, the main patent family for our foundation, and reject an appeal that was handed in by EnerOcean, which is a competitor out of Spain.
And some of you might recall that this was an appeal that was originally made already back in conjunction with our IPO three years ago, and they've now persistently reappealed, and the court has decided to continue to vote in our favor, or rule in our favor, I should say. There is one more chance for them, so they have decided just outside the quarter to appeal again this decision by EnerOcean. So we'll see how that goes. So far, it's been perfectly in line with our expectations, our anticipation, that it's be continued to be ruled, patents to maintain in our favor. Looking at some of the highlights, and I see here, it should say Q2 and not Q1.
So it's been a lot of focus over in South Korea. And not the least, taking over the operational aspects of the MunmuBaram project. So this is just looking back slightly. This is a project that, we were together with a local partner, originating back already at the end of 2018. I lived there across 2019 and got it ramped up, and that was also the time where Shell joined in, and since then, we've developed it in a partnership with Shell. And as of earlier this year, in February, we've now agreed with Shell, who's exiting that market, how to take over those shares. And that comes in many steps, and one of them is, of course, to be able to take over the operational responsibility. We had some roles, Shell had more roles.
Now, we need to ensure that we control the whole project and are able to do it going forward as well. And that's been a good four or five months of transition that we completed at the end of June. And that's a lot of work from a lot of people and some travels back and forth between Sweden and Korea. The second part of this whole takeover is a change of control, so main ownership of a project like this that holds licenses in the country to be approved by the authorities. And for that, there's, you know, a lot of steps that you need to go through. You need to follow a rule book. You need to have certain things that you provide. And all this was packaged in an application that was also submitted during the second quarter.
That is now with the Ministry of Trade, Industry, and Energy in South Korea to be processed, and we don't have an outcome on it yet. During the period, we extended the current credit facility, previously adopted, from July 12th until December 31st. Lastly, I want to mention that mid-June as well, the County Administrative Board, so Länsstyrelsen in Västra Götaland, decided to and publicly recommend to the Swedish government that they approve our project Mareld, which is part of the Freya Offshore portfolio, our fifty-fifty joint venture in Sweden with Mainstream Renewable Power. Mareld, in particular, is a 2.5 gigawatt project off the West Coast that we're now waiting for the government's final decision, but now very importantly, recommended by the County Administrative Board to approve. I want to specifically here provide an update on MunmuBaram.
It is a big and important core project within our portfolio. It's one that across the spring has taken a lot of our efforts, a lot of focus, for all the right reasons. I did mention the operational takeover already. What I do want to mention as well, that it's a project that is becoming mature. It's a project that's got a few really big milestones in the very near term. I don't know the exact timing, but what I can say is that the EIA, so the environmental impact assessment, was submitted to the South Korean authorities in the beginning of this year, and we do expect an approval within very short.
This is two years of work going through surveys, how this project impacts the environment, birds, and whatnot, and then hand it in for processing, and now we're at the final stretch here to get that approved. That is also a prerequisite to participate in the stipulated and regulated offtake auction in South Korea. Secondly, there's. We're expecting and are in the final steps and process also to agree a grid connection agreement with the local TSO named KEPCO, which is a, in addition to the EIA, perhaps the two key milestones during the development phase leading up to the auction. I do want to point out, of course, that the approval from the authorities for this change of control is a prerequisite for us.
It's a prerequisite to take over Shell's part of the project, so Shell's share, and become the sole owner of the project. That is also a prerequisite to complete the ultimate goal here, to hand over to a new ownership structure, where Hexicon would you know, preferably hold a minority stake. This is not a project, when you look at the maturity and size of it, that Hexicon intends to develop itself. It's a step towards that end game to find that new and suitable long-term ownership. That process has started, but it's only you know, able to be finalized with, of course, the change of control also being approved.
Looking ahead into a category of work that we're doing and where we put our emphasis, I do want to mention that we are prioritizing right now, and these are intertwined and work together, so we are looking to secure and improve the company's financial structure. The base of that is very much project divestments. But in weak markets like this, we need to avoid having to fire sale assets. So this is where they work together, where there are multiple processes ongoing at the priority to divest certain selected projects, not the least MunmuBaram, that was mentioned. But to complement that and to back that up, we are also looking and having dialogues with our extensive network, with our partners, investors, shareholders, et cetera, to ensure that we have staying power and not having to fire sale assets.
So to improve, the company's financial structure, again, with the base of being divestments, that is a priority in the near term. In addition to that, of course, we are continuing to push forward, not the least, our key projects. Lastly, longer term, we'll be looking at adding projects to the portfolio, but right now, the focus is rather to mature the existing portfolio. So with that said, I want to thank you all for listening, and now we have our Q&A session. Thank you.
Thank you for the presentation, Marcus.
Thank you.
We have received a few questions from the audience. I'll start with the first one. How are you planning on managing your financing going forward?
Good question. So it's, as I just said here in the last slide, the base is project divestments and a conviction of the significant value of our portfolio. But again, in times like now, so in weaker markets, that being able to ensure that we don't have to fire sale asset, that's probably the worst. Needing to, you know, ruin value by having to sell too quickly, that is something we're working very actively with. And to do that, we're having multiple dialogues within our networks, as said, with shareholders, investors, partners, to ensure that staying power, and that's to be seen as a complement and a potential backup to divestments, which is really the core here.
Mm, thank you. The second question, Hexicon has stated that you will divest stakes in your projects for a long time now. Will it ever happen, and will a divestment cover the short-term finance means needed?
Good question, and I appreciate that this has been communicated for some time now, and that there's an expectations that probably should have been sold by now, and this disappoints me as well. Rest assured, however, that this is our top priority. Market is what it is, takes longer, but it is our top priority, and yes, it will happen. I don't have an exact timing this quarter either, unfortunately. But there are several processes ongoing. There are several projects in discussion with. Several of them are in markets that are recently, you know, had publicized very positive developments in terms of policy. Several are with recent key milestones being achieved or just about to achieve key milestones. So all in all, I can assure you it will happen, but it has taken longer.
Mm.
On the part of how that covers, I think the question on shorter or longer-term financing. I think projects are very different in size and very different in the potential of how the value of them. So some will cover short-term needs, some certainly have the potential to also cover longer-term needs.
Thank you for that. When do you expect the answer from the South Korean authorities for the change of control application, and if you receive a negative answer, how will you proceed with the project?
That is a good question, and it's one that I wish I had the answer to when it comes to the timing. So that's out of our control. But what we do know is, so the application has been sent in, and within MOTIE, so the Ministry of Trade, Industry, and Energy, the decision-making committee within that authority meets on a monthly basis. They meet every third Friday of the month, for whatever reason that is. We don't expect to be part of this month. We do expect, or hope at least, to be part of the agenda to be decided upon in September. We know there's quite a lot on the agenda for these meetings, so I can't say for sure that it will be in September, but that's been our forecast.
We don't get a heads-up, unfortunately, so I can't say two weeks before if we will be on it or not, but we will know immediately afterwards when the minutes of the meeting is displayed. Now, if we don't receive, or should I put it this way, if we receive a negative answer, the only and immediate effect is that the project loses its three electricity business licenses. And that's not a small thing, so don't get me wrong, but what it does is that we are able to maintain a lot of other aspects and developments and, you know, content of the project that we've spent money on and time over the years.
But what it does, it to reapply for those licenses in particular. We need to reapply, and to do that, we also need to remeasure wind for a year. So it sets us back in time. So the overall timeline needs to be pushed back. Exactly how much, what we can preserve, what we need to redo, we haven't done that full sketch now. The focus is now change of control, getting that, you know, through supplementary material, making sure that's approved, but it will set us back in time if we were to receive a negative answer.
Okay, so hopefully, we will receive an answer in September then.
Hopefully, yes.
Yes. Fourth question: You are not communicating that much on the TwinHub project in the UK. How come is that? The recent government support in the UK must provide you with some good momentum there. What is happening?
Well, absolutely right. So I did mention it briefly now, but you're right. So if we look, but the increased budget to start with, that's an absolutely positive signal. So it shows a signal, a commitment, an enforcement in terms of offshore wind, and not the least, floating offshore wind. And the TwinHub project secured a CfD, so Contract for Difference, so the revenue for 15 years back in 2022. Since then, the market has gone through quite big changes, unfortunately, for the worse. So what we're doing on the project side, not the least, the link to the complete supply chain, is to completely review that. Within this new market circumstance, we're taking a stab at that, making sure how can the project succeed in this new market environment?
That's taken some time, so the project as such will be delayed because of that, but that's absolutely critical and needed. In parallel to that, where we are making really good project process is on the engineering development. Some of these work streams, and I, as I did mention as well, in particular, that integrated work between the foundation and the turbine supplier, we're making big progress.
Mm.
What this review will conclude, we'll have to get back to you on and to you all, but it's not finished yet.
Okay. I think we'll have time for a couple of more questions. What market are Hexicon looking at for future developments?
That's a good question, and there are plenty, but right now, our priority is not to add new markets. Our priority is projects we have, divesting some of those selectively, parallel as a complement and backup to those investments to improve and secure our financial structure. That is our clear priority. Second to that, it's to mature and develop the projects that are active today. Thirdly, from that, is when you get into new markets. With that said, there are many, and I think in particular, I'll point out a few, markets over in Asia, some bigger island economies. Longer term, we've got two really big markets in my book, that is Japan and the U.S.
Okay. Interesting. You have previously mentioned that you will do evaluation of your project portfolio. When can we expect that to come?
Yes. We have done work on that. What I can say on that is two things, I guess. One is that it's been in line with previous material that has been out, equity research, et cetera. Two, and this is maybe the most important, so as we are right now in the change of control process for MunmuBaram in South Korea, we are in discussions to set that new ownership structure. And because of MunmuBaram being such a key part of our project portfolio, we have decided not to publicize any evaluations of our portfolio and projects while we are in such discussions until that's finalized.
Okay. Thank you, Marcus. I think that that is what we have time for today. Thank you so much.
Thank you very much, and thank you all for listening.