Welcome to the Hexicon Q4 2024 report presentation. For the entire time of the presentation, participants will be in listen-only mode. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to CEO Marcus Thor. Please go ahead.
Thank you. Good morning, everyone. Thank you all for dialing in and listening. I'm here today to provide an update of our business and the industry that is floating offshore wind. My name is Marcus Thor, and I'm the CEO of Hexicon. Let's get to it. Today I'll run through first what's happened within floating offshore wind globally. There's actually been quite a lot recently. I'll then transition over to a few of our key highlights for the quarter, provide an update of our core projects, and end by looking ahead. To start things off, we are in a time of a rather challenging market. There's no denial of that. With that said, what's happened over the last few years is a delay of the deployment of floating offshore wind.
We're at this transition phase where you can take similarities to oil and gas as an example that went from onshore to shallow water offshore, went deeper and deeper, and at a certain point in time, for oil it was the mid-1980s, it went to floating production units. Wind has made a similar journey and is in the transition between fixed bottom wind and floating wind. A few years ago, that transition or that deployment of floating wind, we foresaw at that time that it would really take off. Now, it's taken a few years longer, but what we've finally seen over the last year is the first-ever time when there's a significant volume of auctions that have been closed and awarded to floating projects. Just to give you a few examples, in 2024, 1.9 GW, or 1,900 MW, was auctioned in OECD countries.
This is commercial-scale floating wind. That was split up amongst three countries. It was in the U.K., France, and South Korea. This is quite important as we've tested and demoed floating wind for quite some time. The first-ever floating offshore wind turbine was installed in Norway in 2009. Now, several years later, we've actually auctioned out commercial-scale floating projects, and it's been done in OECD countries, two of them that we are very active and present in, and that I'll get back to you shortly. If we look forward, I think what industry experts forecast is that, yes, there already is now, and there will continue to be a delay in the deployment of offshore wind. We're now not talking about, as we did a few years ago, that you would see that commercialization, so commercial-scale projects being deployed in 2027, 2028.
We're more talking around the 2030 mark. However, if you look at long-term forecasts, those are pretty much unchanged, that there will be a significant amount of floating turbines in the future. A short look, where is this expected to take place? The majority of it is in Europe, which will be followed by Asia. Over in Asia, it's looking to be an early mover, which is South Korea. Long-term big market is likely to be Japan. Over to some of the significant events last quarter when it comes to Hexicon, and I'll mention a few. To start with, over in South Korea, our MunmuBaram project entered a so-called transmission service agreement with KEPCO, which is, for the Swedish audience here, the counterpart of, similarity to, Svenska Kraftnät here in Sweden. This is a major milestone for the project.
It's basically the grid connection agreement that allows us to export all of the electricity for the project onto the onshore grid. In Sweden, a not-so-positive development and announcement, which took place in early November, was a government decision to reject 13 projects in the Baltic Sea. Two of those 13 projects were ours. It was projects, one was called Dyning, and one was called Cirrus. These were projects we've been working on for some time, and we had handed in the application, so it had not been approved yet, as was the similar status for the other projects that were denied. I'll come back to Sweden in a few slides. Back to South Korea, we, after almost a year of work following the exit of Shell from offshore wind in Korea, we had finalized the transition of Shell's shares to Hexicon.
Now, the short part of that was the agreement with Shell, but what took a long time was to get it through authorities. There is a fairly strict and rigid change of control process. When projects of this maturity and size that hold the rights and licenses to operate wind farms offshore change main ownership, it needs to go through an approval process with the government. This was concluded in late November, which was extremely satisfactory, which paves the way for the future of that project. Also for Hexicon, obviously, this is the largest and most mature project that we have in our portfolio, so hence most valuable. Ending to say that, at the very end of the quarter, we also extended our current credit facility with a group of lenders, including Wallenius , which is part of the Wallenius Group.
We extended that to the end of June this year. What's happened with the project portfolio over this time? It's actually gone down in size for two reasons. One is, of course, what happened in Sweden. The rejection of 13 projects in the Baltic Sea, two of them were ours, clearly affected the capacity of our portfolio. On top of that, we have decided to cancel one of the more early-stage developments we had in Korea for lack of certainty of that project over time. We are in a stage where we clearly are focusing our efforts on core projects. We clearly see a path for value increase going forward. The combination of those two led to a decrease in capacity of our portfolio.
That's obviously not the same to say that there is a decrease in value, because the ones that we had that are removed from the portfolio from last quarter to this were of early stage. In total, as of now, Hexicon holds a net portfolio, so Hexicon's ownership of our project portfolio of just over 8 GW. A short note on our technology as well. We, of course, in parallel to developing projects, also hold the IP for a foundation technology that we have named TwinWind. What we've done over the past 6+ months that is now coming to an end is something quite fascinating, which is working closely together with one of the global main offshore wind turbine providers, in our case, Mingyang, and conducting a so-called integrated load analysis.
This is checking a full model of the complete floating system with moorings, foundation, tower, turbines, everything. Together with the turbine supplier and all their insights into their own technology, we're running this with a lot of different load cases to see how does the structure behave, how does it withstand extreme forces, etc., all simulated as the turbine would operate in a real environment. In fact, this is something that very few technology providers have done to date. Some of them that have done it have stumbled upon some big challenges. We do not have the full results yet, but this is to be concluded during quarter one now this year. That sort of sets a base of doing anything with the technology going forward. Not that many have done it yet.
This is quite exciting that we'll be able to have the opportunity to get back to you in a late stage. Now, onto some of our core markets and what's happened there. Starting off with Sweden, I didn't mention what happened in early November to start with. What has also happened, did happen during the quarter, was that the first floating offshore wind farm in Sweden, which was Vattenfall's project Poseidon, was approved. This was the first approval by the government for a floating project in Sweden. This is fairly close to our Mareld site on the West Coast. It's just south of our project. What we also saw happen just after the quarter, so more recently, was that the Mareld site was also approved the Natura 2000 permit.
This is a permit that was requested by the county for us to apply for, which is when you operate this type of infrastructure in vicinity or on top of a nature-preserved area. In our case, we are not on top of the nature-preserved area. We are next to it. Still, it was a strong advice to apply for this, which we did, and that was now very welcome to see it very recently being approved by the county. This is separate, just to be clear, from the government approval of the site itself that we're now looking forward to. In fact, as it seems, we are one of two, I believe, that are in the final permit applications, I should say, that are in the final review by the government. This is the next milestones we're looking forward to.
Now, if you look at the market going forward, there's a few things that have happened. My very high-level view of Sweden as a market is Sweden is to meet our net zero targets by 2045. The only way to do that is if industry continues its electrification plans. Everything from the petrochemical cluster on the West Coast to green steel, etc., etc. As long as that electrification of industry continues to move forward, offshore wind is needed. There is no other way to continue along the timeline that is needed for electrification to meet our net zero targets. As long as that electrification of industry, especially, is ongoing, offshore wind is needed. It's a regional power deficit that we need to tackle in Sweden to allow that electrification to happen.
This is where offshore wind projects come into play, and that's where our project Mareld comes into play. On top of that, what we did see is that there was an investigation that was commissioned by the Swedish government on how to plan for future offshore wind in Sweden that came back proposing that Sweden transition into an auction system. I think this is fundamentally the right way to do it. I also think that when that is in place, I think there's every reason to believe that there will be projects in the Baltic Sea going forward as well. However, right now, we are focusing on the project on the West Coast. In Italy, another core market of Hexicon, it has already, as was the proposal for Sweden to do in the future, it already has an approved regulation for a so-called CfD scheme, contracts for difference.
Through auctions, offshore wind projects are entitled to a fixed revenue per megawatt hour over the lifetime of the project. This is a market that is, to my knowledge, the only one in Europe, at least, where you have a CfD scheme, but you do not have to pay for your site at inception. You can, through work and applications, secure rights to project areas. Later, once you have, you know, met all the prerequisites, the certain permits, etc., you can enter into a CfD auction. We are still waiting on some of the details of the CfD, but the principle and the framework is in place. Here, we are active with four projects and three prospects, and two of them that are prioritized are now mid through the environmental impact assessment. Over in South Korea, it has been quite an interesting market to follow recently.
Maine is one of the leading countries in floating offshore wind. It has strong political support. It has a subsidy scheme in place, a renewable energy certificate scheme in place that actually favors floating wind. There is a multiple. You get more certificates, so basically, you know, higher revenue per megawatt hour, the further off the coast the projects are and the deeper the water is. This is a way by the South Korean government to minimize conflicts. Activity offshore, whether that is, you know, fishing, leisure boating, etc., that activity drops with distance from shore. This is a way to incentivize projects to be deployed further off the coast.
The first auction, the first part I mentioned in this presentation, these auctions that have been held now of 1.9 GW globally, one of them for 750 MW was held in November last year in South Korea, where Norwegian Equinor was the only floating wind project that won in that auction. Their project is actually one of our neighbors. What has also happened that causes quite a lot of uncertainty is the quite sudden end of last year imposition of martial law in South Korea and subsequent impeachments of the president. This whole thing has unfortunately created a political chaos and uncertainty that is not really, you know, favoring our divestment process that we've been clear previously as well that we're embarking upon. As it looks now, we expect reelections to occur before the summer.
We are still very much prioritizing and progressing with that divestment of this project. This is a late-stage big project. It's not a project for Hexicon to own 100%. So adding new partners into this is a priority for Hexicon. However, the political chaos will mean almost certainly that it will take longer than we planned before that happened. In the U.K., another core market where we have two projects, both are TwinHub demonstrated projects, as well as a 10% ownership stake in Pentland, north coast of Scotland, where CIP is the majority owner. Clearly, and very much remains as a global leader in floating offshore wind. This is where the first project of multiple turbines was installed in 2017.
It also holds most of the floating turbines in the market today and continues through their CfD scheme with separate budgets, separate pots for floating technology, continues to be a driving force within the commercialization of floating wind. What happens next for us? Two things. We're both looking at how to partner and side-share the TwinHub area as such, so that project, which is a demonstrated project, as well as looking forward to this year's allocation round. Each year, there is an allocation round, basically an auction that you can enter into to bid and secure revenue for projects. We're looking forward to see how Pentland can achieve an auction win this year. In South Africa, last core market that I wanted to mention, which is a bit of the odd one here in this pack, because there's really no offshore wind in South Korea.
The prerequisites and our view of a market that is clearly in need of offshore wind is there. It's got a very unstable power situation, very weak grid with a lot of power shortages and very high electricity prices. On top of that, it's got extremely good winds offshore and deep waters. This is clearly a very good floating offshore wind market. We've tested this. Early stage can develop a market like this on quite low spend. What we're seeing now, having gone through parts of the environmental impact assessment, is that we're starting to see both the interest increasing from others as well, as well as it becoming clearer how to navigate this market, how to reach milestones such as site control, etc. This is a market that's, you know, gone through clarity and even more clarity along the way of us developing it.
I will make the point still, though, that this is quite the early stage market still. There are a lot of things that can happen, but it is definitely one that we, in a low-spend mode, continue to develop and look at going forward with optimism. This was a few bullets that I mentioned last quarter. I just wanted to follow up on a few things that we are doing, because as I have written in my remarks in the quarterly report that was released this morning, mentioned earlier here as well, it continues to be a challenging market. There is no denial of that. I certainly see some lights at the end of the tunnel. I see some promising developments here and there. Overall, it is a very challenging market. Here are a few items, six of them, that I mentioned last time that we are working on.
There's still work to do, and it still remains a focus on these six items. Some things we have done that I did want to mention to follow up. It is looking at cost. We continue to be very aware of cost at these times. Resources have been cut both on the consultants' part and elsewhere. We'll continue to see an effect of that. There's a certain lag in some of these cuts that have been made. On top of that, in projects, we have ceased our presence and activity in a few markets and projects, both in the U.S. as a market where they do not have a project per se, but we have presence that we don't have anymore. And a specific project that was named Pohang, which was an early-stage project in South Korea, so not the same as MunmuBaram.
It's a separate early-stage project that we decided to terminate and stop developing. We're taking some measures. We'll continue to be very focused on prioritizing our efforts towards ensuring that we come out in a stable situation on the financial front. To reach that, we need to be very focused on which projects and how we reach divestments of some of the key projects. That ties into our priorities going forward. Summarize them in rather high level. Yes, we are remaining very, very focused on how to secure and improve our company's financial structure. Again, I'm not excluding or can give any details today of what that means, but clearly, project divestments remains a core part of that. Establishing a new ownership structure for MunmuBaram is key. This is, as I did mention earlier, this is the combination of size and maturity.
It is our most mature and large project, hence our most valuable project. To ensure a successful divestment, adding new partners into that is a core workstream. On top of that, we're looking at doing the same for other projects, as well as continuing to mature projects, because as this market really takes off and increases in its development speed, we need to make sure that projects preserve at minimum their value, preferably drives an increase in value. That's how we realize bigger earnings in the future. With that said, 20 minutes goes fast. I'm a few minutes over time already. I want to thank you all for listening. Now I'll, I'm doing this through a webcast here from the office, so I will be able to read questions that have come in. Let me do just that. If I'll just, here we are.
Okay, I'll start reading a question and then I'll answer it myself. Here we go. First one, your liquidity position seems rather poor and with large debt. For how long will you survive with the existing means? How are you planning to solve the situation? Clearly ties into what I just mentioned, a valid question. Again, we are in a rather challenging moment currently, but I have to say, I really do look forward with optimism. We're working at several parallel tracks at the moment. I can't unfortunately disclose any of them as of now. With that said, the current size of debt for a company like Hexicon is not a long-term solution, but it's given us the ability to preserve and increase significant value of the project portfolio.
If we go back and look at when the development loan facility was put in place almost two years ago, it was done at a time when we had taken the portfolio to a stage where we were ready to partially divest selected projects within it. We have grown the project portfolio to a decent size and diversification. It was at that time, however, clear that the market had changed and divestment would take longer. To avoid dumping projects, we instead decided to use debt as a way to carry them onwards through further milestones. This is a balancing act, one that we continue to need to monitor. The balance between, on the one side, keeping debt and keeping projects toward higher valuations, and on the other side, reducing debt and selling earlier at potentially not optimal terms.
This is a very core focus that we continue to monitor extremely closely. Hope that answered the question. Next one here. Given that there are many floating wind foundations out in the market, is there still a demand for more? I.e., is there still time to commercialize your TwinWind technology? The short answer is yes. What we've seen is a delay in the deployment of new technologies over the last few years. In fact, as of now, there are still only a handful of different foundation technologies deployed in full scale. Perhaps more importantly, none as of yet in a commercial scale project. To add to that, some of the first movers and the early movers have had issues with their work in this integrated load analysis that I mentioned that we're doing now with the turbine supplier.
Due to increased turbine requirements and that type of work and insight, some of the early movers have really had their issues needing to redesign and go back a few years. Yes, there's still room and a demand in this space for additional technologies, in my opinion. Next question here. How will the political situation in Korea affect your ability to find new owners for the Korean project? I did touch on it briefly. The short answer is it will affect us by it will delay the process as we see it. Two examples. With some of the investors we speak to, specifically international ones, so non-Korean ones, I'd say, they basically say, this is interesting, but we can't engage. We'll hang on, not engage until a new government is in place.
Others, if you take an example of local Korean state-owned companies that we've also had some dialogue with, they are not even able to make investment decisions whilst this uncertainty is ongoing. They need a government to be able to make investment decisions. All in all, it affects the timeline as we see it. Good news is that there is this hurry-hurry culture in Korea, so we do expect it to be solved rather quickly. The forecast as of now is that new elections will occur in May. Let's see if I found something more here. Is there any chance Glennmont can make more of the facility available for the current projects or increase the facility? Short answer is we're having a, so just to be clear as well, Glennmont is the name of the fund manager that we entered into this development loan agreement.
They have changed the name recently to Nuveen Infrastructure. What I can say is that we are obviously keeping a very close dialogue with them. We're extremely close on multiple topics. There is nothing yet of that agreement, but they are continuing to monitor our situation, continue to be very supportive, and we're planning the future together. I can't say more than that at this stage. There are no, nothing in place as of today to be able to do this, but I can't rule out anything either going forward. With that said, I see time has passed. It's now half past. A few questions remaining that I weren't able to answer. We'll try to provide answers to those in writing. I really want to thank you all for tuning in and listening, and look forward to speaking to you soon again. Thank you very much.