Welcome to the Hexagon Audiocast of Teleconference Q2 2021. Throughout the call, all participants will be in a listen only mode and afterwards there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present Markus Thor, CEO. Please begin your meeting.
Thank you, operator, and good morning to you all and welcome. It's a pleasure to provide an update of our operations today, and I'm especially glad to This is our first report release since listing the company in June. And as this is the first time we give an update being a listed I will spend some extra time explaining who we are and what we do. So if we go over to Slide 2, please. So today, I want to give an introduction to Hexagon.
And as I said, just give a little bit of extra time to introduce who we are and what we do as this is the first time as being a listed company. I'll also give an update of our business and finally look ahead as well. So with that said, let's go to Slide 4, please. So to start off with, I want to give a brief on Hexagon. Hexagon is a developer and foundation technology provider for 3 quarter offshore wind.
We have our own IP for a dual turbine floating foundation, The Twin Wind, which enables an efficient low cost energy production in deep waters with minimal inclusion on marine life and other stakeholders at sea. We focus on early stage project development for high value creation with local and industry partners And have currently projects underway with partners such as Shell, Copenhagen Infrastructure Partners, Bechtel and Aker of Rovin. And by focusing on Allstate's development and sharing risk and financial burden with partners, we keep the capital intensity low of our operations and are therefore able to scale the business model. Hexagon is currently developing projects in key offshore wind markets across Asia and Europe, And we're looking to add new markets to that list over the next 6 to 12 months. And with the rather alarming United Nations IPCC report that came out last week, It's clear that this decade needs to see new renewable energy be deployed at significant scale.
And floating offshore wind is particularly suited to build in large scale, where it's needed and with very low environmental impact. This industry being floating offshore wind is just about See the 1st wave of commercial scale projects and Hexagon's portfolio is well positioned to be part of it. Over to Slide 5 please. Now we've had quite an exciting second quarter in which we took several important steps forward. Some of the key highlights are that in South Korea, our joint venture, Cohen, Hexagon, signed a shareholders agreement with Shell to regulate each party's long term interest in the Mundo brand project.
And also at the end of the Q1, Hexagon and Aker Offshore Wind entered a joint And during the Q2, we've opened that collaboration and have now initiated public consultations for 3 large offshore sites as well as having filed for seabed survey permits for all those 3. We acquired Wavehub, which is a site of Cornwall in England, Originally developed for wave power with the intent to develop an up to 40 megawatt project using the twin wind design. And on this project, Hexagon is partnering with EPC Giant Bechtel, which brings decades of experience from project management, engineering and construction to the project. For the Twinwave project in Norway, a full scale demonstrator to be installed in 2023, we've completed an exhaustive model test campaign at Marien Test Centre in Holland. And this was done over 3 weeks and confirmed the behavior of the Twin Wind design for the Norwegian site and provide data needed to calibrate our computer models.
And last but not least, of the month of preparations, We listed the Hexagon shares on Nasdaq First North in June and in conjunction with that successfully raised SEK 300,000,000 to allow us to execute our ambitious business plan, developing both our project portfolio and technology. Slide 16. Before I go into the Business update, I want to spend a few slides on presenting our own business model and technology briefly. And before that, just a reminder of why we believe that Floating wind is an effective source of clean energy. Using floating technology, there's virtually an unlimited resource.
After the global offshore wind potential, some 70% to 80% is estimated to lie in waters 360 meters. And using floating systems, one can be more flexible in sighting projects, not constrained by water depth and as such, trace them further offshore. This means higher average wind speeds and more stable winds, all in all, increasing capacity factors. The increased flexibility in site in floating wind projects Further increases the possibility of avoiding impacting the environment and ultimately enables sustainable coexistence with other maritime stakeholders. Lastly, floating offshore wind holds all the prerequisites to effectively be industrialized.
And I believe that the 10 or so years that it took commercial projects of fixed bottom wind to hit the more substantial decline of cost can be reduced for floating wind. And some of the reasons for that are: 1, we're not constrained by water depth. This means that wind farms can be really large. It's easy to standardize across a large scale floating wind farm because each foundation is the same across the entire wind farm. Unlike bottom fixed, where every second or so foundation is a unique design.
And lastly, there is a global shipyard infrastructure that has been developed over decades that is very suitable for building floating offshore wind. Slide 7, please. Over to HEXICO's business model, and it stands on 2 legs. We're both a project developer and a technology provider, both for this quarter offshoring. We see strong synergies between the 2.
Not only the perhaps obvious of how project developments entails opportunities to install the technology, but we've also seen how market opportunities arise, thanks to having our own patented technology. As a project developer, we focus on the early stages of projects. We've built up a skill set and team to initiate projects, bring them to definition and onwards and along the way bring in investors and co developers. We early enter partnerships with local competence and network since any project development is, to a large extent, a local discipline. As a technology provider, it's about ensuring that the Twinrin foundation technology is kept cutting edge, protected and adopted for project specifics.
It's about maturing the technology for it to be used at large scale. So at the end of the day, it's only through scale That the industrial value chain can bring down the relevant risk and there through reach the needed cost parity for closing offshore wind. Slide 8, please. Here's an illustration of a typical value involvement versus time for a project. And Hexagon has its main focus on the early stage developments.
This is where the relative value creation is the greatest. Now there's obviously an absolute value creation that is created during the latter phases of execution and onwards, but to grasp such Also requires significantly larger investments. So it's already from inception to permitting and site control and onwards that Hexagon operates. And let's remember that floating offshore wind is in its very beginning of an expected tremendous growth. And our portfolio is well positioned to be part of this upcoming first round of commercial scale projects that we're expecting during the course of this decade.
Slide 19. And just a short one on our technology as well. So our Twin Wind Foundation technology is essentially a triangular shaped floating steel structure that carries 2 large wind turbines. It's more through a turret at the front corner, which is a standard component from the oil and gas industry, and it's basically just a big bearing. And this allows the complete unit to freely rotate with the wind direction around that point.
And this ensures that the 2 turbines do not And this is the key feature enabling the use of 2 turbines on the same structure. This means that we can install more power in a given area when compared to single turbine solutions and which reduces cost as well as even further increases The possibility of coexisting with other stakeholders after occupying a smaller area. Ultimately, our 2 major design drivers are 1, Lowest possible cost of energy and 2, smallest impact on the environment and surrounding activities. Slide 10, please. And to briefly show a concrete case of the difference in power density, Here's an example of 2 wind farms, 1 using single turbines and 1 using our own dual turbine foundation.
Both cases occupy the same area and have the same aerodynamic losses across the wind farm. For this example, using the Twin Wind foundation, We can install 45% more capacity, which equates to also 45% more electricity production. Additionally, the amount of inter array cabling can be reduced by about a third across the wind farm, which reduces costs, but also reduces the seabed footprint. Slide 11, Can I actually go to Slide 12, please? So on to a business update.
I'll go through some of our projects where we are, and I want to start in Norway. In Norway, we're working towards installing a full scale demonstrator at the Met Center Test Site Offshore Haugesund, with fabrication starts planned for next year and installation in 2023. And recently, we completed our 1st major engineering phase and to go with that also conducted a scale model test campaign at Marine test center in Holland. This was done over the course of 3 weeks with the full unit exposed to wind, waves and current in the laboratory environment. Also recently, we've identified and selected a preferred supplier of wind turbines for the project, which are 2 pieces of Vesta 3 93 Megawatt turbines, However, still subject to inspections and final contract.
Looking ahead, We're about to enter the next engineering phase, which is called FEED and to further raise the fabrication readiness for the project And during the fall, we'll also aim to conclude both the turbine supply agreement and an EPCI partner for the project that will build the complete project and install it. Slide 13, please. This map shows the location of our ongoing commercial projects and prospects. And in addition to the 4 projects in South Korea, Scotland, Sweden and England, which I'll present in a bit more detail shortly, We are working with several prospects in markets such as Ireland, Spain and South Africa. And these are typical markets That will have all the prerequisites for floating wind and where legislation is expected within short.
In such markets, Hexaconix is active with local partners to position ourselves ahead of the curve for when the market takes off. As we dig a little bit deeper into our projects, I'll start off with South Korea. Slide 14, please. In South Korea, we're working together with oil supermajor shells in developing a large scale floating wing farm. The overall project capacity is estimated to around 1.4 gigawatts, which is to be deployed in phases.
South Korea is a nation that at the end of last year announced its net zero targets by 2,050 And have since then increased its ambition with raised offshore wind targets and new budget allocations towards the renewable transition. And recent milestone during the past period include having entered a shareholder agreement between our joint venture, Cohen, Saxicon and Shell, to regulate both parties' long term interests and also having initiated comprehensive seabed surveys to map out the seabed over the entire area. Looking ahead, we're closing in on having completed the 1st year of wind measurements, which is a prerequisite to formally start the wind farm permitting process. And we're on track to submit the application for so called electricity generation business license this fall, as well as later in the year kicking off Slide 15, please. In Scotland, end of last year, we sold the majority of our project It was then called Dan Reitrai in North Scotland, the CIP of Copenhagen Infrastructure Partners.
And this has since then been renamed Pentland Floating Wind Farm and the developments are now well underway to repurpose the project to 100 megawatts. And the UK, being the largest offshore wind market in the world, has set some ambitious targets, which not only includes 40 gigawatts of offshore wind in general by 2,030, but also specifically includes floating wind targets, which is the only market in the world that does so. And if we look at this market, specifically Scotland, the wider competitive Scotland process is now underway. And this project comes online in an area adjacent one of the largest Scotland sites and well before the Scotland projects So this project is strategically well placed and timed in one of the most attractive floating wind markets in the world. The project has recently secured 100 Megawatt grid connection agreement and kicked off the environmental impact assessment process.
Looking ahead, some of the milestones include installing a floating lidar very soon and also Initiating the geotechnical surveys, both planned for this fall. Slide 16, please. And at the end of the Q1 this year, Hexagon entered a joint development agreement with Aker Offshore Wind To develop floating wind project in Sweden, capable of delivering gigawatts of renewable power. And during the Q2, we've deepened our partnership with public consultations ongoing for 3 large areas, Mar Els on the West Coast and Dining and Kruje on the East Coast. We've also filed for seabed survey permits for all these three sites.
And looking forward, we're in the process of setting up a fifty-fifty joint venture with Aker Offshore Wind and the shareholders agreements with that to regulate each party's interest long term. And we're also looking forward to during the fall submit both grid connection applications and initiate the environmental impact assessment process. Slide 17, please. In Cornwall in Southwest England, Hexagon has acquired the Wavehub site, which was originally developed for WavePower. The location of this project is strategically chosen as the Crown Estate in the UK has recently announced its intention of lease auctions for floating wind in the Celtic Sea.
And this is just around the corner from this project. The project is located some 20 kilometers off the coast in rather shallow water and with a very good wind resource. The permit that was part of the acquisition has a capacity ceiling of 40 megawatts. So the intention here is to deploy 2 Twin Wind Foundation that entails a total of 4 wind turbines of size yet to be determined. And for these projects, we've partnered with Bechtel, an international EPCI contractor that brings decades of experience of planning, engineering and construction when it comes to large infrastructure projects.
The complete acquisition was recently completed, which included executing a 30 year lease with the Crown Estate for the seabed. Additionally, we during the end of the second quarter applied for a marine license, which is the last and final permit needed to install and operate the project. And looking forward, preparations are ongoing for when the CFD bidding This opens towards the end of the year. And this is the so called contract for difference and it's the UK government backed subsidy scheme, which has been successful, provides a 15 year subsidy for generating electricity from floating wind. Additional efforts during the fall will also be placed on planning the complete supply chain for the project.
And we can take the next slide and skip over to Slide 19. So as a last slide, looking ahead somewhat. If we look at near term the near term futures, Efforts will be placed on maturing both the technology and the project portfolio. With regards to the technology, the design for the Twin Way demonstrated project will be prepared for construction starting next year. This will be the 1st full scale deployment within our technology roadmap.
Following the TwinWay project, 2 TwinWay foundations are planned for the Twin Hub project in England, which will serve as a pre commercial array, positioning the technology ready for commercial scale deployment. Significant focus will also be placed on developing current projects and prospects further to enhance the portfolio value. Several prospects of our ZAR end markets where legislation is expected within short, which may provide the definition needed to ramp up additional projects. And given the rapid expansion Expected of floating offshore wind markets, we aim to mature opportunities in both new and existing markets. And to be able to do this and capture this industry growth and ensure that the value of our business is enhanced, we aim to further ramp up our organization and capacity, to speak, both locally in Sweden, but also abroad.
So with that, I would like to thank you all for the attention and now welcome any questions there may be. Thank you.
Thank you. This chair comes from Johan Svein from Pareto Securities. Please go ahead. Your line is open.
Thank you. Good morning and thanks for the presentation, Markus. Two questions on my end. So we saw a few days ago or last week, I should say, That one of the neighboring projects to your projects in South Korea received one of these Electricity business licenses, could you perhaps provide an update on how you see The rank order of the various projects that you have there in the area, yours being, of course, one of them, but there are a few more. And then the second question with regards to new markets.
You mentioned in the report that the U. S. Could be a market of interest to you. Is Is that something that you can elaborate a bit on? Thanks.
Yes, absolutely. Thank you for that. And So the first one of the ETB license in South Korea and our neighbors and I know who you're talking about. I don't want to comment too much on the details of their license, But we are in the front movers over there with I believe any day now, if it's not even today that we are Have all the prerequisites in place when it comes to wind measurements to apply for our own. And there might licenses over there may come As unconditional or conditional as well.
So there's a lot of aspects to consider when just seeing that there's a license provided. So So speaking of half of theirs, we're ready to apply for an E2B license as soon as we've compiled the data and put the application in place, which is shortly. When it comes to the U. S, definitely being one of the new markets. So U.
S. It's a long term, very interesting and I believe we've become a very big floating offshore wind market, not the least since Biden entered the White House. And we are, during the fall, in order to now planning for an organization to ramp up a presence In the U. S. And I'd like to come back to you in the fall with that, what that looks like and what our plans are.
Okay. Thank you.
Thank you. Thank you. The next question comes from Tom Johansen from Sedan Markets. Please go ahead. Your line is today.
Thank you. So my first question then is on the project divestments. When can we expect to see the next project Divestments. And are there any particular projects standing out?
Yes. So this is not disclosed at this time. And with a new and evolving Markets around the world and this being an industry where our operations are very few and large transactions. So the timing needs to be carefully chosen. So we have not disclosed when that will be, but there are several opportunities And especially amongst the 4 projects that we have initiated are underway and are defined as projects.
But no specific time that I can't disclose at this time.
Well, thank you. And in terms of Exporting revenues, what should we think about that in the coming quarters? As it was fairly low in Q1, should we see an uptick in the coming quarters.
Certainly, fair to believe that it will ramp up as our public portfolio increases. But consulting revenue is never the end play here and the one that will make Hexagon profitable. It's a way to reduce our burn rate and the end targets of the 2 big revenue streams that we're aiming for are both in terms of license fees, Licensing our technology as well as project investments when we value enhanced projects, have ownerships and reduce such.
Thank you. And the final question on accounting. Can you say what percent of investments will go flow through the P and L and how much through the investment cash flow Going
forward. No, I can't say at this stage. I'll be happy to elaborate a little bit further on that via email for you if you'd like. I don't have that answer here in front of me.
Thank you. That was all for me.
Thank you.
Thank you. There will be a brief pause for further questions. Okay, thank you. There appear to be no further questions. I'll return the conference back to you.
Okay. Then I'd like to thank everybody very much for the attention and Look forward to continuing this and the next reports and there in between. Thank you very much for your attention.
Thank you. This does conclude today's conference call. Thank you all for attending. You may now disconnect your line.