Morning, ladies and gentlemen. It's a great pleasure to welcome you today to the Q1 2024 results conference call for the Photon Energy Group. My name is Georg Hotar, I'm the CEO, and to my left is David Forth, our Chief Financial Officer. Good morning. We'll run you today through the financial results, but also some business highlights in the first quarter of this year. So, we'll start with the business review, and David will then take over, running you through the financial results and our guidance for the year 2024.
So, in our investment segment, which encompasses our IPP portfolio, that means the portfolio of PV power plants that is in our ownership and where we generate revenues from the sale of produced electricity, remains the core pillar of our group in terms of revenue, but also EBITDA contribution. We have in terms of installed capacity seen an increase or managed an increase of 3.8 MW in the first quarter, taking our total to 131.1 MWp. After the first quarter in April, we connected another plant in Romania. So, all these additions are in the Romanian market.
So as of today, we have an installed capacity of 132.8 MWp that is generating electricity. We still have 10.7 MW as work in progress. These power plants are essentially built and just waiting for grid connection and commissioning. And these are namely two power plants, Sărulești and Făget three, so the third power plant in a location called Făget. And the commissioning of these power plants should happen either at the end of the second quarter still or at the beginning of the third quarter of this year. And this will take our, will then take our total of installed capacity above 140 megawatts.
In terms of electricity generation, if we look back the last two years, where in Q1 2023, we have suffered a decline by about 10% based on unfavorable weather. We have now, between 2023 and 2024, managed to grow our electricity generation by over 24%. And this is driven both by a larger installed capacity, a larger installed capacity compared to a year ago, but as well, more favorable weather conditions that we've had in Q1 as compared to last year. But the vast majority of this increase comes from high installed capacity. And I think we can comment as well as we've been publishing the April report yesterday.
In the month of April, we have had a very good month in terms of irrigation and also energy generation. And months to date in May, that trend is continuing. The declining trend in energy prices that we have been observing throughout 2023, coming off the peaks in summer 2022, have also continued since the beginning of this year. So, this has had an impact on the revenue generation. As you can see, from the realized average revenues in the first quarter as compared to last year, we have been more or less stable in Australia. In Romania, we've had a lower realized price.
There's been a very significant decline in Hungary by almost 50%, from EUR 124 per MWh that we realized in the first quarter of last year. In the following quarters last year, those realized prices then started dropping. EUR 69 in the first quarter, also based on the fact that seasonally, typically, energy prices in the winter are higher than summer, has been a disappointment. But this is something that we have addressed in the first quarter by switching all our power plants in Hungary that we previously, as of April 1st, 2022, had exited the support scheme.
We executed the option to return to the support scheme, the feed-in tariff scheme, and that became effective April 1, 2024. So we've essentially stayed out with about 40 MWp of installed capacity in Hungary, in the market, for exactly 2 years, returning back into the feed-in tariff as at effective April 1st, April 1st this year. That means, the effect of this step, will become visible in our revenues, starting in the second quarter. And, the feed-in tariff in Hungary is indexed. The formula is CPI minus 1%, average CPI during a given year, which in Hungary last year reached 16 point, sorry, 17.6%.
So the increase of the feed-in tariff was 16.6%, which is a very significant increase, well above what our initial financial model when we built and which we financed our projects when envisaging. And based on the current exchange rate, the current feed-in tariff for this year is the equivalent of EUR 120. So, we've basically jumped back into a revenue mechanism that is giving us very attractive prices. In Slovakia, all our power plants are in a feed-in tariff mechanism, so the revenues remained the same. And in the Czech Republic, we switched to the feed-in tariff, as we announced previously, as of January this year.
Nevertheless, because at the beginning of last year, when we were in the green bonus scheme and were selling electricity into the market, and we were realizing still decent prices on the sold electricity, the per megawatt revenues have declined, comparing the first quarter of this year and the first quarter of last year. But again, as 2023 progressed, those revenues per megawatt hour were dropping. So this EUR 640, unless there's a change in exchange rates, because the feed-in tariff is paid out in Czech crowns, will remain stable during this year.
Coming back to the step in Hungary of going back into the feed-in tariff, this is part of a rebalancing of our portfolio in terms of revenue model, where it is something we've announced as an intention already at the end of last year. And, also in the Q4 call, that we would be doing that. So this has been executed in Hungary, in the Czech Republic right before. So as of April 1st, we now have an almost equal 50/50 split between power plants that are selling electricity based on support mechanisms, and the other 50%, the other half, is selling on a merchant basis.
Where, however, it is important to point out that a significant part of that, merchant portfolio, which consists mainly of our Romanian assets, there we have, for a period of 2 years from commissioning, our revenue model is a an offtake agreement with Transelectrica, which is the Romanian transmission grid operator, and we get paid the 90-day rolling average of baseload prices. Of course, the decline in prices has also been reducing that the 90-day rolling average, but the benefit is that we're not exposed to intraday swings. And we have also seen that sometimes that, I think in recent weeks, energy prices on weekends turned negative during the day, even for extended periods of time.
So we are not affected by these intraday price curves in our revenue model for the first two years of operation. In terms of our second part of our investments business line is our project portfolio or project pipeline, where we have ongoing project development efforts in four different countries. The most important one is Romania, where we still have a pipeline of projects at various stages of development of over 200 megawatts peak. This pipeline we are continuing to bring to the ready-to-build stage.
We have Poland, where, as you are surely aware, we are, we have communicated previously, we are in the process of selling those projects that have obtained the grid capacity. Here we are happy to announce that we have signed an agreement with an investor in relation to our largest project in Domanowo, where we have 20.4 MW of grid capacity. This transaction will fully close once the project gets to the ready-to-build stage, which should be in the fourth quarter of this year. We are progressing well on the sale of the remaining projects in our pipeline.
In Hungary, at the moment, it is very difficult or close to impossible to develop additional projects, given that additional grid capacity for utility-scale power plants is awarded on the basis of auctions. We did participate in the last auction, but were not successful. The development of new projects is essentially on hold, but from our previous efforts, we still have close to 7 MW of projects, which we intend to realize in the Hungarian market. That gets us to Australia, where the pipeline you see of over 600 MW consists mainly of RayGen projects. The 9.8 at the advanced development stage is a project in Boggabri, which is a hybrid project, PV and energy storage.
What is worth mentioning in relation to our ongoing construction, in addition to our IPP portfolio, which at the moment is fully focused on the Romanian market. As you can see in the second table, we have signed a financing facility with the European Bank for Reconstruction and Development, in total, EUR 15 million, of which EUR 13 million are designated for to finance the construction of two of the power plants we have either completed or commissioned. Namely, Făget Two and Făget Three. And the first four that you, well, the first three projects you see at Tămădău Mare One, Tămădău Mare Two, and Sânnicolau Mare , which we will start the construction imminently.
Well, but we have additional projects which are essentially or very at the ready-to-build stage or very close. You can see they add up to another 20 MW-25 MW. At the moment, what we're still planning to build in Romania, and for which we either already have or in the process of obtaining project financing, is another 40 MW of installed capacity. Moving on to our new energy division. The increase in the contracted volume for the demand side response services has now in the first quarter materialized. So we've tripled the volume of contracted capacity as compared to 2023. And as you can see, that has led also to a tripling of revenues in the first quarter as compared to 2023.
A year ago in Q1 2023 from demand side response services from the capacity market, we generated close to EUR 2.4 million, and this has grown to EUR 7.25 million of revenues. The compensation we are getting from the Polish transmission system operator for our services of providing the capacity market have been contracted on the basis of auctions, and these auctions for 2024 were conducted, or all the auctions are conducted on a quarterly basis, so it's not a year.
So there's not a standard yearly price, but there is a quarterly price, and which means that the first quarter and the fourth quarter have the highest prices, and therefore also will be the strongest in terms of revenue generation, with the second and third quarter generating lower revenues for us. And yes, as you can see, we have on the capacity side had a significant increase. In March this year, we participated in the auction for 2025, and after a thorough analysis of the demand and supply of flexibility into this into demand side response on the basis of demand side response, we have decided to bid a lower volume than what we anticipated previously. As we.
Our analysis showed that if we had bid significantly more, which we were originally planning to, prices would have actually been affected in a negative way. So by bidding what we did, 315 MW, we believe that this was the volume that kept the total supply at a point which in overall generated the highest revenues for us for the next year. Looking at some of our other business segments, what we have announced and what we're working on very intensely now is to put more focus on external EPC services.
That means building power plants or behind the meter installations for external customers, where our role is to build the power plants. Of course, on the back of that, we are also offering, and in most cases, also then providing operations and maintenance services. More and more as well, services related to the sale of the generated electricity, particularly for utility-scale power plants. However, in the first quarter, and most of the EPC activities or construction activities then start in the second quarter, and then the second, third, and very often the fourth quarter are very active. But at least in the Northern Hemisphere, there's not much construction going on in the first quarter. So there is no significant dynamics visible there.
There is, and as you can see, so far, most of the EPC revenues are intragroup and relate to power plants that we're building for our own portfolio. But in the next quarter, we believe, based on the pipeline, that we have both the utility scale and here, our core markets that we want to focus on in the CE region are the Czech Republic and Romania. But also in for C&I customers, for behind the meter generation, we will see we expect some very positive dynamics in the next couple of quarters. In our components trading business, the first quarter of this year has been a very slow start.
When we look at the first quarter, 2023, that was still at the tail end of the boom that we have experienced and benefited from in 2022. Looking at last year's numbers, also the second quarter was still relatively solid, where the revenues were comparable to Q1 numbers you're seeing here, and then in Q3 and Q4, we saw a very massive drop. So this Q1 numbers are actually better compared to Q3 and Q4 last year than the first quarter of 2023.
However, we are seeing now signs of a recovery in volumes, and we do believe our components trading business to show more positive results in the coming quarters, particularly compared to the second half of last year. And of course, the financial drop is also mirrored in the drop in volumes in relation to all the components we are trading, that means inverters, modules, and batteries. And here, it's also important to point out that during 2023, prices have also dropped dramatically for all these items. So today, a megawatt of modules costs about 40% less than what it cost a year ago.
Therefore, even with the same volume of modules, inverters, or even batteries, the financial revenues would be 40% lower, as this 40% relates to pretty much all these components. One of the bright spots of our activities, and this is a business that we have been nurturing and growing for a long time, is our operations and maintenance. And I think as you can see, in the multi-year graph on the left, we have had an inflection point in 2023, where we've been able to sign up a lot of additional megawatts. With compared to what we had before, significantly larger ticket sizes in terms of megawatts.
This is a trend that we see continuing. What is, however, happening is that very often we sign up relatively large power plants before they are commissioned, and then there are delays in commissioning. So, in terms of signed contracts, we are at already at a higher number, but we have not physically taken over the operation of these power plants. And we do expect in the next couple of quarters, but also years, relatively very dynamic growth in operation and maintenance. Very often, I refer to operations and maintenance to being the equivalent to facility management in real estate. So these are the numbers are, of course, a lot smaller, but it is a very valuable business because in terms of contracts and customers, it is very very stable.
It takes a long time to, to win these customers, but then when you do a decent job, they stay with you for extended periods of times. And, we are today the only solar O&M company that covers, the, the CE region, or at least the five markets where we are present. And, this is more and more becoming, a, a competitive advantage.
So while we have competitors in each of these five markets, we are at the moment the only ones who really cover the entire region with our own staff, and we are seeing more and more evidence that this regional strategy and footprint starts bearing fruit with large investors in PV assets, where we win them as customers in one country, and then I would say we have significantly higher chances in winning them as customers in other countries. So this has already worked very well between Poland and Hungary, and we see it now in various combinations. And therefore, this is a business where we see a lot of additional potential.
Going forward, what we expect to be an additional driver of business and revenue expansion for our O&M division is an extension of services provided to also cover energy storage. So we are working on being ready to provide the O&M services to battery systems, which very often will be part of a utility scale PV system or PV power plant, but also, of course, on a standalone basis. So this, we believe, beyond only the growth in installed capacity in the region, that will help us drive the growth of this business, an additional further type of technology we'll be able to provide O&M services for. So to conclude my part before I hand over to David, I will just run you through some of the highlights.
So what did go well in the first quarter was we've managed to further increase our portfolio. The last power plant connected in April, after Q1. So we've grown our portfolio. We have generated a record volume of electricity. We have taken the important and, I believe, sensible step of rebalancing our portfolio in relation to its revenue model, given the decline, both the decline in the general level of energy prices, but also the more and more pronounced duck curve. That means low energy prices during the peak production hours from PV power plants. And in recent weeks, we have seen really extended periods of time when prices were zero or even negative.
And most recently, even during the week, so it became a feature on weekends, where demand is typically lower, but this has now extended into some hours during the week. So this step was definitely the step in the right direction. We have continued growing our O&M portfolio. We have sold, of course, that already happened now only in May, but we have sold our largest project in Poland. We have signed the financing agreement with the European Bank for Reconstruction and Development. We continue growing our business, our C&I business, that means rooftop installation business for commercial customers in Australia. And we are currently in the process of finalizing the installation of our first behind-the-meter installation in Hungary.
That is based on a power purchase agreement, in this case, over 20 years. And what did not go so well? Well, actually, what is missing on the list is also that we signed an EPC agreement for the construction of a 21 MW power plant in New Zealand. So a new market, and this is a project where we are currently starting the construction, and we expect to commission this power plant for our customer Aquila in the second quarter of next year. So pretty much 12 months from now.
What did not go that well in the first quarter is that we have suffered delays in the commissioning of two remaining power plants that have already been physically built by a couple of months in each case. So that's 10.7 MW, as mentioned before, that, well, the commissioning and therefore, the revenue generation start has been delayed due to grid reinforcement reinforcement works. This is a common issue in Romania as now a lot of new capacity is being added to the Romanian grid. So in many of these power plants need.
Or before they can be grid connected, the grid lines need to be reinforced, and these works take some time, as they are commissioned by the DSO, and they have their processes which take long periods of time and sometimes get pushed out. But this is a so this is something, a problem that all investors in Romania, but also these days in many other countries are facing. So there's no problem in the grid connection itself, it's just occurs somewhat later. In the first quarter, we have seen another significant decline in energy prices compared to the beginning of the year.
This trend has now been reversed, and here, we're mainly referring to forward prices on the EEX, where towards the end of the first quarter, in early April, we've seen the literal low points. But since then, prices have gone up by, when we look at the baseload price for next year, for 2025, we've seen an increase by 30%, even above 30%. The last number I saw yesterday was, I think, EUR 92 per MWh of baseload in Germany, and typically the prices in our region are a few euros above that level.
So we have had the delay in securing the project financing, so particularly the conclusion of the financing with EBITDA has taken longer than anticipated. But for the next project, we are working on financing with commercial banks and so that should be back on track. On the PV components trading, the volumes have remained low and prices also remain under pressure. That's something I already talked about. While, I mean, low prices for modules and inverters are, of course, very beneficial to us when we build power plants for our portfolio or power plants for our customers. But and they're definitely helping keeping projects viable in the light of declining energy prices.
But of course, last year, we also suffered from a declining volume, and there we are seeing early, early signs of recovery. On the negotiations in relation to the sale of projects have also taken longer than planned. However, with the sale of Domanowo, our largest project in Poland, we have set an important milestone. As I said, we're working on the sale of the smaller projects, remaining smaller projects. So that is ongoing, and I believe we'll also have some potential results relatively shortly or in time for our next call. But the timeline for discussions and the potential sale of our largest project in Romania, that timeline is, you know, definitely extended significantly.
And there, we'll see whether we will be able to conclude and close on the sale still in 2024. So I think the next is yours, David, so handing over. Thank you very much for your attention.
That's right. Thank you. I'll take the. Yes, so the financial results, revenues down, mostly for the reasons which we've described. But in particular, this has been the power generation, which as we've seen, is due to lower prices in Q1 2024 compared to what we had in 2023. Although it's mitigated by us having more plants connected, it's still the revenues was driven down, and that's running at just under 10% reduction. Other revenues, as you'll see, also a decline. EBITDA higher, and that's mostly driven by some improvements in our engineering business, as we'll see. The EBITDA, obviously, has suffered from the lower energy generation revenues, and also from our PV component trading.
We've also had some increase over the period in our personnel. That's been particularly noticeable in our new energy business, where we've been hiring people to develop that business. Our total comprehensive income is down by EUR 1 million. This is due to revaluation of some power plants. This runs through our hedging. Our hedging derivatives have. In hedging, we have gained because of interest rates were both going down, so that's helped us slightly. In Forex translation, we've had some small negatives, and we've written down slightly our RayGen valuation, and that's really only because of the exchange rate differences. So I think that pretty much covers that.
What I'd just like to add here is, as I mentioned before, in the first quarter, we were suffering quite heavily in the Hungarian market from unexpectedly record low energy prices. And of course, this is nothing that will help us today, but for like comparison, I think it's quite useful. If we had had made that switch to the feed-in tariffs in Hungary three months earlier, so as of January first, we would have generated EUR 424,000 more. That means that actually, this EBITDA number, based on the revenue model that we have as of today, would have been over EUR 1.2 million, so the year-on-year growth would have been much more significant.
The good news is, as of April first, we are in this feed-in tariff, but this is not reflected yet in the first quarter. So that swap alone, or that change alone, would have had an impact of EUR 424 thousand. And of course, that would have flown straight through the P&L, all the way from the revenues, as there are no additional costs against that. Maybe even the taxation, the EBITDA, EBIT level. So essentially, everything would have been EUR 424,000 . Back to, so EUR 1.2 million EBITDA, EBIT would have been only -EUR 1 million, and of course, all the other numbers would have been correspondingly back. Sorry for the intervention.
No, thank you. Absolutely right. So in terms of our balance sheet, fixed assets reduced slightly, because of the depreciation of our generating assets. And also there's a change in the currencies. Obviously, we report in euros, but these assets are held in local currencies. In terms of current assets, we have reduced our inventories. We managed to sell some of the batteries that were lurking in our balance sheet at the end of 2023. And of course, we've had some reduction in our related party loans, which both benefited us. Equity has decreased to EUR 68 million, due to the impact of the lower results and the change in currency translation reserves.
However, our adjusted equity ratio remains higher, and in fact, comfortably above the bond covenant of 25%. Our long-term liabilities decreased due to outstanding balance of loans and borrowings, 'cause we've got repayments going on during the period. Current liabilities remain really very stable and, at the end of it, balance sheet in pretty good shape to go forward for the rest of the year. What we see here is the cash flow development. Not really much exciting to report operation. Operational cash flow, much stronger than in Q1, mostly because of the translation differences, but also because of the benefits that we've had during the quarter.
Investment cash flow, pretty much at the same level, and this is about us investing in our Romanian projects, which are being built. Financial cash flow, we have been carrying on making our scheduled repayments of short-term financing. In Q1 2023, we would have increased our borrowings for funding. So net change in cash, a reduction of EUR 655,000, which is not particularly significant in our cash totals, which go from EUR 5.9 million to EUR 5.2 million. So you can see there in the graph. This brings us to our guidance. We obviously had a tough time with our guidance last year.
We've looked very carefully at it this year, and we expect our revenues to be within a range of EUR 90 million-EUR 100 million. This would generate EBITDA in expected range EUR 16 million-EUR 18 million. Now, we've looked at this very carefully, and one quite important point to make is that going forward, we're going to be doing more of the larger third-party EPC contracts. And the issue with third-party EPC is, of course, these are large contracts, and they tend to run for quite long periods. And there are periods when, due to winter weather and so on, you're not going to be out there constructing things.
That makes it difficult if we sign a large contract, and we expect to, during the year ahead, to predict when we can take revenue, when we can recognize revenue, and when we can take profit on those contracts as we are bringing them forward. In other respects, there certainly is reflected the improved generating results from the fixed tariffs, which we've signed. But we're not at the moment giving detailed guidance about the individual elements. One thing we are doing going forward is we're reviewing our asset base with a view to strengthening our balance sheet. This may well result in some changes in the assets that we're holding. This will increase cash.
and reduce borrowings, but the details of that really depend on whether we can achieve prices which are attractive to us. We do have several options, but they're all of them in plan at the moment, so I don't think it's wise for us to give too much detail, except to say that we are very much looking at our balance of assets. I think that would be our message on that, which would take us to the next stage.
Just a Q&A session. So thank you, David. So we are open to take your questions, and hopefully, we're able to answer them in a satisfactory way. We see someone typing, so that is the question. So the first question is, thank you very much, what are the other options to roll out DSR outside Poland? Well, demand-side response is essentially something that is, that is, definitely becoming more and more important in providing flexibility to the grid. In Poland, DSR is part of the capacity market. So just to briefly explain that, the demand-side response flexibility that we're providing to the Polish TSO, that is the contracts for which are awarded in the auction mechanism, have an eight-hourly time.
So essentially, very often, mostly this response is provided in the evening hours, so we get a call or notification from the TSO, sometimes late morning, and then that's when we start preparing, providing that response, in the evening hours. What is referred to as ancillary services, these are sort of flexibility services that have much shorter response times, when as long as they're manual, in minutes, and automatic ones are in seconds.
What we do see. So for the very fast response, where the response time is in seconds, DSR is probably not exactly the right approach, but for the mFRR, the manual with response within minutes, DSR is definitely part of the mix. And it's something that we are working on. Here, it's important to say that we are in the process of getting market access to provide ancillary services in Poland, the Czech Republic, and Hungary. And in all these three markets, we expect to start providing these services still this year.
Demand side response, so the reduction of an energy consumer's consumption, will definitely be part of how we are providing these grid support services. But going back to providing DSRs through a capacity market mechanism, there have been some markets where we were seeing attempts to approach it in a very similar way as Poland did it, so we have it as part of the capacity market. But these approaches have been delayed. One market we've been looking at quite closely has been Spain, and their integration, or the, t his approach and auctions for demand-side response have been postponed. Through capacity market mechanisms, it appears that this is not.
We're constantly searching, of course, for markets where this opportunity opens up, but it is not spreading like wildfire, I would say. However, DSR definitely has its place in ancillary service, in the provision of ancillary services to transmission system operators. So I hope this has probably answered the question. The next question is: What are the prices of selling of PV projects and what margins? Well, I assume that this relates to the sale of our project rights in Poland, where on the transaction we've signed, we cannot be specific. However, we did hint to a number, a range of target value, valuations, target values in our last call.
So all I can say is that we are slightly below what we mentioned back then, not dramatically, so within the 10% range of the lower end. But what we have seen, and sometimes there's a lag in the market, but what you will typically see, and this has happened here, is that with falling energy prices and therefore falling project yields, there's also then a negative effect on the prices of project rights.
And this we've seen across the region in all the markets where we are developing, we have been developing, so not only in Poland, but I absolutely convinced that at this point in time, and we're negotiating and signing this contract, we got a very good price given the market context. So, moving to the next question, which is more of a financial nature. So David, if you want to address that.
Yes. During the first quarter, we have made a change in our, we haven't changed our system, but we certainly ran into some larger Forex translation changes. This certainly does exceed the EPC challenge, but the mechanism here, I think, is not specific to a particular revenue stream. So I don't think that we want to give that we're able to give much more detail on that. The next question actually is, I don't see us going out to market to raise additional capital. We are continuing to look at options to refinance where benefits with our current-
So, well, maybe to elaborate. I mean, so this question, of course, relates to capital markets, which would be either equity or the debt capital markets. Of course, a significant part of what we do is finance the project financing. So that, of course, is, it's also capital, but project-specific. So that, of course, will continue as we are building additional pipelines. But then we are also in the process of identifying and selling certain assets and most of the non-core assets, which will increase our liquidity position. So yeah, but just to reiterate what David just said, at this point in time, we are not considering any capital raising exercise in capital markets until the end of this year.
Okay, there's one more question coming. The question is, where is the risk of inventory write-downs? Well, again, the area in our business where this is most relevant is our components distribution business. And that decline in components prices that has happened across modules, inverters, and batteries over the last year has, of course, had a massive effect throughout the distribution business. So, of course, we are talking to and also looking at what our competitors in this field are affected. And, I mean, what we see, and in the same before Zoom. So in our situation, we have not been caught with a lot of modules. We have not been caught with an excessive amount of inverters in stock.
We have been caught with a relatively large amount of batteries. However, we originally procured them at good prices, and one of the mitigating approaches that have been applied in the industry over the last 12 months is that the manufacturers have been giving their distributors credit notes. And this is also a path we have taken in relation to our battery inventory, and we have, so that means we have been able to reduce our landed costs, and actually, this is a process that is still ongoing. So the, and through that, we have been able to mitigate the need for inventory write-downs. So the...
Well, the value of those batteries in our stock are, at the moment, less than, well, it's probably more like 1.5% of our balance sheet total. So we're not talking about a large number. We have already mitigated or reduced the landed costs to a price or to a level at which we can sell these batteries now. So, yeah, I think we've come out of this, particularly in comparison to many of our competitors in rather unscathed. So the profitability that we've enjoyed in 2022 is not there at the moment. It is well, it's a very cyclical part of the industry, this distribution business.
But clearly, some of our competitors have been bleeding very heavily, and some of them haven't made it, and, you know, I personally still expect quite a bit of consolidation in this part of the value chain during this year. But I think we have come out of this relatively well.
Yeah, we are. We're selling through at lower prices, but we are continuing to sell through, and therefore, we didn't need any write-downs at the end of last year. We've also actually returned a small number of batteries to a supplier because they've found another market where they can deploy them more effectively. And again, that means that we haven't had to write that stock down.
Okay, next question.
Real time.
When the benefits of our cooperation with RayGen will be visible in financial results, and how this cooperation will be monetized exactly? So, well, exactly is a bit difficult, but as you are aware, we are and as you can also see from the slide on our pipeline, we are developing various projects on the basis of the RayGen technology, starting with Yadnarie, which is at a very advanced stage, and we've also identified some additional sites in Australia. So this is what we're doing in the Australian market. We have identified a site in another country, but of course, this technology is going to be applicable in many jurisdictions around the world.
And, it is, I think here, or just in brackets, I would like to point out that RayGen has gone through a successful capital raising exercise where we did not participate, but SLB from Schlumberger, which has topped up its original investment. Schlumberger SLB is very heavily involved in RayGen's technology from an engineering point of view. There's also a technology cooperation agreement signed between SLB and RayGen. So SLB wants to manufacture some of the core components. There's a warranty agreement with RayGen, and so there's a lot, and there are some new investors that have come on board, recently also from Saudi Arabia.
So I think this is a technology that definitely so we have some very significant names in the industry that are standing behind this technology, and it definitely has global potential. What has become apparent to us, but also to some of the bigger companies involved, is that developing a RayGen project is a very specific discipline, and it is, in many respects, very different to developing a PV project. Just to give one example, you need access to significant water source to fill those reservoirs.
But you have to spend and be very careful even the original site in ideally, at initial site selection, you have to have a really good idea of what is on the ground, because you will be digging, and so you. And the topography as well. So there's a lot of things that we have been on a learning curve on the RayGen itself. And so I think for us, there's quite a significant opportunity to act as a developer, not only in Australia, but that would be our idea in other countries as well. Teaming up with other very strong local players who may want to be the final investor in these power plants.
But, also maybe in cooperation with some of those, some of the current shareholders of RayGen itself. So, I think there's a role for us, where we can leverage on the, so we have an early mover advantage in developing a RayGen project, which I think we can apply elsewhere. And, how far our role would then be, and not be somewhat involved in the EPC of a sort of construction of a RayGen plant. I think that's something we will have to see further down. But personally, one area that I believe could be very interesting for us is the RayGen technology, you know, has the great advantage that it can be run either as in a grid-connected setting or as an island.
And some of the markets that we're looking at, and one of them is South Africa, where we have identified a site, is a country that at this moment suffers from a significant shortage in electricity. So if you build a RayGen plant that has the potential to provide electricity 24/7, irrespective of the situation in the grid, that alone will attract businesses that need a stable energy supply. By tweaking the plant on a few parameters, we can also provide excess heat or excess cooling, which again, is important for certain types of businesses.
So I believe that there is one such development work for us, as money to be made by making sure we buy more land, and it's just for the power plant itself, because that land will then be attractive to industrial users who may migrate or gravitate to a location around the region site. So, I mean, there are just some thoughts, but this is, I think, where for us, and of course, we are when we look at the shareholder base of those of the shareholders who recently joined, we are definitely right on the smaller end. So we don't have as deep pockets, I think, for us playing a role in the development. But development done well and right can be very profitable.
The advantage we have here is that there's a specific technology, and there's quite a lot of lessons learned, and we, all of us, RayGen itself and us and the other shareholders, we are learning on the go. I think there we have a head start, and I think there's, if we, if we do go about it the right way, I think we can have an interesting, I don't want to call it business line, but definitely an activity around developing RayGen projects in multiple jurisdictions. I think we'll also learn on the go how to make it as profitable as possible for us.
Yeah, and of course, RayGen does not require lithium for batteries, because it requires water-
Yes.
and working technology. So we certainly do expect RayGen's success to spread.
On the next question about the remediation technology, well, this is a really good question. And I will start with the second one. We are the second part of the question, when will this be monetized? And first of all, our remediation technology also works on other contaminants, and there we have ongoing projects. We have been working on some projects related to PFAS here in Europe. I mean, all this public knowledge, because we won a public tender, we did a risk analysis for Prague Airport in relation to the PFAS contamination within the compounds of the airport. That's something we concluded last year. We are doing some works to mitigate PFAS issues for some other companies here in the CEU region.
So if you wish, but that is actually not using our remediation technology, but because what we want to do is we want to clean sites. We are also getting a lot of know-how in how to filter PFAS out of water. So we have our own filtration units. We've been spending a lot of time finding the right resins that give us the best results. So there is some monetization there. But coming back to Australia, we concluded the pilot project at the end of 2022, and we submitted our final project report in March 2023, so over a year ago.
Based on that, we have the Department of Defence, which works with a large number of advisors, both in terms of consulting firms, but also academic experts. They have reviewed this. They've come back on our report. And this process has been taking very, very long for my liking, way too long. At this point in time, we have reason to believe that we are after this. There was a workshop about three months ago, where the last questions have been addressed to us, and we believe that we are very close to be allowed to publicly present the results of this trial. We have done so on a few selected industry conferences.
We will be presenting the results at a conference in Battelle, which is the world's most important, remediation conference, that is taking place in June. And we do hope that by that time, we can also publicly talk about that there will be ideally a joint release on the results with the Australian Department of Defence. That will allow us to talk about it. I mean, all I can say is the results have been extremely encouraging, and a lot of our commercial activities are linked to that.
So there are discussions with Defence which sites we may address in their portfolio of troubled sites, but there's also a couple of other clients in Australia that basically want to see that verification from someone like the Australian Department of Defence, which is the largest contaminator in, I believe, or definitely one of the largest in Australia. That should then be the starting signal for a lot of commercial activity in Australia itself, and that will then give us... Because we've been waiting with I would say a more commercial rollout here in Europe and ultimately North America for that document, which has taken a lot longer than what we've been hoping for, but I believe we're very close now.
Well, the consequences of not satisfying the bond covenant is that it would be a default event if we fell below the 25.5% equity ratio. We have a carve-out related to us dropping below 25 as a result of regulatory measure. So basically, if in any country there would be some additional taxation or reduction in the Feed-in Tariff introduced, and as a result, we would have to write down the value of our power plants. If that change and its impact on the equity ratio, there is a carve-out. But leaving that aside, it would be a default event. The most important thing is that what is relevant for this covenant are the audited numbers.
So, basically, it's the audited equity, or the equity that we have in our audited annual report. So the quarterly, of course, we calculate and publish them, but if for whatever reason, in one of the quarters, we were to fall below, that would not be a default event. The electricity prices generated in Australia are lower in Australia than in Europe. Well, just very briefly, the revenue model in Australia is that we are until 2030 getting also what is called LGCs, Large Generation Certificates, essentially a green certificate we get for every megawatt hour. There's a market for that, there are buyers for that. At the moment, the price is at AUD 48, around EUR 30.
So actually, when you see the total revenues of, I think it was EUR 74 in Q1, EUR 30 of that is the LGCs, the rest is for the electricity. Further supporting your the logic of your question, that prices are much lower. And the answer is yes. So prices are relatively low, or comparatively low in Australia, and we've also found it a lot more difficult to access project financing on attractive terms. So the number of institutions that would back a 15 MW power plant project in Australia is very, very small. And so it's a combination of factors. However, Australia has been, for us, definitely an interesting, it continues to be an interesting training ground.
So it was the first place where we built a power plant or two power plants on the basis of on a merchant basis. In Australia is also a little bit of a view into the future, in terms of where energy markets are heading. And what I mean by that is that, here in Europe, we have day-ahead markets and intraday markets, which are so far traded on an hourly basis. Now we are seeing everywhere, that the trend is going towards 50-minute intervals, both in terms of trading, the minute prices, but also in terms of balancing. And in Australia, you only have one market, which is essentially an intraday market, and the trading intervals are 5 minutes, which we believe sooner or later will also come to Europe.
It will get to shorter and shorter trading periods. Yeah, so we are selling into a market where every five minutes there's a different price. And those prices go up and down, like, sometimes in incredible ways. And Australia, well, our power plants are in New South Wales, so each state has a separate energy market, and with different prices, sometimes they're very much aligned, sometimes they're massive differences, and sometimes they're very crazy events. Yeah, so we have extended periods of negative prices, but, specifically, thank God, this was, this year we had the 29th of February, because on the 29th of February, for about an hour and a half, energy prices in New South Wales went to 60 up to AUD 16,000.
So there were multiple five-minute segments when it was $16,000, and then also $7,000, $8,000, and our power plants were actually running, so it was not even a bad weather day. I can't actually remember what happened, but basically, within 90 minutes, we made about EUR 80,000 on these power plants. So quite a frequent. I mean, there are days when sometimes it goes very high for a five-minute interval because a power plant just went offline somewhere, a large power plant. But here we've had a situation where for an extended period, prices were at like exorbitant levels. So yeah, this is what you wait for when you are in a merchant setting.
But from that point of view, Australia is definitely a good market for batteries. So this intraday volatility is something that can be exploited very nicely with batteries. And for that, actually, the shorter trading and balancing periods are beneficial. Okay, there's one more question coming. Okay, so I'll read the question. So the question is whether installing more batteries in Europe making prices that are more balanced through the day better cause DSR to be not needed anymore. So is may let the services not be needed in that case in the future? Well, I think that the energy market now is undergoing a massive transformation in relation to the grid.
So what we see is power plants that provide baseload are disappearing from the grid, this partial nuclear coal, and a lot of renewable energy sources, which are intermittent, going offline, going online, solar, wind, and that is at a utility scale. When the utility scale segmented with power plants somewhere, 3 plants, 20 MW on the field, which inject into the grid. But of course, there's also a lot of build-out happening in the C&I sector. It means panels being installed on factories to directly satisfy local demand. So the short term, what we're seeing now is that it definitely pushes down prices, but it also makes balancing the grid very, very complicated.
Also on a sunny and windy day, transmitting all this electricity to the grid is a major challenge, and I think there's a whole debate going on now where the, you know, the estimates, how many billions and trillions, will actually have to be invested to absorb all these new sources of energy and send it left, right, and center. Well, there definitely have to be some build-out, but, you know, one of the realities of the grid is that it is very, very badly used. So I mean, when you think of a PV plant, you have, let's say, a megawatt of good capacity available. That means you have 8,760 hours a year.
And the PV plant only uses that 12%-15% of the time, and hardly ever even fully. So, and the rest of the time, something else can run through that lock capacity. So this is leading to things like cable pooling. In Poland, for example, where now finally it has been allowed that wind and solar can be co-located. Now, batteries are being added to that. So I think everybody understands is that those pipes, those cables can be used much more efficiently. And so I think what we will see, and we may have to see, is, and I think it is a lot cheaper, is finding ways how to better schedule or reduce the amount of electricity that is being sent through the grid and better scheduling.
Of course, the problem with electricity is it's an on-the-spot commodity. But I think there's a long way to go in improving the usage. I mean, it's not like we can increase efficiency by 20%. I mean, actually a few hundred percent, probably. And that will require storage in multiple places. I think what we do see now is a lot of companies that put solar on the roof also install batteries. Some cases, it even makes sense to install just batteries. Some companies don't have suitable roofs or areas where to put it. So storage will play a significant role, and I think it will be at all levels.
But exactly that means there's a lot of devices and a lot of generation and storage equipment that needs to be managed, coordinated in real time, and this is exactly where new energy and the tools and the virtual power plant comes in. It becomes very heavy on managing a vast number of devices and consumption points. So I think it's quite the opposite. I think it's gonna be more and more. Okay, there's one more question coming. So the question, next question is: often the launches of our plants from pipeline get delayed substantially because of lack of readiness of operators to join. Why is this happening? Does the company not know about such problems beforehand?
Well, I think I would say I wouldn't say we never had this problem before, but actually probably very close to the truth. Until we started building in Romania. So, you know, we started a long time ago in the Czech Republic, built in Slovakia, then we had three, I think, very successful years in Hungary, building and connecting power plants, and that worked really well. Which is also why when we entered Romania, we expected a bit more complicated, but it's probably more complicated by a factor of ten. Basically what happened is Romania had a first solar boom in 2013, 2014, where about 1.4 GW of solar were built, and then it came to a very abrupt end.
And actually, our power plant in Siria was the first power plant to be commissioned after 9 years in Romania. So no such plant was built and commissioned. And in the meantime, you know, the people involved at the DSOs that were co-connecting these plants until 2014, many of them were not there anymore. Legislation has changed dramatically in a decade, particularly now in relation to EU legislation, but also technological progress. So it means all the forms, all the processes, procedures were basically already outdated. So there we learned what it means if that being a first mover, you know, can also be a disadvantage. So we essentially ran into, and this first batch of 8 power plants in Romania was multiple DSOs. So in multiple...
So simultaneously with different DSOs, we ran into exactly the same problem. We ran into a situation where the people that were supposed to connect us had, in most cases, never done it before or a long time ago, and when they looked into the documents and processes, not relevant anymore. So it was a learning by doing exercise. This has gotten better. I mean, definitely now we're seeing that in on the next batch. However, coming back to the two power plants that we're still waiting for connection, it is related. There are delays due to the grid upgrade work, which is something that is an issue with a lot of projects.
So this is not defaulting on the us, but we know of many people building power plants in Romania now, that they are incurring significant delays in getting the power plants commissioned. For exactly this, paperwork and, you know, we've now having done this 13 times, I think we understand how the process works, but it was a long, long way. So other people are on learning curve in terms of red tape and, and paperwork, but these grid connection works. Because these are works that we can't do ourselves, so it's done by the DSO. So basically, there's a process where they have to tender it. First tender, the documentation. The documentation gets done, then they have to tender the execution, and it goes all along their processes, and then what come to.
Typically, there's a very limited number of companies that are accredited by the DSO to do these works, and now that Romania is booming, these companies are very busy. So this leads to these delays, then sometimes a core component is missing and, you know, has a lead time of three months. So it's a combination of factors, which is largely beyond our control. And this is the price to pay for being in a market that is. Although there was a solar boom 10 years ago, it is still very much a virgin market, in terms of solar build-out, comparing it to other markets like Poland or Hungary, that have added many gigawatts in the last couple of years. Okay. So as this appears to have been the last question, I would like to thank you for your attention.
Well, thank you, David. Well, I think we'll conclude that we're looking forward to our next call in three months time. And just reiterate, we are very confident that in the next call we'll be able to report and present significant progress, particularly compared to last year's developments. So we're working very hard to make sure that the next call will be a very positive event. So thank you very much, and have a nice day.