Q3 2022 Fusion Fuel Green PLC Earnings Call
[music].
Hello, everyone welcome to fusion fuel Greens third quarter 2022, Investor update my understanding matures I'm head of Investor Relations at these from fuel I would like to first remind everyone. This call may contain forward looking statements, including but not limited to the company's expectations or predictions.
Financial and business performance.
Which are based on numerous assumptions on sales margins competitive factors industry performance and other factors, which cannot be predicted forward looking statements are inherently subject to risks uncertainties and assumptions and are not guarantees of performance I encourage you to read the disclaimer slide in the Investor presentation for a discussion of the risks that may affect our business or may cause.
Our assumptions prove incorrect the company's under no obligation and expressly disclaims any obligation to update ultra or otherwise revise any forward statements, whether as a result of new information future events or otherwise except as required by law.
So thank you all again for joining us today.
I'll just quickly run through our agenda.
For the next hour or.
So we will kick things off with an overview of fusion deals value proposition.
Then the management team will share.
You know actually.
Fuel's chairman.
We'll then open up the floor.
<unk> facilitated Q&A.
I'd like to remind everyone as in our previous quarterly calls questions can be entered into attractive chat box in the webcast platform any point in the next 57 minutes. Alternatively, you can also submit your questions to the Investor Relations mailbox at wishes I R. S fusion dash fuel W.
So let's begin with an overview of fusion fuel.
What makes us unique how we are creating value.
Fusion fuel was in the business of developing and delivering cost effective cleaning hydrogen solutions to accelerate the global.
Energy transition at its core fusion fuel is an industrial technology company.
We have developed and commercialized a proprietary miniaturized perm electrolyze her that unlocks cost competitive green hydrogen through unprecedented functionality flexibility and scalability.
The modularity of our electric laser technology lends itself to a decentralized approach and we've leaned into that as a source of unique differentiation where much of the market has gone down the path of ever larger scale electrolyze to drive down their level of <unk> costs, we've gone in the other direction small scale mass produced.
In doing so we've been able to eliminate some of the cost and complexity of hydrogen production and distribution and deliver bespoke co located solutions that few others can.
So while others are talking about developing greenhouse projects. We are doing at our unique approach and differentiate a tech have enabled us to build a robust commercial pipeline of textile and did all the projects. We are producing greenhouse today at our demonstration facility in Portugal with many more highly actual projects in various stages of the development.
And cycle, including what will be spans first sort of green hydrogen refueling station, which we're developing for excellence in Madrid.
So with that primary I'll now pass it over to Frederica figure to Chavez excuse me fuel's CFO until head for an update on the third quarter and subsequent events.
Yes.
Thanks Ben.
And thank you everyone for joining once again.
As mentioned last time, we have received approval of the 10 million Euro grants from component and 14, the Portugal's resilience and recovery plan for a project in Chinas and also commenced work on our absolute textile projects in Madrid during the third quarter.
More recently, we've announced two type sales contracts totaling 7 million euros in Portugal and in Spain. In addition to the opening of the two opening the Italian markets with the two photo LNG agreements.
We continue to make progress in securing grants for the projects were in Volta <unk>.
The volume.
Into this little puzzle of April .
Two significant nodes from earlier today and last week that are important for us.
We've now disclosed our first project in the us.
This is a project that has been in the works for several months now and with the passage of the English one reduction.
Become a key strategic pillar.
For the company SaaS will dive deeper into this major milestone a little while.
Last week, we also introduced the hemo change. This is the first centralized electrolyze it for the company and its the first that we noted in a market that is based on a series of minutes spreads units working together the strength.
We're extremely excited by this product not only opens new markets to us, but we believe it will also be a true disruptor to the pen molecular as a market in the coming years.
During the third quarter, we posted operating loss of $5 5 million driven by a $4 6 million euros of operating expenses.
The increase in expenses.
From the second to the third quarter was largely driven by an increase in head count coinciding with the go live of sale events at <unk>.
And then as a related tax provisions required in Portugal for the holiday subsidies paid employees.
In addition, we incurred 600000 euros of one off bookings related to IBRA.
<unk> expenses and various larger.
Activities related to marketing costs as well as various consulting and specialists engineering validation work the results of which we've disclosed in previous quarters.
Going forward, we're adjusting our administration expenses items were around four to $4 5 million per quarter for the fourth quarter and also for most of 2023.
Our pre tax profitable for the quarter was again, specifically impacted by the noncash items of the fares are the movements of the outstanding warrants. This had a $3 8 million euro positive impact, bringing our pretax loss for the quarter of $1 6 million euros.
One item I would like to highlight is that we expect to book revenues and also parts of the P&L impacts of the Exelon project during the third the fourth quarter of this year, so thats something too.
We look forward in the next quarterly update.
We've added this slide shows.
For additional transparency for our shareholders and analysts we've added a slide covering some of the elements of our balance sheet.
To this to the financial section of our results and will continue to provide this information going forward.
As you can see we have a total of 61 million euros, social assets and around $15 6 million euros of liabilities.
Our proxy filings with equipment is mainly composed of our ever above all give us sort of seen this project end of essentially facility.
Regarding current events at several months ago, we initiated a process to do a sale leaseback of the property.
We can now inform you that this is a transaction that we expect to close in December which will also generate substantial cash proceeds the proceeds for the company.
Important to note. We currently hold 12 million euros of inventory and around 3 million.
Of advanced payments to suppliers.
This is a result of measures taken late last year and at the beginning of 2022 to secure our supply chain.
We've recently seen several cases, where competitors were unable to deliver due to supply issues and we have had the opportunity to step into projects from that base over.
Over the coming months, we will be working to transition this inventory into revenues and have a positive impact on our cash balance.
Our receivables also includes $3 7 million euros of growth for us.
<unk>.
Making payments.
In the third quarter, we continue to hold substantial.
The receivable balance of $6 5 million in Europe .
However, I'll highlight that we have submitted reimbursement requests for possible balance. These requests have been approved and those those inflows will be reflected in the fourth quarter.
During Q3, we continued.
Pay for some materials orders not only for inventory and for all ever let alone projects as well as investments into our intellectual property and $4 6 million euros of operational expenses.
Our liquidity position is something that we as a team has been actively managing with the various tools that are available to us, including as mentioned the reimbursements of all our Phd in the ground receivables the sale lease back of <unk>.
And as our projects progressed traditional revenues.
We are a company and in the in an aggressive growth trajectory and the recent announcements and projects may require certain capsule in the future.
As we've noted before we will continue to consider all possible options for the company to ensure that we continue to execute at a low low growth plan.
Our outstanding shares and warrants balance is relatively unchanged at $13 4 million.
Yes.
As announced at our last earnings release during Q3, we did tap into the ATM facility and sold around 300000, SaaS with average price of $7 35.
During the fourth quarter. We also used the ATM facility and sold nearly 400000 shares at an average price of $4.
Year to date, we have raised around $3 7 million euros through the ATM facility at an average price of $6 $3 per share.
Sure.
With the sale leaseback of <unk> receivables mentioned in the previous slide and the other capital options being slowed by the firm. In addition to normalizing evolved project activity and revenues over time, we expect to have less use of the ATM facility going forward.
As highlighted previously we have a strong track record of securing grants for our project portfolio.
We've applied for nearly 80 million euros of grants excluding artists a submission.
As of our last update we had during our last update we had 19 billion euros of grants.
Improved at $3 5 million euros across the investments already requested.
As of today, we can share that we have secured another 30 million euros of France for another one of our projects, we expect to be able to disclose information regarding this award in the coming days. So for now I will not go into the details of the products that are related to Super please be on the lookout for the press release.
So that hopefully still this week.
As announced last week, we are technology providers for full projects in Spain towards pre selected for growth, we expect to get the final results of those submissions early in 2023.
This growing portfolio and the related projects are very significant asset for the company and establish a very strong basis for our order book for the coming years.
That's a dive a little deeper into those I will hop desire to share more information with you regarding our commercial activities.
Thank you Frederic <unk> nice to see everyone everyone that.
In the U S. I hope everybody had a great Thanksgiving weekend.
Are we going to go the next basically.
A key focus going into next year for fusion fuel is determined dreams of the hydrogen market into a reality.
The market is being created which which requires projects to be permitted and and attracting customers with providing attractive economics and confidence in our offering.
We're targeting over $40 million gross revenue next year, we plan to achieve this target through technology to third party technology sales to third party customers and sell most of our existing fusion fuel on projects to financial investors.
We've been focusing derisking, our pipeline in 2023 and beyond by concentrating on a few key characteristics.
Desert project have the land secured secondly does it have brands.
Third completing permitting and finally doesn't have a customer these four characteristics as simple as it may seem allow us to rank opportunities all have a high likelihood of reaching final investment decision and lets us prioritize our resources appropriately.
Virtually our pipe our entire pipeline has grants and land secured for 2023. This allows for a pipeline to commence permitting and have a higher probability of reaching <unk> due to the fact that we can subsidize our projects via grants to make them more attractive to third party customers.
We received or started permitting on over 50% of our 2023 pipeline and the balance is planning to start permitting takes approximately six to nine months to receive the necessary permits to reach out.
Our team is focused on initiating permitting on the balance of our 2023 pipeline by the end of Q1 2023.
Next year's pipeline is broken down by approximately one third being already established third party customer sales and the balance of them are fusion fuel on projects, which all located in the Iberian Peninsula that we plan to sell to third parties.
However, our 2023 pipeline being focused on Portugal, and Spain allows for higher chance of success due to our company has most of our employees located on the Iberian Peninsula.
As we are as we're focused on 2023. We're also looking ahead into expanding our reach into other core markets. We're excited to announce that we are expanding into North America and the Italian markets. Both markets are strong incentives, especially the inflation reduction act in the United States. We have secured early stage opportunities in California, and southern Italy, a total over 75 megawatts.
Capacity for 2024, and 2025 production these projects combined with the balance of our portfolio in Portugal.
It's over 138 megawatts of Heber solar and Evo chain units for 2024 and 2025.
Ido chain is a product that Frederic will go into next but its a new product that we have developed and will be in production in 2024 kilo change our own centralized Perm Electra wiser that fed will discuss shortly.
To take advantage of the inflation reduction act in the U S. Our team is actively evaluating if we can supply units for our USA projects from bit of ethane or do we need to build additional production capacity in USA. This could be a step change in our production capacity due to the early successes that we've had so far and the massive increase in the total addressable market.
<unk> VA entering the United States and Canadian markets, we believe our product offering along with our approach will be attracted to third party customers and financial investors to expand into these exciting markets. In summary, we have a strong plan to utilize our 2023 production capacity focusing on a region that we know very well the Iberian peninsula and already we've established anchor.
Projects and two core exciting and strategic markets to ensure the growth in the future for the company.
<unk> technology sales as I. Just noted are focused on the Iberian peninsula, we have over 80 megawatts of capacity or projects that totaled 743 units with an estimated potential revenue of over $45 million of fusion fuel to have $50 million grants attached.
For those projects.
We are concluding the construction as Fabrizio just noted our first technology sale in Madrid with excellent <unk>.
Built a team to be able to execute our projects in this region.
Working closely with our third party external partners. These capabilities allow us to either do a tech sale or a turnkey project that includes engineering procurement on the balance of plant equipment construction of the facility as well as the operations. This allows us to not only make returns on the tech sale, but also on the overall project and potentially recurring revenue from.
Operations, if we operate the facility.
Our tech sales and Portugal are with the same company that can make both.
Our secured grants have the land in the first <unk> project is already under environmental permitting anticipate him a one reaching FID in the first half of 2023 and as Fabrizio noted we already have inventory available to execute this project. The Spanish portfolio has been pre selected for the perfect program and finalizing their respective grants.
Projects are going through a final evaluation to receive formal award of the branch, which is noted as awaiting ramped in the table.
We're focused on supporting these respective projects and receiving their grand so they can initiate permitting in the first quarter of next year. Some of the projects do not require offtake because the company is the end use customer already has secured a customer I cannot emphasize enough that that helps derisk. These projects knowing that.
We already have a customer in hand.
Alcala is the most advanced projects, most advanced Spanish project and its finalizing permitting with anticipations anticipation of reaching FID in the first half of 2023 and again, we have inventory available for this project already executed.
Also we have a backlog of projects for 2024, which include additional technology sales in Spain that are all federal apply for other grant programs.
And the <unk> project in Italy, and other projects. We're currently in negotiations on throughout North America and Europe .
Okay.
Our development projects continue to progress.
We have two key themes as we touched on our last Investor call. First is that we are building a mobility background not only in Portugal, but now in the Iberian Peninsula second is decarbonize industrial applications to sell to customers throughout Iberia with our initial focus on the <unk> region of Portugal.
We secured branch and Lee in for all the projects we plan to reach FID in 2023, which includes two mobility projects and three industrial focused projects.
Our focus is to build out our footprint in the <unk> region through three phases to reach a total capacity of 85 megawatts or first phase has already received its environmental permits and is finalizing feasibility phase to reach FID in the first half of 2023 and again, we have the inventory available to do these projects our second phase has initiated environmental permitting.
And is planned to reach out in the second half of 2023.
We continue to do pre feasibility work on the balance of our portfolio to be positioned to commence permitting in the coming months and reach fid's.
In the second half of 2023.
As noted on our last call Portugal is the blueprint for the rest of the markets that we're currently focused on this blueprint is already being utilized to build a pipeline of over 175 megawatts of development projects in California, Portugal, and Spain for 'twenty four 'twenty five.
I cannot.
Emphasize enough how the expansion into North America is truly a game changer for fusion fuel.
North America has significant momentum due to the IRA an infrastructure bill that create hundreds of billions of dollars in subsidies for hydrogen and other renewables and clean Tech manufacturing most of you've already already know this but I will emphasize anyways. These subsidies include a $3 per kilogram production tax credit can last up to 10 years.
A 30 to possibly 40% investment tax credit on the capital cost of Brazil of the solar components of the project billions in subsidies for clean Tech manufacturing and hydrogen and development of hydrogen hubs to further advance the growth of key areas of hydrogen production and demand in the United States.
We're also we also have significant state level subsidies such as the low carbon fuel standard credit in California focused on the mobility industry.
Lastly, Canada has also recently announced a 40% investment tax credit.
For the upfront capital cost of hydrogen production, which makes Canada, a very attractive market for fusion fuels kilo chain.
We plan to rollout in 2020 for this legislation combined with our expanded technology offering creating strategic shift in our focus to accelerate our plans to grow in North America for 2023.
Securing our first project in North America, and Southern California, with strategic due to our technology offering and maximizing incentives to have the highest likelihood of reaching a successful.
Our first project is in partnership with electric energy a developer of hydrogen projects with operations in California.
Sites are work with Electus, which brings commercial relationships and boots on the ground in California. Our first project is planned to be 75 megawatts of capacity of Green hydrogen production located on 320 acres in Bakersfield, California off of Interstate five.
Bakersfield is it a strategic first location due to its existing heavy industry are located nearby distribution facilities that connect areas such as Los Angeles, we've commenced pre feasibility work with black and veatch as a lead contractor.
And we'll update as we make progress on this exciting development project. Our target is to have an idea on this project in 2024 and have commercial operations in 2025.
We are actively building out our team in North America to be able to execute this opportunity as well as identify and secure additional opportunities in 2023.
We believe the announcement of Tivo chain expands our market opportunity significantly for us in the U S. Canada, specifically in markets, such as northeast and Pacific Northwest of the United States, and British Columbia, and Ontario provinces in Canada. These markets have existing or planned heightened incentives that make them attractive markets to apply to igo chain technology. Besides a baker.
Project alone justifies building, a new manufacturing facility in particular for the IBO component as a project matures to reach a final investment decision along with other projects in our pipeline will need manufacturing capacity in the U S to be able to obtain the benefits from the IRA is the majority of the equipment that you produce has been made in the USA where the URL.
Stages of identifying our needs and starting to look for possible locations are putting manufacturing facility or two in north.
This growth would be an increase of our existing business plan for <unk>. We're excited about the challenge to grow in such an important market is the United States and Canada.
Okay.
We are also excited to have expanded to the Italian markets, we think that the Italian market is a natural expansion of our core and strategic markets in Europe due to its excellent solar irradiance existing natural gas infrastructure ambitions at hydrogen production in the coming years.
Italy also has an existing natural gas grid from Northern Africa, Southern Italy, and is seeking to by 2030 have a significant increase in its hydrogen used for heavy industries and long distance truck transport. This isn't this is ideal for fusions mobility and industrial decarbonization strategies, we're already employing in the Iberian Peninsula.
Our partnership with the FERC <unk> Energia is exciting because the FERC <unk> core business is energy trading steel manufacturing and shipping businesses. The joint agreement has been established between the FERC <unk> infusion fuel with the following goals develop a footprint in Italy in the Mena region for technology sales and profit development using fuel will utilize the FERC those existing.
<unk> that will be the boots on the ground for expansion in Italy, and possibly Algeria and Tunisia.
Interesting aspect of Algeria, and Tunisia is that there is an existing pipeline that connects.
Northern Africa to the Italian markets and and the other interesting part is the deferral has significant operations in both those regions.
The perfectly to start any partnership is a focus on a project and execute it we're doing this through the development of a pilot plant to FERC <unk> Jia Moro site consistently we plan to install 50 depot solar units for the green hydrogen will be used to feed a multi carbonate fuel cell system.
That's a technology at FERC was to test. The project is planned to be installed during 2024 will allow us to showcase the heber solar potential and a strategic country.
And in a very hard to abate market sector to potentially replicate other markets.
Following the following a successful following our successful strategy in Iberia fusion fuel now use the same blueprint as I noted earlier and mobility industrial segments. Our target is to have up to four mobility hydrogen refueling stations in southern Italy by the end of 2024 separately, we've seen northern Italy in areas such as blown year Bresca.
Corona and Rodina as key areas similar to see now is to focus on Decarbonizing. The steel glass ceramic and refinery industries are examples. These are ideal locations for our new <unk> technology that can scale with our customers. These centralized or co located and more efficient than our peers, we'll work with FERC to use us.
Technology at the breast with a steel mill is one of the initial targets in this region.
I'll now pass it back to Frederico to go through our exciting new technology developments of the <unk> chain.
But hindsight.
So innovation hasn't stopped at diffusion tube, and obviously cycling the team and the whole commercial areas keeping us well on our toes with all these opportunities.
I'm happy to be able to share with you some of the great things the team has been working well today.
So for those of you who have followed our story for some time you know that this will began with our first generation of a miniaturized and electrolytes of the EBIT.
This 2020 model was a one bar pressure.
<unk> 660 <unk> units.
We then consolidated three Gpus into one and 2021 and this is the model thats been installed in Edinburgh.
This year, we further consolidated our <unk> so that we only require 144, but he was solar.
<unk>, while still taking advantage of the cost benefits of the minutes of our system can work with false pressure and has an increased hydro output in the 50% cost reduction from the 2021 vessels.
We're already in testing of the 2023 <unk> of the Heber.
This not only sees further consolidations, but still maintaining overall similar size that is able to work with to membrane to the unit <unk> to improve the performance further and also reduce unit cost by another 20%.
This 2023 unit is not only highly competitive it's also a game changer for fusion fuel.
We've recently set.
Taken the step into.
Into a new market for US is centralized 10 markets using the 2023 Tivo, we connected several units on an integrated strength of miniaturized and intellectual license.
With this we created a modular system that is easy to install and operate.
Ken was insights with limited available space.
It's able to work with any energy source, thereby broadening our addressable market substantially and no longer limiting us to markets with high solar radiation.
This system takes advantage of the attractive cost benefits of using a miniaturized system, which we've covered before this allows us to bring.
To make even small systems cost effective.
Rather the work can be seen in the market today, where electrolyze us need to be very large to be cost efficient.
We are bringing affordable hydrogen solutions, even for small scale users.
As it is modular it's also easily scalable, making us competitive already with our first generation for many different types of projects.
All of this together gives us that gives us the hemo chain, a truly revolutionary product and the hydrogen markets.
Now I will show you a short video on the technology.
All tivo chain solution.
Is able to work with any energy source.
Making green hydrogen from any renewable energy.
This is a solid new wells infusion tool in a very exciting one of that.
It is a solution that can be containerized since usable for small to large scale use cases.
It's.
It's all based on our hemo miniaturized pump solution.
Working in tandem on Australia.
The system is.
Easy to install.
Highly modular and highly efficient.
By using our <unk>, we can make the most of all cost efficient design.
To bring a highly competitive.
To the markets.
Paul.
We believe this will truly disrupts a lot of the existing small.
Small and mid sized projects in the market today.
What youre seeing here is a real life version of the Hemo chain unit, that's an all out.
We're running tests to be able to bring this to market in 2024.
We need to first thoroughly test the system and then industrialize it for production.
This solution will truly revolutionize.
The centralized electric leather market.
The Hebron train hydrogen units.
Which I have with me here today, you might be able to see it right now nicely together sense for the size.
It is made of 16, <unk>, all integrated and linked but operating independently.
The system is designed to be modular and scalable.
And we can include them in Iraq to be able to service larger projects.
It boasts one of the highest efficiency rates for <unk> systems to date.
Again. This is all based on what we learned and the creation of the heap of solos.
This new addition to our product portfolio puts us in a strong position to be competitive for a wide range of projects.
Focusing the Heber solar on projects with large scale grants land availability and very high solar radiation.
And the Heber train on markets with land constraints and requiring a range of energy sources.
Yes.
In 2020 to redevelop the first signal chain hydrogen unit.
Right next to me here, allowing us to now begin planning projects using this technology.
The first version uses the existing water and power systems from the Heber solar in the Hebrew Nice technologists.
In 2023, four subjects the hydrogen unit to further testing and also focus on making the water and power systems.
Suitable for inclusion in the rack and container solutions.
In 2024, we expect to source industrial production of the Hebrew chain and commercial operations offering both rates and containerized solutions.
In order to do this we will start planning projects and kicking off the required licensing and permitting processes for these projects already in 2023.
I'd like to briefly update you also on a production basis in our joint venture facility, while we continued to ramp up production of the <unk> each month.
We currently hold 12 million euros of inventory as I mentioned previously together with another 3 million euros of prepaid audits to suppliers.
This puts us in a very strong position to be able to deliver product to our products as I mentioned earlier and in several cases, even stepped in with competitors have not been able to deliver.
This significantly de risks our 'twenty two 'twenty three production and also project.
Portfolio.
In the first half of 2023, we expect to install and salt activities on both our solar concentration the module production lines in <unk> too.
Complement the existing Tivo production line.
And we want to have been advancing with a 100 megawatts annual production capacity by year end.
In 2024, we expect to install and operate our Hugo chain production lines and gradually increase production capacity. So that by the end of 2025, we reached 500 megawatts of annual production capacity and going into 2036.
As always we'll close covering all our main milestones.
But to note we continue to make strong progress across all fronts of all major milestones for the year.
All while significantly ramping up our team and ensuring the comp rates. The company operates smoothly as one unit.
Whereas we would have liked to have seen positive developments in licensing and permitting processes for some of our projects in some of our markets.
We have been positively surprised but large movements governments around the world are making and the hygiene market building up significant momentum for the industry.
For us the IRI in the U S. In particular months of strong game changer in the hydro markets and we could not be more thrilled about the timing of our entry into the into this region with the Bakersfield project.
The introduction of the Hemo chain is also another product that is likely to have a profound positive impact on the company. Both in terms of the markets the markets available to us as well as hosting solutions within the power in the past, we simply had to pass upon.
We're ramping up to <unk> 2022, and a very strong position for the upcoming year.
So with that I'll pass to our chairman for some closing remarks before moving onto Q&A. Thank you.
Thanks Frederico.
This investor presentation has been chock full of important developments with fusion fuel. Therefore, I'm sure we're going to have lots of questions. So I will not take up much of your time quarter.
Quarter after quarter in my remarks, I've emphasized that what has been my formula for success as an investor.
Finding companies with a strong management team, a differentiable and superior technology and serving a growing market.
As I read Wall Street research discussing Europe's impending economic winter of discontent.
The uncertain timing of any relaxation of China's Covid zero policy.
And the likelihood that the federal reserve will need to bring on a recession in order to break the back of inflation in the U S.
I am greatly comforted, knowing the future fuel operates in a market that is and for the foreseeable future will be the beneficiary of huge tailwind.
The financial incentives for Green hydrogen, which will exist for years to come in both Europe and North America give me the confidence to say that despite the highly uncertain global macroeconomic environment, which most businesses are facing.
The market opportunity for fusion fuel has never been brighter.
With that I'll turn it back to you for Q&A then.
Alright, thanks, so much.
Yes.
A lot of questions came through so appreciate your engagement will.
We'll begin with a couple of questions from accurate sung.
Our market research.
With respect to the <unk>.
Breakdown of revenue between the chemo at solar in vivo chain looking out into the latter half of the decade can you provide any guidance as to which product would likely be future fuels main source of revenue by 2025, what about 130.
Fredrik or do you want to Cowen.
Sure absolutely so.
From all side have seen that in the short run Heber solar we will be taking the bulk of that given that that's the production facility available.
In the future as we ramp up most likely Hebrew chain.
We'll likely overtake Heber solar.
Target addressable market is much larger.
For the <unk> chain opportunity again, its bought limited by solar radiation, nor by land requirements. We believe both offerings are incredibly competitive in their markets and then the initiatives.
Of the available market for.
<unk> for the heap of change is just that much larger.
Yes, just a follow on question there any plans to introduce other products across the hydro production.
So from all sides.
We are currently also playing is still on the advantages of the <unk> with a miniaturized electric buzzer will continue to look at solutions that could operate with that asset space.
No no accident, the wallets for People's hold ideological Tivo chain EBIT was the the base of boats.
We don't foresee it.
In the short term any product that is not tebow centric, although there may be variations of solutions.
Could combine the Heathrow, but primarily we see the hematology rotated two major projects at least for the midterm.
And certainly frederico the potential to add Oxford to the auction.
You didn't capture system as it would be incremental revenue.
Very good point.
Switching gears to commercial for the <unk> program in Spain that was it.
Perhaps the other week is it all or nothing for the four projects.
<unk> is involved as a technology supplier or one product and selected while the other three are not.
It's the latter.
Every project stands on its own.
The one project move forward and received a grant in the other three did not we would still move forward with a one project is a third party.
<unk>.
There is a subsequent question about breaking out the number of keep us solar for each after each project I suspect we will we will disclose that information.
Yes.
That's correct.
Acreage deal likely be a mix of Evo train and Heber solar.
Was that the question two questions.
We'll be a mix of that.
Connection kind of broke up.
A question with weather, whether we anticipate Bakersfield being a mix of tivo chain antibody silver or one or the other.
So we've engaged black and veatch to do the initial conceptual study in pre feasibility work, we are going to evaluate both options do we do.
Tivo solar projects or do we do.
Our centralized our centralized depot chain with traditional solar or combination thereof. So we will update you on the progress of that as we get closer.
It is not a question about milestones in order to take FID on that project, but I suspect that your answer about the Aflac and beach.
And after that as well.
Maybe I'll just touch on that for a second.
So the.
As we've noted in previous calls we put in concept pre feed feed and then.
Final investment decision. So we're in the concept stage of this project in the coming months, we hope to make a decision to move into pre feasibility, which we would start we would initiate permitting on the project.
But we are.
Hopefully you can make an update on that in our next quarterly call.
Can you touch on the.
The JV with with electric energy 50, 50 JV.
And then additionally, add with respect to two funding that project given the.
Given that the hefty price tag had we plan on funding the expected capital investment where it come from cash.
<unk> or other.
We are.
We are planning to have a 50 50 joint venture on the project we have a current arrangement on funding the on funding the development cost of the project.
And as.
And we are already in active discussions with our own financial investors to kind of come in and partner with us on that project. So the plan is as we get closer into the region.
We will lock down and <unk>.
Our our financing for it.
For our position, which as I noted earlier, we would sell the tech notwithstanding units too. So look like a third party technology sale with equity upside.
Then <unk> arrange their own financing for their for their position.
And I just want to just emphasize how how attractive the economics of we expect this Bakersfield project to be in.
So we think that the.
The ability to get this.
Asked will we will not be particularly challenging.
The IRI in the California, low carbon fuel standards really makes this.
A very very attractive project.
Thanks last question here from Webber research touching on the partnership with the <unk>.
Is the agreement final for the 50 <unk> solar.
Pilot project and consistently.
Or is that.
Not yet.
Committed owner.
Zach you're on mute.
Good.
We're working jointly with them to develop due to engineering work to submit break at upcoming Grant program in Italy.
The plan is that once after we submitted the brands. We all have entered into a third party technology sale agreement with them right now it's under a memorandum of understanding or letter of intent, but we plan to convert that into.
A binding agreement in the coming months.
Great. Thanks couple of questions here from our one <unk> from Royal Bank of Canada.
With respect to the broader pipeline and timing of revenue recognition.
Should we be using commercial operation date as guidance for the revenue recognition timeline or.
Will we be recognizing revenue.
Got it.
Prior to that date.
That's a great question, we should we'll put on the.
We put the presentation after the call on our website, we will update that to show a final investment decision date instead of COPD I think final vessel. So our plan going forward is that we aren't going to carry all the working capital for all the projects, we're going to be getting installment payments as projects makeup we want to keep our working cap.
Inventory close to a net zero so.
We will update that to show the dates which can be where you actually recognize the revenue we're not going to hold the working capital for the projects until they reach commercial operation. So we'll update that.
Just to note also on the accounting procedure and.
And how we operate also without saloon when it's a type sales will start recognizing the revenue as we deliver the units.
So.
Ed.
Bye bye the days of sale in the COPD, we should have recognized pretty much all of the revenues, although the vast majority of the revenues, but as I pointed out.
The 11th resolution published <unk> onwards.
Thanks, Patrick.
One more for Zach here.
Was the IRI in the U S. A major driver for that the partnership with elected in the project in Bakersfield or.
Had commercial discussions started prior to the announcement of that legislation.
We started talking with Electus back in the spring of the.
2022, so it was before.
Before the.
IRA past, but obviously, the IRS past that solidified and crystallized a $3 production tax credit with our system right now is roughly to keep a solar component even solar is roughly 50% solar. So we also qualify for a solar investment tax credit upfront and then as Jeffrey noted the low carbon.
Fuel share credit's range anywhere between three to $5 a kilogram.
Just the economics when you added in a production tax credit.
Was it so attractive that accelerated discussions with elected.
Yeah haven't anchor projects, we can start to really develop a business in North America.
Thanks, Greg sticking with you here a couple of questions from Tokyo Your pocket from Fearnley Securities can you provide a breakdown of the $40 million Euro revenue estimate for 2023.
Yeah.
So because we have not secured the.
We're finalizing arrangements on the financial investors for the fusion fuel owned projects.
We took a 90%.
Yes.
Close rates.
Our third party sales.
I would use a third party.
Our sales pipeline as kind of a reference page.
And the next quarterly update hopefully, we can talk more about financial investor participation our own projects and then we can.
Update that projection and give more granularity.
Thanks. Thank you your question here for Frederic.
A quick one how much has been invested in the <unk> facility. Thus far I believe its roughly 13 million, but I'll buy Puerto Rico chime in on that.
It's around.
Did we actually have been hit $10 1 million, so far especially in <unk>.
First footnote of slide nine for anyone who wants to refer to it.
We do expect to.
Probably invest another $15 7 million in during 2023 into that facility.
That's $10 $1 million also includes.
Also the real estate investments as I mentioned, we will be doing the sale leaseback, which we expect to close in December .
So part of that $10 1 million will be converted to cash proceeds for.
For the company during during Q4 is our expectation.
Thanks, Margaret sticking with you and pivoting to too.
Capital strategy capital planning.
The most likely our optimal path and timeline to raising capital.
So trustees.
The way, we would hope would also be to us.
While the two best choices, we'd have is obviously converting a bunch of our receivables into.
Cash inflows close the items that we're working on both with the VIP grants as well as the asset.
Type sales.
Been invented.
So absolutely.
The other is and as I've mentioned before we have a substantial amount in inventory.
Like to converge into.
Cash and cash proceeds that will significantly help all capsule position. However, as much full we have the sale leaseback as options.
And while we'd like to see is as the.
The market recognizes the position we're in the we're able to potentially.
Based capsule through whatever means available to us, which we will consider whether it's equity or so on to be sure to fund our growth plans.
Of 2023 and onwards.
For a moment.
We're very focused on on cost of capital.
And.
As an example, the the bad event.
Sale leaseback.
Would be at.
At effectively at a very attractive equivalent of cost of debt.
I apologize about the feedback.
Additionally, when Zach mentions the potential financial investors for our fusion developed product.
<unk>.
We will look at we understand that our cost of capital right now is higher than that of well higher than that of traditional infrastructure investors and so.
That would be a very attractive source of.
Our financing for four for our fusion projects at some point in time once we have developed a little bit of a track record. We expect that that project financing debt based project financing for those fusion projects becomes a.
A reality so.
I want our shareholders.
To understand that we are very focused on trying to identify the.
The best way to to fund the growth of the company for the benefit of our fusion shareholders, but we think there are multiple levers for us to be pulling and we imagine that.
We will be using.
Yes.
Some from column, a some from column B and some from column C.
Great. Thanks.
Sticking with her Enrico if you could just add.
Quickly quickly at a point here.
Current production capacity.
For the company.
For this year end and I guess expectations for 'twenty three.
Score.
For 2022, we expect.
Corruption.
I wouldn't say has to do with the available production to us for the.
Full year would be closer to somewhere between the 40% to 50 megawatts of production now.
We will note.
We will only produce what the project's 10 stage.
We will avoid producing just full stop we have a significant amount of inventory right. Now. So we do realize this was also right now we are producing at less than we could produce if everything was licensed and permitted.
So we are holding back some of the production capacity. So the production capacity for next year <unk> lines go fully live.
<unk> would only be in theory between sort of 40% to 50 megawatts.
But how much of that we produce will depend on the prototypes going forward as I've mentioned before we have a very healthy.
Pipeline.
And a lot of inventory too.
To surplus those.
So we hope to be in a good position to be.
Are you able to deliver on that but there is just want to highlight it's also important for our capsule.
With Jefferies I don't cause capsule.
<unk> expenses for us.
So we want to produce what is needed.
Thanks, a couple of questions on grants came in.
With respect to the $30 million estimate under listed under other grant applications is that referring to.
Two components.
So.
I will answer that mysteriously.
Unfortunately, we cannot disclose.
That is related to.
Diluted.
<unk>.
That is secured.
Until the.
Respected entity allows us to actually dispose for the diesel.
What that relates to.
We will then communicate that to the public we expect to be able to do that.
That is our target.
This week.
Thanks, and then sticking on that.
On that topic the potential size of the its a grant that was excluded from from the table I know, it's something that we've been we've not commented on in some time, but it's still hanging out in the background. If you have any clarity on that.
Sure So if they grant.
The total, let's say project was over half a billion.
With the <unk>.
No.
Mistaken was put in this sort of $150 million range at.
I believe so.
It historically can significantly distorts.
All of the numbers.
Sure.
We're in the.
Third tier of the.
I'd say submissions so we should be it's the next one to be communicated.
So we don't define that timeline and given that uncertainty and given the potential volatility and impact of that in one single line item. We've removed it from the list that doesn't mean, we adopt is doing it.
Very much.
Bill.
With the Whitehall.
Is that something that we don't want to create expectations.
With the single large right.
That can be such a binary outcome.
Frederico I just want to I just want to clarify when you say third tier what you really what you mean or there are different tranches, depending on what the the.
The funding is for.
Youre right its third wave.
I apologize.
So with the few minutes, we have remaining just want to pivot over to a couple of commercial questions for Zach.
Based on the advantages of our Heber solar technology and high DNI regions are we seeing any increased demand or interest in our technology from <unk>.
The Mena region and are actively pursuing potential opportunities in that in those countries.
That's a great question.
We have not put that on the.
The last two presentations not because we're not actively pursuing them or are there still opportunities in the Mena region.
But until we secure a kind of a necessary components that I noted.
And in the presentation around land.
Subsidies if they exist.
Initiating permitting those kind of things we didn't want to disclose it because the number the size of a can skew everything else we're working on.
But with all the caveat aside still working on Morocco.
The Cup opportunities, we're looking at in Egypt, and as I noted the FERC ROE has.
They have some potential opportunities with existing partners in Tunisia.
And I'll Julia.
There's a question here, but that those pipelines.
At Trans Mediterranean pipeline from from Tunisia to Italy.
Are those pipelines natural gas with a hydrogen.
Do you have any understanding of what percentage of hydrogen those pipelines can.
Can transport.
Natural gas my understanding as we're looking at.
Under 5% to be blended is hydrogen.
Capacity will be TBD, but.
But because we've been focused more on the Italian aspect of it but.
But there is significant land available in those countries and those are those are similar to Morocco opportunities that as they kind of advance we get land we know more.
About the projects and we can have more definition and we'll share it.
Thanks, a lot our last minute here.
Estimated revenue for 2022 for <unk>.
Yeah.
Also as revenue will be likely under 2 million, we will be booking the absolute revenue. The excellent projects is a 2 million euro projects, we will be booking a portion of that.
To note.
As we go on into 2023 of what we want to do is with me.
Many of our projects, which currently are foreigners HP as well.
Want to parse into a financial investor.
Maybe a financial partner.
And as I've mentioned before is such that we can recognize all of those.
Revenues, so we expect in the future to be able to book revenues for.
For <unk>.
Both the slides that showed <unk> and other products.
But for Q4 drilling revenues will be likely bookings will be.
Related to the partial component of Epsilon.
Perfect.
Thank you Federico will that will do it for our third quarter webcast. Thanks, everyone, who joined after your engagements. If you have any additional questions or if we did not get around to entering your question. Please.
Please feel free to reach out to me and the IR team at IR at Houston fueled debt.
Fusion SaaS fuel that EU.
So we look forward to seeing you all again at our next update.
Thank you everyone have a good day.
Let's see here.