Aker Horizons ASA

OSE:AKH

Earnings Call Transcript 2022-Q2

[Kristian Rokke, executive]

A warm welcome to all joining this presentation of Aker Horizons second quarter results. My name is Kristian Rokke, CEO of Aker Horizons. With me is Nanna Tollefsen, CFO of Aker Horizons; Kristoffer Dahlberg, CFO of our Asset Development business; and Mary Quaney, CEO of Mainstream joining us from Dublin.

Before going into the specifics of our portfolio development, I'd like to say a few words about the market context. The past 6 months have been marked by geopolitical and macroeconomic turmoil and extreme market volatility. We expect this may continue for a while.

The global economy is slowing down, and we face risk and protracted period of people growth and elevated inflation. Fortunately, Aker Horizons entered this period well prepared. We remain confident that our core markets and hence, growth opportunities for Aker Horizons will continue to strengthen.

CO2 emissions continue to rise. Global emissions reached an all-time high in 2021, and the past month has seen the highest atmospheric concentration levels of CO2 in history. The urgency with which we must act on climate change is only increasing.

Energy Security has moved to the top of the geopolitical agenda, threatening to derail efforts to curb greenhouse emissions quickly enough to avoid catastrophic climate change. However, it is equally important to note the many positive developments that have taken place.

For instance, we have seen swift policy responses to reduce overall demand for fossil fuels, such as REPowerEU, which will speed up permitting for renewable energy projects and boost green hydrogen imports. Such developments support our view that the world will eventually find its way to a net 0 pathway.

Now turning to the main developments in Aker Horizons in the second quarter, starting with the structural changes made to our portfolio. We have signed and closed a number of transactions recently, most notable of which is the merger between Aker Horizons, Aker Clean Hydrogen and Aker Offshore Wind. These transactions were closed on June 17 as scheduled.

Aker Clean Hydrogen now forms the basis of Aker Horizons' asset development, which will develop, own and operate large-scale decarbonization projects globally. Just this morning, we announced the merger between Aker Offshore Wind and Mainstream. Mary will talk to the merits of this transaction.

From Aker Horizons' perspective, this consolidates all our renewable energy developments in one platform, which will be Mainstream. The transaction was done at a total value of EUR 2.3 billion, with a split of approximately EUR 2.1 billion for mainstream and approximately EUR 200 million for Aker Offshore Wind. These values correspond to the same valuation as in the recent equity injection in Mainstream by Mitsui and the Aker Offshore Wind, Aker Horizons merger price.

The post-transaction ownership percentage for Aker Horizons will be approximately 58.6%, up from 54.4%, while Mitsui will own 25% and the Irish minority shareholders 16.5%. Closing will be in August, at which time we'll have a fully operational integrated structure. The other transactions have been discussed in detail before, but it's worth mentioning that all have closed according to plan.

Turning to the pathway towards net zero as broken down by the IEA. There is no singular solution for reaching net zero by 2050. It will require immediate and massive deployment of all available clean and efficient energy technologies. Electrification, wind and solar form the backbone of a decarbonized energy system.

Even though costs have risen in recent months, clean technologies such as wind and solar PV remain the cheapest option for new power generation in many countries, even before we account for the exceptionally high prices witnessed for coal and gas in 2022.

But transforming power generation to renewables and switching to electric vehicles will not be enough. To reach net zero emissions, we will also need to see significant growth of a competitive clean hydrogen market for energy-intensive or hard-to-abate emission sectors such as aviation, shipping and chemicals. The momentum behind low emissions hydrogen has been reinforced by current geopolitical tensions, which has bolstered policy support for the energy carrier especially in Europe.

Carbon Capture will also play a key role by tackling emissions from existing assets, providing a way to reduce emissions from sectors like cement and gas to power and providing a cost-effective pathway to scale up low carbon hydrogen production rapidly.

Aker Horizons has a clear positioning across 3 levers: renewable energy, carbon capture and hydrogen. These form the foundation of the Aker Horizons ecosystem. Our portfolio of companies, our in-house asset development organization and the synergies between them.

Over time, we will extend our Aker Horizons to other net zero levers. Considerations will include market growth potential, synergies with the Aker Group and time to cash flow. Kristoffer will speak more to this under asset development.

Turning to Aker Carbon Capture. The company held its quarterly presentation yesterday. So therefore, I'll only mention a few key points from the vantage of Aker Horizons as principal shareholder.

First, it was a significant milestone for the company when in June, U.K. energy company SSE Thermal selected a consortium of Aker Solutions, Siemens Energy, Doosan Babcock with ACC as carbon capture provider for a FEED contract to develop the Keadby 3 Carbon Capture power station. This facility could capture up to 2 million tons of CO2 annually. This comes in addition to the FEED for BP's net zero Teesside Power Project, which would also have a capacity of approximately 2 million tons of CO2 per year. In summary, the prioritized market segment of large-scale gas to power plants has shown promising development over the past 6 months. And with this, the U.K. has become a key market for Aker Carbon Capture.

Secondly, in terms of the market, we see CCUS as a major component of net zero. Our internal modeling of the EU ETS market shows that the carbon price alone is likely to incentivize CCUS projects for more than 50 million tonnes per year by 2030. This comes in addition to projects financed directly through national governments or EU schemes as well as projects and waste energy or the transport sectors that are not covered by the EU ETS.

On Friday, the European Central Bank published the results from its first climate stress test. The results highlight the urgency of decarbonizing to avoid potentially large financial losses to Eurozone banks from increased natural disasters. The ECB flagged EUR 70 billion of assets at risk in a scenario with delayed policy and too low 2030 carbon price. A carbon price of EUR 295 per tonne in 2030 will be required to remain on the pathway to a Paris Agreement-aligned target according to the bank. While this isn't a prediction, it goes to show the importance of the carbon price going forward for the energy transition.

With that, let's hand it over to Mary for an update on Mainstream.

[Mary Quaney, executive]

Thank you, Kristian. I'm very pleased to present Mainstream's progress during quarter 2 of 2022. The first half of the year was yet another period of growth and delivery right across the Mainstream business.

Today, first of all, we are delighted to announce the agreement to combine Aker Offshore Wind with Mainstream, combining Aker Offshore Wind early mover position in floating offshore wind, their strong subsea technical and engineering capabilities, together with Mainstream's proven project development methodology, execution track record and global presence very much unlocks new opportunities worldwide.

When the combination closes in August, it will bring over 80 colleagues from Aker Offshore Wind into Mainstream's offshore team, as well as over 2 gigawatts of projects that will add 3 new markets to our portfolio. Together, the 2 companies will create a stronger renewable company with a combined 27 gigawatt portfolio across solar, onshore wind and bottom-fixed and floating offshore wind projects. I'll take you through this in more detail over the next few slides.

So at the end of June, we now have 1.5 gigawatts of wind and solar assets in operation and under construction across Latin America and Africa, and I will take you through our global portfolio in a few minutes. Earlier in this year, I updated you on the sale of our Chilean joint venture with Actis, which was sold to the Canadian listed developer Innergex Renewable Energy in February. I can confirm that the deal closed in June, generating net proceeds to mainstream of USD 114 million.

In April, we closed the Mitsui equity investment with an investment of EUR 575 million into the business. I'm really very pleased to welcome Mitsui as our new long-term strategic partner alongside Aker Horizons. As we described it previously, this is very much a transformational investment for mainstream's future expansion because it not only brings a significant injection of capital, which will be deployed to drive growth, but also Mitsui's complementary geographic footprint, global strategic network and industrial capabilities will accelerate our journey to becoming a renewable energy major this decade.

The investment further strengthens Mainstream's balance sheet at a time of broad macro volatility, which, of course, corresponds with increasing momentum in the renewable energy sector and the green energy transition. Moving on then to the next slide, I will give you some more detail around the combination of Mainstream and Aqua offshore winds.

This bringing together of the 2 organizations is about creating a global front-runner in the global offshore wind sector, combining Mainstream's proven track record in offshore wind development, with Aker Offshore Wind's early mover position in floating wind technology together gives us a very strong competitive position for growth. Both organizations already have a long-standing culture of agility and fast pace, and we will continue to increase digitalization across our business to deliver efficiencies, scale and to reduce costs.

Importantly, Mainstream and Aker Offshore Wind bring together very complementary skill sets and core competencies right across the project life cycle from offshore wind project development, engineering, consenting to technology know-how in the floating sector.

Aker Offshore Wind brings an additional 2.1 gigawatts to the Mainstream portfolio and combined creates a global footprint for offshore wind, which I'll take you through into more detail in a few minutes. We will leverage the combined global reach of our respective networks, including those of the wider Aker and Mitsui groups to both strengthen existing and bring forward new strategic and supply chain partnerships as well as strengthening our combined policy and government relation efforts globally.

On the next slide, I will take you through the key strategic pillars of the combined organizations and how these will take us into a leading position in the global offshore wind sector. Our core purpose is the early identification of offshore wind opportunities across global markets. Then we take these opportunities through the entire asset life cycle from the development process through consenting, grid and financial close. These are areas which Mainstream has a particular strong track record in, being one of the most successful developers of offshore wind at scale globally. We've developed and consented 20% of the U.K.'s offshore wind capacity, either in operation or under construction, including the Hornsea zone, which is the largest operational offshore wind plant in the world today.

We're developing over 2 gigawatts of offshore wind capacity in Vietnam, including our flagship Soc Trang 1.4 gigawatt project, which is one of Southeast Asia's largest offshore wind developments. Post development, we will take the assets into construction and into long-term operations, which will involve deploying large quantities of capital due to the scale of offshore wind projects.

A key focus is on diversifying our portfolio across fixed and floating wind globally, and we expect to do this through a well-considered mix of organic greenfield development, acquisitions as well as through leveraging strategic partnerships across our global business networks. We will continue to drive our world-class development standards and industrialization capabilities with our combined experience and track record. And we will maximize the benefits of the preferential rights to a bankable floating foundation technology through our ownership stake of Principle Power, which is a clear source of competitive advantage.

As I mentioned in the previous slide, we see our agility as a key strength, and we intend to use this early mover advantage, particularly in emerging markets, to generate long-term value creation opportunities as we have done already in markets such as Chile, South Africa and Vietnam.

In summary, we're fully focused on accelerating our entry into new offshore wind markets globally, where we will drive local value creation and continue to derisk development and execution phases through a partnership ecosystem in which we will leverage the combined global business networks of mainstream of Aker and Mitsui.

On to the next slide, then you will see our global portfolio, which now stands at a net 27 gigawatts. I wish to point out that we are now including our predevelopment assets when reporting on our global portfolio. So from this point onwards, we will report on the 4 phases of the project life cycle: predevelopment, development, construction and operational.

As a reminder, our predevelopment pipeline consists of projects which are currently undergoing rigorous feasibility analysis. And if they successfully pass through this screening process, they then funnel through into our development pipeline. And then behind the predevelopment phase, we have a large amount of project opportunities undergoing pre-feasibility analysis at any point in time.

At present, today, we have 9.8 gigawatts in the predevelopment stage. As the development phase this quarter, we have 15.5 gigawatts of net capacity, we added 386 megawatts net capacity from the Aker Offshore Wind project in South Korea and updated our development pipeline. The net impact is a 0.1 gigawatt decrease in our development pipeline from the previous period.

In Construction, we have 0.8 gigawatts of capacity, which consists of our Andes Renovables portfolio in Chile of wind and solar assets, which is unchanged from last quarter. And finally, we have 0.7 gigawatts of assets in operation, which is down 0.1 gigawatts from the previous period, reflecting the sale of our wind assets in Chile as part of the Aela Energia joint venture I referenced earlier.

The next slide then shows our global portfolio, which, as you can see, spans across Latin America, Africa, Asia Pacific and offshore. And on the left-hand side, you will see our capacity by technology, which is well balanced between wind and solar PV. And you will note that our offshore wind development capacity has increased due to the addition of the Aker Offshore Wind assets in South Korea. Now, I'll take you through our platforms. So starting in Latin America.

On the next slide, in Chile, our flagship Andes Renovables platform is continuing to progress well through construction. As I reported last quarter, the first phase of the platform, the 591-megawatt Condor portfolio of wind and solar assets is fully operational.

The second and largest phase in the platform, the 630-megawatt Huemul portfolio, as well as the final phase Copihue portfolio, remain on target to complete construction in 2022 and 2023. Specifically, in the Huemul portfolio, the first of the solar assets has now been fully energized and exporting since May, with the second solar asset fully energized and exporting since June. And combined, these 2 assets totaled 205 megawatts.

The first of the wind assets being 158 megawatts started energization in May. With the 2 wind assets combined, a combined total of 318 megawatts are expected to be fully exporting in quarter 3 of this year. Then our next phase of growth in LatAm, the 1 gigawatt Nazca platform also in Chile continues through the late-stage development phase, the first portfolio of which called Humboldt is on track to reach financial close later this year.

In Colombia, we continue to expand our growing pipeline of wind and solar assets, which now stands at over 750 megawatts. And as I reported in quarter 1, we signed a 15-year private PPA for the 100-megawatt Andromeda solar PV projects there, which we continue to progress.

And finally, for LatAm, as I mentioned earlier, the sale of our Aela Energia platform closed in June and has generated net proceeds to mainstream of USD 114 million. Then moving on to Africa, and starting with our win late last year where we were awarded 1.27 gigawatts of capacity under Round 5 of South Africa's renewable energy procurement program. Mainstream was awarded half of the total available capacity in the tender, being 824 megawatts of wind capacity and 450 megawatts of solar, both of which our local team continue to progress across all stages of late-stage development, including grid access, financing and preconstruction activities to progress the projects in preparation for reaching financial close.

Then in terms of the next commercialization opportunities, which we see in the market, the private bilateral market in South Africa is very much opening up with a number of live processes underway. We are actively exploring a number of private PPA opportunities, which I hope to update you on in due course as we progress.

Then the next public round, round 6 of the renewable energy procurement program, is scheduled for submission in August. Regarding our Pan-Africa platform, Lekela Power, in which mainstream is a minority shareholder. The planned sale of Lekela Power is underway. Phase 1 of the process started early this year. And as with the Aela process, we're seeing a very strong interest in the platform, and we expect it to complete later this year.

And now on to the Asia Pacific region. Starting in Vietnam, where we have a net 1.7 gigawatts of solar and offshore wind assets. Our key focus here is progressing towards financial close for the first phase of our flagship Soc Trang offshore wind project as well as continuing to develop our Dak Nong portfolio of solar assets.

Importantly, Vietnam's latest power development plan and PDP 8, which sets out the country's energy road map has now received Prime Minister comments and with the latest draft committing to accelerate the deployment of renewable energy at scale.

And then to South Korea, and the net 0.4 gigawatts KF Wind, floating offshore wind project and Aker Offshore wind project, as I mentioned, has recently secured its electric business licenses, which is a very significant step towards realizing one of the world's first large-scale floating offshore wind projects.

As I reported on last quarter, we entered the Japanese market with Aker Offshore Wind with the closing of the transaction to acquire 50% of an 800-megawatt floating offshore wind project in quarter 1. And we continue to explore further opportunities across the Asia Pacific region and are actively analyzing a number of prospects across a range of markets.

And then finally, I will take you through on the next slide, our offshore wind updates, which includes the combined Aker Offshore Wind and Mainstream portfolios. The Aker Offshore Wind portfolio brings an 0.4 gigawatts of early-stage development pipeline in South Korea, which I referenced earlier, resulting in total projects of 2.1 gigawatts across South Korea, Norway, Sweden, the U.S. and Japan.

In Norway, Aker's home market, of course, the government has stated its ambition to award 30 gigawatts of offshore wind capacity by 2040. The first allocation round is expected next year with the second to follow 2 years later in 2025. In the Norway offshore market, Aker Offshore Wind has established very strong partnerships, a consortium for Utsira Nord with Statkraft and Ocean Winds focusing on floating wind, which is currently working on in the predevelopment phase.

And then in addition, for SN2, which is bottom fixed consortium with Statkraft and BP also progressing through the predevelopment phase. In Sweden, the joint venture with Hexagon has development progressing with environmental surveys now having commenced. And then on the next slide, in Japan, we are progressing the floating offshore wind assets, which we announced earlier in quarter 1.

And in the U.S., the government has announced plans for a number of offshore lease actions over the next 3 years. Our offshore team is analyzing these opportunities, and we will update you on these in future presentations. And then finally, to Ireland, mainstream's home market, we are progressing opportunities of the East, West and South Coasts and reviewing potential strategic partners in advance of the government's Phase 2 process here in Ireland.

So to conclude, a very strong quarter for us at Mainstream as we closed the sale of our Chilean joint venture with Actis, the Aela platform, generating net proceeds to Mainstream of USD 114 million. We closed the Mitsui equity investment with an investment of EUR 575 million into the business. We continue to progress through construction in Chile and continue to mature our development pipeline globally.

And finally, really delighted to announce the agreement to combine Aker Offshore Wind with Mainstream and to bring together our highly complementary skill sets and market positions together, giving us a very strong competitive position for future growth.

And with that, I hand you over to Kristoffer.

[Kristoffer Dahlberg, executive]

Thank you, Mary, and good morning, everyone. Following the merger, we have been working on structuring and creating a stronger organization, building on Aker Hydrogen's technical resources, combined with Aker Horizons' resources and capabilities within finance and business development.

The new organization is well positioned for becoming a leading developer of green energy and green industry projects, which brings me to some exciting progress in Narvik, where we are developing one of our first large-scale green industrial hubs. Northern Norway and Narvik offers the cheapest renewable energy in Europe, and good logistics for both sea and ground transport with its ice-free port and railway.

We have secured access to 8 industrial sites in the area and we are now working holistically using local expertise to develop the best short, medium and long-term industrial plan. Power-intensive, hydrogen based industries are being further matured, and downstream applications like green ammonia and green iron looks very promising.

In April, we announced an agreement to establish a joint venture with a regional utility company in Nordkraft, which is predominantly owned by local municipalities. Through the JV, Aker Horizons will hold an 80% stake and Nordkraft will hold the remaining 20%. We have acquired the rights to 5 industrial sites and the opportunity to continue developing these together with Nordkraft, which has already worked systematically over several years to prepare the sites for industrial activity.

Permitting work on the different sites is ongoing, and the strength of each site will be carefully considered as we are developing the optimal industrial plan. Kvandal in the Narvik region is our most mature site, and we have already committed several hundred million NOK in preparing it for industrial activity.

Together with Nordkraft, we have recently signed a contract with a regional construction company, [indiscernible] Machine & Transport, to start the civil work at Kvandal. And as you can see on this picture, we already have machines working on the ground now.

Teaming up with local industry players and the community is a key success factor, and the work at Kvandal is a good example. The civil contract of more than NOK 160 million to [indiscernible] machine, the biggest contract in the company's history, is a reminder of how these large-scale industrial hubs enable local growth from an early phase. Facilitating partnerships across value chains is key in realizing our strategy. And in the quarter, we signed an agreement with Statkraft to explore opportunities for green hydrogen and ammonia production in India and Brazil, targeting local steel and fertilizer industries.

Both India and Brazil are large consumers of hydrogen, have supportive governmental policies in place and benefit from world-class renewable energy resources. This offers good opportunities for green hydrogen and ammonia production. In Chile, we are developing a large-scale renewables to ammonia project together with Mainstream. Here, we are working on using the abundant renewable resources from solar in the area to produce green hydrogen and green ammonia for export.

A global engineering company with solid experience within the renewable sector is now working together with us to further mature our solutions and to prepare a strong execution plan and cost estimates. Turning to our key projects from Berlevag up north to Chile in the south.

As mentioned, we have started the civil work to prepare our first industrial site in Narvik, and zoning and permitting work on the other sites is ongoing. In Berlevag, we are developing a green ammonia project together with our partners to help decarbonize the Arctic. The project is maturing well, but Norwegian electrification efforts are creating a large demand for new grid capacity prolonging permitting processes, resulting in a delay in our project. We are currently reviewing phasing of the project together with our partner, Varanger Kraft.

The project will rely on wind power from Raggovidda and baseload power from the grid to balance power intermittency. And we have been working with Statnett on securing with connections since the inception of the Berlevag project, but we have not received a firm answer on capacity or timeline yet.

On the bright side, Statnett has announced that they are working on regional plans for grid capacity and that Finnmark will be prioritized. We expect the plan to be released in September, and that it will give us more information about the outline for the grid permitting process. We will then come back to you with information on how this will affect our time line and phasing of the project.

Our large-scale blue hydrogen project at Aukra is progressing well. Together with our partners, CapeOmega and Shell, we are currently studying 2 different production capacities from 500 tonnes per day to 1,200 tonnes per day, equivalent to around 1,000 to 2,500 megawatts of [indiscernible] capacity.

We have also initiated a dialogue with the authorities on the potential for developing pipeline infrastructure to Germany. The signals are positive for the Aukra project. Early estimates indicate that the project will have a world-class carbon intensity on par with green hydrogen, enabled by high CO2 capture rate, green electricity and low methane leakage from the new Huemul gas processing plant.

At Rjukan, we aim to produce green hydrogen to decarbonize Eastern Norway, targeting transport and industry sectors. We have completed the engineering work for Concept Select and both the concept and the business case in this project has been matured over the last couple of months, resulting in a significantly reduced CapEx estimate.

The updated cost estimates enables an even lower levelized cost of hydrogen. And with mature dialogues ongoing with major offtakers, this project is well placed for being an early industry mover in the green hydrogen segment.

In Chile, we are, as mentioned, working on using the abundant renewable resources from solar and wind in the area to produce hydrogen and green ammonia for export. These types of projects being based on intermittent renewable energy are key challenges to secure a stable operation of the ammonia facility. We are now working together with DNB on an exciting opportunity to explore a solution for energy storage to cover night periods where there's no hydrogen production without impacting the downstream plant operation.

We are expanding our funnel, and we see a great set of opportunities, both within hydrogen and its derivatives, but also downstream in the value chain. In the quarter, we have, amongst others, added a green iron opportunity in Africa. Several African countries have access to low-cost renewable energy, and we are exploring these opportunities, building on our green iron strategy.

In addition, we are considering another opportunity in Africa, more specifically an opportunity for green hydrogen in Tunisia, together with the local renewable company TuNur. Albeit early stages, we see the potential for exports to Europe as interesting and experienced interest from key players in the value chain to be part of the project.

I would also like to highlight here our partnership with Statkraft in Brazil and India. Both countries are very promising for hydrogen supply and demand, as previously mentioned. We see concrete opportunities in both countries and look forward to exploring this further together with Statkraft. We also have a great collaboration with Mainstream on opportunities in a range of countries.

Together with various other changes, the opportunities have increased by 900 megawatts since Q4. Standardization is key to reducing CapEx in all decarbonization assets, including hydrogen, ammonia and methanol plants. We are developing a standardized plant architecture and establishing a supply chain tailored according to our specifications with strategic suppliers to deliver the right equipment at the right time and cost. The proprietary architecture enables module-based plans and low-cost scale-up. And since last time, we have developed a modularized hydrogen concept that will be included in our standardized plant architecture.

The layout, as illustrated on the right-hand side of the slide, consists of the component required in the electrolysis process, including the power system, process system, electrolyzer sets and safety and automation system. The whole process takes place in a dedicated building and the concept as a whole is a joint effort between the suppliers and Aker Horizons integrating our industrial expertise and supplier equipment into a fully functioning, low-cost and safe operating hydrogen facility.

The multi-realized concept involves prefabrication, performed in suitable environments, indoors using the fabricators, own facilities and work methods, thereby reducing direct installation work and man-hours at site, ensuring improved quality and safety in addition to lowering costs significantly.

Our proprietary standard technical solution and supply chain will be used by the EPC companies that will build the plants together with us. We work integrated across green value chains and developed projects. We focus on 3 key pillars in the value chains: securing low-cost feedstock, developing abatement assets and securing offtake. These 3 pillars remain the same for all our target segments.

In our view, there is significant value to be added by being the integrator and making the transition easy for the end users. Across these 3 pillars, we will find and develop integrated decarbonization assets across hardware-based value chains. We will build, own and operate decarbonization assets at scale and we drive value and secure competitive financing.

With Aker Horizons asset development, we are now broadening our playing field, expanding the focus beyond hydrogen and derivatives. From hydrogen, we are, as previously stated, expanding further downstream in the value chain into green iron. And in Narvik, we are exploring concrete opportunities to develop assets to decarbonize the steel value chain.

We're also looking for similar opportunities elsewhere, as mentioned. As part of the ongoing strategy work, we are considering expanding downstream from hydrogen from some of the other hard-to-abate sectors as well.

In addition, we're also looking into a broader set of net zero topics beyond hydrogen, including segments like infrastructure, biofuels and geothermal, to mention a few.

For these segments, we see several key attractions. The first one is a strong market outlook, driven by a large decarbonization potential, strong expected growth and promising outlook for profitability. We also see a strong right to win for Aker Horizons. It is suitable for the developed build, own, operate business model. It is large, complex industrial developments. It requires integrated capabilities and access to favorable funding, to name a few.

We are now expanding our business development and origination team to target these new segments in addition to new hydrogen-related opportunities, while our technical staff are busy developing our key projects.

So to summarize, we will focus on 2 strategic dimensions: one, maturing the current hydrogen projects and exploring downstream opportunities. Second, we will explore opportunities outside the hydrogen segment. And with that, I say thank you for your attention and leave the word to Nanna for a review of the financials.

[Nanna Tollefsen, executive]

Thank you, Kristoffer. Starting on Slide 28. In the quarter, there was a slight positive development in the net asset values from NOK 17 billion at the end of Q1 to NOK 17.4 billion in Q2. While the development in the share price of Aker carbon capture reduced the NAV by NOK 1.5 billion, the merger of 100% of Aker Clean Hydrogen and Aker Offshore Wind into Aker Horizons at transaction prices increased NAV by NOK 2.1 billion.

The cash position in the holding company of Aker Clean Hydrogen of NOK 2.5 billion has since the merger been lifted up to Aker Horizons, and the closing of the second sale of REC shares also increased the cash position in Aker Horizons as it gave cash proceeds of NOK 1.4 billion in the quarter.

The next slide shows key financials for Aker Horizons' parent and holding companies for the first quarter. We reported an EBITDA of negative NOK 26 million in Q1. This is reflecting general overhead and project activity. The net profit was negative NOK 593 million, reflecting value changes in our listed shareholdings and other financial items, mainly being interest costs.

Cash flow from operating activities consists of running costs and interest paid and amounted to negative NOK 71 million in the quarter. Investing cash flows include the issue of a temporary shareholder loan to Aker Offshore Wind and investments in Narvik, as well as proceeds from the closing of the sale of REC shares of NOK 1.4 billion.

The net cash flow for the quarter was NOK 1.2 billion, including the cash that was lifted from the Aker Clean Hydrogen Holding Company of NOK 2.5 billion. This gave an ending cash balance at Q2 of NOK 4.4 billion. This brings us to available liquidity on Slide 31.

In addition to the cash of 4.4 billion, the RCF of EUR 500 million was undrawn at quarter end, giving a total available liquidity of 9.6 billion, significantly up from 5.5 billion at Q1. The net debt position was similarly down from 5.2 billion at Q1 to 1.4 billion at Q2.

The capital structure on Slide 32 reflects market values of listed assets, the most transaction -- most recent transaction value subject to material transactions with third parties for nonlisted assets and book values for other assets. The loan-to-value as defined by the RCF covenant has been redefined as the net senior debt over the gross asset value and stood at negative 10% as of Q2, and giving significant headroom to our covenant of 50%.

Taking a step back, Aker Horizons is well capitalized to continue industrial progress and to seize opportunities that may arise with a gross asset value of NOK 23.4 billion, net debt of NOK 1.4 billion and available liquidity of NOK 9.6 billion. Mainstream is also well funded with a recent capital injection of EUR 575 million from Mitsui.

Closing of the Aela sale will give proceeds of $140 million to Mainstream. The funds are currently in the shareholding vehicle and are expected to reach Mainstream in Q3. And as such, the combination of our Aker Offshore Wind and Mainstream will give improved access to financing for our Aker Offshore Wind projects.

Aker Carbon Capture ended the second quarter with a solid financial position of NOK 1.5 billion in cash. The company also has access to public market capital in addition to private capital, for example, to fund assets in the carbon capture as a service business model. All in all, the Aker Horizons ecosystem is well capitalized to seize opportunities and to accelerate net zero.

With that, I give the word back to you, Kristian.

[Kristian Rokke, executive]

In closing, I'd like to say a few words about the bigger picture for Aker Horizons, starting with the fact that CO2 levels continue to rise. It's easy to lose sight of that with all the countries and corporations committing to net zero emissions by 2050. But the remaining carbon budget clock for 1.5 degrees is ticking.

We only have 7 years left with today's emissions levels. That means if we have 7 more years like 2021, we need to go to net zero emissions overnight. Even before the war in Ukraine, the world was off track from achieving its shared energy and climate goals. Now storing energy prices and threats to energy security are likely to result in further setbacks to the net zero agenda in the short term, but we remain confident that the long-term trends are taking us in the right direction.

There is a growing understanding that accelerating the transition to a renewables-based energy system is the only viable answer to both the energy crisis and the climate crisis. The EU, United States and national governments alike are taking decisive action to reduce overall demand for fossil fuels in line with the Paris Agreement, creating an environment for investing that is conducive to accelerating the market deployment of clean technologies.

Investments in clean energy are rapidly increasing and are expected to represent 3 quarters of growth in total energy investments in 2022 according to the IEA. We believe a continued clean energy investment search will accelerate the energy transition and provide a lasting solution to energy security risks, ease the pressure on consumers caused by high fossil fuel prices, and get the world on track to reach net zero by 2050.

Aker Horizons remains well prepared to handle the turmoil we expect will roil the markets in the short to medium term. We are rightly positioned to harness the opportunities that such turmoil frequently creates.

Aker Horizons closed the first half of 2022 with NOK 9.6 billion in liquidity, a simplified group structure that includes companies and technologies that will play a central role in reaching net zero by 2050 as well as a broad partnership base.

With the establishment of Aker Horizons' asset development, we have a potent project development muscle to generate gigawatt scale decarbonization projects. Combined, this enables us to leverage the current trends and seize opportunities to further grow and extend both within our current segments and in new ones organically as well as inorganically. We believe it is the most significant contribution we can make to ensure both energy security and a rapid, just and sustainable energy transition to a net zero emissions future.

And with that, we'd be happy to take some questions.

[Christian Yggseth, executive]

Thank you, Kristian. We have a question from Jorgen Bruaset at Nordea. Regarding SuperNode, what is the expected timeframe for commercialization?

[Kristian Rokke, executive]

Well, taking a step back about the company. SuperNode is an Irish company developing technology to enable the transportation of renewable energy from source to market and to connect markets to enable full decarbonization.

Most often, best renewables are on the peripheries of Continental Europe, away from where the demand centers typically are and the existing transmission infrastructure isn't fit for purpose to accommodate them. What SuperNode is doing is developing technology solutions that can address these challenges in a way that offers a step change in cost effectiveness.

Offshore transmission costs can be reduced by up to 50%, we believe, specifically by using superconductivity technology, which doesn't have electric losses and can carry much more electricity with a much smaller footprint than conventional electrical cables, which also has less of an environmental impact. So the team is making good progress, increasing the technology readiness level, developing prototypes and subsequent demonstration projects are planned.

We recently invested EUR 7 million in the company, which was 50% of the capital raise of a total of EUR 14 million, and will, of course, revert as the company meets various milestones going forward.

[Christian Yggseth, executive]

Okay. Thanks, Kristian. That concludes the questions for today.

[Kristian Rokke, executive]

We thank you for your attention, and wish you a great summer. Thank you.