Cloudberry Clean Energy ASA

OSE:CLOUD

Earnings Call Transcript 2021-Q4

[Anders J. Lenborg, Founder]

[Audio Gap]presentation from Cloudberry. Sorry for the slight delay, but we have now waited for you presentation that we would like to go through over the next 20 minutes or so. And then we are opening up for Q&A. So please use the Q&A ribbon on the Teams, and then we will try to answer as many as possible of the questions that we receive. Today's agenda is that we will give you a short overview of Cloudberry and then move on to overview of the last events. And then my colleague, Christian Helland, our CVO, will take over and go through the financials.As you are aware, Cloudberry is the local IPP in the Nordics. We develop, own and operate renewable assets throughout Norway and Sweden. We believe it's important to have full control of the project development through our in-house development team, and we have also a production company holding that producing assets giving the long-term cash flows through the company. In addition to this, we have added operational units that has the responsibility to operate all our renewable assets in the Nordics. Cloudberry is a listed company, and we are listed on Oslo Stock Exchange under the ticker CLOUD.Moving on to the next slide, where we have some highlights for you. We have been able to grow the revenue of the company, the production portfolio of the company, and we've also been able to grow the balance sheet. If you have a look here on the right side of this slide, you will see our production volume increase over last quarter. And compared to last year, it has been a strong growth. And also, this growth will continue. As you can see here on the right side on the bottom, we have doubling of the production from 2020 to 2021 and also a doubling of the production from '21 to '22, and there will also be a doubling of the production from '22 and end of next year. So we have a very stable development in the production portfolio, doubling the production every year now for the last 3 years.And in addition to this, we have also been able to grow the balance sheet. We have a strong cash position, and we have financed our projects those are under construction, but also the projects that are permitted. And another event is that growing this portfolio, we see that being the merchant is something that we will take action on. And we have entered into some discussions with the offtakers in the Nordics. We see a strong market for corporate PPAs, and we look probably enter into a corporate PPA during 2022 for part of our production capacity.Moving on to the next slide. This is the one that you have seen over the last years. We are adding a new project to the map. For those who have followed us over the last years, you've noticed that we have now also added more project in Sweden. On the production segment, we have a total of 28 assets in production or under construction. 24 of them are currently producing. And then we have 2 hydro power plants under construction and 2 wind farms under construction. And these are moving forward according to the plan.On the development side, as you see here on the map, we have added some late-stage development project in Sweden. That's the yellow box, and we have also been able to grow the backlog with more projects. You see also that we have opened up offices in Gothenburg, and that is the offshore wind team that we will present closer during the first half year of 2022.Yes. Moving on to the operational update. Just want to give you some more flavor to the Captiva transaction. We entered into a process with Captiva end of last year and closed up early January. Captiva is a company that we know very well. We have been a customer of Captiva on the operational side for some time. Captiva is bringing capabilities when it comes to both development and construction of hydro and wind assets, but also then our operational capabilities. So Captiva and Cloudberry together will cover the full life circle of all our renewable assets in the Nordics. And they have also a digital solution that we use today. This is a solution like it's a market-leading platform of operational intelligence, a bit more than 400 high-power plants on this platform. And this platform will be together with Captiva develop further over the years.Moving on to the next slide. I thought that it's good to give you some more flavor on how we think on the development side. We had recent field development projects that we develop in-house to our development team, which we have also used opportunities in late-stage development projects in Sweden to acquire more mature projects that are ready to build over the next years. So as you see on this slide, we will have new projects coming into production in 2022, 2023, '24, '25 and so forth. We have been focusing on building a stable growth, both when it comes to adding new projects to the development portfolio, but also bringing the project into production every year. So we will expect to have a new project hydro or wind coming into production every year over the next years.Moving on, we have also formalized our organization with the management team. As you can see here, we have focused on the 3 segments. We have develop, production and operations in the top management together with the CVO and myself. So this is just formalized, and we will then develop the structure of Cloudberry and Captiva and probably give an update on this later this year.ESG is important to us. We live in ESG every day, and we have been able to formalize the ESG process in the company. So we have an ESG committee. We have it as an integrated part of our decision process on every project. And we are also now working on the sustainability report that will come out next month. That will give you more flavor on how we impact this through the ESG effort in Cloudberry.Then I'll hand over to Christian Helland, our CVO, who will take you through the financial results. Thank you.

[Christian A. Helland, CFO & Chief Value Officer]

Great. Thanks, Anders.Yes. For us, it's been a really nice fourth quarter. As we mentioned before, it's been really important for us to start growing the portfolio, getting things in production. So as you see from this graph, if you took 1 year back, we have 3 of these in production. Now we're getting almost process in production, full year production from a reservoir, and we're also getting a mute info in production, and we've added on 4 projects. So at the end of the quarter, we had about 60 megawatts of capacity in operation. And as you see, Odal is now coming on stream. Yesterday, it was 50 turbines installed. It's growing a lot of wind up there. So that's obviously good for the long term. But Siemens installing needs, obviously, to installment is not doing this. So it's going well, and we expect it to be in full operation before summer. So a big project for us coming on stream.And also, as you see, it's Ramsliana and Skarana, 2 hydro plants. We're done with the construction and the grid connection is going on as we speak. So there, we expect to have the production from Q2. It's also important to mention here in Norway, it's obviously cold in the winter. So it's normally very little production from rivers in Q1 or winter time. So it's not very sensitive these big projects on the revenue side. But very good there on constructing and shows that we didn't able to deliver projects through COVID times on time and on schedule. So that's good for us.The Han project progressing well, will add 21 megawatts in the end of the year. And also the new project Ovre Kvemma, it's early phase hydro project that is newly sported. You see Kafjarden and Munkhyttan, 2 new wind projects, late development stage where we see where we can add significant value through the projects before we start building them. Very good position in SE-3 region in Sweden, fairly close to Stockholm. So those will be 2 projects that we will be starting constructing hopefully already this year. And we have Duvhalllen and Stenkalles. Duvhalllen is not ready, the grid is not ready, but that's hopefully coming end of the year. And then Stenkalles, we're very active in the project and using, as I mentioned in the last quarter in the report top people from that. So lots of things going on.And then I think it's about time to jump into the numbers. First, balance sheet for us, always been important to be well financed, when we're growing, have a strong balance sheet. And as you see very low debt level at the moment. We financed the new project with equity, and we will draw the debt level when we get closer to the 200 -- and as we say, we are fully funded for 290 megawatts. The strong cash balance, we raised 600 million in December. So the cash balance is NOK 1.1 billion and where we were more EUR 100 million. And as you see, no net debt. So minimal debt compared to the balance sheet. Again, growing a lot on the asset side. So we expect to continue that obviously going forward.Next slide. Yes. Here we do breakdown on the P&L. We report both consolidated and proportionate. Again, we think it's quite important to show you the proportionate number since the Odal, Forte portfolio, we own one-third of those, and those are important to us. So we break it down and show both the consolidated figures and the proportionate figures. Again, growing the revenue, very pleased with that we have the control of the projects we're doing today. It shows a good planning.And for us, good quality control in the project. It's very important. We have one project that was constructed before Cloudberry was established, which we're not -- which has been tough for us to finish. It's finished now, but it does cost us NOK 12 million extra. So that's -- we had to rebuild some shallow cable routes, and that we see how important it is to have the quality control and the planning done early. So a lot of emphasis in the organization on the projects and quality control and early planning. So it's been working well on the projects we have going, and this is the end of closeout for the Marker project. So yes, very happy with the development.Again, yes, one slide forward, please. Here we show the production segment. Again, we see we're growing production from 13 GWh last year to 48 GWh. So we both have a good growth in the production, but also see that power prices is attractive. We had some fixed pricing, 13%, but now we're fully exposing the spot market. And as Anders mentioned, we are now discussing to lock into some longer-term pricing as said to the market that we will be over time a balance between spot exposure and long-term power prices.Yes. So I think for us, that's maybe summing up the numbers. It's again, important to mention that the bigger projects are coming on screen for us this year and going forward. So a very good start with a lot of hydro in the portfolio. And then we see a lot of wind coming in. So we've got a good balance between hydro-wind in Norway and Sweden. And so we have a robust increase on the top and also on the production profile going forward.And there's maybe a couple of words with the market outlook before opening up for questions.

[Anders J. Lenborg, Founder]

Thank you, Christian.And yes, we have a positive view on the prices -- power prices going forward. We have seen quite large differences between the different price areas, both in Sweden and in Norway. And as you see here on the map on the [Audio Gap] and you can see the different price areas and the prices. And compared to where we have our projects, we are very pleased that we are able to establish project into attractive price areas, such as SE-3, SE-4, where you have a large demand for renewable power. And we see also that we clear power plants are being phased out over the last years, and that will continue to do so. And then also in the southern parts of Norway, we see that there is demand for more renewable power. We see that the interconnectors have an effect on the prices. And all in all, we then -- we have a positive view of the power prices going forward. We have expected some -- experienced some COVID issues also in our portfolio and our projects, but we have been able to solve most of those issues as they have occurred.Yes, to sum up, I think we have been able to do what we set up we will do. We would be growing our production portfolio and our revenue. We have been -- also been able to grow the early-stage backlog portfolio and late-stage development projects through in-house development, also on M&A activity on the late-stage development. And I think this -- you will see this continue also in the years to come. This mix between the in-house developed project and also using the opportunities in the market to buy new projects. We experienced, as I said, some issues when it comes to higher prices and also some constraints on the supply chain. In wind, we had some issues with the turbines, but today, 15 out of the 34 are erected and in place, and 5 of them are coming on the grid as we speak. So that will hopefully continue developing that project and be in full operation from late summer or from summer on.And all in all, we have today or from 1st of January at all our production in the spot market. So positive power prices have an effect on Cloudberry, not so much last quarter of 2021, where we had some of the projects on fixed price, some of the production on fixed price. But today, we are fully merging and currently in discussions on securing some of our production on fixed price.So thank you so much for attending and for this meeting, and then we will jump over to the Q&A session. And Christian will start off with answering some of the questions we have received. And please do use our Q&A ribbon and send any questions. Thank you.

[Christian A. Helland, CFO & Chief Value Officer]

Yes. All right. Thank you.That's a lot of questions there, so I'll just try to do some of them. The first one was a question about grid in Sweden and that is -- the grid capacity is limited. For us, this has always been a huge focus with our new project, which is security grid. And obviously, very important on stakeholders also Central Sweden it receives capacity. So that's one of the most important picture in the development project the security grid. So this is secured for all the projects you saw in the pipeline where we have 367 megawatts. The only one there is viewed and where we have 30 and then trying to expand it to 6 and it's already an ongoing project. So except that any project has grid security.Then there was a question about equity one, it was up. Then we had a successful raise in December, attracting NOK 6 million, NOK 7 million in equity with a lot of well-known institutional investors and families here in Norway and Sweden. So that's been very good for us. So we have, again, a strong balance sheet to finance the project going forward. We also have a good debt facility and extended our debt facility from NOK 600 million to NOK 700 million to NOK 1.4 billion with local banks here in Norway, at attractive terms, very light governments as well. So a good facility for us going forward.Then there was a question about price areas. As you see -- and we have done a little more work on this in the quarterly report. So please look at that. We have broken down what projects are in the different price areas. So you can see what prices we get. It's obviously in the Nordics, big differences between the price areas and already have 5 price areas. We are mostly in the south or more or less, so we have good price areas, but some also in the center of Norway, where it's been a little bit lower. But on average, very good prices in Norway. And in Sweden, you have the same. We have 4 price areas. The better prices has been in the Central and South of Sweden, where our projects are. So please read into details, which is now in our Q4 report.That's I had here before Anders answer some more was production going forward. Again, we don't guide, but it's -- as we also said previously, hydro normally is less production in the winter. So Q4, Q1 is normally lower, cold January, February. So yes, we expect having all our projections a little bit lower production in Q1 before it starts picking up in Q2 and obviously, Q3. When wind is coming on stream, we expect that to balance out much more because wind produces normal battery in the winter season and hydro in the summer.So Anders, maybe a couple of more before we finish up, yes.

[Anders J. Lenborg, Founder]

Thank you, Christian.We have some more questions here related to our project in Sweden and grid capacity. And that is an issue and that we are very well aware of. We have had the same issues in Norway, where we have the limited grid capacity. We have an infrastructure that is lagging when it comes to some of the project that we developed. So this is something that we are very aware of. And for example, on the Stenkalles shallow-water project in Vanern, we were able to secure the last capacity on that grid for several years now before they can upgrade. So in that case, we were able to upgrade. On the Duvhalllen project, we are waiting the increase of the grid capacity. So today, we have a permit and we build and deliver 30 megawatts from Duvhalllen, where we decide rather to wait and wait for the grid to be upgraded, and then we will have a 60-megawatt project. So this is the grid connection capacity and project development is something that we focus on when we prioritize our in-house projects and also when to[Audio Gap]I think we have answered most of the questions, and I would just like to thank you all for joining in, and I hope you have enjoyed the presentation. And we look forward to presenting next date or next month on the annual report. Thank you so much.