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spk03: Hello everyone and welcome to Fusion Fuel Green's first quarter 2022 investor update. My name is Ben Schwartz and I'm head of investor relations at Fusion Fuel. I would first like to remind everyone this call may contain forward-looking statements, including but not limited to the company's expectations or predictions of financial and business performance, which are based on numerous assumptions around 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 they are not guarantees of performance. I encourage you to read the disclaimer slide in the investor presentation for discussion of the risks that may affect our business or may cause our assumptions to prove incorrect. The company is under no obligation and expressly disclaims any obligation to update, alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. So thank you all for joining us today. I'll briefly run through our agenda for the next hour. We'll begin with an overview of our value proposition, as well as some commentary around what we're seeing in the market from a macro perspective. Then the management team will share some first quarter highlights, financial results, and a business update focusing on commercial progress and the latest on tech and production. We'll then close with some remarks from Fusion Fuels Chairman and Open up the floor then for a half hour or so of facilitated Q&A. As in our previous quarterly calls, questions can be submitted in the chat box in the webcast platform at any point during the next hour. Alternatively, you can also submit your questions to the investor relations mailbox at ir.fusion-fuel.eu. So let's begin with an overview of Fusion Fuel's business case. For those who are new to the name or in need of a refresher, Fusion Fuel is in the business of developing and delivering cost-effective clean hydrogen solutions to accelerate the global energy transition. Our aspirations take a meaningful share of the global hydrogen opportunity, which between legacy demand and emergent applications is already a significant market today and one that's poised to experience tremendous growth over the coming decades. At its core, Fusion Fuels is a technology company. We've developed and commercialized a proprietary integrated solar to hydrogen generator that unlocks grid-independent hydrogen production at a market-leading levelized cost. We are only one of a handful of companies that are producing green hydrogen today at our demonstration plant in Portugal and are moving quickly to capitalize on that early mover advantage and execute on the substantial commercial pipeline that has been built over the last year and a half. We believe we have the right technology and the right team at the right time to make Fusion Fuel a major player in the green hydrogen business. So before we dive into the business update, and as we have in recent meetings, we want to take a step back and touch on the hydrogen market more broadly. So as has been the case for much of the last year, the economics of conventional hydrogen production remains under pressure. most acutely in Europe amidst a sustained increase in the price of natural gas. And similarly, the levelized cost of green hydrogen, extremely sensitive to electricity prices and the pervasive volatility in both the price and availability of renewables is challenging the economics and the viability of large scale electrolyzers, particularly when you include between one and two dollars per kilogram in last mile logistics from centralized production. In this market environment, our integrated grid-independent solution is significantly advantaged. Not only can we offer known long-term certainty of cost, but we can do so at market-leading levels at small or large scale without grants. With clear line-of-sight to de-risk cost reductions from the ramp-up of automated productions at our Benevente facility, along with the introduction of successive generations of Archivo technology, which will help sustain our advantage even as the competition continues to drive down the cost curve. So having set that context, I'll now pass it over to Frederico, who will provide an update on the quarter.
spk00: Great. Thank you so much, Ben. So good afternoon. Thank you, everyone, for joining us today. So today is an exciting day for both me and Zach. It's the first time that we present to you as co-heads of Fusion Fuel. and we're very excited to present the latest developments of the company. And before we go into the details and show you all the great things that are going on here, we'll briefly go through some of the financials and quarter highlights. So first to note, as part of our drive to strengthen the senior levels of the company, we continue to hire key personnel, including most recently Zach, but also Jason Barron, who will, together with Zach, jointly oversee Fusion Fuel USA. Later in the presentation, I'll provide more details on our personnel development overall, but you'll see there's been huge advances in that department and we still expect to increase significantly the talent in the firm. In this update, we want to highlight a very important development for us. As of today, we have secured confirmed binding income for 2022 of 8.4 million euros, composed of both technology sales and grant income related to our projects and to Benevente. In addition, we have another six projects in late stage development that could generate up to 20 million euros of revenue potential in 2022. So that is 8 million euros confirmed, an additional 20 million euros income in late-stage negotiations for a total of potential income in 2022 of 28 million euros. In the first quarter, we also entered into agreements with AESA regarding projects aimed at decarbonizing the industrial sector and hydrogen mobility projects in Spain, as well as with Hive to develop an already established portfolio of projects with fusion fuels technology. I will touch upon some of the points here regarding Benevente and our partnership with Toshiba later on in the presentation. Regarding financials, in the first quarter, we recorded an operating loss of 3.8 million euros, of which 3 million euros are related to operating expenses. Around 1.6 million euros of those are related to personnel costs, the single biggest item. But overall, the costs are in line with the guidance we provided at the last update of between 2.3 million to 3 million of operating costs per quarter expected in 2022. Even as you'll see with a ramp up later on in one of the slides of the personnel, our guidance still continues to be between that 2.3 to 3 million of operating costs per quarter expectations in 2022. We've booked 800,000 euros of share-based payment expenses. These are non-cash expenses and are related to restricted stock units and options awarded to fusion fuel personnel. This is a charge that will be recurring as it's amortized over the vesting period. We do intend to keep using securities with vesting clauses as a means to attract talent, reward staff, and ensure alignment with shareholders. Therefore, a non-cash expense line related to these should be expected to continue over the coming years. As mentioned in previous clauses, we need to recognize the fair value movement on outstanding warrants. With the increase in stock price in the first quarter, we need to account for the fair value movement of around 4.7 million euros in the warrants. This is simply an accounting recognition. This is, as mentioned before, this is a non-cash item. With FX movements as well as movements in the value of short-term investments we hold, we booked a charge of around half a million euros. The 115,000 euros charged there of equity-accounted investees is related to our FusionFuel joint venture and our share of their results. So this is an entity that has recently started or started last year its activities, continues its ramp-up, and as we expected to... to still continue to operate pre-revenues for a while, we do expect this line to continue to show a loss for the foreseeable future as we invest in that entity. One point I'd like to mention here, and it's also related if you will find more information of that in our 20F for the full year financials for 2021, but it's our total assets. So as you can see, we have here around 23 million of cash and short-term investment instruments, liquidity instruments. But in addition to these 23 million euros, we have around 23.5 million euros in PPE assets related to our two Avro projects, our HevoSul project in Sines and our Benente production facility. We have around 11 million euros of inventory and materials that we have prepaid to secure their delivery. and we have around 5 million euros of VAT that we will be recovering through the regular process. This actually brings our total assets to around 68 million euros, of which 23 is our cash and short-term instruments. It's important that everyone's aware that we have been significantly investing the company and the assets of the company over the last year, and that is reflected in that total assets value. On outstanding shares and warrants, they remain unchanged from the previous courses. The 92,000 restricted stock units are related to our employee initiative plan that we briefed upon in the last couple of courses. The increase is regarding new hires that have been made as we award them restricted stock units with a several-year vesting period. The options granted are related to options granted to members of senior management and board of directors that vest over three to five years. Now I'll pass on to Zach, who will take us through some of our projects and the more exciting stuff for the presentation. Thanks, Frederico.
spk01: It's nice to meet everyone. Fusion has established ourselves as a leading player in the Iberian green hydrogen market and built a foundation for significant growth over the last year by building out a well-rounded and experienced management team and building off of our initial projects across multiple applications, which are mobility, industrial applications, and green ammonia. Fusion's decentralized electrolyzer provides multiple solutions to our customers, which is to sell turnkey technology solutions as sales, as well as to sell hydrogen through our own projects that we develop. Our unique offering provides several key advantages. First, our modular technology is viable at competitive costs on even small volumes. Usually centralized electrolyzers are not economical below five megawatts of capacity. However, fusion can be competitive on projects as small as 25 to 50 kilowatt hours of capacity. Second, Fusion Stevo solar technology is grid independent, and we do not have energy cost fluctuations unlike our competitors, which is an important feature when energy prices continue to rise, as the majority of our cost is actually CapEx related. Third, through our integrated solar solution, we can take advantage of existing solar investment tax credits in the US, as well as cash grants in Europe, which further reduces our capex. As Ben noted earlier, we already have quite an advantage from a levelized cost of hydrogen standpoint without grants, but with the grants or tax credits, it could be an additional 10 to 30% cost reduction, which would make us world-class pricing in the hydrogen markets. Lastly, we have a low carbon intensity, which is an attractive feature for industrial applications in particular. Typical grid-connected power has an estimated 26 kilograms of CO2 per kilogram of hydrogen, where our Hevo Solar provides a solution with almost zero emissions. This means we're not just greener, but we can also provide better netbacks on offsetting carbon taxes and tariffs for our customers, again, to further reduce their costs. Next page. Our solution, as you can tell on this page, is gaining traction globally. The pipeline has expanded substantially and now includes projects in five countries with a combined pipeline of over 170,000 metric tons per annum of green hydrogen. This pipeline represents over four times our expected capacity through the end of 2025. We have built a significant presence, as most people are probably aware, in Southern Europe, which is made up mainly of mobility and industrial application projects. In MENA, we're developing a project in Morocco, which will be a low-cost green ammonia export project. And lastly, with Jason, Barron, and I joined the company, we have recently started our business development efforts in North America. We're excited that in a short period of time that we've already built early stage opportunities totaling over 2,500 tons of green hydrogen potential. We believe the United States is about to take off as several subsidies are already in place that will help drive hydrogen development. These subsidies are the green hydrogen hubs, which is over $8 billion of investment, the Department of Energy loan guarantee programs, and low carbon fuel standard credits in the states such as California. These programs, along with Fusion's unique ability to utilize the solar investment tax credit, makes the U.S. market very attractive as a platform for the company. These projects we're highlighting on this page are in advanced stage receiving grants and or near-term opportunities for technology sales, which represent a total of 43,000 tons of our 170,000 ton pipeline. We've submitted for over 60 million euros in grants for these projects and have been awarded thus far 8 million. As noted earlier, we're already providing industry leading costs of hydrogen without grants, but these grants just further help support us closing projects and building our pipeline. Over the coming months, we hope to announce that we've been awarded additional grants which will further bolster our project pipeline. As I noted earlier, our company is focused on several key applications, which are mobility, industrial applications, and green ammonia. These applications have a total adjustable market potential of over 150 million tons per annum of hydrogen by 2030. Our first application I'll discuss right now is mobility. Fusion Fuel provides a low-cost, modular, scalable solution to our customers in the mobility sector. The mobility sector will grow to an estimated 12 million tons per annum by 2030. We're currently constructing our first refueling station in Madrid, which is with Exolume. This is a pioneering project and a first-of-its-kind application in Liberia. As we continue to pioneer this market in Iberia, we've built a pipeline that represents over 20 projects, totaling $140 million in capital costs, $65 million in grants that have been submitted for, the net capital exposure of $75 million. These projects are a combination of tech sales and Fusion-owned projects. Fusion's technology provides decentralized and low-cost hydrogen, which are attractive features in industrial applications. Also, our low carbon intensity, as I noted before, provides not only emissions reductions, which is important, but also just as important, it provides customers with the ability to reduce their carbon taxes and tariffs. Industrial applications is made up of power generation, midstream assets with natural gas blending, refining, heavy industrial applications such as steel and cement manufacturing, and the oil and gas markets. The total addressable market by 2030 is an estimated 110 million tons per annum of hydrogen potential worldwide. Building off our early successes with Everin Green Gas, which most of you all are aware of, we've advanced our pipeline to seven projects with a total of 43 million capital costs, with 14 million grants submitted for or have been awarded, for a net capital exposure of 29 million. As we continue to build out our presence in both North America and Australia, we believe our advantages for industrial applications will continue to gain traction for further build out of our pipeline. And lastly is green ammonia. Green ammonia is the most efficient way to transport hydrogen today. Green ammonia market is estimated to be approximately 40 million tons of hydrogen by 2030. Our technology is perfectly suited to provide low-cost hydrogen in markets with strong solar radiance and with a suitable amount of land. Morocco is an ideal first location for fusion to develop a green ammonia export project. Fusion's role in these projects is to provide the green hydrogen in partnership with other technologies and companies to build the ammonia facility and related export infrastructure. The project is approximately 32,000 metric tons per annum of hydrogen and totals over 180,000 tons per annum of ammonia. And I will now pass it off to Frederico to talk about production technology.
spk00: Thanks, Zach. So I now have the pleasure of speaking to you all about the fruits of someone else's work, because this is all due to the R&D team that's done a great job. We're very excited to introduce to you our second-generation Hevo that we plan to launch during the summer. Through changes in the product design, we've been able to consolidate two of our first-generation Hevos into one Hevo for the second generation. This has not only reduced the raw materials used in the HIVO, but it also reduces the complexity and amount of hydrogen and water network required on the back of each HIVO solar, which is driving a lot of the cost reductions that you see there. We're also already designing the third generation model to further reduce costs, and we hope to be able to put this third generation into production in the first quarter of next year already. So we are, as I mentioned last time, we're fast, we're nimble, and we very much wanted to stay at the forefront of innovation. So we believe that this will keep us relevant and will keep us also, keep our projects to be very attractive in the green hydrogen market. So this is a phenomenal job from the R&D and production teams. On the production team, we've also got very exciting news to share with you from Beneventi. So we bought the property one year ago, and we spent most of last year extensively renovating the site to be able to house what will be one of the leading production facilities of electrolysers in Europe. Next week, we will do our soft launch of the facility with the first production line for the Hivos going live. This is an incredibly exciting milestone for the entire team, and it also marks the first large-scale manufacture of electrolysers in Portugal, possibly Iberia. So it's a phenomenal step for the company. Next year, we expect to have around 100 megawatts of electrolyser capacity and be able to ramp that up to 500 megawatts in 2025. One thing I will note about production output with production capacity, One of the things that we want to make sure we do is we tie as closely as possible the actual output with when we can put things into the field. The projects have their own timelines with regarding to development, licensing, and permitting processes. And what we want to avoid doing is having too much stock of previous generations. So you saw in the slide before how quickly our technology is evolving. So we want to make sure that we are producing as much as we can the latest generation when we're installing things in the field. So the numbers I mentioned before is our production capacity. Our production output will try and match that as closely as possible to the actual needs in the field. I want to touch upon a press release that several of you may have seen already between ourselves and Toshiba. This was the agreement with Toshiba to study procurement, manufacturing, and sales process and R&D partnerships together. This is a partnership between two companies with disruptive technology in the electrolyzer space. So Toshiba has a new membrane production approach which fits incredibly well with our HEVO and our miniaturized PEM concept and the potential that that partnership can do to further our costs and to take hydrogen production and cost-efficient hydrogen production to the next level is incredibly exciting. So we are, this is a joint sort of R&D and production partnerships and agreement that we are studying together and in addition there is also a commercial angle to this. There are from both the Fusion Fuel technology as well as the Toshiba technology, there are partnerships where both sides' relationships can benefit from a commercial collaboration representing each other's products. So we're extremely excited about this partnership, this agreement, and over the coming months, both the Toshiba team and the Fusion Fuel team will work closely together to put the final points on it. So as I've mentioned before, I want to touch upon the team. It's a team that has grown incredibly quickly. So to note, at the end of the first quarter last year, we were a grand total of 18, having only a few months before spun off and become an independent body. Since then, we have substantially invested and dedicated substantial time as well to finding the right resources, talents and experience to make our team robust and senior and put us in a position to actually execute on our aggressive growth plans. So we have been able to attract phenomenal talent with a significant experience across a variety of areas, whether that's gas management, hydrogen infrastructure, electrolyzers, and all sorts of engineering specialists, and also a world-class production team. So this is keeping us at the forefront of innovation, positioning us in a place where we feel confident that we can execute an aggressive growth strategy. So we will continue to hire, in particular towards the end of the year. We do expect to see still substantial growth in the teams, and in particular in Benevente with the production line as those become live. Now, lastly, before I pass on to Jeffrey, I want to touch upon the key milestones that we communicated for 2022. For those of you who follow us for some time, we'd like to make sure that we are updating you on what we said we would look to accomplish. So on the first slide, we have the go-live of the Beneventi event. facility and also securing grants and financing for Benevente so we will have the first as mentioned soft go live next week already for Benevente and then we'll ramp up and continue to install other production lines in the second half of 2022. We have secured grants nearly to the tune of 10 million euros for Beneventi, which is phenomenal support also from the Portuguese government for this world-class facility. On HPA sales and grants, as we noted before, we have an extremely large pipeline, larger than we could hope to tackle. And now, as we're working hard to convert those into confirmed orders, as we mentioned before, we have 8 million of confirmed income related to our pipeline. And as we noted, we have a potential of up to 28 just for 2022. So the team is working hard on closing those as well as preparing ourselves for 2023. We have, and as Zach noted, put in a large, we've submitted for large orders of grants related to projects both of ourselves and third parties that are using our technology. And we believe that that will also position us very well for 2023, even 2024. On the tech development, I mentioned now the launch of the, in the summer, the launch of the Gen 2 and our expectation to go into Gen 3 in Q1 of next year. One thing that's exciting is we are already working on a oxygen capture system. So this is, this would allow us to actually be able to capture green oxygen produced with no carbon footprint. This is something that our engineering team is working on, and we hope to have a demonstrated pilot on that in the next 12 to 18 months. And we do continue, the R&D team continues on product innovation and also new product development. And we'll hopefully be able to share some of that with you towards the end of the year. Project development, this is now the delivery of, as mentioned, our EBRAS, our CNIS project, the Hivosul, as well as the Exolume, and the kickoff of the other projects that we expect to put in place in 2022 and 2023. So that is ongoing work. One point we will note is that safety, Zach and I and the executive committee overall are completely committed to making safety a core pillar of our firm's culture. This is something that we continue to push and install and implement robust safety protocols. We are happy to report that we have had zero serious safety incidents in the company so far, and we hope to be able to maintain that hopefully throughout the life of the company. So this is something that we want to make sure that is in the core DNA of the company. So it's been a very exciting start of year also for us personally as we enter into our partnership and it's been great and things are now really starting to come together and we are live where others are still thinking about how to get in. So with that I will stop here but I will now pass to Jeffrey, our chairman, who will do some
spk02: Good morning, good afternoon to everyone. I want to add my thanks to everyone who has tuned in today for giving us the opportunity to update you on developments at Fusion Fuel. As anyone with even a passing interest in financial news has observed, it's been a challenging year for the stock market. However, as any sophisticated investor understands, the term stock market is a misnomer. A more apt description would be a market of stocks. That conveys the idea that every company is different. And so I find it frustrating when people say to me that Fusion Fuel has done well compared to other SPACs. The taint of being a de-SPAC company makes no sense to me as we have nothing in common with the vast majority of companies that enter the public markets through the SPAC structure. We were not the third company with a plan to develop a market for flying taxis, or the fifth company with a plan to mine the moon for rare elements, or the 19th electric vehicles company with plans to compete with Tesla, Audi, Volkswagen, Porsche, and the rest of the global auto giants. And unlike them, we did not have a valuation measured in the billions or tens of billions. No, we were a real company targeting a nascent but huge real market opportunity using a differentiated technology that enables us to produce green hydrogen more cheaply than our competitors. And that shields the cost to produce that green hydrogen from the vagaries of the electricity and natural gas markets. And we control our own destiny as we are about to begin producing that technology in our own factory. But don't take my word for it. I encourage you, come conduct on-site due diligence in Portugal. Visit our initial hydrogen farm in Evora. If you come this summer, I fully expect you'll find it in commercial operation. visit our state-of-the-art factory in Benevente. Our head of production would love to give you a tour. We'll take you to see the progress of the construction of the hydrogen plant we're building in Spain for Exelume. See it all for yourself. Make diligence inquiries of developers who are asking manufacturers about availability and price for centralized electrolyzers for delivery next year. Can they deliver, and at what price? Fusion Fuel may be a small company, but we are ready to take on all comers, not with promises of what we hope to be able to do sometime in the future, not in 2025, like some of our competitors are talking about, but today. In my 40 years as a professional investor, I've learned that if a well-run business with a product or service that is differentiated from its competitors and that serves a growing market can be bought at an attractive valuation relative to the size of that market opportunity, then you have a very high likelihood of generating attractive risk-adjusted returns over time. So do your own diligence and see if you agree with me that, indeed, Fusion Fuel is one of the rare companies that possess those attributes. With that, I'll turn it back over to Ben, and we'll open it up for Q&A.
spk03: Great. Thanks so much. As a reminder, for anyone who has questions, there already have been a handful submitted into the chat box in the webcast platform. You can submit questions there or via email at... to the IR mailbox at ir.fusion-fuel.eu. So we'll start with a handful of questions that came in through email. This is for Zach or Frederico. Can you provide a status update on what you expect in the second quarter from a grant perspective? I think you guys may be muted. Well, while they sort that out, I'll take a question myself. There was a question that came into the webcast platform around our supply chain and potential impacts from lockdowns in China. I was just chatting with our head of production who also manages procurement as well, and he confirmed no impact from lockdowns in China up to this point, and the procurement team is securing buffer stocks and also has has backups for nearly every component in the case of a more extensive shutdown.
spk02: Ben, why don't I jump in? I had one thought while they're sorting technology in Portugal. Just to mention that some proposed legislation has been introduced in the EU that would require for hydrogen to be deemed green hydrogen, that it would have to be produced in conjunction with newly built electric generation, specifically tied to that production. This is something that will be just, I guess, as an example of our advantage versus the traditional centralized electrolyzers who, if this legislation were to come into force, would not be able to be using using electricity from existing renewables, whether it's solar or wind projects, but would have to be built in conjunction with new solar or wind projects. That CapEx, that extra CapEx is something that we don't have because we generate our own electricity. And that will be a headwind for the sale of electrolyzers by the traditional centralized electrolyzer companies and plays directly to our strength. Any other questions? Looks like they're ready in Portugal to answer.
spk03: They may not be ready. While we sort that out, another question around... Well, we can talk about the... I'm getting confirmation from Federico that they are ready to go. Want to try again, Federico, on that grants question?
spk02: Nope, that's not working.
spk03: Okay. Well, then for you, a question came through around roles and responsibilities given the new leadership structure between Federico and Zach. Do you have a perspective on how those co-head roles expected to be split and how they'll work best together?
spk02: Yeah, so we, as a board, and we have a very actively engaged board, but we have been monitoring the progress of the co-head relationship and have been very pleased. I think what's happened is that Zach has taken on certain areas of responsibility, such as the commercial business development and execution. And Frederico is focused on the R&D, tech, and production, in addition to his roles as CFO. They jointly oversee the executive committee, which is comprised of, I think, seven, maybe seven members. And and so and then Frederico and Zach are in touch, you know, every single day, keeping one another abreast of of what's doing and kind of. In the others portfolio. So we as a board, the non-execs are very pleased with how the co-head management structure has been working so far.
spk00: And we're happy to hear that. Can you hear us now?
spk02: We can.
spk00: Great. So with that, perfect timing to jump into the grants question.
spk01: I'll answer the grants now. Apologies for the technical difficulties. So what we're expecting on grants is approximately 55 million euros of grants have been applied for that. I'll go through the programs now. So C14 is a program in Portugal. That's just under 10 million in grants we submitted for. We are already eligible for, we've been confirmed we're eligible for the grant, and we expect to hear if we're awarded the grant in the June, July timeframe. Another program is called C5 in Portugal. which is a total of 45 million of grants we submitted for. Again, we expect that one to be about a month or two behind C-14. So between July and September timeframe, you're awarded that grant as well. The company's done a great job on filing for grants and has a good track record of securing them. So we hope to update you in the Q2 about some new announcements on the grant awards.
spk00: So I'll just add for anyone working on a model, the way the grants work is that you're reimbursed against invoices. There are some grants that we have already requested the first reimbursements. So we probably expect to be booking the first grant income, be it in Q2 or Q3. We don't control that timeline of reimbursement, but somewhere between Q2 and Q3, we expect to be doing the first bookings of that income.
spk03: Great. Zach, you referred to the solar investment tax credit in the States. Can you give a little bit more color on that and what it might mean for Fusion Fuel and its aspirations here in the U.S.? ?
spk01: Sure, Ben, that's a great question. So the solar industry over the last decade plus really took off in the U.S., mainly funded through supported by tax subsidies. So the investment tax credit used to represent about 30 percent of the solar capex for solar projects, which was funded through tax equity structures, which is a very common structure. So right now it's 26% this year is the tax credit, and it's going down every year after that, starting next year. So the HEVO solar would qualify for about 50% of our capital costs are solar equipment related. So we believe somewhere between 10% to 12% tax credit would qualify against our capital costs. And that would include bonus depreciation or additional benefits off depreciation.
spk02: Zach, aren't I right in saying that Congress is also considering potential subsidies for clean hydrogen production? You never know what comes out of Congress, but that's certainly something that's being discussed.
spk01: Yeah, you're correct, Jeffrey. So the Build Back Better plan, again, if it passed or a version of it passes this year, the Build Back Better plan had up to $3 per kilogram of production tax credits for hydrogen. It was based on your carbon intensity score. So with us having a world-class carbon intensity score, we would qualify for the full $3, where blue hydrogen would qualify for much less carbon. And a point to note there is if we can track market share now, just plain on because of the cost of our hydrogen, and then you add on top that we have investment tax credit, you have loan guarantee programs, and then you've looked at our levelized cost of hydrogen that Ben shared in the presentation, and you take $3 a kilogram of tax credits out of our levelized cost of hydrogen, it becomes extremely competitive.
spk03: Thanks, Zach. Question here around the off-takers for some of the projects currently under development in Evora or Encinas.
spk01: So where we are on off-take with Evora and Encinas is generally, we're right now in discussions with several off-takers around refueling station applications as well as selling into the power grid. Those conversations are ongoing. And as we, our strategy is after we get through the licensing process on the projects, we will then be commencing, you know, negotiate off-tick agreements because one thing I've learned from doing development is is if you go and you secure offtake too soon, before the projects are licensed and ready for construction, you usually pay a pretty big discount. So we want to make sure that we maximize returns to the company, and we plan to execute on offtake post-licensing. So specifically to Evra, the plan is to sell into the grid right now. It's a hydrogen power project. And we're well along the way for doing that starting in the summer.
spk03: Great. Thanks, Zach. Question around current utilization at Benevente. Is there a minimum level of activity needed or can you ramp up or down production as sales come in? I have an answer, but I'll let Frederico chime in first.
spk00: Sure. So we do expect that for 2023, around about the sort of 100 megawatt level or let's call it between 70 to 100 megawatt level to be the reduction capacity we need to be targeting to be able to have it on a full utilization of the lines installed. So that's where we're targeting to make sure that we're having those economies of scale as much as possible. For this year, we saw there is a gradual ramp up of costs and we're doing it by a sort of a soft launch. So we will add shifts as needed later in the year when we see the production required. So I think that's more of a 2023 question than a question for 2022 as Benevente continues to build out. And then I would say it's between the 70 and 100 megawatt level in 2023. Yeah, sure.
spk03: I think just adding to that, in terms of near-term production at Benevente, Federico mentioned the introduction of the installation and go live of the initial production activities and the HEVO line in particular. So at kind of the, they were likely around a minimum of 120 HEVOs as opposed to HEVO solars, HEVO microelectrolyzers per day at kind of running on, that's kind of the minimum production throughput with the ability to ramp up as needed. There's a question around the project pipeline through 2026. The slide that Zach had presented, are those figures per annum or the sum over the next four years? It's a pretty obvious one, but Zach, you want to take that? You can take it, Ben. Sure. So that is an aggregate over through 2026, not per annum. Although once those facilities are are online than you are, you're talking about per annum production. Federico, guidance for G&A costs following the ramp up of hires. You alluded to this, that we expect to remain within the 2.3 to 3 million euro range through the year end. Any further color on that?
spk00: So it was around 3 million of operating costs booked in Q1. Q1, as I mentioned, about 1.6 related to personnel, the personnel ramp up that we'll see will obviously increase that 1.6, but not as substantially as people might expect. So we still expect to be in that 2.3 to 3 million range in Q1. We did have a number of operating expenses that were booked that are not sort of recurring throughout the year.
spk03: Thanks. Question on the mobility platform. the CapEx, what does that CapEx represent? Will those be owned projects or tech sales? I think, Zach, you mentioned a combination of the two. Any additional commentary?
spk01: It's roughly 50-50 split between fusion fuel loans and tech sales. The CapEx is very similar. We're building our HEVO solar and the balance of plant equipment. for those refueling stations. And those projects are, there's different applications, or there's different, I'll say aspects of every project, but generally it's our EVO solar equipment and balanced plant equipment.
spk02: And I just wanna sort of jump in for a moment when you mentioned mobility. One of the things that Zach mentioned in his presentation, was the advantage that our modular approach to producing green hydrogen has over the centralized electrolyzer approach this is particularly relevant in an area like mobility where i think as we all know the demand for green hydrogen is going to be growing sharply over time but today it is fairly modest and lots of folks want to stick their toe in the water so to speak to prepare for that future growth but they don't necessarily want to make the type of very large capital investment that's required to install a centralized electrolyzer at size that enables the centralized electrolyzer manufacturer to drive the cost down. We're able to be installing at fairly modest size, enabling users to to grow as demand grows and we're able to be cost competitive even at modest size and so we have the benefit of this this modularity and and as you said we're able to for for facilities where they can be where the hydrogen production can be co-located with the refueling, we are able to avoid the need for those logistics and distribution costs. So mobility is really an area that we are extremely well positioned to serve this market both today and as it grows over time.
spk01: One more point on top of that, Jeffrey, and I thought that was all great. I go back to my comment I made in the presentation around, you know, really centralized electrolyzers struggling to be as competitive as below five megawatts of capacity. And, you know, for example, the largest refueling station project in our pipeline is roughly 180 Hevo Solars. So to kind of break that math out, the largest one is roughly just over four megawatts of capacity. So for us to kind of go from projects the size of one megawatt to four in this space, we're very cost competitive. where our competition can't. And the other thing we're seeing is that they don't have production available today. And we're able to kind of fill in on projects that are permitted and ready to execute.
spk03: Thanks, Zach. A follow up on the mobility question. Do you have a sense as to the pipeline for any of those mobility projects? I'm sorry, the timeline, not pipeline.
spk01: That timeline represents projects that we're working to execute over the next two years. So it's not part of the five year plan. It's our kind of short to what we call medium term projects internally.
spk03: And then a related question as well, more broadly around time to market for projects. Assuming no commissioning or permitting issues after the initial project, is that timeline measured in months or years? And then the related question is, are there any updates regarding the delays in the licensing process?
spk01: Yeah, it's a great question. I'm going to focus on Portugal. It's where a lot of our initial projects have been. So we had some great news about a month ago, which was there's an exemption that was passed by the Portuguese government that cut our permitting timeline by 50%, which would put us from start of a project to finish. of under 12 months. So it's definitely now measured more in months than years for the projects.
spk00: I would say that the, especially EBR2, we expect to benefit from that. As Jeffrey mentioned, if you come in the summer, we fully expect to have EBR1 commissioned, but on the EBR2 and EVO SUL and so on, those are projects that we expect to benefit from this accelerated process. Great.
spk03: Just a question here around how much hydrogen is being produced at the pilot project in Eberra.
spk00: So the pilot project, until it's commissioned and live, we can't go live with all 15 of the hyposolars. So we currently continue to have the two hyposolars. producing hydrogen and releasing it into the air, or for testing purposes, measuring purposes and so on, as soon as it's commissioned, we will go live with the 15. And then when we go live with the 15, we're talking about roughly around 15 tons per year of production. Unfortunately, the first hydrogen being produced, green hydrogen being produced in Evron was in August of last year. And we have been continuously on and off testing of that facility while the permitting process closes until now. But we've had to release it to the air. We're not allowed to store or capture it.
spk03: Thanks, Federico. A question here via email around capital position and whether management is thinking about raising additional capital at any point in the near future?
spk00: Sure. So as I mentioned, we have that cash position. We do have a significant amount of stock. We do expect to continue to invest both in our projects and in some raw material for production, which will impact our capital. We expect that the, as we mentioned, the inflows from both the tech sales and the grants to provide us with some support. So until now, we've been mainly operating on a cash outflow basis. We're now moving into hopefully booking some inflows as well. Now, what we've said in the past and what we've discussed is that we want to be sure that we have optionality on our capital. We see that there is a lot of opportunity in the market. We see there's a lot of opportunity in making sure that our projects can proceed and that are not hindered uh through delays on or concerns on the capital side um what we did do is we we have filed a shelf that is public and can be seen in our filings uh for up to 75 billion uh this is us being just prepared uh if needed and as we uh and if required then we can um look to tap into that through through various different means So we always want to have optionality and do whatever is possible to not sacrifice the phenomenal growth opportunity that the market is presenting to us right now. Geoffrey, on the capital position, maybe you want to say a few words as well?
spk02: Yes. So as Zach described, the grants that are available to encourage the development of the clean hydrogen industry can enable a low-cost producer like ourselves to be generating attractive returns on projects that we might take on. So if we are to wind up winning some of these grants that will enable us to move forward with some of these very high return projects, we have to think about how do we fund the company's share of those projects sort of the complement to the grants that are received and one choice is to fund it with with uh 100 of the project owned by the company in a scenario like that we we would need to be raising capital another choice would be to go out and find a partner who would be interested in putting in some or all of the equity to complement the grants. And so we will see what generates the best returns for our shareholders on these. If we do win some of these grants, these will be very very profitable projects. And we'll take a look at what options generate the greatest accretion to value for the shareholders, whether that's raising capital to enable the company to take those projects on themselves, or whether it's the company using some sort of SPV project company structure in which we use third-party equity for those projects. So we'll Like we have said in the past, we have multiple levers that we can pull to facilitate our growth, and certainly raising capital is one of them.
spk03: Great. So nearing the top of the hour here, just squeeze in one or two more questions. A question around how many HIPAA solar units we expect to produce this year. As Frederico mentioned, that will be, we will do our best to try to align that with what we expect to be able to deploy in the field. So I need some time.
spk00: Yeah, Frederico, go ahead. Sure. So, yeah. We're currently producing for 350 units. We, as soon as we hear, hopefully as Zach mentioned in June, July, on the C5 and C14 answers, we'll ramp that up to 600, between 600 and 650. And as we know, so as the projects get confirmed, are in a position to start receiving units, our production will ramp up. So as we are optimistic that those grants will come through, I would say that we'd be looking at around the 600, 650 mark. If further projects come along, we will see what we need to do in terms of production.
spk03: Okay, thanks, Frederico. So we're now at the top of the hour here. If anybody's question did not get answered, feel free to reach out to the IR mailbox, and we'll do our best to get in touch with you. Otherwise, that will do it for our first quarter webcast. So thank you to everyone who joined, and we look forward to our next update.
spk01: Thank you. Thank you, everyone. Have a good day.
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