Minesto AB (publ)

Hello and welcome to today's broadcast with Minesto, where CEO Martin Edlund will present a report for the first quarter of 2025. After the presentation, there will be a Q&A, so if you have any questions, you can send them in via the form to the right. And with that said, I hand over the word to you, Martin.

Thank you very much. And hi, everyone. It's quite impressive to see the interest in an update from Inesto like this. So I think this is a good format that we will keep going with. Unfortunately, today, my colleague and brothers in arms, Gustav Kvibling, our CFO, is not available this morning. So I will attend to and focus a lot on strategy, content, progress, technology, all the areas that I'm driving in Minesto. And we will also... have room for quite some questions. I just heard from the organizer here that a lot of questions has come in just lately. So I try not to be too lengthy with my run through to be able to cover as many of those questions as possible. And we'll try to stay within the hour that we have set aside for this. So first, on technology and the status of our operations in Westmanna over the winter and first quarter here, we published in January the results or shared results in general on the large third party valuation of our production during 2024 with a big commercial scale D12. And I think the main takeaway from that is that the next natural step, as DNV puts it, the next natural step for Minesto is a scale-up in number of units into a dragon farm aiming for Hestfjord. And with our internal work over the first quarter, I think we can just underline that the technology is in really good shape and ready for that scale-up. And if we look at the operations and the work we're doing in Westmanna, there are basically three areas here, three purposes of this, with the evolution of the technology and being ready. The first one is related to operations. You see this, it looks a bit messy from this drone footage here that you see. And in this context, there are a lot of unique steps of handling, of lifting, of moving, of inspecting and testing that needs to be in place and to be scalable for the next phase. And I think that we've had all the progress we need up until now in being ready to do this with multiple units for Hestfjord. So that, let's say, operational aspect, including the marine operations, is really, really in a good shape. And you can say, is that anything to talk about? And is that a concern and so forth? But we should be aware that no one else is towing megawatt power plants of this type in the world. And no one is doing marine operations with power plants within hours from Quayside to launch. And this is really at the core of the competitiveness for Minestos. We better make sure that those procedures and the supporting technologies are robust and at the performance levels we need them. And they are in place. Definitely so. Then on the hardware, the tech, to build six units and do some tweaks to the D12X, which is the next unit, we also believe that we're ready. We've had some small upgrades. We've had inspections. We have had repairs and service needs and a lot of experience now in handling, touching, working with the units. And all that is also now migrated into the build of D12X. of the six units for Hestfjord. The third area on demonstration, the obvious goal for us is to do more, and not only with the D12, also with the smaller units, where we are in discussions on microgrid installations for that unit. So that is what we're looking forward to. We will start with a D12 and then we will move also to get smaller units into production, in demonstration production. And this is obviously also supportive or more, let's say, more needed from a commercial perspective than from a technology perspective today, let's say. I think I'll hold it there on the test site and testing and then move on to... to the Horsfjord or Hestfjord, which is what we're really eager to get going with, to really now go into a commercial demonstration array to take Minesto forward. And we're not just sitting around waiting for project investments and project development to happen. We're working. This is our priority activity in many ways when it comes to hands-on infrastructure design, site development work, site measurements, and also the financial setup around it. So just to comment on a few of those activities that we're involved in. I mean, we've set, and I think we've mentioned that externally also on a few occasions, that we've set a market development company that we call Vretjin, which means the dragon in Faroese. And it's not a conventional special purpose vehicle or special project vehicle. It's a market development company where the rights... to develop the tidal market with our technology in the Faroes resides. And what we're trying to do here is also to, let's say, compensate for the fact that this is not just a normal infrastructure investment. I think this is something the sector needs to do better, and I think we are at the forefront of that, to acknowledge that the risk profile and the setup of a world-first array like this one is not a setup where you can do it in the same way as you do with wind farm number 55,000 in the world. And this market setup, those rights and the way we structure it is one part of helping that. We also really want local investors on board with this. This is a natural resource that should be long-term owned and operated by the Faroese and from a Faroese perspective, given its huge value for the Faroe Islands. We have also, in this context, decided on and in dialogue with government and our partner SEV to set it up in a way where we will be able to benefit from the same strong power purchase agreement price level that we have for the test site in Västmanna. And that means that the first 10 megawatt build-out has a price level that is significantly above market prices in Europe or elsewhere, but at a commercial level from the Faroese perspective. And that is a huge strength. I think that will position the Hesfjord case as the only investment opportunity in the world for a tidal array where there are actually, let's say, commercial terms and not everything based on huge subsidies that we see in the UK. which actually are competing technologies need to even be able to make a case. Having said that, of course, we are not going to sort of put the opportunity to secure support funding to this aside. The EU is creating a lot of opportunities in this area and we are definitely there and involved in it. It's a good way of driving business development also because it drives partnerships, it drives, it's challenged you to really build partnerships business, build the business plan for a case like this. And there's a handful of opportunities for us now in this area, where being a Swedish company is an advantage because the Faroe Islands is not always included in those EU based funding setups. We do more in the Ferros. We're also involved together with SEV, the utility company, to look into grid mix simulations. We've known and we've seen data historically from research and from SEV's own analysis that the tidal case has real serious advantages to really create cost-effective simulations. net zero energy for the pharaohs and we believe that we have strengthened this case even further and that we will have a story to tell that will be further emphasized in this as we move on and i think this is this is at the core of of the energy transition debate also globally to really be able to hands-on, step-by-step show that it is possible to reach net zero and build 100% renewable networks that are affordable. I think we can compare with Sweden and other areas. I mean, we have a debate now on how much wind and how much storage. And I think we can conclude from a more controllable context as the Faroe Islands that... that there is the belief in the really high quality wind resource in the Faroes to be able to fix that on its own together with a small hydro. It's simply too costly. The overcapacity and the long-term storage needs makes it very, very difficult to afford it. So even with tech risks being a novel technology, we believe now that it's fair to say that to reach net zero, the Faroe Islands need the Minesto technology up to 40, 50% of the energy production. And this is something that we are showing in numbers and are working on together with SEP now as a part of funding the Hestfjord and really show the economic value of what we're doing. Also on the same topic, we have seen now from our analysis of hands-on ADCP measurements in Hestjord, which is equivalent to measuring wind speeds in the wind sector, where you can analyze the energy content in the straight that you see here, the nice illustration we have in front of us. And of course, the more energy that passes through the straight here, the better the business case. And there is a significant increase from our real measurements to what we historically have relied on from simulations. So this is also really good news for the business case and making it investable. I think some of you, if not all, have also seen that as a part of our Faroe Island commitment, we've also, together with SKF, had quite a successful and, as we believe, rather cool commercial exposure with the Faroe Island space program. I will come back to that, and I even will take some of your time to show you one and a half minutes film from that. But that focus on the Fair Island context, and it's also the reason why we're involved in that and do that, apart from general exposure, is of course to support the Hestfjord investment case. And A final comment on Hestjord is related to manufacturing, where I believe I'll try to move into my next topic. We obviously get from local investors and others get questions around how will you supply six units in the first phase and then another 150 to 200 units into the Faroe Island context. So we have together with suppliers including SKF been working on an analysis and a conceptual design of how to manufacture our dragons. And I think it's fair to say that Minestos technology has unique competitive advantage in many ways related to handling and operations and its energy conversion performance in the sector. But we're also unique in the way that that small size, relatively small size, and that it's built on components that can be manufactured at supplier sites at volume. This puts us in a situation where we can do where we can streamline batch-oriented and flow-oriented manufacturing processes. So building kites is not a shipyard one-off operation. And this is a huge advantage because it means we can build volume faster. We don't need bespoke key sites or unique environments for this. We just need to duplicate and migrate a stable best practice system integration and assembly process. And we're looking into doing this in a specific area in Sweden on the West Coast. And we have the partners on board to do the first phase of development of this, to really be ready to push the button when needed. We already have... capabilities to build prototypes with the same suppliers and basically with the same testing and quality assurance. But by doing this in a streamlined way and building a small bespoke operation for it, we will be really ready for scale up. And this will also lower the risks from the project investor perspective, where we can show hands-on how the six first units will be built, tested and quality assured and even transported for direct installation at site in a very efficient way. We hope to be able to talk more about this as we move on. And also to underline here that this is not something where Minesto is going to burden our balance sheet with manufacturing or plant investments. This is build as you grow setups, where it's a lot of focus on on, let's say, testing the process and not building expensive assets for production. And we're not doing it as a small standalone tech startup in this. We're doing it together with really strong global partners that have experience in this type of manufacturing, of course. But growing importance, and I think we're in a good place. So, okay, that's the manufacturing. And then perhaps if you bear with me, for those who haven't seen it, this is a minute or so on communication.

Increased demand for energy has led to a new space race. Global superpowers are competing to control lunar resources. One of the world's smallest nations will now join them. With one difference. This space program will never leave Earth. We already have endless lunar power. It's called tidal energy. Our spacecraft won't go up. They'll go down. And they'll fly underwater. As tidal streams pass through their turbines, they generate renewable moon energy every day, right here on Earth. The space program is a part of the Faroe Islands mission to reach 100% renewable energy by 2030. Join us in making the most of the resources we already have.