unlocking a new era of solar power
TRANSCRIPT
Unlocking a new era of solar power
18.08.2021
Rogaland Investor Forum
Disclaimer
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The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not rely, act or make assessment on the basis of this presentation or anything included therein.
The following presentation may include information related to investments made and key commercial terms thereof, including future returns. Such information cannot be relied upon as a guide to the future performance of such investments. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Norsk Solar AS or any company within the Norsk Solar group. This presentation contains statements regarding the future in connection with the Scatec Group’s growth initiatives, profit figures, outlook, strategies and objectives as well as forward looking statements and any such information or forward-looking statements regarding the future and/or the Norsk Solar Group’s expectations are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.
The following presentation contains unaudited financial information
Alternative performance measures (APM) used in this presentation are described and presented in the 1st H report of the group for 2021.
–– Norsk Solar
18.08.2021
Rogaland Investor Forum
Org.nr. 819 113 912
Norsk Solar Stavanger (HQ) Oslo
Løkkeveien 107
N-4007 Stavanger
Norway
Phone: +47 455 00 840
norsksolar.com
Møllergata 23-25
N-0179 Oslo
Norway
Øyvind L. Vesterdal
Presenting
Helga CotgroveChief Executive Officer
Chief Financial Officer
Overview, Highlights & UpdateØyvind L Vesterdal – CEO 10 min
FinancialsHelga Cotgrove – CFO 10 min
Market & OutlookØyvind L Vesterdal – CEO 10 min
Q&AØyvind L Vesterdal (CEO) and Helga Cotgrove (CFO)
10 min
Agenda
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Overview, Highlights & Update
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Øyvind L. Vesterdal – CEO
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About Norsk Solar
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Established in Norway, with a global reach.
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Norsk Solar develops, builds, owns, and operates large-scale solar PV power plants in emerging markets – maximizing our impact on sustainability and economic growth.
–– Norsk Solar offices –– Active markets
• Norsk Solar is a fast-growing solar energy company
headquartered in Stavanger, Norway
• A vertically integrated independent power producer,
founded in 2017
• Listed on Euronext Growth since April 2021
• Competent team with extensive experience
Featured partners:
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Development Finance Construction Operation Asset management
• Project and business case
development
• Site development, land &
project rights, licenses &
permits, grid connection
• PPA negotiation
• Power production
• Asset management
• Financial optimization
–– Norsk Solar
• Debt and equity financing
• Due diligence (technical,
legal, integrity and
financial)
• Financial modeling,
costing and cash flow
management
• Engineering, procurement,
construction and
installation
• Project management
• Quality assurance
• Operations and
maintenance
• Maximize uptime and
performance
• Asset integrity
Solar as a service - providing clean and reliable power while significantly reducing clients overall power cost
Norsk Solar is an experienced organization that secures value in all phases of a project and ensures sustainability alongside financially and technically viable projects.
From origination and early-stage development, through structuring of financial, technical, legal and regulatory matters, Norsk Solar will secure construction and operation
for solar PV projects that will benefit both local communities and secure growth for the organization.
Our value chain
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Power plants in operation
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• Gharo, Pakistan
• Customer: K Electric
• COD December 23, 2019
• Capex USD 46,6 million
• Debt and equity 75:25
• 13 year debt tenor
• Norsk Solar ownership 10%
• PPA duration 25 years
• Semypolky, Ukraina
• Utility
• COD July 1, 2020
• Capex EUR 8,9 million
• Debt and equity 50:50
• 10 year debt tenor
• Norsk Solar ownership 45%
• PPA duration 10 years
• 10 rooftop sites in Vietnam
• Customer: Central Retail (C&I)
• COD Q4 2021 (under construction)
• Capex USD 8,2 million
• Debt and equity 70:30
• 14 year debt tenor
• Norsk Solar ownership 100 % -> 28 %
• Long-term PPA
Pakistan
50 MW
Ukraine
9 MW
Vietnam
11 MW
–– Norsk Solar
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Commercial & industrial market
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Benefits inthe Commercial and industrial(C&I) market
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No capital investment for the customer
Creditworthy clients
Significant savings on their electricity bill
No need to wait for government programs
Fast deployment creates immediate savings
Short time from prospect to powerplant in operation
Lower carbon footprint and increased sustainability metrics
Potential to implement complimentary services (Storage and services)
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–– with Norsk Solar
For the client For Norsk Solar
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Joint investment platform with Finnfund
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Nordic Impact Cooperation AS
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• Joint investment platform with Finnfund
• Securing additional equity financing for projects in developing countries
• Earlier stage funding than traditional debt financing
• Construction phase versus commercial operation phase (COD)
• Possible due to Norsk Solar decision gate and strong due diligence
process
• Initial target of NOK 150 million, potential to grow to NOK +1 billion
Nordic Impact Cooperation AS
Value added
to SDGs by
the platform:
–– Platform and project structure
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2021 first half highlights
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1H Highlights
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Listed on Euronext Growth Oslo
Established partnership with Finnfund: Nordic Impact Cooperation AS
Construction started in Vietnam – despite COVID
Major development in Brazil- first fully fledged NSOL regional hub
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–– Norsk Solar
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1H key highlights
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International expansioninto key markets5
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Europe
– Market entry in Hungary and North Macedonia
– New legal entity in Hungary
– Term sheet for PPA with off-taker in North
Macedonia for first 10 MW of larger portfolio
LATAM
– Market entry and new country
unit in Brazil
– Development agreement with
off-taker signed for first 37 MW
in a larger portfolio
Africa
– Country unit under establishment,
reinforcing Sub-Saharan Africa
activities
– LOI in Morocco with one of the
world’s largest retailers
Asia
– Construction in Vietnam ongoing with
flagship C&I off-taker
–– Norsk Solar
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Financials
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Helga Cotgrove– CFO
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1H 2021 – Norsk Solar Group P&L
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+ 901%Increased revenue
- 144%Decreased EBITDA
• Group Revenue ~NOK 7 million for 1H 2021, 1H 2020 had no plants in operation
• Increase in operating cost reflects increased activity
• Listing/ one-off costs influencing EBITDA - NOK 6,3 million
• Listing Bonus to management, recruiting cost, one- off fee to stock exchange etc.
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+ 6New employees
All figures in 1000 NOK 1H 2021
(Unadited)
1H 2020
(Unaudited)
FY 2020
(Audited)
Revenue 6,775 752 8,375
Other operating income 0 1,750 3,281
Total operating income 6,775 2,502 11,655
Cost of goods 2,503 1,216 5,292
Payroll expenses 9,768 3,103 7,846
Depreciation 4,980 0 7,041
Other operating expenses 4,902 1,033 3,926
Total operating expenses 22,152 5,351 24,105
Operating profit -15,377 -2,849 -12,449
EBITDA -10,398 -2,849 -5,408
EBITDA adjusted for various
one off -4,115 -2,849
1H 2021 – Norsk Solar Group balance sheet
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• Total available cash ~NOK 130 million.
• Private placement of NOK 140 million prior to listing
• 5 million Euro in unused debt facility
• NOK 40 million in non - recourse debt in Ukraine
• Inventory is project under development
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All figures in 1000 NOK 6/30/2021
(Unaudited)
12/31/2020
(Audited)
Total fixed assets 69,406 73,546
Inventory 4,046 2,638
Total receivables 6,453 5,217
Cash and cash equivalents 143,227 27,032
Total assets 223,131 109,274
Total shareholders equity 174,343 54,659
Non-controlling interest 15,606 19,253
Total non-current liabilities 43,945 44,328
Total current liabilities 4,844 10,288
Total equity and liabilities 223,131 109,274
78,1% 50,0%Equity ratio:
Flow of funds
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Income streams for Norsk Solar AS
• Development and construction (D&C) revenue and margin
• D&C revenue is being eliminated in group financials due to intercompany
eliminations
• D&C revenue expected to average 50-70% of project capex dependent on Norsk Solar’s
role in the project
• D&C margins 8-15%
• Dividend from plants in operation (replaced by consolidated numbers
from the subsidiaries in the group accounts)
• Built on long term recurring revenue from the subsidiaries/projects
• Power production: Annual recurring revenue for 15+ years,
average IRR on equity in projects 12-17%
Financing
• Equity
• Equity from 3rd parties (i.e. Nordic Impact Cooperation AS)
• Non-recourse financing from project lenders, triggers at Commercial Operation Date or
earlier
• Bridge financing in the construction phase, i.e. bank financing at parent level or
subsidiary/project level
• Sale of ownership of plants in operation
• Capital discipline is KEY
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Market outlook
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Øyvind L. Vesterdal – CEO
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Solar Market Growth
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Source: Bloomberg New Energy Outlook 2021
Getting on track for net-zero emissions in 2050 means deploying commercially available abatement technologies in each sector this decade. According to BNEF solar power on its own
should reach per annum an installed capacity of 455 GW (3.6x 2020) per year till 2030. Solar installations in 2020 alone were of 127 GW.
As solar is becoming the LCOE source it’s deployment for supplying more power to an electrified world (i.e. 35m of EVs added on average per year till 2030) and producing green
hydrogen will drive further growth on solar installation up to 632 GW/annum (4.9x 2020) until 2050 as per the "green scenario" of BNEF.
IEA expect annual solar PV expansion to reach 145 GW in 2021 and 162 GW in 2022, breaking records and accounting for almost over 55% of all renewable energy expansion this year
and next.
The latest IPCC report proves the need for and the urgency of increasing renewables
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Source: IEA
Green Scenario 2050 - BNEF Net renewable capacity additions by technology, 2019-2022
108.6
134
145.3
161.6
0
20
40
60
80
100
120
140
160
2019 2020 2021 2022
GW
Solar PV
59.5
113.6
82.877.5
2019 2020 2021 2022
Wind
14.220.6
32.9 32.1
2019 2020 2021 2022
Hydro
9.4 10.1 8.9 8.4
2019 2020 2021 2022
Other renewables
Solar Market (C&I)
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Source: IEA Source: IEA
Corporate power procurement had another record-breaking year in 2020, with a 25% year-on-year increase credited to declining costs and PV rates more competitive than
utility electricity bills
While the United States remains the world’s largest corporate PPA market, activity in Europe and Asia-Pacific region is also growing
In Latin America, Brazil continues to be the largest corporate PPA market with an increasing number of projects relying on long-term contracts outside the government’s
auction scheme
Shifting to renewable energy is not only necessary and possible, but it also makes business sense (REN 21)
Corporate PPA volumes by region, 2015 - 2020 Corporate PPA volumes by technology, 2015 - 2020
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4.0x 4.3x
Featured markets
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• C&I market upwards of 1 GW and growing fast
• Norsk Solar market entry with solid partners and country
unit
• Country pipeline exceeding initial targets
Brazil
100+ MW pipeline
Vietnam
50 MW+ pipeline
North Macedonia
100 MW pipeline
–– Norsk Solar
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• Skyrocketing solar, but utility have plateaued for now
• C&I market not dependent on government utility programs
• New project developments in line with 11 MW project in
construction
• Electricity market is dominated by fossil fuels
• Unique business model with merchant and C&I
• First project of 10 MW in advanced development stage
Project pipeline
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Development*
453 MW
60% C&I / 40% Utility
Brazil
Colombia
Ecuador
Honduras
Hungary
Maldives
Morocco
Nicaragua
Nigeria
North Macedonia
Pakistan
South Africa
Vietnam
Zimbabwe
Construction
11 MW
100% C&I
Vietnam
*Opportunity pipeline of more than 2 GW not included
On schedule for 2021 target of 100MW and 2025 target of 2GW and NOK 3Bn revenue
– based on current pipeline and rapidly increasing C&I portfolio
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Key highlights
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Utility projects developments delayed by covid, C&I sector largely unaffected
Significant increase in C&I projects compared with the utility market
Strong pipeline within C&I – this is the future and key focus for NSOL growth
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The solar market is booming
Solid infrastructure investments with long-term recurring revenues
Norsk Solar is uniquely positioned globally within the commercial and industrial («C&I») segment in emerging markets
–– Norsk Solar
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Summary
18.08.2021
Rogaland Investor Forum
Unlocking a new era of solar power
18.08.2021
Rogaland Investor Forum
Org.nr. 819 113 912
Norsk Solar Stavanger (HQ) Oslo
Løkkeveien 107
N-4007 Stavanger
Norway
Phone: +47 455 00 840
norsksolar.com
Møllergata 23-25
N-0179 Oslo
Norway
Øyvind L. Vesterdal
Q&A
Helga CotgroveChief Executive Officer
Chief Financial Officer