Meyer Burger Technology AG (MBTN) Earnings Call Transcript & Summary

Ladies and gentlemen, the investors, the analysts welcome to Meyer Burger's webcast on the occasion of the today's publication of the H1 financial results. My name is Gunter Erfurt. I'm the CEO of the company. And with me is Mr. Moritz Borgmann, our Chief Commercial officer. We want to discuss and present today financial figures and give you as well an update on our business and the business environment on the market. And of course, we will also give you information on today's announced agreement for an offtake with the U.S. headquartered DESRI D. E. Shaw Renewable Investments. And let's start with an update on our manufacturing and where we stand in production. We had reported end of year 2021, 30-megawatt of production, which was a pretty small number due to our delays with the ramp-up last year. In the meantime, and in H1, we have produced 108 megawatts, of which we have been able to sales recognize 87 megawatts. This gives you also an indication later on when we speak about the sales contribution of the module sales, where we stand with our ASPs, and Moritz will give us further information on this. We have until August 15, produced almost 150 megawatts. We already see that we have an increased throughput or reduce tech time to use this technical term. In essence, we are able now to run the line at the highest speed possible. We still see some impacts on the full throughput caused by our 3 product variants we are producing currently on the same line. That means whenever we switch our products, our Black, White and Glass, we have to empty the line, put some new materials and restart the line. So this is at the expense of the throughput. And in addition to that, as we are currently increasing our manufacturing capacity in the same factory, we have to, once in a while, stop the line in order to embed new equipment to connect the tools to start software debugging and things like this in order to be ready to start the ramp as planned in September. But overall, we are very happy with the achievements in manufacturing, both in terms of the throughput, but also in terms of our yield and, of course, the quality. I already mentioned that I can confirm what we have earlier communicated on August 2, but we expect the ramp-up of the additional capacity to begin effectively in September. Supply chain is a big topic nowadays, and supply chains are risks of continuously reviewed and we are taking action to balance this as good as we can. And so far, I can report that we have not seen any issues from nonavailability of direct materials that we need for the manufacturing. Yes, we've been suffering from delayed deliveries of some components for the equipment, but these components have been delivered in the meantime. And again, I can confirm that we will start the ramp of the additional capacity in September. We are also continuously derisking our supply chain. We have just earlier this week published a deal, an agreement with Norwegian wafer make, Norwegian Crystals for first deliveries of Europe made low carbon footprint wafers. And we are also in discussions with this specific vendor to increase these volumes as we grow also Meyer Burger's business. And with the wafer, that's worth mentioning, we have also closed the last gap that we were facing in terms of fully European supply chain, all the other components we are already able to source at least partly in Europe. It's not our goal to source entirely from Europe. This I can make to hear as well. But we want at least to have a critical volume that we can source outside of Asia or in Europe in order to make sure that we have also the leverage when we negotiate our contracts. On the financial figures, we see compared the H1 numbers, of course, the effect of increased sales in our growing business as well as a decline in the legacy business. We have us sales recognized for the module business of CHF 42 million. Again, I mentioned the sales volume, 87%, which gives you the indication on where we stand with the sales prices and comparing them with last week, we see an increase of about [ CHF 0.04 per watt peak ]. EBITDA is, of course, still affected by the low volume and the ongoing ramp-up. And so are the other financial results because we are, for instance, already paying interest rate for our syndicated loan facility, and this is reflected in our results. FTE numbers have, of course, increased because of the growth in our manufacturing capacity we have in the meantime in July, exceed 1,000 people number in Meyer Burger. And we, of course, will continue growing our workforce as we grow our capacities. Cash and cash equivalents, of course, have been reduced comparing end of last year due to our CapEx -- ongoing CapEx investment and the ongoing business, the OpEx. PP&E increased, of course, because of the investments and equity reduced because of the drawdown of addition of the syndicated loan facility. The investment part, this chart is known from our last conference. We have showing here the total investment required to achieve the 1.4 gigawatt capacity, which we are building right now in Germany. We have spent in H1 another CHF 70 million on CapEx and expect until the project is completed another about CHF 130 million for the 1.4 gigawatt capacity. And for next year, I can also reiterate and confirm the earlier published production guidance of achieving up to 1.2 gigawatt in production for next year. The financial liabilities, of course, have increased because of the drawdown of the outstanding amount of our syndicated loan facility. So the EUR 55 million we have in euro shown, we have drawn down the full amount now of the syndicated loan facility. We have a factoring facility, which is being used already. On the cash side, last year, we stood at CHF 231 million net cash. We have a reduction caused by the ongoing business here shown as EBITDA and of course, also a change in the net working capital. If you look into our balance sheet, you see that our inventory -- inventories have grown to CHF 61 million, which reflects the ongoing business, the increase in business, but also shows that we have to cope with longer lead times for our materials with higher prices. So this has also an enormous impact on our cash balance. CapEx, we spoke already about with CHF 71 million and the increase in financial liabilities, ending H1 at CHF 167 million net cash. We have restricted cash, pledged cash in the bank and in total, CHF 186 million. With this quick update, I would like to hand over to Moritz to speak about the CS marketing and, of course, also the DESRI deal, which was announced today. Please?

Great. Thank you very much, Gunter. So I would like to give you an update on our sales and marketing activities and some recent developments. So first of all, the obligatory market forecast update from the [indiscernible] So what we see here is that we can expect a continuous rapid growth of the renewable energy and particular solar build-out in years to come. Of course, we have a very challenging global situation on the back of the COVID crisis and the still ongoing global supply chain crisis. We're now also facing a very dire energy crisis. And in particular, here in Europe, due to the imperative to wean ourselves off of the Russian gas. We already had a very strong demand for solar before, of course, due to the climate imperative and the general realization that solar and wind are essentially the most inexpensive forms of generating electricity. But now it has become even more urgent. And this has now fueled a vast variety of policy measures policy announcements and also a huge demand from the private sector and also developers. And we are seeing this in our business. And so the demand is so high that supply currently cannot catch up with demand. This, of course, also leads to -- and this is also on the backdrop -- against the backdrop of the continuing global supply chain crisis. Of course, materials prices are still at a very high level. For example, polysilicon continues to be at a 10-year high. These are figures that we haven't seen in a long time in our industry. And so these are, of course, continuing challenges. But in terms of the demand for our industry, the outlook is very, very positive. Also, what is being increasingly realized is that beyond the simple fact that we need more supply globally, there's also the lingering question of supply diversity. And there is an increasing realization that is almost exclusive dependency on Asian manufacturers of solar components is not necessarily a healthy situation. And so customers are increasingly looking to diversify their supply portfolio. And this is also why we see a lot of support for European and U.S. solar manufacturing from policymakers, but also from our customers. We're very happy to report today a landmark milestone for Meyer Burger. From the beginning of our transition in 2020, we had communicated that our technology is ready and will be able to deliver -- to support all market segments in the solar industry, i.e., the residential, commercial, industrial and also the utility-scale segment. Of course, we started our journey in the highest value segment, the residential solar sector. But at the same time, we had to already prepare our market entry into the larger project business in order to prepare our growth. And the Meyer Burger team, and thanks again to everyone involved here. This was as a tremendous achievement over the past couple of months. We have worked very hard to secure our entry into the utility-scale sector and have reached an agreement with the major U.S. developer, owner and operator of renewable energy plants, DESRI, D. E. Shaw Renewable Investments. It's a subsidiary of the investment group D. E.. They have around [ $60 billion ] of assets under management and committed capital. So it's a very large major player in the U.S. And we have now closed an agreement with them for a volume of 3.75 gigawatts to be taken off in the period between 2024 and 2029, with a right of first refusal to extend this volume to 5 gigawatts and also potentially the option to extend the relationship beyond the 5 years period. Very importantly for us, this agreement comes with a very substantial recurring annual down payment, which helps us to our finance working capital and purchase the materials ahead of time. So what this means for us, as I said, this secures our entry into the utility scale sector and enable us to kick off our growth further into this decade. And on a short-term basis, on the back of this deal, we expect to be able to reach 3 gigawatts of production capacity in Germany and in the U.S. around mid-2024. This is contingent upon successful completion of financing, and we'll talk about that later. Very importantly, this agreement allows us to reach bankability for our product. That is very important and will then allow us to also scale our utility scale business with other customers in the future. In the short term, we believe that we will have a very healthy segment mix, about 2/3 residential, 1/3 utility. Of course, residential has stronger margins, but we need the utility-scale segment, scale. And also the annual debt payments allow us and the security and the visibility that we get with this deal allow us to further optimize our supply chain and further optimize costs. I would also like to mention that we are in discussions with a number of players, both in the U.S. and in Europe on further offtake relationships. And I'm very happy to report that the interest from the market continues to be very, very strong. Next slide, please. So one more very important thing happened in the U.S. We already believe to be dead legislation around support for renewable energy manufacturing, clean energy manufacturing in the U.S. has actually been revived in recent weeks. And thanks to the efforts of Senator Schumer and Senator Manchin, the so-called Inflation Reduction Act passed the Senate, then eventually passed the house and was signed into law by President Joe Biden on Tuesday of this week. This very comprehensive bill contains many provisions. But for our industry, very importantly, it contains provisions designed to support the domestic manufacturing of clean energy components. And very importantly, it provides not only -- it doesn't provide for CapEx support in setting up new manufacturing facilities, but it provides for OpEx support, i.e. a continuous tax credit for every module or cell or wafer manufactured in the U.S. And concretely speaking, since we are planning to start and launch module manufacturing at our Goodyear, Arizona site. This means that for every watt peak produced in our site, we expect to be eligible for a $0.07 per watt peak tax credit, which can actually be paid out directly in cash. That is our current expectation. And so just to give you an example, if we produce at 1 gigawatt capacity in our facility, this means that we will be eligible for [ $70 million ] of annual tax credits, and you can do the math how that scales with further capacity and over time. The provisions are scheduled to start phasing out in 2029 and end in 2032. So overall, a 10-year duration of the legislation could, of course, possibly be the extended beyond that. So we are very happy to see this support from the policymaker side in the U.S. And we believe that this, of course, confirms our earlier commitment to manufacturing in the U.S. And we firmly believe that this first step of filling the Goodyear site in the U.S. will not be the last step in the U.S. So an update on our current sales and marketing activities here in Europe and in the U.S. is also an order. So as I said before, the demand in the solar market by far outstrips the supply, and this also affects us. And in particular, affects us, we're very happy to support that the demand for our product is extremely high. And it is, in fact, so high that we have decided to no longer take proactive orders from our customers, but we have switched to an allocation mode, where we are allocating products in a fair manner to our existing customers. We're no longer onboarding new customers at this time. And at this time, currently, we are already allocating our volumes for Q2 of 2023. This is unprecedented in the residential distribution business. Nominally, the visibility and the order book is on the order of about 1 quarter. We're also very happy with the pricing. We are consistently achieving premium pricing and through two price increases since the introduction of our product to the market, we have been able to essentially pass through cost increases that we unfortunately had to suffer on the procurement side. Also due to the high demand, we're able to almost exclusively focus on the higher-margin residential business. But of course, in due course, we will also enter the commercial industrial. And then, as I said before, through the offtake deal in the U.S., the utility scale sector, and we have, for example, already entered into some but very limited iconic projects, for example, the SC Freiburg Stadium project, which was recently inaugurated. Very importantly, also for our sales operations, we have started shipping and also selling in the U.S. So first, Meyer Burger modules are with customers in the U.S. and the feedback is great. The only complaint is the lack of products. So we are working very hard to ship as much as we can to our European and U.S. customers. And of course, now in hindsight, given that there is this extreme imbalance between the demand and supply, technically speaking you could say, why do you even have this large sales team. But of course, it is very important to have established the presence in the market, our basic premise and principle is to be close to our customers, meaning our installers in the market. And so we have used our time very well to establish the relationships to our installer customers. And we have also used the time to establish the presence in a broad set of markets so that we are ready to scale once our production volumes go up towards the end of this year and also then in the next year. So with this, I would like to hand back to Gunter.

Thank you, Moritz, for the update. So let's now close with an outlook. We believe we have now with the aforementioned elements, both the pretty strong growth in the residential sector in Europe and in the U.S. and as well fueled by this benchmark deal with DESRI for the utility product have now a unique opportunity to accelerate our growth. And what we would like to do and to entertain is that we grow our capacities on the back of these expected capacities to 3 gigawatt nameplate capacity as soon as we can. So reaching this capacity by midyear 2024. Starting also shipments in 2024 to DESRI. And in detail, what we are doing or what we are planning to do is to increase the cell capacity in Germany. The plan is to do that in the Solar Valley to add another 1.5 gigawatt in cell manufacturing and do the entire additional module expansion in the U.S. So 1 gigawatt for dedicated production of utility products and 0.5 gigawatts for the U.S. residential market. That will help also to ease the situation that Moritz has described that the market needs product and producing it directly into the U.S. does help the lead times, plus it also going back to the tax credits, also in Greece, the tax credits potentially for Meyer Burger, running the factory at full capacity 1.5 gigawatt per annum. You can run the numbers yourself, it equals USD 105 million on an annual basis. So in order to execute this project, we are contemplating potential capital increase in the next months. We are in the planning phase. The necessity to consider this capital increase comes from the fact that on the one hand, we are accelerating the growth. We have until so far not planned to increase capacity throughout 2023. So the plan was to simply utilize the existing 1.4 gigawatt produce, generate cash flow and then eventually invest in the growth. So this is now expedited and accelerated. And in addition to that, I already mentioned working capital requirements, we have increased prices. In fact, today, there was a new announcement coming from China that polysilicon prices may go up again, due to power shortages in China. So we believe we have to deal with these constraints for a while. And so that all needs to be well prepared. And also in all transparency, we have communicated earlier this year and already last year that we've been facing a delay in our ramp up, which is resulting in also increased OpEx or ramp-up costs. And in order to now take the opportunity on the back of this agreement signed with DESRI and the strong demand in the market. We are now preparing a potential capital increase of CHF 250 million. I apologize that I will not be able to give further details on this capital increase today. It will be communicated in the next few weeks and months. All right. So with this, we end the presentation and are now happy to take your questions via the chat, and I already see we have a number received. If we are unable, just as another housekeeping advice to answer all questions, we will follow up with you by e-mail.

So starting -- so the as a housekeeping question where the presentation downloads, it's on our website. So we uploaded the presentation basically at the beginning of this webcast. So it should be available in the meantime. So let's go with the first question on the topic. Can you please update us on the current production ramp up following the guidance downgrade. I mentioned this already, so I can reconfirm what we have communicated on August 2. So we believe -- and you can also run the numbers yourself with 150 megawatts that we have achieved or produced until August 15. Assuming that we will also increase our throughput or reduce tech time as we're now taking the additional capacity into operations. We believe we can also the existing lines throughput, which is already on a very good level. So this one from today's perspective, looks very, very positive. With the capacity now being built in the U.S. and operational from mid-24, how should think about the $0.07 subsidy, including in the IRA? I think Moritz explained that, that is I believe, answered.

The question there is will you be eligible from the point the line is operational?

Are this lodging with sales of the product?

Yes. So obviously, we cannot make a definitive statement yet. The law was signed 2 days ago or 3 days ago. So we are currently checking this from a legal perspective, but we have reasons to believe that we will be eligible from the various [ start ].

Yes. So you haven't mentioned your '23 guidance. How should we think about the negative impact of the delays on the '23 margin targets? So as you could see today, we have decided to continue with the production guidance, but we are refraining from guiding on financials, simply due to the fact, but we have a very, very volatile environment in terms of the supply chain. I've already mentioned that just today, the breaking news came in that very likely Chinese polysilicon makers are increasing prices again. So these are news coming in like every week, and I believe it's fair to say that it's important before you provide a guidance that we have to have the clarity also on external factors, which is currently very, very critical. What I can say though is we have been able, until so far to pass on these increased material prices to our customers, pretty much one-on-one, which is also, of course, keeping us very optimistic on what Meyer Burger can achieve with our products. And this year's behind. On the long-term agreement, why didn't you receive a lump sum ahead of building capacity instead of prepayments in the future? I do admit that in March, we had communicated also the option that potential offtakers would contribute to the CapEx portion of -- to be added capacities. So this is obviously not the case in this agreement. Nevertheless, without stating the exact amount, I can assure you that the down payment we are going to receive on an annual basis is, I would say, exceeding normal market conditions. It's a very substantial amount. And this alone is a large contribution to the business, and we are very thankful to DESRI that they have with us agreed on this. So we decided to use this part of the financing, which is also very important, especially nowadays as prices have increased and longer lead times expected for the materials. And for the additional CapEx needed, we believe that a capital increase is the right -- can be the right tool on the back of this binding offtake agreement with DESRI, which secures the volume we are selling through the capacities we are expanding. Can you maybe also shine some additional color on the recently signed agreement with Norwegian Crystals? I can, to some extent. So in order not to not to provide too many details with regards to ongoing negotiations also for -- with other suppliers for wafers, we decided not to communicate the amount, but it is already a substantial part of our next year's volume. We are sourcing in wafers. And what's more important to us are 3 facts. Number one, we already see that wafers made in Europe can be manufactured very competitively. Number two, we have a super low carbon footprint with these wafers, which is a big advantage also in some sales regions. And number three, we believe jointly with Norwegian Crystals that this relationship can be grown and expanded as Meyer Burger is also planning to increase its capacity. So we believe it's super important that we have started, but we have an agreement that we are sourcing these wafers and that we can grow from there. Another question, how should we think about the potential ramp-up of the wafer capacity? So that's something we don't want to disclose for the time being because this is still under discussion with Norwegian Crystals as a partner. Do we expect to still have to import wafers in the next 3 to 5 years? As I said earlier, we do not aim at sourcing all materials in Europe that would be a wrong decision. We still believe in global supply chains, on the power of global supply chains, but we believe it's super important that we have a critical mass of volume of critical materials also secured in Europe. And today's announcement about potentially increased polysilicon prices due to shutdowns of power shutdowns in China gives more reason to put more effort into this, at least partly of independence from sourcing in Asia. And I also can tell that the wafers we are sourcing in China from renowned companies, very good quality is -- has been now since we've signed the Norwegian Crystals. Norwegian Crystals supply agreement has been the only component, which we were unable to source in Europe. So we have pretty substantial volumes for our materials coming already from Germany, from Austria, from Belgium, from other regions. We are also -- we have started to already build a supply chain in the U.S. as we are now going there to produce in Arizona. So this is all underway. And luckily, we were able to start this process already 2 years ago and do not need to rush now because of very recent geopolitical development.

I can take that one. So the next question is, is the agreement with DESRI part of the U.S. Solar Buyer Consortium in which DESRI is a member. So for background, there is an initiative that was launched in the U.S. quite recently, basically consortium from a number of developers, including AES, including Clearway, including Cypress Creek. And they formed this consortium to source domestically manufactured solar components. And we were aware of this initiative, but we agreed with DESRI that we would negotiate bilaterally. So this is a deal that stands outside of that initiative. And yes, so it's a separate deal. I can also take the next one. So the question is, why are you not providing any indication about the purchase prices, which DESRI will pay for the 3.75 gigawatts and the down payments DESRI will make any figures about this contract would be very helpful. But obviously, these are commercially highly sensitive figures, and we have agreed to not disclose commercial details with our customer. The next one for you Gunter.

Yes, I can take. So why are we conducting a cap hike when this is making substantial upfront payments? Your cash burn looks much higher than initially expected when presenting the [ Indian ] strategy? So on the first one, as I explained, the down payment on an annual basis is very substantial. Nevertheless, it starts not immediately, but in advance of the first deliveries, i.e., not now. So in order to move fast and to use the opportunity, we need other sources of funding. And the question related to the cash burn, I already answered, yes. Yes, there is a contribution of the need for funding is partly coming also from our delays in the ramp-up that has cost a bit more than originally expected. But primarily, it's the acceleration of our growth, and again, in 2023, we were not planning on doing any additions to our capacity, plus the fact that materials costs have gone up and lead times now longer. And so that needs all to be tailored in and that's also why we are reworking our financial planning as we speak.

So this one, we have already answered, I can take that one. This one, we have also already answered. Yes. Just to clarify a misunderstanding. So there's a question on the impact of the USD 0.07 per watt peak advanced manufacturing tax credit. Just to clarify, the example I made was on a per 1 gigawatt basis. So I said [ USD 70 million ] per 1 gigawatt. Gunter made the example for 1.5 gigawatts. So that's the, of course, USD 105 million. correspondingly and you can do the math for any other capacities.

And helping you with this, maybe if you take into account the ramp or the volume produced in that factory, the total tax credit during the term of the law until end of 2023 amounts to USD 700 million. Next question, again, on guidance. In March, you announced that you would provide investors with the guidance for 2022 for revenue and EBITDA. Why are you providing any guidance these 2 metrics? So the March announcement happened on March 24. It was exactly months after the invasion -- the Russian invasion on Ukraine started. In the meantime, I would say the supply chain world has changed dramatically with impacts everywhere on logistics, on availability, on pricing, as we know. And with other factors we have now to deal with in growing geopolitical tensions in China. And we have China and Taiwan, just to name one example, and the uncertainty out there, we believe that it's pretty tough if not impossible to provide guidance based on facts and figures we do know about external circumstances. Nevertheless, again, I can confirm that we are remaining very optimistic here because we, until so far, have been able to pass on increased prices. We see a strong demand in the market, and we also see the effects of growing capacity in our factories, diluting fixed costs, increasing our margin. So I believe we are on a very good way here. And I again ask you for understanding that it's currently impossible to provide a very, very firm guidance in these times.

So this one, we've already answered. There are some double questions in here, so we just need to walk through this one. So there's a question on margins in regards to the long-term agreement, whether that is positive or negative, with regards to our long-term profitability targets. So again, we currently are not communicating any margin guidance due to the circumstances that Gunter mentioned. However, I think it's fair to say that we are very happy with the commercial terms of the DESRI agreement. And of course, we had also potentially the opportunity to not expand into utility, but expand it to residential first and then only do utility later. But -- and the overall balance of factors, we believe that this was an economically very attractive agreement to enter into. And so we're very happy with that. Then the next question is, can you provide any figures about order entries and order backlog in H1? Yes, I have implicitly already answered the question. So effectively, the concept of an order book has more or less lost its meaning in the current market situation. So we are in allocation mode, so we are no longer taking orders sort of proactive orders from our customers. But in fact, we are allocating our supply volume. And we are doing this basically one quarter after another. And currently, we are allocating the volumes for the second quarter of 2023. And that effectively tells you where our order book technically stands. But again, it has effectively lost its operational meaning in these very extraordinary times.

So there's another question on how valid still our volume guidance of nameplate capacity guidance is that we presented at the beginning of our strategy change, suggesting that we would reach 4.2 gigawatts by 2025 as a nameplate capacity. Comparing now and 2 years ago, I think along with the DESRI deal, we can show that we can now turn pure planning approach into reality. As Moritz mentioned, we are in talks with other potential partners in the offtake arena, both in U.S. and in Europe. And I believe it's very, very likely that we will see continued growth. 4.2 gigawatts, I would say, yes, we stick to the plan and potentially can even be more. Depending on real deals instead of a planning approach, we've been using in the past. The market demand is there, and we are working hard on securing real orders on which spec we can increase our capacities in the future. There's a question on the cap rate and the user proceeds. Again, I apologize that I can, for the time being not give further details, we will inform the market as soon as we are ready with the preparation here. And there are duplicate questions which we already answered. So many questions on why we are not providing the guidance. We answered this. How much capacity can be installed in existing factories, Germany and U.S. before new factories have to be built? So we have -- we have executed on a pretty successful strategy to go brownfield. We have not yet spent money on concrete that much because we could use existing buildings, existing factories with our fiber site for the module and also the factory we are sitting in right now for the solar cell manufacturing, the plant still is to increase capacities for the solar cell manufacturing here in the Solar Valley. There is, we believe, enough real estate available to grow big. And we have also planned for this growth. We have communicated earlier this year that we could secure a second building, which is adjacent to the existing one. And so the solar cell part is for the time being assumed to take place in the Solar Valley, whereas we would like to erect additional module factories once we go beyond the 3 gigawatt in our respective market. So that makes total sense also from a supply chain and also lead time perspective to be closed in closer proximity to end customers. So we have now real estate enough to the 3 gigawatt. And if we have to go beyond the 3 gigawatts, which we are working on, we will go into other sites and ideally brownfield. Which components in the supply chain are missing that prevent you from ramping up production faster? That's a very good question, and it also ties back into the financing discussion. We have until so far worked on our expansions such we be planning for what do we need in terms of equipment, in terms of components, then we place the orders, build the tools and then when they were built in our Germany factory in Hohenstein-Ernstthal, we moved into and started the ramp. We've been facing issues, as communicated from nonavailabilities of certain components and the problem unlike in the module production and cell reduction, if you are missing 30% of your wafer volume, then you produce 30% less modules. If you're missing certain components for your manufacturing, you can switch on the line. So that can be very much gating and also defines the critical path along the anticipated capacity growth. So what we are now looking into to accelerate also the build-out of new capacities is that we have identified the long lead time items. And we would like to entertain a system in our procurement process where we are purchasing these long lead time items, put them in our warehouse in order to act as fast as possible, as soon as we have the ability to continue our growth. The volumes we are talking here are they are not small, but I think this is an approach we would like to use in the future also in order to reduce the risk of -- or to reduce the lead time for a factory build out. In the current -- under the current circumstances, we have to work from an assumption that starting from 0 to having the factory ready is going to take about 18 months. And if you would have asked us 2 years ago, we would have answered it 12 months. So that's due to longer lead times and restrictions in the availability of material. But again, I believe we can entertain a system where we are ordering long lead time items long enough that we can again, shorten these 18 months. And the components, which are most digital semiconductor components, so equipment controllers, PLCs and elements like this, which are currently predict in terms of the availability. I think the next one Moritz goes to you.

Yes. So the next question, you mentioned strong interest from other utilities to potentially get a similar agreement at D. E. Shaw. Would you need a further cap increase for such for the agreements? So obviously, we're not going to comment on future financing plans specifically. But it is safe to say that there, of course, multiple sources of funding for future CapEx requirements. The most important one, of course, operational cash flows that we can reinvest. But we also believe that we can maintain a healthy and reasonable balance sheet structure. And of course, that will be available, et cetera, et cetera. So again, not making any concrete statements, but we believe that we will have many options to finance our growth going forward.

So the next -- the next question is on the impact of higher silicon prices on our cost per watt peak.

So the question is, yes, what's the impact of higher silicon prices on your cost per watt peak. The answer is very simple as a rough order of magnitude you need about 3 grams of polysilicon per watt peak. And then we can do the math, run the numbers. Currently, polysilicon is slightly north of $40 per kilogram. And so you can compute what it means?

The next one goes to you.

Next question is how much of the 87 megawatts sold in H1 '22 were already produced in '21. That's, of course, a good question. And we can answer that with the figures that we gave in our March presentation. We have produced 30 megawatts in 2021, but only sold 20. So the remaining 10 have obviously been sold in the meantime for our practical prices.