Orrön Energy AB (publ) (ORRON) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Orrön Energy Capital Markets Day 2024. Happy to see so many of you here at the venue. But also happy to have so many people joining us by web conference. And for those of you joining us by the conference call, there is a function on the bottom of your screen where you can type your questions, and there will be a Q&A session at the end of this event. We have a presentation. We have several presenters today, and hopefully, we'll get the presentation done in under an hour, and then plenty of time for questions and answers. And with that, I would like to hand over to the CEO of Orrön Energy, Daniel Fitzgerald, Dan will kick this off.

Thank you, Robert, and it's great to be here this afternoon, and thanks for all that are joining us here in Stockholm and online. And together today with Jonas Dahlström, who's the Managing Director of Sweden; and Espen Hennie, who's our CFO, we're going to present a little bit more around the company, what we achieved in 2023 and most importantly, what we're looking for in 2024 and beyond. And 2023 was a strong growth year for the company and a really important year laying the foundation of what's going to deliver value in the future. As we enter 2024 and focus on the new year, we've got a significantly increased production profile. We've got increased cash flow, and we've got a growth an activity set around our growth portfolio, that should be the core of where value creation is going to come into the future. And hopefully, we can share a little bit more around that today through my presentations and Jonas' presentations on the activity set and then with Espen on the financials. And so Orrön Energy is a pure-play renewable energy company. We're diversified across technologies. We have wind, primarily wind in production with some hydro power. We have projects in solar. We have projects in batteries and we're stepping into ancillary services market. So we are diversified primarily on the onshore domain and in proven in existing technologies that have a low levelized cost of energy. Our operational assets this year will deliver around 1,100 gigawatt hours of production, which underpins the cash generation of the company. And then secondly, we have a growth portfolio of around 40 gigawatts of very early-stage projects, which gives us material exposure to upside as we're able to execute, secure the project rights and look to monetize some of those projects. And like all of the Lundin Group Companies, we have a strong focus on organic growth. The best value we can create for the company and shareholders is by stepping into assets and stepping into opportunities, where we really have to work them and create value that others are unable to see or unable to execute on. And that's something that really differentiates us, and differentiates a lot of the Lundin Group Companies. And we're one of the Lundin Group Companies where through the Lundin family and the backing of the family, their owners of $14 billion or $15 billion worth of companies in the primary energy commodity space where they're active, owning, operating and growing assets to create value long term. And that culture exists in Orrön Energy. We started this company Orrön Energy 20 years ago in the oil and gas space. We've delivered back over a single equity raise. We've delivered back over $15 billion of value back to shareholders. And starting again in renewables, we're aiming to create value over that journey again. Our corporate strategy is quite simple. There's 2 parts of the energy transition where we're really focusing on. The first is to build a portfolio of cash-generating assets, and then go and increase the value of that portfolio. We're going to touch on that a little bit today. That can be through acquisition of existing production. And what Jonas will touch on is the opportunities around optimization, life extension, repowering and project development within that existing asset base to increase the underlying value. So the first area where we're looking to grow is in that producing asset base that gives us the opportunity to leverage up the assets and use that as an equity investment to go and generate higher returns elsewhere. The second part of the strategy is developing a large-scale portfolio of projects. And simply, that's securing land, securing grid, securing permits. And for Orrön Energy, we will be monetizing that portfolio as we reach key milestones. And that gives us a significant return, once we're able to secure the rights, it gives us a significant return on the employed capital. And those 2 areas of the energy transition is where we believe we bring something different to this space. Early-stage projects, we see a strong return, but large-scale derisked projects, I think, is for other players to step into with a much lower cost of capital. But as we get into mid- and later-life stage -- later-life assets, the opportunity to be an industrial player that's financially backed to go and squeeze more value out of these assets is where we really want to focus. And since inception, we've been delivering on that growth ambition. We're now 18 months old as a company. This is only our second Capital Markets Day, and we've taken our portfolio from 100 megawatts installed capacity to 400 megawatts through delivery on projects and acquisitions. And we don't stop there on the producing asset side. We have a runway of opportunity in front of us to continue that journey. On the development pipeline, we started with no development pipeline. We had only 2 producing assets. Between inception and now, we've generated organically around 40 gigawatts worth of early-stage opportunities. And this is only 18 months of this team really working, and even less when you bring in the Slitevind team that Jonas was a part of and the growth that we've established around his team and also the greenfield development team. And so I look forward to another 12 months where we can do many, many more turns on this growth ambition. If we spend a few minutes on 2023 before we look forward into the new year. We delivered 765 gigawatt hours of production in 2023, and that's our highest year so far as a company. And in Q4, we delivered 226 gigawatt hours. So again, a record level for the company. 2023 was impacted by weather, and we delivered a little bit less than what we guided for the year because the wind conditions in the Nordics were lower than what we expected for the year. And we've seen some of the porous wind conditions over the last 10 or 15 years in the Nordics. And that impacts our production profile. The underlying assets are delivering very strongly. And so it is down to weather this generation. As we move into January, we're already seeing stronger production from our assets in January, above where we are guiding production for this year already. Espen is going to spend a little bit more time on financials, but we delivered EUR 37 million worth of revenues at around EUR 47 per megawatt hour achieved price. And EUR 8 million of EBITDA, excluding the noncash items. Importantly, though, if we look at the net debt position, the company has around EUR 90 million of net debt. And in Q1 of this year, we increased our finance facilities to have EUR 190 million worth of finance. So we have around EUR 100 million of capacity under our existing facilities for growth in this business. Last year, we completed 6 transactions. We established the Greenfield business. We acquired 4 or through 4 transactions acquired some producing assets well. We brought Karskruv online at the end of Q4 at the late November, and that adds significant production for us, and we delivered against our cost guidance. So in all, for us, 2023 was a strong year. We delivered what we set out to deliver. We grew the company significantly, and we were impacted somewhat by lower wind speeds and lower prices than what we forecast at the start. And if we look at the growth in production, second half '22, we delivered 251 gigawatt hours. In '23, 765 gigawatt hours and we're forecasting 1,100 gigawatt hours in 2024. The assets we have an average age of around 7 years. So the remaining running life of these assets is over 20 years. And as Jonas will touch on, there's many opportunities to extend that. We have high-quality assets with long-term cash flow. And that -- we're not going to stop at 1,100 gigawatt hours. We have the opportunity to increase our production through organic growth through new projects and through acquisitions. Our producing asset base generates its production through a range of different price regions in the Nordics. And around 85% of our production is in price regions that are either in line with or above the system price in the Nordics. So we're in some of the most favorable locations for this power generation. And the second pillar that I touched on strategically is around the value creation through Greenfield development. We have around 40 gigawatts of pipeline where a majority of that is in the U.K. with secured grid connections in the U.K., closely followed by Germany, where we're -- we have signed a range of exclusive agreements aiming to secure land and then followed thirdly in the Nordics where Jonas and the team have been building a portfolio. These projects are all marching towards milestones, and we will look to monetize these projects at a very early stage once we've secured land and grid for these and started the pre permitting work. And there's a significant market for large-scale projects, which gives a significant value to Orrön Energy once we move into that monetization phase. We're very opportunistic around our approach here. We have a strong enough balance sheet to carry these projects longer and create more value. We can invest in some of the projects ourselves and bring side the company, or we can step out of the projects as and when the market return is strong enough for us. And it's clear that sustainability for Orrön Energy really is at the core of our business. We are delivering, since inception, we are delivering clean energy. We've delivered over 1 terawatt hour of clean renewable production into the grid since inception. We've got 40 gigawatts of new projects that we're aiming to increase the share of renewable energy in the market. We're part of the UN Global Compact and our sustainability. The core sustainability policy follows a sustainable development goals. In every single local community, we're spending time and energy with the local community to develop, whether it's lodges and support for the local community or stepping in to improve the biodiversity around the projects that we're operating. We're active all of those different elements. Safety is, of course, a key priority for the company. And last year, we had no incidents employees and contractors went home safely at the end of the year. And as we look forward into 2024, which is really a change for the company, it's a change from 2023 where we had a heavy CapEx year and a much lower production base. This year, we're aiming to produce around 1,100 gigawatt hours, and that's a 40% increase compared to 2023. Our operating cost reduces on a unit basis by 20% down to EUR 15 a megawatt hour, and our G&A expenditure is in line with our guidance for 2023. We'll be spending EUR 9 million on G&A and EUR 8 million on the Sudan legal case. And the Sudan legal case, it started on the 5th of September. We're now almost 6 months into the process, and we expect to reach conclusion of the district court in 2026. Our view on this is very clear, and it hasn't changed since inception. If anything, it's got much stronger. There is no substance and evidence behind the case. And now we've seen all of the evidence from the prosecutor being put forward. And there's nothing new that comes out of that. And there's nothing we didn't expect and nothing that links any of the allegations through the evidence. This, in our view, will result in a full acquittal for all of the 2 defendants. And with that, the charges are dropped. And with that, the company has no further liability. So our view on this is that there will be no ultimate liability for the company because we will be acquitted once this finishes its process. However, we will guide on how much we're going to spend on Sudan. And so for 2024, we're guiding EUR 8 million. And for 2025, roughly the same amount as we enter into 2025. But then the case will finish in the early part of 2026. And in our view, this will disappear completely. Our capital expenditure for 2024 is dropped significantly by 80%, down to EUR 14 million. And importantly, that's fully funded out of the cash generation of this company. So this year, we move out of a place where we're funding our CapEx through debt into a place where the cash generation of the company is funding its future growth. And beyond that, we have significant capacity within the debt facilities. And on the EBITDA side of things at a EUR 50-megawatt hour price, we're generating around EUR 22 million of EBITDA, which is almost 3x what we delivered in 2023 at roughly the same achieved price for the year. So it really does mark a change for this company as we are still growing. We are still investing in growth but we move into a place where the cash generation is much stronger and the production profile supporting that is a lot stronger. And if we step out of 2024 then and look a little bit longer term at what the core of this company is able to deliver through its means today, we expect to deliver around EUR 35 million to EUR 75 million annually of revenues on the back of a EUR 30- to EUR 70-megawatt hour price -- achieved price. Translating that into EBITDA is around EUR 10 million to EUR 50 million of EBITDA excluding the short-term costs associated with the Sudan case. And so when we look longer term at the producing asset base we have today, there's significant cash generation coming from that asset base. And I think we have to look in towards that long term, not only on the cash generation but also the growth side to understand the value that sits within the company. We've touched on it a few times. But today, we have EUR 190 million worth of debt capacity within the business, which gives us EUR 100 million beyond our cash generation to look at accretive growth for the company. And now looking at share price which is an interesting discussion, certainly for Orrön Energy as it stands today, we're trading at more than a 60% discount to the underlying value of our assets. And when we look at recent transactions of our assets, Karskruv, MLK and Leikanger are very early life assets. They're some of the biggest assets in -- of their type in the countries in which they are. These assets are very liquid on the market. And if we look just back at comparable transactions that have happened in the last 6 months, we see a value of those assets based on a SEK per share value of around SEK 13 a share. If we look at our analyst average valuation for those coverage -- the analysts that are covering us for the remaining Swedish -- primarily Swedish portfolio, it's another SEK 7 a share, getting us to around SEK 20 share of underlying asset value. Removing the net debt from that gives us a true net asset value of over SEK 16 per share. And that implies around a 60% discount to where we're trading today. Our banks are lending is EUR 190 million today based on the existing value of our assets. Our market cap, as it stands here is closer to EUR 160 million. So there's a fundamental disconnect between the value of our share and the value of our underlying assets. And that underpins hopefully, a good opportunity for investors to come into the story. Those valuations only take into account our producing assets. They assume we're not successful in growing the company. They assume that the Greenfield business has no value and that this team who have a proven track record of delivering value through many of the Lundin Group companies are not able to deliver that over time. And that's something we fundamentally don't believe in and something where I still think there's a significant value to be had for this company. So pausing a little bit on the corporate overview. We're going to now shift gear a little bit. We'll talk a little bit about our Greenfield development platform, primarily in U.K. and Germany, and then I'm going to pass over to Jonas to speak in a bit more detail about the Nordics before Espen rounds out on the financials. We started this journey on the large-scale Greenfield platform 1 year ago at Capital Markets Day. We announced our entry into the German and French portfolios. And then on the 1st of March, we announced our entry into the U.K. portfolio. And we've come a very long way in a space of 12 months. We didn't happen to fall just into this portfolio out of luck. I think it's strategically positioned us to exactly why we are where we are and why we're targeting these countries. The U.K., Germany and France are at the top of Europe's ambition to build out on renewables. They have some of the most ambitious targets in terms of renewable generation. And over the next period between 2023 and 2035, we're going to see a quadrupling of installed capacity in those 3 countries alone. If I look at the second chart on this page, looking at the economic side, the strongest electricity prices of these 3 countries have the strongest electricity prices, significantly above where the LCOE is for solar. And all 3 of them have a huge ambition to grow in the solar domain. And from our perspective, the mix of solar and batteries and the value proposition looks very attractive. And the third piece is we've positioned ourselves in these 3 countries to go and execute on a plan that achieves that value. We have local teams who are well connected, very entrepreneurial teams. We have a portfolio that's rapidly maturing and growing at the same time, and our organization can move a lot faster than what our competitors can. We can execute on land agreements and have discussions with landowners at a much faster pace than some of the other people in front of us. We've secured a significant portfolio in the U.K., which has happened very quickly through a strategy that we set out with the guys that we brought in to run this side of things. And so looking a bit more detail in the U.K., we have 31 projects, and we have secured grid connections for around 36 gigawatts worth of projects, 24 gigawatts of solar and 12 gigawatts of batteries. Those connection dates are between 2030 and 2040, which means for the earliest dated projects, we reach ready to build sometime in 2025, which means that has enough time to go and plan and execute the projects. If we step back from there, grid is secured, we need land, we need permits and we have a ready-to-build project. We will look to monetize these projects once we have land and grid secured. Because we have the grid already secured, we need one thing before we start to monetize. So how have we approached that land, acquisition effort? We've stepped into areas and screened areas where the grid capacity was available, and we've secured high-voltage transmission connected grid positions. That gives us a much bigger radius around every substation, which unlocks land that has previously been unavailable for solar projects. For instance, earlier this year, we've signed our first agreement, which is a single land agreement for 1,400 acres, which gives us around a 350-megawatt project on a single agreement with the landowner. We're in an exclusive phase with that landowner and if we can move that forward that gets through a single opportunity, a significant portfolio compared to the size of Orrön, and that's just the start of this process. We have in-house GIS and land mapping people and we brought that competence in to go and screen how much available land there is around every single substation. And with a 20-kilometer radius, which is allowed to us by the higher voltage connection, we need less than 5% of the available land around every single substation to get a gigawatt of project away. So there's a significant opportunity for us to step into something where other players have been focusing on much smaller scale projects which tend to be distribution connected. And the value proposition for these large-scale landowners is huge. We can turn up with a much larger scale project, which has much bigger returns for the large landowners in the U.K. And we're talking to larger state owners and the Crown land to go and secure these portfolios. From a permitting side of things, U.K. has around 90% of permits for solar. For all solar projects that have been put forward, 90% have been approved. For nationally significant projects, which is the project we're targeting 100% have been approved. So we have a very high success rate on permits, which we don't necessarily see in the same way for wind and other projects in the Nordics or in Sweden. So for us, our biggest focus this year on the U.K. portfolios to secure land. And once we have that, we can move forward into some of the earlier monetization and testing the market for monetization of these projects. In Germany, we have just shy of 4 gigawatts worth of pipeline that's spread between batteries and solar. The solar side of things is growing very fast, and the battery has matured very quickly. We see a much quicker route to permit for batteries in Germany, and we're seeing huge success on that very early on. We started in Germany with a screening that looked at a range of criteria, and we landed on 4 regions to start in Germany, based on a radiation levels, land availability, grid capacity and strength of the grid and the amount of dispatchable or variable generation within that region. And so we're focused on the east and northern parts of Germany, which is away from a lot more of the competition. The land availability piece is key. And we've gone in with a two-pronged strategy looking at traditional solar and also agri PV, which is blending a mix of farmland and solar to ensure that the farm can still operate as a farm, but it can have solar alongside. That unlocks a whole range of land positions that were previously rejected or unavailable for solar, and we're working with the local municipalities to unlock that discussion with the local landowners. And again, the agile nature of the company means we can act very, very quickly on some of this. And Germany is growing very, very quickly in terms of the securing of land and the exclusivity around some of the land that we're moving forward. And so between the U.K. and Germany, we expect to mature these projects through to land plus grid, and then moving forward into the pre permitting work at which point we will test the market for monetization of these projects. And so what's next for the Greenfield business. Securing land is absolutely key, and that's our biggest focus. Once we get that, we move forward to ready to permit, and we look to monetize. And I think this portfolio, I'm really excited about what this portfolio can deliver for Orrön. As we touched on in an earlier slide, there's no value for this in our stock today. We have a very short development cycle for the strategy within this business. It's not a massive amount of capital deployed. We have a very short time frame between securing land and grid monetization. And with our opportunistic approach, we can move much quicker than some of the competition in here. The scale of this is big for Orrön. Today, we're listed at EUR 160 million, sorry, market cap. And if we're able to monetize any of these projects at either 0.5 gigawatt or gigawatt scale, it could mean material things for Orrön, and we need to go away and deliver against that framework to demonstrate to the market that the value exists within this portfolio. Jonas Dahlström, who is our Managing Director in Sweden to run us through the Nordic portfolio.

Thank you. Let's talk about turbines. In the Nordics, we have a diversified portfolio with the production of -- from '24 onwards, 1,100 gigawatt hours. We are owners in more than 200 wind turbines across 3 -- 200 wind turbines and 1 hydropower plant across 3 countries, 5 price areas and 50 sites. 90% is wind and 10% is hydropower. The diversified portfolio reduces the sensitivity to weather. And we have high quality assets from top-tier suppliers, mainly Vestas, Siemens, General Electric Enercon. In 2023, we received -- we achieved a 96% availability, a number that we hope to improve slightly going forward. Around 80% of the total production is covered by long-term availability guarantees. Average asset age is 7 years. The wind side, we do expect 30 years' operational life, hydropower 60 years, and this is before any life extension initiatives. 2/3 of the production is from 4 main hubs. Näsudden on Gotland consists of a few subsites. And the main site, Näsudden came in operation in 2012. Leikanger 2021, MLK in Finland 2022 and Karskruv November 2023. So the newest addition, Karskruv, 290 gigawatt hours in Price Area 4, which is a high price region. It was constructed between 2021 and 2023. 20 Vestas the 150 turbines, proven supplier, proven technology. And these turbines comes with a 30-year availability guarantee. Karskruv was taken over from OX2 in November, ahead of schedule. All turbines have been operational since August. So meaning that by the time of handover, the turbines have been through a long ramp-up phase, minimizing carryover work from construction into operation. Karskruv has, as a result, delivered well since start. So we are 22% above forecast, January production, good start. And the 290 gigawatt hours added production in SE4 is expected to have a positive impact on Orrön's overall achieved price going forward. We have had a strong growth in production from start. As Daniel mentioned, 250 gigawatt hours was produced first -- the second half of 2022. We reached some 375 gigawatt in the first half 2023 and just above that, the second half with Karskruv online from late November. We do expect to produce around 550 gigawatt hours per half year from now. In 2023, the production has a negative impact due to weather, lower wins compared to long-term average. So we'll loss out some 5% compared to our estimate or our long-term average production number. In Q4, we produced a record production of 226 gigawatt hours. And in January, so -- in January, so far, we have produced half of that 113 gigawatt hours, which implies that the Q1 2024 could be a new record quarter in terms of production, chances are. In a normal wind, we expect to produce 1,100 gigawatt hours, a normal variation from that is plus/minus 100 gigawatt hours or some 10%. We have many opportunities to create value. We can grow the company and the power generation, both via optimizing existing asset base and through acquisitions and Greenfield development. Within optimizing existing asset base, we see 3 focus areas: life extension, which is actually just making sure that the turbines are maintained properly and the spare parts are exchanged before they break rather than after. We have in-house competent technical team with a background of Vestas, Enercon and Siemens, which allows us to do this. One example is a life extension we did at the site on Gotland. We replaced blades main components -- moving main components like blades and generator. And we achieved an operational life extended with 15 years. So this is something we already -- we do on a daily, daily basis as a normal part of the business. Technical upgrades is -- should normally also result in higher production. If you do a rotor upgrade, you could on daily 90 to daily 100 rotor or slightly [Audio Gap]. Production out from the turbine, and that can be done at low cost. Another example on technical upgrades is actually upgrading software, so that existing assets wind turbines can participate in the market for ancillary services and get more revenues. You take down an old site, older, smaller turbines replaced with bigger turbines. And normally, you can expect double or triple production from such a site. For us, it is a -- it's very important to have the 3 tools because repowering can take more time with planning permits and so forth. And therefore, life extension and technical upgrades requires none or less permitting work, which means that awaiting permits for more large-scale repowering we use life extension and technical upgrades as tools to create value. The acquisition and Greenfield development part. We are the 200-plus turbines where we own -- fully owned or partly owned. We do have a 400 gigawatt hour potential out from the minority interests in these sites. But it's something we -- I mean a few of the acquisitions we have done the last year is buying out minority interests in sites where we are already present. Of course, we will continue to acquire to enter new projects. Since inception, including the Slitevind deal, I can't say that I weren't really involved on the buyer side in that deal. But including the Slitevind deal, we have done -- we have added 500 gigawatt hours since inception. And finally, Greenfield development in the Nordics. Today, we have a 765 megawatts portfolio which can, for the future, be used for investment increasing production or divestment. The portfolio in the Nordics. Over the last year, we have developed, based on the network we have in Sweden and Finland, we have developed a 765-megawatt portfolio. Projects in different stages and technologies. The last -- the mentioned in the report is that we recently bought 4 wind projects in Finland, which is really us entering the Finnish market on the Greenfield side, and that is 4 projects with a capacity up to 180 megawatts. And the planning work is -- the permitting work is in progress. We have 140-megawatt solar, 40 megawatts of ancillary services. I mean, this is 2 of our major sites actually in the process of starting to deliver ancillary services right now. 40-megawatt is the part of these sites, which will participate in the system. The potential for us is much greater than 40 megawatts in the Nordic portfolio, ancillary services from existing assets. And then we have developed a portfolio of 105 megawatts of battery storage projects. And all these activities, all these projects, I mean, we will choose to invest or divest pending where we see the larger value creation. I mean, more and more intermittent power generation in the Nordic energy mix increases the demand for grid stabilizing services. And this is where ancillary services from existing turbines, but very important for this market is battery projects. We have developed a number of battery projects from start to capture the immediate business opportunities. It is a market where a lot of things are happening right now. We see strong economics with the existing market conditions and short payback times. The first project is expected, I mean, it's actually under construction. So expected to start to deliver second half this year. It's a small 1 megawatt project. We have 5 -- sorry, we have 4 more permitted projects and to well advanced in the permitting process. It is much shorter permitting process for batteries compared to wind as we see today. And most of our battery projects are co-located with existing wind farms. I mean it means 2 things. We have more options when it comes to revenues. If we are, on the other side, we can be on both sides of the meter, so to speak. And we can at least for a part of the capacity use existing grid connection, which reduces CapEx. Espen?

Thank you, Jonas. Good afternoon, everyone. Welcome to this event, and thanks to everyone listening in online. We'll go through the '23 financial performance. And I guess, more importantly, the outlook for '24. I hope sort of what you will take away from this session is that you'll be, I mean, even more convinced. I mean, you heard Daniel mentioned it already that we are indeed sitting on a very high-quality portfolio, producing strong long-term cash flow. We have significant financial flexibility now through our RCF recently increased from EUR 150 million to EUR 190 million, providing us with a lot of optionality to pursue both organic and inorganic growth opportunities. And we think sort of -- in combination, we view our portfolio as a very compelling mix of -- we have a stable long-term low-risk cash flow and very, very material upside potential from our Greenfield platform. We are happy to be sharing a bit more information about today. I guess if we start with the fourth quarter and full year '23 results. Just a quick look at that. We did deliver record power generation for the fourth quarter. Karskruv came online late November ahead of schedule. But then as Daniel also mentioned, I mean we had low wind speeds during the quarter, which sort of mitigated the early start from Karskruv, but all in all, coming in at 226 gigawatt hours record volumes. And of course, we expect and hope to set a new record in this current quarter, and we're off to a very, very good start already in January. Achieved price of EUR 43 per megawatt hour during Q4, leading then to revenues of EUR 10 million and EBITDA after we exclude certain noncash items from G&A related to our incentive plans, the EBITDA then coming in at EUR 2 million. For the full year, it was 765 gigawatt hours or power generation. Again, sort of the Q4 low-wind speeds impacted outcome achieved price of EUR 47, leading then to full year revenues of EUR 37 million and an EBITDA of EUR 8 million after noncash items. As you have seen, I mean we did deliver on all our cost items, operating costs, legal costs, G&A and CapEx came in either below or in line with what we guided for the full year, meaning that also our ending net debt ended as we were planning for. According to EUR 92 million at the end of Q4. And then if you see that in relation to our EUR 190 million RCF facility, as I said before, provide a lot of liquidity headroom and flexibility and resilience as we move into '24. Looking at some of the key financial metrics for '24 with a quarterly resolution. You can see here on the slide that if you look at the quarter-by-quarter change to power generation and achieve price as we move throughout the year. And that explains also the quarterly variance in revenues and corresponding change to EBITDA. We are obviously very pleased to see a significant uptick in Q4 earnings, EBITDA compared to what we had in the previous quarter. And obviously, we do expect to see that kind of improvement continuing into 2024. I mean on the back of 40% higher power generation and 20% lower unit cost and flat G&A. And I guess, just to repeat that, I mean if you sum our EBITDA for the fourth quarter of '23, EUR 8 [ million ] at EUR 47 per megawatt hour achieved price, comparing that to our outlook for '24 at a similar price of EUR 22 million, so almost a tripling at a similar price. So it's underpinning the importance and the sort of the step up in cash flows resulting from the higher volumes and lower unit costs. When it comes to CFFO, at the right hand of the slide here, our consolidated CFFO will continue to be lumpy on a quarterly basis, very much driven by the timing of distributions from our JVs. And that's also why we are presenting an alternative measure focusing on the proportion of underlying cash flow, which we'll come to in a later slide. Moving on to our realized electricity price for Q4. As I mentioned, all in achieved price of EUR 43 per megawatt hour, very much impacted by high capture price discount in Q4. We think sort of 2 things to -- important to take away from this slide. First one is also what Jonas referred to because of the additional Karskruv volumes coming into the production mix. The difference between our regional spot price, the second bar and the system price in the first bar here from the left. That picture is expected to improve significantly now throughout 2024 as a significant higher portion of our volume mix is coming from Karskruv, which is SE4, Southern part of Sweden being a high-price region. Secondly, we view the second half capture price discount above 30% as an outlier and way above what we view as a normal average capture price discount going forward for our portfolio. First half of '23 we had 16% capture price discount, which we think is a lot more -- lot closer to a normal discount and the second half was very much impacted by Storm Hans especially Q3, but also spilling into Q4, impacting capture price discounts. So for our internal planning, we estimate 20% as an average normalized capture price discount. That view is also supported by external energy research consultants like Aurora Energy Research, which we have referred to in this slide. And I can say that so far this year, if you look at January figures, capture price discount has indeed sort of normalized, and we see below -- I guess, seen below 20% so far going into 2024. This is the underlying proportionate cash flow generation metric, which I mentioned earlier, taking that into account all our assets on a quarterly basis. And we think it's a better and more relevant way to track the financial performance of our portfolio. We start out then with -- we had EUR 10 million, just shy of EUR 10 million of revenues during Q4 operating costs and G&A in line with guidance, as I mentioned before, leading then to an EBITDA before Sudan legal costs of EUR 3.8 million. We think this metric, the EBITDA adjusted for Sudan legal cost or before we deduct on legal costs, is very relevant, and it really tells the true story of what our portfolio can produce in terms of cash flow long term. Please keep in mind that we have in the order of 25 years of remaining lifetime of our portfolio. And as we already said today, the legal costs we anticipate to be here in '24 and '25 before the case is expected to conclude early 2026. So we're comparing sort of 2 years of cost to a 25-year remaining lifetime portfolio. And that's also why the EBITDA before legal cost is a lot more relevant for evaluation and future cash flows. We will then deduct the quarterly legal costs and just for a positive current tax charge, which we had during Q4. We had an underlying proportionate operating cash flow of EUR 2.3 million for Q4. And then against that, we had interest expense of EUR 1.7 million related to our external debt, meaning that we cover all our costs, all our legal costs, all our G&A all are running operating costs for the quarter before funding CapEx. Important to note that Q4 was the last quarter with very high CapEx. It marked the end under the Karskruv development project. So going forward, as you also probably have seen in our '24 CapEx guidance, which is 80% lower than '23. I mean the quarterly CapEx figures will be very, very different and significantly lower. So for the coming quarters, you will -- on a like-for-like basis, you will see a significant uptick in EBITDA from the higher production and then obviously also a lot lower CapEx leading into a stronger underlying cash flow. Development of our proportionate net debt [Audio Gap] with a proportional net debt of EUR 66 million. Then on a consolidated basis, we have cash flow from operating activities of EUR 1 million before working capital adjustments. Cash flow from investing activities here include also acquisition, around EUR 2 million of -- due to closing of the acquisition we announced in our Q3 report. And then some other impacts, including FX. Before we also had then a reduction in our net portion of JV net cash during Q4, and that is driven by payment of tax liability in Norway related to 2022 taxes, which we guided on -- in our last CMD, which was actually paid now in this quarter. And for next year, 2024, that figure will be significantly lower. It was EUR 8 million -- around EUR 8 million here in 2023, and we expect EUR 1 million in 2024. So if you take all this together, look at our proportionate net debt, if you look at our total liquidity at the right hand of the chart here, we have a cash balance of EUR 22 million as when we ended 2023. We add our portion of cash balances in our joint ventures, another EUR 4 million. And then together with that, add in the undrawn portion of our RCF facility, which recently has been increased to EUR 190 million, as I said, giving an all-in liquidity of EUR 104 million to the company. As I said, that provides us with a lot of resilience and flexibility for both organic and inorganic growth as we go forward. The other commercial terms of the RCF has been unchanged since we increased the size. Maturity is still 2.5 years away, somewhere of '26, before we add an extension options, and we are paying off, we've is a quite competitive margin 1.8% above the reference interest rate. A quick look at our tax balances for the company. We think this is an important point as it really -- this will boost our short and midterm cash flows, meaning that we are -- we'll be in a position to convert a larger portion of our revenues and EBITDA into net cash flow. Because when you look at these figures, it's quite obvious that we will have quite a few years in Finland and Sweden without any significant tax charges. So here, we have laid out the tax balances and loss carryforward per country in our portfolio. Just one thing to note is that even though we have tax balances in Norway, we are actually in a taxpaying position due to -- we depreciate these tax balances over a very long period under the hydropower tax regime in Norway. But for Finland and Sweden, that's different. So there, we fully depreciate on a normal basis, and we have full sort of impact tax shield impact from these tax balances. So if you look at Finland and Sweden in combination to put it in perspective, based on the figures that we present here, week and the company can generate EUR 0.5 billion of EBITDA. As a EUR 500 million of EBITDA before we enter into a taxpaying position in combination for those 2 countries. So like I said, quite a significant uptick to our net cash flows in the short to medium term. Then recapping our 2024 guidance. Operating expense, EUR 15 million to EUR 17 million units, which implies a unit cost of EUR 15 per megawatt hour and a 20% reduction from '23 actuals. Out of that operating cost base, we see that 30% will be variable and then impacted by electricity prices and power generation volumes, thereby the range, EUR 15 million to EUR 17 million based on EUR 30 to EUR 70 per megawatt hour electricity price. G&A expense, EUR 9 million, which is flat compared to '23 actuals, despite very significant growth to the business during '23. And then as I mentioned, Sudan legal cost, EUR 8 million in '24. We foresee now also a similar level in '25 before, as I said, we expect the case to conclude early '26. Capital expenditure of EUR 14 million in total. We see the split on the chart here is the majority is invested towards Greenfield initiatives and activities. And very important to note that all these greenfield projects are short cycle and a very discretionary nature. So we have the opportunity to ramp up and down our investments according to the market environment and opportunity set that we have. But the EUR 14 million according now to the current plans and the portfolio, which has been presented today, which we now anticipate to spend during 2024. Now to that EUR 14 million, you have EUR 2 million of phasing from '23. There remains some remaining CapEx on Karskruv with the total cost for CapEx -- sorry, total CapEx cost for Karskruv still being fully in line with plans. So that is just a pure phasing from '23 to '24. Meaning that in the order of 90% of our CapEx program, for '24 is related to growth initiatives. And like I said before, very much predominantly towards Greenfield. And then we have one battery project in Sweden. If we then sort of sum it all up, taking into account our CapEx or all our cost guidance for '24, reflecting the expected power generation of 1,100 gigawatt hours for '24 based then on achieved prices ranging from EUR 30 to EUR 70 per megawatt hour. We get the cash flow outlook, which you can see on the slide here. Revenues than with a range from EUR 33 million to EUR 77 million. And then on EBITDA, excluding Sudan legal costs, ranging from EUR 9 million to EUR 51 million, implying a breakeven or EBITDA breakeven price of EUR 22 million, which then is a very significant drop from what we had in '23. If you then add in the legal costs, EUR 8 million, mentioned earlier, the range is then from EUR 1 million to EUR 43 million of EBITDA in '24, on the price from EUR 30 million to EUR 70 million EBITDA breakeven of EUR 29 million then based on the '24 expected cost and volumes. From that EBITDA, we deduct anticipated the payable tax, which is EUR 1 million and the projected finance expense of EUR 7 million, leading to a total free cash flow pre-CapEx for '24, ranging from minus EUR 7 million to EUR 35 million. And that means that based on achieved price of EUR 36 per megawatt hour, we expect to cover all our costs, excluding CapEx. So all across all our running costs, G&A legal costs and OpEx including also payable tax and net finance will be covered on the EUR 36 per megawatt hour, on average for '24. And then another thing, which also Dan mentioned earlier, at EUR 50 per megawatt hour, we are fully funding our internal or fully funding our CapEx program for '24 through the internal cash flow, meaning that at least at EUR 50 per megawatt hour and higher, we will have a positive cash flow after CapEx. And even in the -- if you end up at the low end of the price range here, given the EUR 100 million of liquidity available to us, it's obvious that we can fund all our activities and projects for '24 many times higher, many times lower, even in a low price scenario, given us a lot of resilience and it's very crucial that we then have the opportunity to progress and accelerate all the greenfield projects to ensure that we reach the phase that we can monetize them as soon as possible. And thereby, of course, bringing revenues from these projects. So that was the financial part. So with that, I'll hand over to Dan for some concluding remarks.

Thanks, Espen. And so wrapping up what we've put forward today before we move back into Q&A in the room and online. Orrön Energy is uniquely positioned today. I think it's a fantastic value proposition for shareholders to come into a stock which is severely undervalued against the underlying assets. We're delivering 1,100 gigawatt hours worth of power generation from an operating asset base got many ways of increasing production from that operating asset base, whether it's through optimization, life extension, any of the entrepreneurial and industrial focuses that we have within the business. We've got a significant portfolio of projects, 40 gigawatts, which is going to create value over the long term for Orrön Energy and gives us an upside that is bigger than what the size of company suggest today. Our people are absolutely key, and we have organic growth platforms now established, one base out of Visby, which is servicing all of the Nordics centered around Jonas and a team that have 30 years of confidence in this industry and a network which is unrivaled in the southern end of Sweden, combined with a group of onshore project developers who have been doing this for the last 10 or 15 years within some of the major names in the renewable space. We've got people from Vattenfall from Macquarie, GIG and a range of the other providers who are now working day in, day out with financial backing and an entrepreneurial vision from Orrön. Espen touched on the finances. We have ample liquidity within our finance facilities and ample opportunities to grow. So we don't need to touch the equity side of the equation nor would we, at this price point to do anything. We have the means within the company and within our finance facilities to go and grow in all areas that we wish to. So the tools are in front of us for a fantastic year in 2024, significant growth in production, significant opportunities and all of the tools to go and execute on that. And so with that, I'll invite Espen and Jonas to come and join me up here. And Robert, I think we move into the Q&A.

Indeed, we are. Thank you to the speakers. And now over to the Q&A, and we actually did this in an hour so that was pretty well done. I suggest that we start with questions from the room here in Stockholm and then move over to the questions from the webcast, and we'll have a microphone going around the room. So hands up. Questions from the room. Thank you, Nash.

Thanks for the presentation. Nash Cui from Barclays. I have a long list of questions, but let me just start with 3, if that's okay. So my first question is on the EUR 14 million CapEx. I don't see any acquisition CapEx on that. Am I right to assume you won't do any acquisition next year -- sorry, 2024 this year?

No, you're not right to assume that, but we will not guide on how much we're going to spend on acquisitions until we secure the transaction. And when we secure, we'll give the guidance as to what we're spending on them. So that will come as we come through the year, Nash, as we find the acquisitions and execute on them, then we'll guide our CapEx assumes no acquisitions in that guidance today.

Got you. So basically, that EUR 14 million is like a CapEx floor, right?

Well, CapEx floor but M&A, we haven't held in CapEx in the past as well. So as we move into M&A, we'll guide on what we're acquiring, the value proposition and the cost.

Perfect. Then my second question is, I like the slide where you show there's a huge valuation discount for the fair value versus the current share price implied. My thinking process is if you see a 60% discount in valuation, will you consider share buybacks rather than spending CapEx into future projects? Just kind of why not just buying back your own shares because there's so much value in it?

It's a very good discussion, Nash, and something that's not lost on us. So I think the discount to valuation is something that we're not going to sit back and let it persist forever. So we have -- like we touched on today, we have all the tools in front of us, whether it's liquidity through the existing debt facilities. We have some very, very high valued assets sitting on the balance sheet, so MLK, Karskruv, Leikanger. We have many means to go and address this. And I think if you expect us to sit still and not have those discussions and move forward, I think you're undervaluing the management team. So I can't say anything on it day. We don't have any plans for a buyback at this stage, but I think you should expect us to have those discussions.

Got you. And then my last question is on battery. I think there's a huge focus on battery in your slides. And may I ask you for that project in Sweden, I know it's a 1 megawatt project for EUR 1 million. May I ask what is the duration of that project like in terms of megawatt hour? And what's your assumed CapEx cost on a per unit basis? And how do you think battery will improve your IRR?

Yes. So maybe I'll hit it first, Jonas, and you can pick up the second part. The Vilhelmina project is a special project. It's fully grant funded by the Swedish road and traffic authority. We have a charging station as well as a 1-megawatt battery somewhat lower grid connection capacity. So if I step out of that project, we're seeing battery CapEx around 500,000 or 600,000 per megawatt installed, is where we're seeing batteries. And as you step up in terms of megawatts, you step down to the lower end of that range in terms of cost. Battery paybacks, we're seeing, if we look historically at revenues in Sweden for batteries, 2021 and 2023, delivering around 500,000, 600,000 per megawatt installed of ancillary services revenues and over 2 million in 2022 with the volatility in price. So the payback on batteries still in Sweden is very, very high. But I think looking at Vilhelmina as a smaller battery project because it's got the charging station and a few other things, the CapEx isn't representative of what we would see. But as we touched on, it's fully grant funded. So it's not CapEx that we will be spending out of borrow and it's funded by the traffic authorities.

Yes. Duration, I mean, as Dan mentioned, it's a special circumstance project. So duration in this case is 1.2 hours. So I mean, this is a battery setup for the frequency market. And what we have, I mean, presented 50, 100 megawatts could be for the frequency market. Going forward, it's likely that the average size of battery projects can be larger, longer duration hours and maybe more focused into arbitrage. But I mean this first set of projects is they are likely to be constructed for -- mainly for the frequency markets with shorter duration compared to -- if we were to focus on arbitrage.

Thank you, Nash. And I think we had questions from Niclas here, too.

Niclas Wahlström at Pareto Securities. Two main questions for now. The first one is just timing with Greenfield investments in the U.K., France and Germany. How soon do you think you'll be able to monetize some of those projects? I think you have EUR 9 million allocate this year? Will we see any payback coming this year? And how will you disclose those transactions going forward?

Yes. I think the transactions, it's forefront of our minds to move them to monetization as quickly as we possibly can. So for us, in the U.K., it's securing the land positions, and then we'll start to test the market shortly after that in Germany. The land position is first, and then we move into pre permitting and then we look to monetize thereafter. So I think depending on the progress of the portfolio and the appetite in the market, I think we'll start to test things later this year or early 2025. Value-wise, if we're able to get a 1-gigawatt project, I think you can look at metrics for what are ready to build 1 gigawatt project trades for in either Germany or the U.K., some of that is public, and it means we have no future CapEx costs for this business. So it is material for us, but we need to get there first, which is likely later this year when we go and test the market or early 2025, I think.

Okay. Great. And then one second question for now for Jonas, on the 40 megawatts of ancillary services. Could you talk a bit more about the revenue model there? And maybe what kind of margins you can expect on that?

The margins, I can't say that much about the revenues. I mean, let's wait and see. But the margins are great as at least one of the sites, it is at 0 CapEx. So the great margins. I wouldn't say that much about revenues at this stage.

Yes. I think it adds a slice on top of your achieved price. So in at times when the market price is low and there's high volatility, we'll see an uptick in revenues. But it's hard to say that, that if we look back through the past 3 years, it's hard to say that that's 5% or 50% of revenues from an asset. It's definitely positive and adds value for us at very little cost, if not no cost.

Okay. Maybe actually just one question on M&A. Given you have so much firepower, how much of a discount do you really need to buy something in the market right now?

Discount in...

Discount in where you see as a fair value, for example, for Karskruv.

Yes. So I think if I look at valuation of Orrön versus valuation of M&A, the best thing we can do is Orrön given the valuation of the stock today. That said, we look at a spread WACC, and we need a certain and a big enough spread to ensure that we're generating a strong enough return. I think 5% or 10% growth in production year-on-year is something that's going to make a material difference over the long term. And I think we're targeting certainly double digit, if not 10%, 12% is the absolute minimum at which we would step into some of these projects without a big strategic rationale. Most of the projects, if I look back at one of the ones we did in Q3 of last year, it was more like 15% to 20% IRR based on the producing asset alone, and similar price deck to what we showed today in terms of guidance. And that excludes any value for the life extension repowering and future opportunities. So they're the kind of deals we're seeing in the brownfield space, so you should expect us to keep looking at those.

Thank you. Do we have any more questions from the room here in Stockholm before we move over to the questions from the webcast audience? Let's do a few webcast audience questions. So I would like to start with one that concerns estimates for interest rate payments in 2024. Espen, we have any such estimates? And also, is there an estimate for the average tax rate going forward?

Yes. So if I take the interest payment first, we expect that the payable interest is around EUR 7 million 2024, which was baked into our cash flow outlook in my last slide. So we reflected that in that free cash flow pre-CapEx figure. Second, on the tax rates, that's also sort of included in the tax balance slide. You can see the respective tax rates for the countries. It's 20% of Finland, 20.6% in Sweden, and 67% in Norway, the hydropower assets in Norway and the hydropower regime. But as mentioned, in Finland and Sweden, we will generate more than EUR 500 million of EBITDA before we will actually pay meaningful amount of taxes.

Thank you very much, Espen. We have a question about renewable energy in Southern Europe and saying that in Greece, it's been a very big increase in renewables over the past years and the Southern Europe as a whole. Is that an interesting place for us? Could we branch out to Southern Europe?

Yes. I think when we launched this company, we had a view that we would expand across Europe. And I think what we've tried to do is where we have a base like we did with the Visby organization and Jonas' team after the acquisition. We want to strengthen that base and that team. And we've done that in Visby. We're now on that journey as well with the Greenfield platform, really focus on and grow the value of what we have, but it's not off the cards that we move into an M&A opportunity that is outside of our footprint today.

Thank you, Daniel. And moving over to the next question with very high prices, as you have shown for wind power assets in Sweden, and also other assets in Norway. Are you considering an asset sale at this point?

I think with every one of the Lundin Group Companies, everything is for sale at the right price. And so public markets always today are undervaluing renewable stocks, but the asset market is holding up quite strongly. So we don't expect to move into an asset sale, but should the market opportunity be favorable where we can trade out of one of the big assets we have at a very low rate of return and recycle that capital into a much higher IRR, you should expect that we go and chase that. With the debt capacity we have, though, we don't need to do that today. So it's always an opportunity. There's always an option to do so, but we have ample firepower to go and invest in our own assets today.

Thank you. And we have quite a few questions, not too surprisingly, about the share price. And why do you think, Daniel, that the stock price went down so much since January 2023? And what are your plans to increase the share price?

I'd love to be able to do something today that would increase the share price like that. I think renewables as a sector has had a really challenging time over the last 12 to 18 months. We've seen off the back of the energy prices. We have seen the electricity price normalize a lot more across Europe. And we saw that through the early part of 2023. And then in the second half of 2023, with the ousted write-downs in the U.S. and some follow-on market inertia, I think people are really strongly focused on returns in this sector. And I think we've traded with that view, but we haven't changed our strategy. We haven't stepped out of assets that are uneconomic. We haven't invested in things which are on the border line, we have a strategy that has always been focused on accretive project economics. And so I think we're a little bit different to potentially some of the larger scale parts of the market, but we can't escape what's happening in the renewable sector. And I think all of the public names are punished today on share price, and there's a big disconnect between asset valuations and the underlying share of renewable companies. If we are able to address it, that's front and center of our minds. And so we will look at that as we move through the year to see how we can do that.

And a question that is connected to the last question is about short selling of the stocks of Orrön Energy. What do you think is the reason for the significant short interest, it's about 9% today. And what would be the consequences if the electricity price remains below say, EUR 40 to EUR 50 per megawatt hours during this year?

Yes. Hard to say on the short interest. Unfortunately, we're one of the most liquid renewable names in the Nordics. And although that brings value on the trading side, it always bring some short interest as well, and we're one of the few companies where you can step straight through into electricity price within the company given that we trade largely on our producing assets. So I think that's why we have such a short interest, but it doesn't take much to move that position as well should we move into accretive M&A or any of the other options in front of us. So I can't really tell you for all of the short interest, what their position is, but it's because we have liquidity in my mind, and we're linked to price.

And the second question about the consequences for the company with the electricity price staying below EUR 40 to EUR 50...

Maybe touch on the breakeven investment, Espen?

Yes. So as showed in one of the slides, I mean EBITDA before, so Sudan legal cost breakeven of '22. If you roll in all the costs, all legal cost, G&A, everything, including interest payments breakeven of the EUR 36. And you need to keep in mind that we have EUR 100 million of sort of liquidity firepower. So -- and we put out the scenarios here from EUR 30 to EUR 70. And you can see even in the EUR 30 scenario, like I said, we can finance our CapEx program for '24 many, many times over and ensure progress for our Greenfield platform. And make sure that we will reach those milestones when we can monetize projects and secure revenues.

And I think if we're EUR 30 a megawatt hour long term, the whole renewable energy transition doesn't happen. None of the technologies today breakeven at EUR 30 a megawatt hour on a levelized cost of energy. So if we are EUR 30 long term, like Espen touched on, we just slowed down on the growth side, all of our CapEx is discretionary. Our assets generate revenues beyond EUR 15 or OpEx cost is EUR 15 a megawatt hour. And then EBITDA breakeven with our current business is EUR 22. So we can stand much lower prices than EUR 30. We just step away from the growth and we hunker down around the operating assets and cash generation.

Thank you. We move on here because we're getting a lot of questions, which is fantastic. How will you, in the long term mitigate the risk of low winds and other weather conditions and still be profitable?

Yes. I think climate change is going to do things to weather patterns around. It may not be lower winds. It may be higher winds, and we don't know how that's going to move. However, the diverse -- Jonas touched on the diversified portfolio were spread across Sweden and into Finland. And so winds in that area, if we look back historically, we're using a long-term average to forecast our production. And so I don't see it as a huge risk that suddenly overnight, there's no wind in the Nordics at all. And so I think that risk is not something we will need to focus too much on.

Thank you. coming back to questions about the share price, if management thinks that the company is severely undervalued, are you putting money where your mouth is? And are you going to buy more shares in the company?

Of course. So unfortunately, we're blacked out from trading. So we can't do anything up until the quarterly results. I know a number of the staff have bought today -- have bought shares today. And I think if you look back through the disclosures, the PDMRs or we have to disclose, have been regularly buying shares at a much higher price than they are today. So we all believe in the story and we'll continue to do so.

I think the next one is a question that has been touched on before, but it's worth raising again. Do you plan on initiating any actions to address the fact that you're trading at a 50% discount to your own book value?

I think we touched on that question from Nash earlier, and we can't sit back and let this continue for a long period of time. We have ample opportunity within the company to go and address it. And I think it's something you should expect us to discuss over the coming periods.

And there is also a question on Karskruv. Can you say something about what you think the value uplift has been relative to what you paid the OX2 since you took it over on the balance sheet?

Yes. I think when we acquired Karskruv, we acquired somewhere between EUR 35- and EUR 40-megawatt hour long-term price. And if we look at that in terms of multiples, it was around EUR 1.4 million per megawatt installed capacity. OX2 sold in Q3 of last year Ånglarna, which was sold at EUR 2 million per megawatt installed capacity. If we look back a little bit further than that, we've seen assets trade at EUR 2.5 million. So I'd say there's significant uplift in Karskruv from when we purchased it. and exactly where the market sits, whether it's EUR 2 million or EUR 2.5 million, there's somewhere between -- somewhere around a 50% uplift in value since we acquired that asset.

What long-term capture power price do you assume in your book in the book value of assets?

Yes, for long-term planning, we expect 20% -- around 20% for our portfolio to be sort of the normal average capture price discount. And of course, we will have fluctuations. Like I said, first half of '23 was a lot lower and the second half was higher, but on average, 20% going forward for our portfolio and which is also consistent with the view that we see that energy external energy consultants have. So 20% is the answer.

But the book value is the acquisition price, which we haven't updated since. So I think the future value of the assets is significantly higher than what we hold in the book value.

Thank you, Daniel and Espen. Moving over to the next question. As per 2024 guidance, if company achieves positive free cash flow, what would be the main focus for the company then? What would we do with the money?

Yes. I think we're focused on growth today. So we have ample opportunity within the asset base to grow. And we'll flex our CapEx program to match where we see accretive growth, whether that's using excess free cash flow or using the finance facility, we'll focus on accretive opportunities to grow the business.

Thank you, Daniel. And then there is a question about one of our shareholders may be better asked to them, but does the Lundin family have time to focus on Orrön Energy having in mind all the other companies that they are all...

Absolutely. This is a renewable vehicle within the Lundin Group and the Lundin family are not -- it's not like they've turned up today to manage a broad portfolio of companies, they've been doing this for decades through many generations. So absolutely, they have time, and this is a key focus for the family.

And back to your question on technologies again and diversification, which technologies besides batteries are you looking into to offset wind-generated energy sales and also hydro and hydro is not flowing?

Yes. I think the core of the business is wind and hydro. And so when we look at long-term historical averages, the wind will be blowing through the periods of the year. And so even taking into account the long-term average, we're still generating 1,100 gigawatt hours. I think batteries give us a slice of revenues over and above that, and they allow us to deal with some of the capture price discount and volatility where we'll see other revenues coming into the business. So -- for me, it's an important diversification to step into batteries alongside existing production, but also into Greenfield development, which spreads our revenues across many parts of the energy transition.

We have a few questions left, but if there are more questions, we encourage them, of course. Could you provide a breakdown of the CapEx program and how this relates to the development pipeline over the next few years? I mean, we looked at it on your slides estimate may be worth reiterating.

Yes. So out of the EUR 14 million CapEx in '24, we have EUR 2 million of phasing for '23, as you can find in the slide, and the rest is growth CapEx with EUR 1 million for the battery project in Sweden and the rest Greenfield, either in U.K., France, Germany and in Nordics. I guess 2 important things to note is that a Greenfield investments are short cycle. So we expect to be at a stage where we can monetize, like Daniel mentioned late this year or during 2025. So short payback on that investment. Secondly, it's discretionary. So we can ramp up and we can slow down. And when it comes to '25, very much depends on sort of the activity set and the progress of the projects. And we need to sort of revert to that when we get closer. But we are very much opportunistic, and it's important for us to keep focus on the discretionary spending, so we have optionality and flexibility according to the market environment.

Thank you. And we have another question for you, Espen. Is there any kind of a convertible loan currently? Or are you -- is there any kind of convertible loan at the company right now? Or is it something you're looking into?

No. There's no comfortable loan. We only we have our RCF -- external RCF and some small portion of other external debt. We're not considering any equity issuance in any form, including convertible loans. So no is the answer.

Thank you, Espen. And that actually concludes the question from the Internet now from the webcast, but I think we have some more in the room. And there might be more coming from the webcast. So you have time now. Nash, questions.

Perfect. Another 3 from me, if that's okay. The first one is on the encouraging OpEx trend. So 20% decrease on a per megawatt hour basis. I wonder, is that driven by the capacity increase from Karskruv? And what do you think you want to achieve OpEx per megawatts hour basis in the longer term? Do we expect that to go down every year to around turn or whatever? So how should we think about that?

Yes. Well, thanks. That's a good question. So the first part of the question first, I mean the reduction is very much driven by Karskruv is the asset in our portfolio with the lowest unit OpEx close to EUR 10 per megawatt hour for that asset. So it's a great high-quality asset with low cost. Longer term, I mean our base case, the starting point is that we expect it to stay close to the EUR 15. And then, of course, it's the optimization and operational excellence that the Jonas also touched upon, which sort of comes into play to make sure that we keep all our costs on track and chase all the reductions that are possible. But as a starting point, I think today's or '24 level should be the expectation going forward.

Perfect. And then my second question is on the very interesting breakeven analysis. I thought that's very helpful. If I understand it correctly, you will be free cash flow breakeven after CapEx at the power price around EUR 50 per megawatt hour. Does that mean if we have that power price, our net debt will be around same level as 2023, so around EUR 90 million. Is that right?

Yes, that's right.

Perfect. So my third question is on PPA. So I thought the sensitivity analysis is very helpful to give a range of power price. And I wonder what could -- how shall we think about PPA? What could trigger or on to go into the PPA market if you say, okay, that's my power price range for a PPA landing within this range, probably lower end, probably higher end. So will you ever consider that just to derisk the portfolio a little bit derisk cash flow a little bit?

I think it's always an option to step into hedging or PPAs, but we need to see the value. So today, we don't need it. We can withstand within this business. We can withstand pricing significantly lower pricing than even EUR 30 a megawatt hour once we're through the Sudan case. So the company doesn't need hedging to manage its balance sheet. It would be purely opportunistic. And so we would need to see hedging, I think, between the mid and high cases to then step into something that makes sense. So derisking absolutely on our minds, but we have to see the value proposition and have to see the long-term hedge price being closer to where we see our base case or above.

Thank you very much, Nash. Do we have any more questions from the room here in Stockholm? That does not seem to be the case and no more questions from the webcast. So with that, I would like to thank everyone so much for coming here and for attending the webcast today.

Thank you very much.

Thanks so much.