Fusion Fuel Green PLC Q1 FY2021 Earnings Call

Thank you for joining us for the Fusion Fuel Green Q1 Webcast. All participants are currently in listen-only mode. I will now hand the call over to Ben Schwarz, Head of Investor Relations. You may begin.

Thanks so much. Hello everybody, and welcome to Fusion Fuel Green’s 2021 first quarter update call. Before we begin, I'd like to remind everyone, this call may contain forward-looking statements, including but not limited to the company's expectations or predictions of financial and business performance, which are based on numerous assumptions about sales, margins, competitive factors, energy performance and other factors, which cannot be predicted. Forward-looking statements are inherently subject to risks, uncertainties and assumptions, and they are not guarantees of performance. I encourage you to read the disclaimer slide in the investor presentation for a discussion of the risks that may affect our business or may cause our assumptions to prove incorrect. The company is under no obligation and expressly disclaims any obligation to update, alter or otherwise revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. In terms of how the next hour will proceed, we'll have a brief presentation by management before opening up the floor for Q&A. Please submit your questions in writing, if you're joined online you can do so on the webcast platform, and if you're dialed-in, you can email your questions to [email protected]. So at this point, I'd like to turn the call over to Fusion Fuel, CFO, Frederico Figueira de Chaves.

Great. Thank you so much, Ben, and thank you everyone for joining us today. Today's a very exciting day for us. It’s our first quarterly update call as a public company. So, you have on the call with me today also João Wahnon, our Head of Business Development; and Jaime Silva, our CTO. So we’ll be doing the events, the three of us, providing different updates, and then we will all be here for Q&A as well. In addition, we have also our Chairman, Jeffrey Schwarz on the call as well in case anyone has questions for him as we go. So first, what we will do is, as we have a few new joiners on this call, I’ll start by briefly recapping what is our thought on Fusion Fuel, and then we’ll go on to provide a brief financial update before going into more detail on the latest developments on Fusion Fuel. With that, if we can go to the next slide. So, just to remind everyone on the Fusion Fuel story, we are a green hydrogen technology and industrial player. We provide both the technology for clients who produce their own green hydrogen, and also we sell and provide green hydrogen as a product to industrial players. Our origin comes from the solar concentration industry, and at the start of 2018, we began the R&D process of creating our own electrolyzer solution. Through that, in essence, what was created was an integrated concentrated solar to hydrogen solution that is off-grid. We use a revolutionary miniaturized electrolyzer technology, you see an image of that on the left-hand side. We have modular and scalable units, so those miniaturized electrolyzers attach a couple of hundred of them attached to the back of that solar panel you see on the bottom left, and each of those units can produce around one ton of green hydrogen per year using solar radiation—up to two tons with day-and-night production, and therefore, it's a very modular and scalable solution for all types. With that, we've been able to deliver one of the leading green hydrogen production costs in the industry. We have a team with a high degree of experience in this space and one of the highest pan-based electrolyzer efficiencies in the market. And this is what the cause of Fusion Fuel. So everything stems from this core technology that I've mentioned and the two business models that we have are both selling the technology and selling hydrogen as a product. So, going forward, we’ll provide quarterly financial updates along the lines of the tables in this presentation, given our size currently and activity levels, we won't provide full quarterly financial results, but instead make sure that all key financial data is shown on a regular basis, so that you can track our progress and see how—where the company is at any point in time. Currently, we're not showing debt levels in the chart that you will see in a few slides, as the company has no debts. Business developments will introduce these elements into our financial updates, along with the production quantities as well. So you can see on the slide here, there are some highlights of the quarter. I will cover the financials in more details in the coming slides, but I want to note that, the first quarter was an incredibly busy start of the year, right through the first few weeks. We've already mentioned some of the projects here in our Investor Day in January, about recap the main highlights. During Q1, we entered into two different MOUs to explore synthetic fuel plants, using Fusion Fuel hydrogen in Portugal. One was with Grupo Industrial CL, which operates a steel mill, and looking to use the carbon emissions from that steel mill. The other was with Magnesitas de Rubian in Spain as well, looking at the carbon emissions from the mining activities to also create synthetic fuel plants. We established a partnership with CEEES in Spain, which is the Association of Service Stations, to introduce Green Hydrogen fueling infrastructure and supply across Spain. Linked to that was the MOU with Zoilo Rios, to develop Green Hydrogen for the first integrated Green Hydrogen fueling stations in Spain. We also announced the partnership with BRG Energy Systems in India to build the demonstration plant and start the business development activities in India. We've had some more recent business development updates, but I know João will dive into those a little bit deeper in a few minutes, so I would like to cover those. Next slide. On the financial overviews, I want to note that we have revenues of around €500,000, related to the purchase and then subsequent sale of custom made components to our production process. So what you're seeing there is the revenues and the cost of sales effectively canceling each other out, as this is the way that we are securing these custom made components and securing the stock of these, and then putting them at the disposal for the production partner to then build the final HEVO-SOLAR units. We expect that this back and forth will continue throughout the year. And this is of strategic importance to us, because it ensures that we are actually in control of the stock for these core components throughout 2021. Cash and cash equivalents at the end of Q1 was around €62 million – just shy of €62 million, up from €58 million at the end of the year. The increase was mainly driven by capital inflows from the conversion of around €1.1 million warrants, leading to inflows of US$12 million during the quarter. I should say. The operating losses of around €6.5 million are effectively driven by a charge of €4.9 million related to share-based payment expenses that were part of the transaction. So these are charges that are related to the potential share and warrant issue obligations. That was part of the business continuity agreement. These are not cash expenses. I think it's important to recognize the same way that we had – as can be seen, at the end of 2020, large transaction listing expenses, which were also not cash expenses. These are all related to the transaction. I will note that these expenses are actually expected to continue throughout the year, and they will continue until the end of June 2022 – the €4.9 million – roughly €4.9 million each quarter. Other expenses beyond service are net of debt of roughly about €1.6 million related to, I would call our fixed costs of payroll, lease, insurance, and so on, around €250,000 per month. Intellectual property transfer charges were, again, after the legacy sort of contracts, pre-business combination, roughly of €250,000. We had two more quarters of those payments to go. And then project production upfront payments of around €1 million. So these are in order to secure the production units, a portion of the product charges we pay upfront. Then we start paying the remainder of the materials on as we take delivery, with then a success fee at the end of the project at the end of meeting the production projects. Lastly, we go into pre-tax income. It was positively impacted by around €15 million of positive movements based on changes of the fair value of the outstanding warrants. This is simply reflecting the lower valuation of the warrant price versus the end of December, which then would release those €15 million that we had. We will see that this will continue to move until the warrants are fully converted. We will always break that out for you so that it's clear. Again, this is not a cash expense—it has no cash impact, but will transparently always carve this out, so that people can follow and understand where the numbers are coming from. Move to the next slide then. So we currently have 13.1 million shares outstanding. The increase was driven by what I mentioned before, the conversion of around 1.1 million warrants during the first quarter. Current, the firm has around 5.5 million tradable warrants that are outstanding in case anyone wants to keep track of that. That figure, if all of those 5.5 million warrants were converted, that would lead to around US$64 million–US$65 million capital inflow. So, as I mentioned before, we will look to provide this sort of financial overview every quarter. We’ll also look at adding items as the firm grows, so as we take—when we take on debt, but we have substantial assets to show as well, versus including these and building these out. So as a foreign issuer, we are not required to do the very intense quarterly—full quarterly financial results, but we still want to make sure that our shareholders have all the information needed to keep an eye on the track on how we're doing. So, with that, I'll move on to the business updates and our 2021 milestones. So, as we mentioned in our investor updates in January this year, we have three core priorities and strategic priorities for the year. The first is to go live with the Evora Plant and the installation of that Evora Plant. The second is the signing of strategic MOUs, partnerships, as well as hydrogen purchase agreements, so that we are well on our way to execute and deliver on the business plan we presented. The third is the build-out, installation, and subsequent go-live of our Fusion 2 production facility in order to manage the expected much larger production numbers that we are targeting in these business plans. So, those are the three core priorities for the year. I will now give you an update on how we are in each of those and then towards the end, finish. So, João.

Okay, let me start. So, thank you for attending our quarterly results presentation. The past months were especially active in the pursuit of our strategy to develop green hydrogen projects using our preventive technology called HEVO-SOLAR, which defined as a priority, the negotiations of MOUs and HBA with some of the world's leading companies involved in the oil and gas business, as well as the ammonia business. In several countries worldwide, the strategy for green hydrogen is already approved and under implementation, but there are a few pending specific relations that will lead to obtaining the necessary licenses and permits to develop the project. These constraints will lead us to take the decision to anticipate securing the land needed to install our projects in Portugal and Spain, and start the environmental study, which is the most important document for obtaining permits and licenses for construction and operations of green hydrogen projects. Our initial strategy was to develop green hydrogen projects and solidify our presence in Southern Europe, mainly in Portugal and Spain, and at the same time, in North Africa in Morocco. But increased interest from several other countries in the world will lead us to accelerate our international growth and start developing business in different geographies. Our HEVO-SOLAR technology has a tremendous advantage when compared to other electrolyzers since we produce green hydrogen directly from the conversion of solar radiation, allowing us to reach the highest efficiency and the lowest levelized cost of hydrogen. It also allows us to develop projects in remote locations, meaning that we do not need electricity from the electrical grid to produce green hydrogen, allowing us to solve our projects in areas that do not have power capacity available. Additionally, our technology is more suitable for the regions of the world with higher levels of solar radiation, including regions where we have been—such as Australia, the Middle East, India, the USA, and Chile. Now, can we have the next slide please? The Evora project involves the installation of deep learning and will be carried out in two phases. The first phase includes the installation of 15 HEVO-SOLAR units to demonstrate the production of green hydrogen from solar radiation conversion. It will also integrate purification, compression, storage systems, and the conversion of electricity via fuel cells to inject into the National Electrical Grid. With advanced construction technology, the first HEVO-SOLAR unit has recently been commissioned and is producing green hydrogen beyond our conservative expectations. Two more units are already installed, with the rest set to be installed and commissioned in the upcoming weeks. Phase two of the Evora project entails the installation of 40 HEVO-SOLAR units to show the ability to inject green hydrogen into the natural gas pipeline and supply it in bottles for industries and hydrogen refueling stations. The Municipality of Evora has approved the construction license, and we plan to start construction next week, aiming to finalize installation by the end of July. We would like to present a preview of the current Evora projects installation. We are preparing to commission phase one of the Evora project in Portugal, inviting potential developers to visit the operational plant and request an independent engineering report on its performance. We are making progress on our strategy to develop five green hydrogen projects in Sines, with three currently in development aimed at injecting green hydrogen into the natural gas supply and producing green ammonia for export to Northern Europe. We have secured over 300 hectares of land and are beginning the permitting process, representing approximately one-third of the initial seamless project expected to be installed by 2025. For funding, we have submitted our first project for European funding, expecting a response by the end of July. We are also part of the Portuguese projects submitted to the IPCEI, which offers special conditions and grants for green hydrogen projects. Recently, we began operations in Spain, negotiating with major oil and gas companies and electrical utilities to develop green hydrogen projects. We are also in discussions to expand into Portugal, focusing on green synthetic fuels. Two projects are underway, one with Grupo CL in Badajoz and another in Lugo, producing green hydrogen to create green ethanol and green jet fuel. Both projects will apply for European funding available for decarbonization. Additionally, we are negotiating to secure over 1,500 hectares of land for further projects, primarily aimed at producing green hydrogen for injection into Spain's national gas pipelines. We have established strategic cooperation for hydrogen fuel installations and expect to announce key contracts soon. Concurrently, we have initiated negotiations in Greece with major oil and gas companies and electrical utilities to develop green hydrogen projects, including a demonstration plant to be announced soon. In Morocco, discussions are ongoing to produce green hydrogen for green ammonia in the fertilizers industry and to inject it into the natural gas grid. Our international expansion includes the Middle East, where we've signed a cooperation agreement with a leading international contractor to develop green hydrogen projects in the UAE, Oman, Qatar, and Kuwait. Recently, we made significant strides in Australia, our priority market due to its favorable solar conditions for producing low-cost green hydrogen. We have signed an agreement with an Australian oil company to develop business relations and start the installation of a demonstration plant, with several projects under negotiation in Western Australia. In India, we signed an agreement with BGR Energy to develop green hydrogen, particularly in Rajasthan and Gujarat, which entails mixing green hydrogen with CO2 from coal-fired plants to produce methanol. We have also initiated operations in the USA, viewing it as a promising market for green hydrogen development, and incorporated Fusion Fuel USA to begin project development. Lastly, we have started negotiations in South America, specifically in Chile, to sell hydrogen in the Atacama region, known for having the highest solar radiation in the world, thus enabling the production of the cheapest green hydrogen. We want to emphasize some key agreements signed with leading companies, including a Memorandum of Understanding with Elecnor, a prominent EPC company in Spain, to develop our HEVO-SOLAR technology. Elecnor, with 60 years of experience and presence in 55 countries, is an important partner for enhancing our operations in the Spanish market and beyond. Then next slide. We signed a cooperation agreement with a company called CCC, the name is Consolidated Contractors Company. We signed an agreement with this company to develop demonstration plants to produce green hydrogen in Kuwait, Oman, and Qatar. CCC is a global diversified company, specialized in engineering and construction, and has become one of the leading international contractors with a global commercial footprint. The Middle East represents a significant opportunity for Fusion Fuel due to the high levels of solar radiation that allows the production of green hydrogen at a very low cost. Now the next slide, please. Recently we signed HEVO-SOLAR agreements, which are a fantastic operation that we signed with Ampol. We signed HEVO agreements with Ampol to install demonstration projects in Ampol's Lytton refinery site. The installation is expected over the next 12 months and will lead to joint business development opportunities in Australia. Ampol is Australia’s leader in transport fuels and has recently announced its ambitious future energy and decarbonization strategy. Australia's abundance of solar energy makes it one of the best locations for our HEVO-SOLAR technology and for the production of very low cost green hydrogen. Now I would like to present you Jaime Silva, the CTO of Fusion Fuel.

Hello, everyone. To take and to be able to produce to the project that business development is making or expecting, we have to drastically increase our manufacturing capacity. We closed an agreement for the facility of our future test manufacturing facility, which is located in the Manuvent in South of Portugal. It has around 15,000 square meters of area. In 2022, it will have a capacity of delivering around 100 megawatts and it will have space enough and the equipment enough to be scalable to reach the 500 megawatts of capacity to deliver in 2025. This facility is in a location that is able to apply up to 25% of funding support from the government on all the investments made in the production and all the renovation. The renovation of the factory of facilities will kick-off immediately, and it will be a fully automated unit— we expect to have around 90 people working on the manufacturing by 2022 to reach the objectives of 100 megawatts of capacity to be delivered. The installation of the production equipment that is being built will start late summer, and we expect to have the first units to come out in the first quarter of next year. Then, next slide, please. So in terms of research and development, during the first quarter we are planning several projects. Some of them we will be presenting at the end of this year, beginning of next year for the evolution of the technology. We have our research and development department being increased drastically. We are also closing partnerships with stronger research institutes for several specific areas, like for an offer—a research institute in Germany, and we are also looking to start a partnership in other more strategic areas like hydrogen storage, which we are starting in Australia.

Thank you, Jaime. So to the final slide then. So now just to wrap up, I'll finish again with the 2021 milestones, especially in this very important first year for us. Just as we heard and you've seen—the Evora plant is well and truly underway. Within a few weeks, we'll have Phase 1 in the bag, and in a couple of months, we will be there in Phase 2 as well. So the initial results we've seen from the units we have up are incredibly promising and actually outdoing our expectations. On our second priority that we're using HBAs, you heard from João, we are well and truly underway to put everything that João said in perspective. In January, we said that our entire pipeline—not committed orders, but pipeline—was around four times bigger than what the business plan projected. We were pretty comfortable being able to still execute on the business plan. In only about three months that number has gone from four times the business plan to around six times the business plan. So, the market is developing very quickly and we're certainly keeping up with it in our business development team as well. The production facility, as you just heard from Jaime, locations are set, renovations are starting very soon, installation in the summer, and we are well on the way to these three core milestones for 2021, setting us up exactly in the right path for the coming years. So, with that I want to thank you for listening to the three monologues, and now we hope to hear from some questions from you guys as well. So, Ben I'll pass it to you for Q&A.

Yes, thanks Frederico. The first question is for Jaime to start. Do you see any risks that something that worked well on a small scale might become problematic when deployed at utility or industrial scale? And if so, what problems might those be?

Yes, the units we had—and we formulated in the past make the visualization and all the analysis in the last year were individual units, not connected in networks. The question is the HEVO-SOLAR, you saw working in the video is already fully connected and is using the network being supplied at industrial scale, and the hydrogen is also flowing directly to the central points and is using the centralized point. This means that, in fact, the unit that we have already working on the field is already exactly equal to the unit that will be in the full power plant. The main challenge we had during this first trimester that, in fact, at the transition from a research unit prototype to a power plant unit has been overcome. So, right now we are going to replicate more quantities; the main challenge has been overcome and we are ready to jump to the next level so we don’t forecast any additional situation than the one that we have overcome this trimester.

Great. Thanks Jaime. A question here, perhaps stick with you, what is—why is the integrated solar electrolyzer solution better than using a large-scale centralized electrolyzer and combining that with renewable energy from the grid? Would you say that a miniaturized electrolyzer is more efficient?

Yes. In fact, if you take a solar—a very cheap solar PV power plant, you transport the energy and convert it with Tier 1 solar modules—19%, 21%, 25% of solar conversion. And then you have to transport the electricity, convert it to AC, convert it to DC, transport it to a centralized electrolyzer, then convert it again. When we have a small miniaturized electrolyzer connecting to the cell and taking advantage of the heat—strong heat generated by the cell, you eliminate all the inefficiencies of the system. In fact, we are able to have at the HEVO level, solar to hydrogen conversion efficiency of 26.8, which is extremely higher than the fuel chain levels to transport energy and convert it to hydrogen. We’ve also another strong advantage in making it smaller, making it miniaturized and rebuilding how the electrolyzer is constructed and designed. It is designed in a completely different approach than the traditional models. It allows us to have a small unit, completely optimized to be able to make it at extremely low cost. So, when we put both things together and you consider the performance of a power plant and the CapEx you have to do to make it work, you reach a much lower hydrogen cost compared with the PV or with a centralized electrolyzer.

Thanks, Jaime. Next question for perhaps to João or Frederico in terms of the pipeline growth from 4x to 6x, how much of that is more demand from existing counterparties versus incremental demand coming from new counterparties?

I can answer that. In fact, our business plan was the performance for Fusion Portugal, let's say for southern Europe and Morocco, regarding the demand for green hydrogen. Of course, we knew by that time that the world was doing first steps—more than one year ago. We knew that there would be plenty of opportunities worldwide, but we never reflected them in our business plan. So today, of course most of what we are negotiating is coming from, for instance, Australia and the Middle East, where the opportunities we are negotiating today are really big compared to the opportunities that we have in Europe according to the initial business plan.

Thanks, João. Any plans for projects or initiatives to address the transportation market in the future, right? And maybe you could talk a little bit about Zoilo Ríos in greater detail or others?

Yes. Today, hydrogen refueling stations for fuel cell electrical vehicles are growing, of course, according to demand. So, today, there are not too many vehicles in fuel-cell hydrogen vehicles. A lot of our negotiations are with several entities. We made this agreement with CEEES, the association of the gas stations in Spain, to install hydrogen refueling stations. There is a strategy from the European Union to have green highways—to connect the capitals of the countries. Imagine from Portugal to Paris, Milan, or whatever. There are a lot of opportunities; we are first under NDA, but we are negotiating with several other oil companies to install hydrogen refueling stations along these green highways, apart from smaller installations for more city consumption of future hydrogen vehicles.

Great. Thanks. Question back to João, how many HEVO-SOLAR units does 100 megawatts of electrolyzer capacity equate to?

Sorry, can you repeat?

Yeah. It was a question about how many—so for next year, you mentioned that the production facility will have a capacity of 100 megawatts, how many HEVO-SOLAR units does that equate to?

Around 4,800. Anyway, the manufacturing capacity will be installed, preparing already for the delivery needs in 2023 and 2024. So with designs for the full manufacturing capacity, we will not have all the equipment installed. We have just the equipment necessary for 2022 because the line is already designed and installed while considering the manufacturing capacity of 2024. This means that when we decide to make the additional equipment, it will be a very fast operation, just delivery of the equipment, because the line is already prepared for the manufacturing capacity of 2024. So the different placements for the equipment and the transportation of the materials will already be there, and we will jump very quickly to the next level of capacity as soon as we have green lights from the business development. This means that if the business development sells more projects sooner, we will jump sooner to the next level and we will not wait too much for the increment of capacity.

Thanks. A couple of questions here for Frederico around expected revenue. When do you expect to start generating revenue and how much?

Sure. So, in the business plan, we noted that we actually expected to start making revenues in 2022, with total revenues of around €45 million during that year. We will likely see some modest revenues in 2021 already, even excluding what we've shown today of the revenues due to the production stock and material that's provided to our partners, simply because everything will be up and running, and we will start generating some modest revenues already in the second half of this year. The reality is that where we expect most of the sales revenues to be is actually towards 2022, with around €45 million. That said, we still expect to be posting an operating loss for that year, given the fact that we want to significantly invest in developing our own hydrogen plants. If we were to sell our technology fully to third parties, we would be breakeven and likely profit in the back end already in 2022, but strategically, we are building our hydrogen plants portfolio.

Thanks Frederico. Maybe we'll stick with you here, or Jaime. A question around material impact on the levelized cost of hydrogen coming from increasing poly-silicon prices or perhaps other raw materials. So, just the impact of increasing raw material prices on the levelized cost of hydrogen?

Yes. We are facing, in all industry and in all chains, from noble metals and silicones to steel and electronics, semiconductors, and steel, aluminum—we are facing a massive—you could say, more than increasing costs; what we are facing right now is a shortage of materials. We have big groups saying that they are not able to deliver and they will delay, and they do not have the labor available. So, we have reinforced our purchasing departments. We are testing many more alternatives for each item to ensure that they are available, and this is one of our internal objectives—to secure raw material availability—to prevent strong delays in the deliveries and in manufacturing. Regarding the impact on cost, I would say that the main components bringing some impact are not relevant; there's not a huge impact, but there is some impact due to the materials we use in our product. All the remaining materials—the main issue is securing deliveries and not directly linked to the impact on cost. But again, our department has been reinforcing and we have an internal task force to increase the number of companies that we have qualified in each item to reduce the risk of being without material. Some materials are very complex—for instance, semiconductors, and there are not many suppliers currently qualified in the industry, but we have increased our purchasing department to tackle this problem that is not yet completely understood as to when it will ease.

Great. Thanks Jaime. A question here for Frederico, on our capital requirements, how long is your expected liquidity runway based on the current cash position and expected capital needs going forward? How much additional runway can capital inflow from warrants provide? What are the biggest risks to the liquidity outlook?

Certainly. So, in terms of the runway, certainly, the warrants are the sort of biggest unknown on that factor. The simplest way to think about it is that if the outstanding warrants were converted, we would not require any additional capital in order to execute the business plan exactly as we stated in January. If we assume that the warrants do not convert, we have enough operational runway to take this well into 2022, even into 2023. The main drag on capital consumption will be the investments into our own hydrogen farms. That is something that we could always take off the accelerator if the capital positions are required and instead focus more on technology sales and generating immediate short-term revenues, rather than the longer-term hydrogen sales. So from a capital position for our existing business plan, I would say we have enough runway, certainly to handle it with the warrants, enough runway time to manage the situation whether or not the warrants convert. The only caveat I will note is that as we saw from all of the exciting developments that João and his team have been up to—when we start going further afield and if we start to look to more aggressively expand into new regions, that capital position could change. So that will be something that we are constantly analyzing, and as these strategies for those new emerging markets continue to develop, that will be something that we will be keeping an eye on regarding the capital requirements.

On the subject of those new markets and new opportunities outside of southern Europe, due to the potential demand from large markets such as Australia, India, and the US, how quickly can you develop a production facility to supply those markets?

So, the view here is that obviously the most important is the current production facility we have that is being built during this year. We believe that when we take the decision of going live, within one year we would be able to have a production facility in the new region installed. So Jaime, do you want to add?

Yes. The industrialization here has been built in a modular way. This means that it will take six to eight months to develop each model that you repeat. It will just be the delivery of the equipment. So this modularity allows us to build a factory. After it is built and tested, we will be able to duplicate the process and will not take the same time to build a second factory or to build a second line like we are taking for the first one.

Thanks. Sticking with you, Jaime, you said that the units are actually exceeding expectations. Can you elaborate a bit on that? To what extent is it exceeding expectations? What is performing better?

I would say that the results that we have in Evora are exceeding expectations. The term exceeding expectations means that it is creating us the possibility—we have done some tests and analysis to increase the throughput of the product. Right now we have a throughput of each model at 3.90 grams per hour at 1,000 watts per square meter of radiation. We will probably be able to increase it after the third power plant is delivered, and that will give us an additional small reduction in cost. Right now, what is expected for Evora, even before finishing it, is that we will call an independent auditor to make reports on two directions. One is the performance of HEVO-SOLAR, and the radiation sold for this radiation—it will produce hydrogen. The second one is the security issues, because one of the main bottlenecks to the business development side is licensing if the tracker is adequately certified or not, or what is required. We want to move very fast with auditing reports on performance and security issues to allow us to speed up the business development in more complex periods like we are facing in Southern Europe.

Thanks, Jaime. A couple of questions here about Ampol and the potential foreign joint venture structure in Australia. How are you thinking about commercial opportunities in that region? Are you contemplating a partnership with Tesla, which has also partnered with Ampol?

Thanks, Ben. At the moment, we’re in the early days of our partnership with Ampol. So, we are still defining what that entails and what that brings. I'll confirm here that we have not had discussions with Tesla, but I have seen a couple of questions come through on that front. But for us, partnering with Ampol, the leading transportation fuel player in that market, is something we greatly look forward to, and we are extremely excited about that opportunity. We see the opportunity in Australia to be significantly broad, not only in hydrogen for transportation fuels but also hydrogen for some of the heavy industry sectors that operate in Australia. Additionally, hydrogen as a potential ingredient for some of the potential future fuels like ammonia for heavy transportation, be it cargo, trains, boats, and so on. Eventually, we also see hydrogen as an ingredient for other chemicals that will be exported from Australia. So, we see the partnerships in Australia being incredibly broad. João, would you like to add anything?

I just wanted to add that the design of our hydrogen refueling stations is primarily being developed for the Spanish market and Portugal. We will also develop them in the future in Australia for sure. As mentioned, we produce the hydrogen upgrades and in some hydrogen gas stations that are far away from the national electrical grid, we are designing a solution to produce hydrogen through solar radiation, which would also allow us to produce electricity to charge electric cars in gas stations where there is no electrical grid available. This means that our solution is for fuel cell electric vehicles using direct hydrogen, but at the same time, we plan to use hydrogen with fuel cells to supply electric battery cars such as Tesla.

We’re approaching the top of the hour here, so one more question before we conclude the call. Have you—has Fusion Fuel acquired expertise regarding applying for subsidy programs, whether it's the EU Green New Deal or ECB Green Investment Fund for infrastructure projects?

Certainly. Thanks, Ben. This is a very important factor in this industry and is only going to grow in importance not only in Europe but also in other regions. As we start to see items emerging in the US. Currently, we do have some limited expertise within Fusion Fuel and we are expanding that expertise as we speak. Additionally, we have partnered with several players whose primary focus is to support firms in navigating what can be a pretty complex submission for government programs. However, one of the points I would note is that, well two points: first, the business plan that we shared in January did not include and did not assume any subsidies already within it. And I believe it's fair to say that there are no projects that we are looking at where we have built them on the premise of receiving subsidies. The projects we are pursuing are based on the validity of the project as a whole. Any program that we can be a part of will be the cherry on top. The exciting fact is that we believe our current pipeline is robust regardless of the governmental aid.

Okay. Thanks for responding, and with that I think we'll end our Q1 update. There's a lot of engagement in the Q&A session, so if you didn't get your question answered, we apologize. Please reach out to [email protected], and we'll do our best to get back to you. So with that, we'll say goodbye. Thank you for your support, and we look forward to speaking with you in the future. Goodbye.

So ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.