In previous reports and Insights, I have indicated that we will focus our business more towards becoming a technology supplier of larger plants to customers with a need for high production capacity. There are several concrete reasons for this, two of which are particularly important. The first is that the customers who have their own large and critical need for the fossil-free hydrogen for their processes, naturally have the greatest incentive to come to a purchase decision. The second is that Metacon now, through the collaboration with PERIC, has one of the world’s most competitive offerings both technically and in terms of price. With our latest won order for Greek Motor Oil, we are not only taking the first step towards starting to serve this customer category but are also initiating our manufacturing activities for our own electrolysis plants for those customers who prefer European-made systems.
Our largest order to date, Motor Oil 30 MW
To start with, a few words about the agreement with Motor Oil. This deal of close to a quarter of a billion SEK is, as most readers know, our first order for a major plant and something that transforms our business in a big way. It was able to be se cured after a lengthy qualification and negotiation process that we eventually won in competition with several other suppliers from both Europe and Asia.
Motor Oil is one of Greece’s largest companies with a turnover corresponding to approximately SEK 175 billion (2022). Motor Oil owns and operates Europe’s second largest oil refinery based in Ag. Theodoroi in Corinth, Greece and also serves several fuel chains (including the Avin, Shell and Cyclon brands) with a total of around 2,000 filling stations in Greece.
Motor Oil’s entry into the field of hydrogen production through electrolysis is made through this order, which at the time of the agreement is one of the first major commercial ventures of its kind, not only in Greece but throughout Europe. The plant is also ordered and built prepared for an expansion to 50 MW.
Motor Oil’s procurement team has conducted a very professional job and has set high standards for the choice of supplier of the plant. We are of course proud and grateful that they have chosen Metacon. The order value initially amounts to EUR 19.8 million and includes delivery and prefabrication of the entire plant, (initially 30 MW) which will be prepared to be expanded to 50 MW. The plant will be constructed on-site by Motor Oil under a supervisory agreement with Metacon, which will oversee and supervise the work on site. Our deliveries to the project are planned to take place on an ongoing basis, starting during the summer and second half of 2025.
Those who have followed us and perhaps also listened to my presentations in various contexts over the past 1-2 years will remember that I have consistently tried to explain the logic of developing our strategy towards larger hydrogen-based projects by the fact that it is easier to both reach and manage fewer customers than many. And that if these deals are large, not as many are needed to achieve set goals. This order for Motor Oil alone, will now take us almost halfway to meeting our financial target for 2025. A similar order with the right timing would likely get us there. And two of them could make us exceed the goals. I believe that the understanding of the actual value of a company with such numbers, in a long-term growth industry, will come naturally.
Development of our capabilities in larger hydrogen projects
Since the last edition of Metacon Insights and as everyone probably understands, an intensive and demanding work has been performed to prepare for an order for a contract like this. The work on the Motor Oil order has been challenging throughout 2024 and has taken a lot of operational and management power, as competing suppliers have been involved all the way into the final negotiations. But through the work on this order, we have also had the opportunity to design a complete hydrogen plant in the 50 MW class from scratch and to develop a unique modular concept that is scalable for larger plants than that. Based on our partner PERIC’s electrolysis technology, we have adapted the plant to become the beginning of a “Metacon plant” with the inclusion of several components from suppliers that we have selected ourselves. Among other things, we have chosen Siemens as a supplier of various important components, such as control systems.
One ambition with our system design for this delivery to Motor Oil has been to prepare as far as possible to become a European manufacturer and full-service supplier of electrolysis-based hydrogen plants. We also see the opportunity to test our ability to assemble key elements of the plant with our own staff in Patras, Greece, in preparation for our larger investment in our own “gigafactory”. Our project team has been put to the test in developing their own design and choice of components, and the result has been successful.
Our focus on larger plants has proven to be commercially correct, and we are now seeing an increasing demand for everything from mid-size to very large plants. Projects for such facilities naturally take longer time to come to completion, and customers often conduct a very professional procurement process in which we and several of our competitors participate with responses to inquiries in several qualification phases. For the really large plants in the range of 500 MW, it can take several years of hard work to finally end up with a contract, or in the worst case, that the choice falls on another supplier. Personally, I believe that these lead times will be shortened significantly in the coming years as both customers and suppliers become more skilled at specifying and designing the plants. And that our modular offer is chosen (in simple terms) as “Lego”, which aims to streamline projects from start to finish.
I therefore envisage that Metacon will invest a lot in modular solutions, meaning that our customers can be offered a palette of choices, but at the same time standardized to our design and our basic specifications based on proven modules. As it is and has been so far, we as a plant supplier have constantly had to adapt to customers’ varying design requirements and specifications, something that in the long run will probably be unsustainable if we are to be able to reduce costs. As a simplified comparison, for example, one could imagine that a truck manufacturer would have to build each truck according to the customer’s design and specification. My vision for the future is instead that we will have complete offers where our customers at an early stage will be able to choose the type of plant with different configurations and specifications directly from our website and then even be able to get an indicative price and delivery terms provided that they design the plant based on our guidelines and system products.
At Metacon, we are always ready to respond to procurements and participate in several projects in different phases. The size of the facilities does not really pose any major technical difficulties as our plants are modular and can be expanded in stages. Instead, the challenges and time consumption in the projects usually lie with the clients, who are usually dependent on external funding, permits and grants. Of course, just like in similar industries such as wind power and solar energy, these challenges are temporary and will disappear over time.
With the order from Motor Oil, we have, in my opinion, proven that we are a supplier to be reckoned with for large plants and I am convinced that this order will lead to more orders from other customers.
Gigafactory
During the second half of Q1, we put together a project team for our own factory project “Gigafactory” according to plan. The team has come a long way and has been helped by the work with the design of Motor Oil. The work is done in close collaboration with PERIC and our team has been on site at PERIC’s factory in China to gather information, knowledge and experience. We have also hired a very experienced Chinese engineer who is stationed in Handan at PERIC. We now know in broad terms what is needed for us to be able to put the shovel in the ground for our own factory and we have a good picture of how our facilities will be designed and who our subcontractors will be. We have evaluated several possible locations for the factory and the main focus is now on an industrial site in Uppsala. We have a property developer who, as long as all the conditions are in place, is prepared to put the shovel in the ground and build. The site is located in an area with very good communication opportunities and close to our new head office in Uppsala, which we have just moved into, that significantly facilitates the management and control of such a complex project.
During the spring, several collaborations have been forged and one of the most important is the collaboration with Siemens, which has already been involved in a number of our projects and with which we intend to expand and deepen the work as we progress in various processes.
Other activities
It is important to remember that we are not yet fully equipped either organizationally or financially to be able to take on large new contracts with high frequency. We simply have to make this journey in steps and in as controlled a way as possible, but at the same time dare to take some risk. As many people probably understand, this is the main reason why we have not announced new orders for a period of time. Our new focus on customers who are planning larger plants and our work on the design of our own factory have taken most of the capabilities in the organization lately.
Another reason that we can also see has delayed things is the cost of financing for our customers which has dramatically increased over the past few years with high inflation and high interest rates. There are plenty of new companies and players who want to start up operations with hydrogen production, or who otherwise want to participate in the new hydrogen society. A crucial factor for their success is they are able to secure funding for their projects. We are now seeing increased clarity in both the national and supranational EU subsidy systems, where the EU’s Hydrogen Bank is one of several examples that have now been launched, while the cost of capital seems to be on the way down. We hope that this will now lead to increased activity and future orders, and we see that some players with whom we have already built relationships will be able to start their projects.
There is also a lot to be done in terms of regulations and various permit procedures. There is still uncertainty about what rules apply and what permits are needed to build a hydrogen plant, and there are different local situations in each country. An example of this is our upcoming reference plant for reforming (HHG 50) in Kempten, southern Germany. The plant has been ready for delivery by us in Patras, Greece, for some time. However, our German partner is in a process with local authorities to get final permits for the construction of the plant and we support it as much as we can. Our hope is that everything will be resolved during the year and that foundations and more can be prepared so that the facility can be put in place. During the waiting period, we have set up the plant outside our premises in Patras on an area similar to the one which will be available in Kempten and with the specifications that will be used in Kempten (a “mimic”). The plant is currently running and operated on methane in the form of LNG, since we do not have access in Greece to methane in the form of biogas as in Kempten. However, we now do have strong indicators that the plant should work according to specification also when it is in place in Kempten. The unit already gives us data and experience from operations. The facility is available for visits by interested customers and can be shown in operation, although there are safety distances to adhere to on-site when the system is running.
For some of our other projects, the development of national regulations has taken place during the project period, which, in addition to other factors, has affected the project timeline. This applies in particular to the completion of the two plants for northern Sweden. The regulatory changes, which are fundamentally positive, have meant a need for redesign and increased costs of the projects. But again, these are at the same time natural phenomena in an immature market that is taking shape and things that will disappear over time.
In Slovakia, where we are installing a PEM electrolysis plant, we have managed to complete the installation within the time specified in the customer’s grant terms in cooperation with the end customer in a short period of time pressed conditions. The plant is getting closer to commissioning, which is expected to take place in the autumn.
Metacon’s journey up until today
With the recent sales success to Motor Oil and the breakthrough of our strategy, I have been thinking about the company’s historical journey and what it has cost to build this and get us here. The registered capital increases, including a number of setoffs, historically amount to approximately SEK 460 million before all financing costs. This means that the company has received net cash and cash equivalents of just over SEK 400 million since it started in February 2007, i.e. over approximately 17 years and the equivalent of just under SEK 25 million per year. With this extremely limited invested capital in this context, the company has been able to build with its own unique and patented reformer technology that has now been translated into products against different market needs and at the same time also built up an offering of world-leading electrolysis plants that have generated individual order values that are now in the same order of magnitude as all the capital that has been spent historically, at least in “modern times” for the company. I think there is a lot pointing in the direction that we have now created a great opportunity to accelerate value development going forward.
In conclusion
As everyone understands, it is very exciting to be able to see the results of the choices and investments we have made while operating in recent years in an unusually challenging external environment that has complicated and made virtually everything we have tried to do more expensive than ever. The smaller projects that we have sold and installed so far, or that are under installation, have taught us a lot, even if it has meant much higher costs than originally budgeted, especially in terms of costs for external staff on site in the projects. I now see an increased interest in our facilities and solutions from both small, medium-sized and very large customers. Our focus will be on larger projects where individual deals make a major contribution to our financial targets. These customers have professional procurement and their own technical organizations that have good insight into what is required to build a hydrogen plant as well as their own internal need for the hydrogen. They are also commonly not limited by external subsidies and have greater ability to act in order to meet their own needs.
I am pleased to see that Metacon has taken a clear place in the hydrogen market and that we have advanced our position significantly. With the order from Motor Oil, we have shown that we are a company to be reckoned with for large projects and I hope that it will pave the way for several new contracts in the same class. We are not stopping here; we want to move on to the next level as quickly as we can.
Finally, I would like to extend a big thank you to all of you who follow and support us on our growth journey!
Christer Wikner
CEO, Metacon AB (publ)
Metacon is a leading energy technology company specialising in hydrogen, electricity and heat. Through our innovative solutions, we are committed to shaping a more sustainable future and addressing global challenges. With our technological advancements, we continue to be a force driving positive change. We are committed to strengthening our role as a leading player in energy technology, with a focus on sustainability and a sustainable future for all.
+46 19 126800
info@metacon.com
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753 40 Uppsala
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