Annual report 2019
Azelio’s push to become a commercial industrial company continued as planned in 2019. We are purposefully driving the company forward so that we can shift up to series production and installations for customers globally in 2021. It is pleasing to see a growing awareness in the outside world that we have everything in place to make a serious contribution to the UN’s global goal of sustainable energy for all – and to do so in the near future.
In autumn 2019, ahead of plan, we began signing the first Memorandums of Understanding (MoU) for our energy storage solution with on demand Stirling-based electricity production. At the end of 2019 the MoUs amounted to a total capacity of 159 MW, with further additions since then making a total of 184 MW. These MoUs relate to our prioritised markets in the USA, Pakistan, sub-Saharan Africa and the Middle East. Various MoUs have been signed with project development companies for the purpose of entering into long-term partnerships, as they want to include our technology in their offerings to customers.
Our storage technology has wide-ranging applications, as can be seen from the needs of our counterparties in the various markets. In sub-Saharan Africa many people live without access to a stable grid, which is why hospitals, factories and communities use solar energy when they can and diesel generators at times of day when the sun does not shine. Our solution, with solar energy being stored during the day for use during the hours of darkness, replaces diesel for baseload power generation and considerably reduces both electricity costs and the environmental footprint. The stumbling block for our potential customers is generally not getting the costings to work but financing the projects.
Biodico, Inc. of California, with which we have signed our largest MoU to date, has a different type of demand. Biodico wants to create environmentally friendly biofuel plants in the region that are run locally using renewable resources. Solar panels are an obvious choice in California, but they are combined with supply via an underdeveloped electricity grid in which tariffs are high. Here we represent a local, renewable and cheaper alternative.
We succeeded in signing these MoUs as a result of having strengthened our organisation in the areas of marketing and business development. We recruited capable individuals who have begun working on the expressions of interest received since the first technology demonstration in the summer of 2018, which is now having results. The goal for 2020 is to continue to sign a number of MoUs and also to convert some of these into firm orders.
To do this we need to carry out feasibility studies together with the potential customers, and then finance the projects and plan the details. That demands both time and resources, which is why it is important for us to select the right projects and engage in deeper dialogue concerning them, and then also to prioritise them correctly.
Jonas Eklind, CEO
2020 will be a year of new agreements, converting existing MoUs into concrete orders and making preparations for 2021 when serial production starts.
Another important step we took in 2019 was to get the verification projects in Morocco and Åmål (Sweden) in place. Together with Masen (the Moroccan Agency for Sustainable Energy) we installed two units at one of the world’s major solar farms, Ouarzazate Solar Power Station in Morocco, and put a corresponding system into operation in Åmål as a test bed. In the first quarter of 2020 we will engage a third party to record operating data for verifying the technology. This will initially be done from Åmål because of the travelrestrictions from the coronavirus.
The aim of this verification is to give our customers, their customers and financial backers a robust basis on which to make financing decisions for full-scale installations. For optimal project financing it is often necessary to finance projects by borrowing, and this is therefore essential if we are to be able to convert the significant customer interest into orders.
In the case of small projects, a couple of months of data is sufficient. For medium-sized installations a time series of up to a year is needed, and really large installations need an even longer time series.
In 2020 we will install a further verification project, this time in partnership with project developer and renewable energy giant Masdar as well as Khalifa University in Abu Dhabi. Masdar, which operates in 25 countries and specialises in the development, installation and operation of renewable energy systems and sustainable national development, wants to verify the system and get to know our technology so that they can include it in their product portfolio. The project involves a total of four units.
Within the company it is clear that we are approaching series production. We ended the year with around 160 employees and consultants, and today we have a delivery organisation in place and a production unit standing ready. An important milestone for us internally was achieved last summer when we produced the first volume-production Stirling engine at our plant in Uddevalla.
Expressions of interest, Memorandums of Understanding and orders from customers have to go hand in hand with production. In 2020 we will focus on optimising the company for series production in 2021. That means making minor adjustments to the technology to adapt it to the production methods we choose with our manufacturing partners. We also need to make final choices of components and run a product verification (PV) series to check that all the adjustments we make are optimal.
2020 will be a year of new agreements, converting existing MoUs into firm orders and making preparations for 2021 when serial production starts. Our plan is ambitious, taking us from idea to industrial volume production for a global commercial market within the space of five years. Everything has gone according to plan so far, thanks to purposeful hard work together with our partners. We intend to continue to be focused and work hard going forward, to contribute to climate targets and change lives for the better for millions of people around the world.
The prevailing situation with COVID-19 is hitting many severely and closed borders are creating major challenges for businesses. The impact on Azelio has been relatively mild, but travel restrictions mean that we cannot work at that rate and from the places we planned for in all projects. In light of the Swedish authorities' clarification that travel restrictions remain until at least June 15 and the otherwise uncertain development of the coronavirus impact, we are adapting our project plans to the new situation. Optimization of our resources based on the best assessment of the situation leads to some changes in the previously communicated time plan. The company's working capital is estimated to be sufficient for another quarter compared to what was previously communicated, until December 2020. The need for the next financing is thus extended accordingly. The overall time plan is then also moved forward one quarter with initiated commercial installation during Q4 2020 and serial production from Q3 2021.
Gothenburg, April 2020
Read more about Azelio as an investment
This is how it works