Annual report 2020
Azelio continued to deliver on its established targets in 2020. We are now approaching another important milestone in the third quarter of 2021, when we plan to initiate series production. This year, we will also expand our order book with more and increasingly larger orders.
To enter the next phase, Azelio is building a strong team within and around the company. We continue to recruit key competencies with the skills and qualifications needed. The number of employees grew during the past year by 30 percent to 153. We are also developing a partner network around us consisting of leading global players in renewable energy.
We are ready for a global establishment and are well on our way to transforming Azelio from a promising development company into a major new Swedish sustainable industrial company.
The targets we had set for 2020 were to continue to conclude MoUs and start to convert them into commercial orders. During the year, we signed seven MoUs for projects including our energy storage solution TES.POD®, comprising a total of 259 MW or 3 GWh in storage capacity, which more than doubled the volume in our pipeline. At the end of the year, we also secured our first commercial order, which came from ALEC Energy and related to a unit for a mini-grid system in a world-leading solar park in Dubai, the Muhammed Bin Rashid Solar Complex.
We are very proud to have secured this order. Our TES.POD® will also be included in a system where we will, for example, supplement batteries as sustainable baseload power and where the principles and the challenges are the same as in a large-scale grid. This will place us in an environment that will provide us with exposure to a number of major players in renewable energy, such as DEWA (Dubai Electricity and Water Authority), ACWA Power, and Silk Road Fund of China.
The MoUs that we have secured also demonstrate that the need for and interest in long-duration energy storage and specifically for our TES.POD® are increasing as we approach series production. During the year, we forged relationships with several leading project developers who can serve as key partners for successfully commercialising and industrialising TES.POD®. Handled in the right way, this will provide us with potential, with our limited in-house organisation, to make rapid progress in the global market in the years ahead.
An example of this is ALEC Energy, which has already installed Azelio’s verification project in Abu Dhabi, and is in the process of installing the next one in Dubai. They are getting to know the product and how it interfaces with other equipment, which will help them to independently design and install projects. ALEC Energy is part of ALEC Engineering and Contracting L.LC. (ALEC), which has more than 12,000 employees globally. In addition to the commercial order, the MoU we concluded with ALEC Energy in 2020 encompasses projects totalling 49 MW in the Middle East and North Africa over the coming four years. This type of partner provides us with leverage in the roll-out of our technology.
It is worth repeating that even if the MoUs are an initial step towards commercial orders, this does not mean that all of the projects encompassed by the MoUs will actually come to fruition. The reasons why a project may not be exactly as foreseen are often project-specific. We therefore pursue a strategy of concluding more MoUs than we need projects for, thus increasing the potential for and reducing the risks pertaining to our commercialisation. At present, MoUs add up to projects worth more than USD 2 billion up to 2025.
Jonas Eklind, CEO
2020 Looking to the future, we are looking to initiating series production fo TES.POD® and thus also be able to launch larger commercial projects.
We have witnessed a shift in the type of projects covered by the MoUs, from projects in regions without grids to projects in areas with a well-developed infrastructure. In these areas, the need of long-duration energy storage is growing, at the same time as increasing numbers are opening their eyes to the fact that this is something different to the power control that batteries are suitable to handle.
Perhaps the clearest example of this is California, which has a well-developed grid with a large and rapidly expanded element of renewable sources of energy. Here, many users perceive that they are not receiving what they want from the grid, that the price fluctuations are enormous and also that fires from short circuits in the grid are completely cutting off the supply of electricity. Their conclusion was that the distributed grid, correctly aligned for sun and wind and supplemented by various types of energy storage, is a long-term, cost-effective and sustainable solution. And this is a solution that they want to be realised as quickly as possible. This is generating a keen interest in TES.POD® and is the background to why we have chosen California as one of our prioritised markets. The situation and the needs are the same in many other markets.
The second objective for the year, which we also achieved, was to verify the technology. This is of vital importance for ensuring that our customers and above all their customers will be able to secure financing projects based on our technology.
There are many financiers who regularly finance the types of infrastructure projects that we are a part of and who rely on various types of verification data to assess the viability and thus their financing of various projects.
The verification project is now continuing to generate ever longer time series as part of our regular operations.
Looking to the future, we are looking forward to initiating series production of TES.POD® and thus also being able to launch larger commercial projects. The production in Uddevalla will be ramped up gradually and be fine-tuned, so that it is fully ready in 2022. Once production is under way, we should be able to deliver units to projects of a couple of megawatts. We are maintaining a close dialogue with our partners about the status of the ramp-up to make it easier for them to identify projects that fit in with our time schedule.
In 2021, we will also formulate a clearer offering concerning the heat generated by the system in parallel with electricity. The objective will be to create deeper understanding of how the heat is used and thus how it should be transmitted from TES.POD® to other applications. Many users can comfortably recoup an investment in TES.POD® based solely on the electricity that is generated; however, by also harnessing the heat from the system, many will be able to dramatically improve their financial and environmental calculations, and thus also expand the market potential for TES.POD®. More on this during 2021.
In summary, 2020 clarified the important role that Azelio has to play in the green transition that is under way throughout the world. The shift from fossil fuels to renewable alternatives is fundamental and will result in radical changes in energy infrastructure. The needs we are addressing with TES.POD® are an important piece of the puzzle in the grid of the future. Our job is to make sure we are ready to meet these global needs.
Azelio’s journey has just begun.
Gothenburg, March 2021
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