February 25th 2022
Events after the end of period
Azelio achieved several key milestones in the past year. We finalised the technology development and completed the TES.POD® system for volume production. The technology, production, R&D and test facilities were validated by the leading certification body DNV, which in December issued a validation report showing that the system delivers according to the technical performance specification. The validation is of great importance in the commercialization of the product as it serves as documentation for customers seeking external financing of projects with the technology. The final major milestone that we achieved in 2021 was that we were able to deliver TES.POD® units to the commercial project in South Africa.
The pandemic creates challenges and a need to strengthen financing
The ongoing pandemic has resulted in major challenges in the form of restrictions and component shortages. The lack of components has been noticeable to us overall and the situation deteriorated during the fourth quarter. We have also identified a need to take control of central technology for coating the storage tank, which requires investments in Vaggeryd, Sweden.
We engage in dialogues with a large number of customers, among them are those who have signed MoU agreements as well as other parties. Difficulties to visit customers and project sites have been particularly challenging as we are introducing a new technology, resulting in delays, also delaying getting reference projects in place. However, we are now beginning to see light at the end of the tunnel with the newly completed DNV technical report as well as the easing of travel restrictions
We still expect the pandemic to continue to affect component supply, order intake and cash flow during large parts of 2022, despite the fact that we have recently begun to get more positive indications from subcontractors and that travel possibilities are improving.
In order not to jeopardize the commercial breakthrough for TES.POD® and the opportunities for strong growth, we have initiated a process to strengthen our financial position in 2022. In total, the capital need is estimated to 300-500 MSEK and we are now evaluating different options, including both debt and equity.
Measures to speed up processes
Our goal is to become a technology supplier, but initially we also assume the role of joint owners in projects, designing them together with partners, establishing them and then selling their production as EaaS (Energy-as-a-Service). Due to the prevailing inertia in the market, we have decided to invest more in these types of projects than was originally planned. Short term, this requires capital, however, it gives us valuable reference projects that can serve as models for other projects with similar conditions. We can also gain valuable insight into the system’s use by end users, which contributes to strengthening our offering to the market.
Success by local presence
Another measure we have taken to manage the effects of the pandemic is to hire country managers locally in Australia and South Africa. One positive outcome of this strategy is the deal with the South African agricultural company Wee Bee Ltd. The deal makes us owner of a project company that supplies electricity to Wee Bee Ltd, reducing their energy costs and emissions, and bringing significantly higher reliability to their energy supply. There are many similar farms in the region that suffer from unstable electricity supply and are attracted by lower energy costs that TES.POD® can provide. The project with Wee Bee Ltd is an important reference project for additional business.
Different types of agricultural activities are also in focus in Australia. The system’s competitiveness in the sector is reinforced by the fact that the heat generated has very good applications in sustainable agriculture, among others for heating animal stables and greenhouses. Heat is also a field that is increasingly gaining attention in the green energy transition. The Long Duration Energy Storage Council has accordingly recently added the “Net-zero heat” area to its operations.
In focus for 2022
Despite a challenging situation, in 2021 we developed a supply chain and began production of TES.POD® units in volume design. We reached the goal of securing and initiating delivery of a project in the size of 100 kW or larger. The pandemic with associated restrictions continues to be a challenge for us, as it impacts subcontractors’ supply ability and creates inertia in sales. Although there are many indications that the situation is set to improve during the year, we will face continued challenges for a period. This means that the increase in volumes may take longer than previously expected, but we still aim to reach high volumes by the end of 2022. As the world continues the quest for more sustainable energy solutions, I remain confident that we are well placed for the long game.
Year-end report 2021: Azelio_2021_EN
Jonas Eklind – CEO
Tel: +46 709 40 35 80
Fredrik Wäppling – CFO
Tel: +46 709 91 12 34
This disclosure contains information that Azelio AB is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on February 25, 08:00 CET.
Azelio is a Swedish cleantech company. We have developed an ingenious long duration energy storage technology, providing dispatchable electricity and usable heat for all hours of the day – with zero emissions and at a very competitive cost.
417 56 Gothenburg
© Azelio 2022