Orsted A/S (OTCPK:DNNGY) Third Quarter 2022 Results Conference Call November 3, 2022 9:00 AMm. ET
Participating companies
Mads Nipper – CEO
Daniel Lerup – Group Chief Financial Officer
Conference Call Participants
Alberto Gandolfi – Goldman Sachs
Casper Blom – Danske Bank
Vincent Ayral – JPMorgan Chase
Kristian Godiksen – SEB
Robert Pulley – Morgan Stanley
Mark Freshney – Credit Suisse
Luis Boujard – ODDO BHF
Deepa Venkateswaran – Sanford C. Bernstein
Lars Heindorff – Nordea Markets
David Paz – Wolfe Research
Jenny Ping – Citi
Peter Bisztyga – Bank of America Merrill Lynch
Operator
Welcome to the Orsted Q3 2022 results call. During the first part of the call, all participants will be in listen-only mode and then there will be a Q&A session. Just to remind you, this lecture is recorded. Today’s speakers are CEO Nipper crazy; and Chief Financial Officer Daniel Lerup. Presidents, continue.
Pliers of fools
Thank you very much and good afternoon, good morning everyone. We continue to see the world, not least Europe, in a very unusual and volatile era with ongoing war, political sanctions and instability, incredibly high inflation, a looming recession, and sharply emerging interest rates. The European strength crisis continues to have a significant impact. It will affect households, businesses and countries. And despite the decline in fuel and power prices after spikes in late August, they remain high and volatile compared to any era before 2022. On the regulatory side, uncertainty remains both on the EU and UK as regulators work on how to design and implement value caps to protect businesses and consumers from skyrocketing energy bills. We continue to support the projects necessary to mitigate the social effects of higher electrical energy values. At the same time, those projects pose a regulatory threat to our industry if they are launched without regard to future volumes sold through individual force production. ers.
We have also continued close and constructive discussion with governments and the government involved around these vital projects and remain confident that smart answers will be found. It is imperative that governments around the world confront and help reduce the dangers they face. the renewable energy sector, namely that contractual electricity costs reflect the realities of our existing inflationary environment and that we see an increase in simplified and streamlined authorisation procedures.
Otherwise, mandatory investments in renewable energy threaten to slow down and cause a devastating loss of momentum for green transformation. On our monetary side, I am pleased to see that our asset portfolio continues to demonstrate the benefits of diversification. Driven by higher gains in bioenergy and others, we have increased our full-year EBITDA guidance from DKK 1 billion to a planned amount of DKK 21 billion to DKK 23 billion, an accumulation of SEK 2 billion over our initial guidance for the year. In the markets where we operate, we continue to see very high electric power costs having a very large effect on our financial functionality and the implications for our combined earnings, as we have other exposure to traders in our business units.
As you know, we have covered almost all of our short-term market market exposure within our offshore business, while we have more onshore market market exposure and bioenergy. And at the organizational level, our policy percentage for the rest of 2022 is 75%. This balance in our exposure to traders resulted in a different earnings mix than we expected at the beginning of the year, but we are very pleased to have exceeded our expectations despite challenging market conditions.
In addition to assembling our short-term earnings guidance, expanding long-term earnings from our renewable energy investments remains a key goal for us. We remain confident that our existing investments in offshore and onshore renewables will help drive significant earnings expansion in the coming years. And as noted, we expect an average annual EBITDA increase of approximately 12% from our offshore and onshore operating assets during the 2020 to 2027 period. So while our diverse portfolio and strong operating functionality have proven to be very effective in protecting and even offering a To spice up our short-term earnings, our ambitious investment program, combined with our long-term inflation index contracts, will help to significantly expand long-term earnings. volatility. And we will continue to do so to run our business effectively and to achieve results. But we will also remain firmly committed to providing the leadership necessary to ensure the strong long-term financial, environmental and social progression of Erste and our industry as a whole.
We continue to see an active and developing portfolio of opportunities in renewable energy, and with an industry-leading portfolio, we can continue to be very selective. Despite the demanding situations in our industry, we remain confident that we can continue to invest in allocations that create value and realize our vision of a world that runs entirely on green energy. That said, I’ll now define the strategic highlights of the third quarter on slide 4. On the last day of August, we commissioned the 1. 3 gigawatt Hornsea 2 offshore wind farm. I am very proud of our entire allocation team, who installed the world’s largest offshore wind farm in very difficult conditions, as COVID-19 affected much of the installation phase. The time of 2 months is very well controlled. And after commissioning, we finished the fleet to AXA and Crédit Agricole Assurance.
The transaction is one of the largest in the field of renewable energy with a valuation that reinforces that of our offshore wind assets. Together with Copenhagen Infrastructure Partners, we have joined forces in a new partnership to expand up to 5. 2 gigawatts of offshore wind. in Denmark through four projects under the Open Doors programme. The partnership includes the expansion, structure and operation of the Speaking Bangna Basin East offshore wind farms and their use, as well as related transmission assets.
Significant offshore wind resources in the projects have the potential to particularly drive the green transformation, create value in the offshore wind industry and create a Danish business and export stronghold within Power 2x before 2030. I am very pleased that Astra is now have a partnership where 2 wonderful corporations have the opportunity to combine skills and wisdom to expand offshore wind resources, which may become a key catalyst for the progression of large-scale 2x electric power projects in Denmark and Europe. At the end of October, we announced a five-year global partnership with the World Widelife Foundation, WWF, the world leader in nature conservation, to drive a step change in the process of mainstreaming climate action and biodiversity through the advancement of offshore wind power that strives for a net positive effect on biodiversity. The planned expansion of offshore wind power risks having a negative effect on biodiversity if done incorrectly. However, if done right, it can help improve the biodiversity of the oceans and create a net positive effect on biodiversity. And therefore this type of partnership is so vital because it can ensure a sustainable structure of the industry.
Together, we will identify, expand and advocate for offshore wind deployment projects and approaches that are not only out of balance with nature, but also decorate biodiversity. During the month of October, we closed an agricultural transaction with Energy Capital Partners that will earn a 50% stake in a portfolio consisting of 3 onshore wind farms and 1 solar park in the United States. And in a few minutes, I will make the transaction. Highlighting our onshore expansion in Europe, we have completed the acquisition of an onshore renewable energy company, Ostra.
The acquisition expands our European onshore portfolio in Germany and France with more than 1. 5 gigawatts of progressive projects under development. position last June this year, and market position situations have been particularly repositioned since then. However, the book was oversubscribed three times, underscoring the continuation of Erste and the progress of renewable energy.
In mid-October, we announced a new organizational design that aims to position ourselves well for successful long-term expansion; However, before describing the reorganization on the next slide, I would like to highlight 2 ordinary occasions in recent months when you are facing as a result of the existing energy crisis. First of all, the Danish government has ordered the commissioning of 3 of our oil and coal power stations to ensure some security of the electricity source in Denmark. The plants in question are Unit 3 of the SP Power Plant, Unit Four of the StorstoPower Plant and Unit 21 of the Kunia Power Plant.
These last 2 games have been decommissioned and preserved, and the SBI plant was scheduled to be closed on March 31 next year. We will comply with the order of the Danish government and now begin to prepare and maintain the games, as well as safe the mandatory body of workers for the operation. We still believe that we, as a society, will have to phase out the use of diesel and coal as soon as possible, however, we are in the midst of a European energy crisis, and we will, of course, help make sure that electricity is supplied in the most productive way possible. As the order requires us to operate the equipment until June 30, 2024, we remain committed to our goal of maintaining carbon neutrality until 2025.
Secondly, we entered into a short-term agreement with Equinor to extract up to 8 terawatt hours of Norwegian fuel to meet the demand of our Danish and Swedish business-to-business customers. The volumes will update the fuel we recently purchased from European markets are the era when the colour box does not supply fuel to Denmark. The agreement covers the era from January 1, 2023 to April 1, 2024. Let’s now turn to slide five and our recent reorganization.
As we see a more complex market environment with increasingly varied local requirements, new visitor wants and demands, and a shift towards embedded energy systems and, most importantly, continued competition, we need to reflect this in the way we organise ourselves to ensure we are well placed to drive expansion in those circumstances. Therefore, we have to regionalize our business activities in 3 zones: America, Europe and Asia-Pacific. With this new structure, we are getting even closer to our markets and consumers by integrating our and onshore renewable energy organizations while leveraging the synergies of a global organization and ensuring fast and undeniable decision-making processes.
As part of this reorganization, our Chief Commercial Officer and Deputy Managing Director, Martin Neubert, has made the decision to retire and leave us after almost 15 years with the company. And I want to take this opportunity to thank Martin for his great contribution and commitment. your time with the company. He played a vital role in building the offshore business within Orsted, taking it to where it is today as No. 1 in the world and incubating strength as a new expansion business for Orsted. At the same time, I am incredibly pleased that this replacement also means that we are able to announce several of Martin’s direct reports to the organization’s new control team and, as a result, leverage his deep knowledge of the company and industry.
In addition to the existing members, the 3 regional CEOs will be represented on the organization’s control team, along with Power2X’s heads of legal, and global stakeholder relations. Despite many new faces in the control team of our organization, it will be a permanent party control organization with an average of 7. 5 years of experience in the industry that, on average, has been operating in Erste for 6 years. I look forward to operating with this new configuration, whether for the organization’s leadership team and both across the organization. Let’s move on to slide 6 and our first farm on land.
In the financing plan provided at our Capital Markets Day in June 2021, we took over 50% of our offshore wind farms. At the same time, we have stated that we will opportunistically pursue land parks as a way to recycle capital for our 2030 expansion. ambition. The transaction is not only used as the first farm in onshore assets, but also as the first time we have destroyed multiple assets in an individual transaction. With the completion of the transaction with Energy Capital Partners, we have now divested a 50% stake. in a portfolio with a total capacity of 862 megawatts, ensuring total revenues of $410 million, net of fiscal participation. Thanks to hot valuation, we will retain approximately one hundred percent of the net supply price through divestment, even in an environment of maximum interest rates.
The portfolio of allocations includes onshore wind farms, Lincoln Land, Plum Creek Wind and Willow Creek, as well as solar park power banks, which are geographically distributed across four U. S. states. U. S. generation capacity. The interest we have seen in this portfolio underscores the quality of our assets and our ability to raise capital. And I see this transaction as a key milestone in our adventure on land and a testament to the price created through our allocations.
Let’s move on to slide 7, where I’ll provide an update on our structure mappings and our pipeline, starting with the mappings under structure. With Hornsea 2 commissioned at the end of August, our full focus is now on completing Taiwan’s Greater Shanghai Lanes 1 and 2, where we continue to make progress on all gaps in the structure. To date, we have installed 111 turbines and expect to commission the allocation in 2023. It should be noted that the subsidy for our allocation in Taiwan is structured as a feed-in fee and we have earned the fee consistent with the turbine commissioning and therefore So don’t threaten to be over-covered. Our 130-megawatt South Fork offshore wind farm in the United States is on track to succeed with commissioning in 2023 as planned. Our partner, Eversource, is moving forward with painting onshore structures, adding the substation where the allotment will connect, while we started painting offshore structures last month. Finally, the first frame paintings of our 2 German wind farms, Bocom Rigon 3 and Godwin 3, are progressing as planned. Regarding our onshore renewable energy allocations in structure, where we’re currently structuring about 1 gigawatt.
In Europe, lately we are structuring 3 onshore wind allocations in Ireland, Northern Ireland and France with a total capacity of 52 megawatts, and all 3 allocations are progressing as planned. In the United States, our 201-megawatt sunflower wind allocation has entered the structure phase. The allocation is progressing as planned and we expect commissioning in part of 2023. Lately we are structuring the three hundred installations of the solar phase in the Lena Energy Center. Both assignments experienced delays due to similar problems to the solar module’s source. chain and similar legislation.
However, we have installed more than 80% of the project’s capacity on the 300, and this component is fully operational and offers all the strength committed to your power acquisition agreement. The remaining modules are expected to be delivered in 2023, and we will be expecting a full publicity operation before the end of 2023. Similarly, for the Helena Energy Center, we expect a full publicity operation also before the end of 2023. For our award-winning portfolio, we are making progress on our progression projects in the United States.
Since our second quarter update, the U. S. District Court has been in the U. S. District Court. The U. S. Department of Justice in Massachusetts has ruled that Ocean Wind 1, due to its complex state, is exempt from the dispute between Siemens Gamesa and General Electric. We are pleased with the resolution as it allows us to take a step forward in advancing Ocean Wind 1 in time. In our Sunrise Wind and Revolution Wind projects, we continue to expand the 2 projects with our JV partner, Eversource. With only around 30 gigawatts of company capacity, some of which is already installed and the other part is structured or allocated, we are on track to reach our ambition of 50 gigawatts of installed capacity by 2030. Let’s move on to slide 8 and a brief update on the outlook for offshore wind. As you may know, he opted out of the 3rd auction circular in Taiwan.
The trilemma of low prices, the pressure of the inflationary rate and the complicated situations of frame paintings prevented us from finding a value creation task despite the paintings of many of our colleagues. If each and every developer continues to build tasks that are not financially viable, investments in green transformation will eventually stop. And that’s a much bigger challenge than not getting an assignment that we would have liked to build. I am confident that our constructive discussion with the Taiwanese government will continue and that we will see smart investment opportunities in Taiwan in the long term and therefore that we will be able to help the country achieve its net 0 ambition.
In the Netherlands, we are still waiting for the outcome of the 1. 5 gigawatt tender for the west coast of Holland, which we presented shortly before the summer. the goal of 30 gigawatts of marine capacity in the U. S. 65 gigawatts of offshore wind capacity in the North Sea by 2030 and the target of 20 gigawatts for offshore wind in the Baltic Sea by 2030. They are being implemented in all regions of the world. And to achieve all renewable energy ambitions, we want to boost the structure by focusing on faster and more optimized perversion processes, which continue to be a major factor. Bottleneck in our current industry.
We not only want more visibility when it comes to the timing of auctions and tenders, but also a greater focus on the duration of the price provided through renewables to ensure a sustainable structure of the industry. The framework of long-term auctions is not based only on price, but come permanently with points such as effective integration of the energy system, biodiversity and the recovery of nature to gain advantages from local communities. This is not a simple task, and will require a totally new technique for progression and delivery. of offshore wind and electric power for X. And as the world’s largest and most experienced offshore wind developer, we are in a position and willing to advise, interact and invest. And with that, let me hand over the finances to you, Daniel.
Daniel Lerup
Thank you, Mads, and good afternoon everyone. Let me start with slide nine and EBITDA for the third quarter of 2022. For the group, we achieved an overall EBITDA of DKK 12. 3 billion, adding new partnerships. New farm-like partnerships of 50% of 22 provided a profit of DKK nine . 3 billion Excluding the new partnerships, our EBITDA was in line with the third quarter of last year at DKK 3 billion. However, this figure includes a negative effect of DKK 1. 2 billion similar to the inefficient IFRS nine hedges, which will generate EBITDA in long-term periods.
Excluding these transient changes to IFRS 9, we had an organizational EBITDA of NOK 4200 million, 40% more than last year. Offshore, wind speeds were slightly higher than those of the third quarter of 2021, but particularly below the overall point of the third quarter. positive effect of approximately DKK 0. 2 billion compared to last year, while the expected decrease in wind speed resulted in a negative effect of DKK 0. 8 billion due to volume-related overcoverage.
The negative effect was similar to the policy of our planned offshore production, which did not materialize basically due to a lower than expected wind speed. Due to lower than expected production, we had to buy back general volumes at particularly high market prices. which had a negative effect on our accounts. In addition, as I have just described, we have noticed a negative effect of SEK 1. 2 billion of IFRS nine, as useless hedges. It is important to note that these IFRS nine changes do not flow money and relate to hedges that are not accounting effective according to IFRS nine. At the portfolio level, the overall price of transactions similar to the execution of our hedges remains positive.
To adapt to unprecedented energy market situations with an incredibly volatile and significant increase in electric power costs and to better reflect the current composition of our business, we are revising our policy framework. Going forward, we will decrease policy grades and shorten the horizon to minimize the threat of unforeseen negative hedging effects in the future. Our hedging framework has served us well as it has given us stability and profit visibility. However, we have noticed significant effects on our finances when we have not generated electricity. energy in the degrees we expected when we covered generation. The implementation of this framework will take time. And while we haven’t concluded any new energy coverage since late 2021, we remain close to completing the offshore policy by 2023.
If costs continue at a higher level, we expect to continue to see offsetting effects on the portfolio and a low threat to our overall monetary performance. We will discuss the main endpoints of our updated policy framework once it is finalized. remaining component of our offshore sites, profits in excess of DKK 500 million, driven by increased production at Holse 2, higher electricity costs on the one hand from German CFDs and value creation business activities in the market. As part of our existing component partnerships, we increased our revenue through DKK 400 million compared to last year.
The construction is basically due to structural works for our partners in the Greater Changhua 1 project. As for the land part, where profits more than doubled and amounted to SEK 867 million. This significant accumulation is explained by the production of new assets in operation as well as by the increase in the value of electricity in the United States and Europe. In the US, we benefited from higher electric power values in the acceleration phase of our assets in structure, where PPAs only started at start-up. Additionally, some of our newer PPAs have upward percentage structures that capture peak value periods of additional earnings. In Bioenergy and Others, earnings rose as much as 53%, driven by particularly high earnings from our combined heat and power plants. Revenue from our combined heat and power plants more than tripled due to higher values of electrical power and condensing power generation. The build-up was partially offset by lower earnings from our fuel and market infrastructure businesses, primarily due to the positive effect of the renegotiation of fuel purchase agreements last year.
Let’s move on to slide 10, which covers our net source of income, ROCE, and equity. Net profit for the quarter amounted to DKK 9. 4 billion, adding the gain from the 50% decrease in ALCI. than last year’s net source of revenue due to higher depreciation of more operating assets. Our capital transfer contracted 24%, an accumulation compared to last year, thanks to higher EBITDA over the 12-month period. Our equity at the end of September DKK 54 compared to SEK 79 billion 1 year later.
The relief is explained through unrealized losses in the hedging reserve for electric power coverage due to the significant accumulation of prices. Compensated through the superior source of long-term income from the underlying assets when the contracts come into force. Around 58% of this hedge reserve will have materialized by the end of December 2023 and, as a result, our capital will accumulate again. Let’s move on to slide 11 and our indicator of cash, net debt and credits.
Our net debt amounted to DKK 45. 7 billion, an accumulation of DKK 4. 3 billion since the end of the current quarter. Our cash flow from operating activities is particularly affected by a net outflow of money from transitional collateral deposits amounting to DKK 18. 4 billion. At the end of September, we had a total of DKK 30. 6 billion recorded as guarantee payments, which are our net debt, but as with the hedge reserve I just described, those are transitory effects that will be absorbed over time. During the quarter, our gross debt investments totalled DKK 14. 4 billion, primarily due to our investments in the offshore and onshore allocation structure, as well as the acquisition of Ostwind and Ford Ridge. We earned DKK 26. 5 billion similar to Hornsea 2 farm and saw a negative effect of around the exchange rate changes to — due to the fall in the pound.
Our key credit indicator, FFO/adjusted net debt, was 35. 3% for the 12 months ended September 2022. The point was lower than last year, due to higher net interest-bearing debt, partially offset through an accumulation in the operating budget. . To align with the method used through credit rating agencies, we have updated our definition of FFO as adjusted net debt. We now exclude invoices with variation margin in our definition of FFO and have excluded other interest-bearing debt and other interest-bearing receivables on net interest-bearing debt.
To make some comparison between periods, we have restated credit measures for 2022 and 2021 accordingly. If we were to calculate our credit metric according to our previous method, the metric would be 6% for 2022 and 42% for 2021. Let’s move on to slide 12, where I’ll review our existing liquidity position. During the quarter, we continue to see an accumulation of guarantees that we will have to deposit in the stock exchanges, basically due to the high prices of electric power. At the end of September, we had deposited a total of $30. 6 billion in collateral.
In order to ensure sufficient liquidity to meet the imaginable payment of certain bills during the winter and to continue our investments in green transformation, we have taken on several projects to improve our liquidity reserve. In September, we issued green bonds denominated in pounds sterling and euros equivalent to almost SEK 15 billion, established a new 2-year syndicated RCF of approximately DKK 15 billion, and higher than the current 2-year RCF showed bilateral credit services totalling DKK nine billion. the transaction similar to Hornsea’s 50% farm.
As of September 30, 2022, our liquidity reserve was $88 billion. We will consider reducing our bilateral services to more general levels in the coming quarters given the stabilization of energy costs and the maturation of energy hedges that will gradually decrease our exposure. to the guarantee. We frequently monitor developments in energy markets and will continue to maintain a healthy liquidity cushion, adding that we have the ability to access more liquidity in a short time if we see significant upward strain on energy costs. Despite the very volatile markets, I am myself – confident in our strong balance sheet and liquidity position. Our monetary policies have not changed and we are committed to pursuing our ambition to build the dividend paid at a higher single-digit rate compared to last year’s dividends covering the era until 2025.
Let’s move on to slide thirteen and a review of our debt portfolio. As mentioned, we have secured additional financing for our short-term liquidity desires and financing for our continued renewable energy development. Lately we have a debt portfolio in which our bonds make up about 70%. of our debt financing, and the rest is a combination of bank debt and hybrid securities. On the debt side, I would like to emphasize that we continue to maintain solid debt as more than 95% of our bank and bond portfolio is subsidized through constant interest rates.
Given the significant obesity in constant interest rates, we continue to have relatively low investment prices in a high interest rate environment. As such, our existing debt portfolio has limited exposure to emerging market interest rates and the adulthood of our portfolio, sorry, does not require To refinance existing bonds through 2026, we expect to have investment desires similar to our continued expansion additions. Let’s move on to slide 14 and our non-financial indices.
In Q 3. er 2022, our taxonomy-eligible benefit percentage is 73%. Our percentage of operating expenses is 80%. Our EBITDA 92% and gross investment percentage 99%. The ineligible portion of our earnings basically relates to our long-term legacy fuel business and our ineligible electric power sales. The percentage of green energy rose to 92%, compared to 89% for the same time last year. The progression is basically due to more wind and solar farms operating, as well as higher wind speeds.
Since the Danish government ordered us to continue operating the SBI power plant and resume the operation of the Stuart power plant and the Kunpeakloa plant, this will have a negative effect on our green force percentage and our taxonomy-eligible KPI. , especially in 23 and 24. Since the order requires us to operate the sets until June 2024, we maintain our goal of carbon neutrality in 2025. On the security side. We have noticed a disappointing development, as the overall rate of recordable injuries stands at 3. 3% during the first nine months of 2022, compared to 3. 0% in the first nine months of 21, an increase of 15% compared to the same era. last year.
The backlog is due to a higher number of recordable injuries for subcontractors and workers, partially offset through a slight relief in the recordable injuries of our own workers. In fact, we are not satisfied with this unfavorable development, and for protection, we have launched several initiatives. These come with participation and intervention of construction control, protection stoppages and protection campaigns aimed at urgent problems. To ensure the effectiveness of these initiatives, they are sponsored through control and updated weekly. injuries in the office and ensure the protection of all our workers and partners. As Mads noted at the beginning, we have increased our EBITDA guidance for the year 2022 through DKK 1 billion from DKK 21 billion to DKK 23 billion.
These indications assume overall wind speeds for the rest of the year. We have not included the effects of possible political interventions, such as value limits or providence taxes, in our forecasts. For our gross investments, we have reduced the indicative diversity from DKK five billion to DKK 38 billion to DKK 42 billion due to time effects on projects with a decrease in spending in 2022 than planned. We remain comfortable with our long-term monetary goals. And with that, we now open the questions. Operator, please?
Q&A session
Operator
[Operator Instructions]. The first comes from the lineage of Alberto Gandolfi of Goldman Sachs.
Alberto Gandolfi
My first query has to do with interest rates and yields. Perhaps by looking at your slide 7, you can tell us what percentage of those projects already have guaranteed financing costs. And can you tell us those in which you have not insured?financing costs, given that you already know the most sensible line, are you still contemplating a positive IRR in WACC?Is there a threshold below which you can’t move forward with some of those projects?We have noticed that one of its competitors in the United States, in Massachusetts, necessarily asks for a renegotiation, otherwise the economy is not working at all. I’m just looking to measure the profitability of your order book. And any color it can give would be very useful.
fools pliers
Thank you very much Albert. Je you can. . . maybe if I pick up a little bit of the topic, which is, I guess, multidimensional, and then Danel can cover the funding. But I think it’s a pretty broad question, Alberto, because as you know, I mean, we don’t comment on specific returns on assets or projects, but they’re very different in the sense that some of them will have earnings lines indexed to inflation.
Some of them are more advanced and others are still early. So, it’s still a pretty broad question. But specifically, as we’ve talked about a few times, they are. . . I mean, recent progress has clearly not contributed to shorter-term allocations. stone that we can, adding more powerful headlines for those allocations to make sure they are improving. But I mean, it’s hard to say, yes, of course, we’ll only settle for IDF on assignments that are defensible. But currently, our portfolio is looking for portfolio localization tasks with existing clients who remain engaged. Danny, perhaps, if you can charge if there is anything to charge on funding.
Daniel Lerup
Yes definitely. So, as you know, Alberto, we don’t do allocation funding. So, our technique for debt financing is at the portfolio level, and you have the numbers on the total duration of our debt, so basically it all comes down to the prestige of the individual allocations that you refer to on page 7. And here, as you know, we’ve made smart progress in Greater Changhua because we’ll do it next year. And we also built the German portfolio, and the beta version progressed, as well as the rest of the assets under construction.
Much depends on the investment of the allocated portfolio. And here we are still in our phase of progression. So, of course, we’ve already spent cash on those projects. . So that would be the time when we had to start investing in those projects. However, we have locked interest rate exposure for the CapEx component of – in our short-term progression portfolio from approximately DKK 60 million to DKK 70 billion.
Operator
The next one comes from the Casper Blom line to Danske Bank.
Casper Blom
A query that also evolves a bit about interest rates and interest rates and WACC, etc. But I was a little surprised to see his farm on land in the United States, I found that it was very positive that he talked about the retention of one hundred percent of the VAN there. Does this mean we start seeing more farms on land?I mean, if you can make one hundred percent retention of the NPV, it’s rarely such a favorable and horny path. And at the closure of the farm, in the last quarter, you gave an update on the possible closure of the next farm in Taiwan, saying that there was still a smart interest and that the securities were more or less intact. Is this still the case?
Pliers of fools
Yes. Thank you Caspar. Surely you are right. I mean, we’re very satisfied with the land farm we did with all four assets. And, by the way, it is also the first portfolio farm we have made, not yet at the asset level. So, the undeniable answer to that query is yes, it’s something we’re definitely going to consider. And if we can have this kind of NPV hold, which we have no explanation for why we couldn’t, then it’s definitely another key tool in the expansion financing toolbox. I don’t think there is any news about the interest in our farm in a possible long-term farm in Taiwan.
Daniel Lerup
Little by little we are beginning this cultivation process. And our team went to Taiwan to get the first hints of where the investors are and the positive feedback we received there. So, right now, everything is going according to plan.
Pliers of fools
So there’s no news compared to what we said on the last call, Casper.
Operator
The next one comes from the lineage of Vincent Ayral of JPMorgan.
Vicente Ayral
One is, again, the pullback as interest rates rise, it is evident that renewable energy tariffs are rising. And we also see this in Vestas as in the manufacturers, and we perceive that the tariffs accumulate by 15%, 20%. Therefore, the burden of funding is increasing. The question I have is its dissemination to the works on its investment criteria. Could you know how you are adapting to this update so that we can better perceive the evolution of pricing in your pipeline?
Pliers of fools
Oui. Je means, thank you very much, Vincent. Our criteria for when we bid on new projects. So at auction, we retain that. It’s still a salary hole of 150 to three hundred basis points. That is obviously our ambition. Therefore, it is not modified. And that is also why we argue very strongly that, in the current environment, we will have to understand that regulators will have to perceive that it cannot simply be a pressure on lower prices, because there are inflationary tensions, the capital burden is rising. So, as Daniel described earlier and what he did with the first consultation that I sought to do, obviously, I mean, where we’re fighting hard now is where — it’s in our FID projects already awarded but not yet. This is all that remains a challenge. But for incoming projects, which is part of the explanation of why we chose not to bid in Taiwan, it’s because we actively take it into consideration and bid, we aim for 150 to 300 basis points.
Vicente Ayral
But my query was different. Obviously I sense Alberto’s consultation earlier, when he set his turnover and not his funding, so he potentially has pressure. creation is the ratio in 2. So it’s decreasing. So will you update your investment criteria on stage? Do you expect the industry in general to increase the spread of WACC in absolute terms? So, relatively speaking, it’s still the same price creation point.
Pliers of fools
Do you do it when we bid for new projects, or do you bid for all projects already awarded?
Vicente Ayral
For long-term projects. If you have a WACC extension of 200 bps of, say, four and your work goes to 6, you must, or for an extension of a job of more than 200 bps to create the same amount of value.
Daniel Lerup
So I think when we enter new auctions, we update our WACC and then make sure that when we bid on a new auction we get the spread in the WACC in the updated WACC. For the portfolio of award-winning projects, as you say, in some we have a kind of more sensitive line blocked, some have indexation for inflation. But you’ll see, of course, that as the wax rises, it will eat into the spread of WACC. And that’s why, of course, we’re working hard with the allocated portfolio to make sure we’re maximizing the price of projects to make sure we’re doing everything we can to maintain margin on WACC.
But it is, of course, a challenge when expanding the CapEx and also the financing charge. On the other hand, we are also seeing smart developments on the regulatory side, for example with the IRA, which is, of course, a wonderful merit to our portfolio allocated to the United States. So, we have things going in other directions, but, of course, with emerging interest rates, it’s clear that anything hurts our differential at work.
Pliers of fools
But to be very transparent, in everything we offer in the future, we want: if RAC is going up, we want to see our IRRs increase correspondingly to succeed in the same hole as WACC. That is our transparencia. es a commitment we are making.
Operator
The following comes from Bernstein’s Deepa Venkateswaran lineage.
Deepa Venkateswaran
So I think I have an undeniable question, which has to do with your collateral and your net debt. So, Daniel, he discussed that he has $30 billion blocked as collateral right now. If I’m not mistaken, in the way it provides its ratios, net debt is — it’s not offset by collateral. And therefore, when you supply electricity, you deserve to receive a smart bite already next year, I think about 60% of past discussions. So, can you verify that? And then secondly, if it costs the market value today, that is, some raw curtain values have gone down, probably the guarantee point has gone down. Could you say how much?
Daniel Lerup
Yes. So that’s right. The approximately SEK 30 billion as collateral is undoubtedly a brake on our net debt. the year and pass up to 60% until the end of 2023. However, we’ve noticed that costs have come down a bit since the end of the third quarter. So, we probably recovered a little more than a few billion in collateral. more at around SEK 24 million, DKK 25 billion as collateral at the moment, and that is, of course, a figure that is adjusted every day. But it is being transmitted.
Deepa Venkateswaran
So, that will alleviate some of your financial needs, right? Because when you get the bank guarantee, you don’t want to back down and take on new debts. Therefore, it will also provide assistance and assistance with the investment we talked about earlier.
Daniel Lerup
Yes, it will be. And also our existing money reserve, at around DKK 90 billion, to be quite conservative, but we’re also entering, of course, a winter where it’s hard to expect exactly what will happen, so be pretty conservative. Getting through the winter and, of course, more and more hedges are being installed, we hope to reduce that reserve of money.
Operator
The following comes from the lineage of Robert Pulleyn at Morgan Stanley.
Robert Pouleyn
So I’d like to ask, that’s a little bit of integrity. I apologize for that. But as we review your revised guidance for 2022, could you help us understand what point of IFRS nine, fourth quarter overcoverage losses, and accounting increases comes in the guidance you’ve given today?Clearly, these are the two dynamics, which were not well understood or expected at the beginning of the year and which have weighed on the last two quarters. The macroeconomic context suggests that they are improving. Therefore, it would be wonderful to have some explanation about what is incorporated into the boards.
Daniel Lerup
Yes. We expect around SEK 500 million to be sold by the end of the year.
Pliers of fools
And I can. . . just as service information, Rob, I can also say that the wind speed in October was above normal, and that’s a smart start to the quarter.
Robert Pouleyn
Sorry, Daniel, I have not stuck to 0. 5 billion euros of additional charge or 0. 5 billion euros less than I am sorry, I did not understand. . .
Daniel Lerup
It is a trickle from, it can be said, the negative transient effect of the 1. 5% of IFRS nine that we have lately in our accounts. So when that kind of thing runs out, our EBITDA will. And that $500 million is based on the futures curves at the end of September.
Operator
Our next one comes from the Peter Bisztyga line of Bank of America.
Pierre Bisztyga
So I just tried to stick to Deepa’s query about net debt. So, I guess you have £30 billion of collateral that can be recovered in the next 2 or 3 years. And its cash flow over the nine months showed something like the negative replacement of $11 billion in derivatives and some other kind of current capital movement of $10 billion or so negative. I was wondering if that $20 billion in total is something we can also expect in the coming quarters. Very grateful for any explanation there, please?
Daniel Lerup
I’m not sure if you’re referring to the evolution we’re seeing between now and the third quarter, though, because it’s just shy of the 20 billion Swedish kroner in higher collateral. And that’s all that’ll come back with around 60% around 2023. .
Pierre Bisztyga
It is ok. I mean, just looking at your cash flow type in your quarterly report, you have a derivative replacement in your operating activity cash flow of a £10. 8 billion rate over nine months. Isn’t the most sensitive glass absolutely transparent?Maybe you will disconnect it.
Daniel Lerup
The variation in derivatives is the variation margin, and then we have the initial margin down in the variation of creditors.
Pierre Bisztyga
And I’m sorry, maybe only in ordinary capital. I mean, obviously, there’s also a significant movement of current capital so far this year. Is this something you hope to oppose and that we will continue to build?So, in general, we see a large part of current capital coming from our Opto assets. So that’s what, of course, will replace when we get rid of the asset outside the core, and we’ll also see in the long term that when, hopefully, FID keeps C3 at some point, that will grow as well.
Operator
The following comes from the lineage of Mark Freshney of Credit Suisse.
Marc Fresney
That’s with respect to the UK, which my figures show is about a fraction of the price of your business. The British government, if you read the hypothesis in the press and communicate it to the Department of Energy, is proposing things that amount to expropriation, that is, of some of the oldest VOC assets in which it has invested, in good faith. Obviously, CFDs are incredibly protected through the agreements you have with the government, and you have independent arbitration rights. They are well protected.
But the assets of the Republic of China are a big disappointment. And on that basis, I think some investors are surprised that it hasn’t been more difficult with the option to cut UK spending on Hornsea 3, because it didn’t proceed with IDF because existing assets have been, in my view, expropriated would seem to be a perfectly rational response. So why don’t we use a more powerful language in Hornsea 3?
Pliers of fools
Thank you, there is Marc. No doubt that the UK remains an incredibly vital market for us. And I would like to. I think we’re going too far in saying it’s potentially a preparation because, first of all, the ROG assets, I mean, I didn’t hear any rumors that the ROG percentage is going to disappear. And then there’s the hypothesis of whether it would be some kind of value cap or whether it would necessarily be a one-time tax. As we have already mentioned, we are in quite intense rods, either with the base and also with the Treasury to make sure that this is done wisely.
And if that ends, like anything we’d convert rocky assets into CFDs, it can be anything that’s a win-win. This is probably not the maximum maximum end result likely in the short term. But we’re also listening, I mean, and we probably are, I mean, we’re not a company because the market discussion hasn’t officially happened yet. But it literally depends on where that value would end up, because the variation we’ve heard those degrees may just be inside is very, very large. Therefore, we believe it could backfire if we threatened [indistinguishable] not to take FID at Hornsea3 until we had something else about what the appeal of a measure would be, whether it is a value cap, whether it is a conversion to CFD foam or whether it is a one-off tax. But we are in a fairly intense discussion as mentioned, with the two ministers.
Operator
Our next one comes from Citi’s Jenny Ping lineage.
Jenny Ping
I just wanted to pick up on everything you said earlier about the United States. So, as I perceive it, you are necessarily telling us that you will only invest in value creation projects, which means that there is a threat that you will FID some of the projects, given that some of your peers in the United States have said that the projects are not viable. And in the same vein, the PSEG talked about making its final decisions on Ocean Wind 1. Can I check what their plan B is if they don’t?And then let’s go back to the $60 billion to $70 billion that was talked about for the original consultation, the first consultation that was done. Those figures for the projects you just talked about, the short-term projects, the projects for which you have secured exposure to interest rates.
Pliers of fools
Thank you, Jenny. I think we can, maybe more, almost the same answer to say that the returns of U. S. projects are not going to be the same. The U. S. government, adding Ocean Wind 1, is not where we need them to be. But we continue to explore those options. And so is it, as we also have. I think we’ve percentageized this before, also arguing about the option of getting the maximum percentage of IRA benefits back to us. So it’s too early. say nothing. And as a result, we remain committed to those projects.
We’re not in a scenario where we say it’s something we wouldn’t need, where we no longer believe, we believe there’s a way to create value. I cannot move on to the main points of the discussions. They are confidential in nature, and are based on such projects on a case-by-case basis. But it’s anything we strongly adhere to and have interaction with PSC. And we’re coordinating strongly with them as they move forward in their thinking, whether it’s Ocean in Wind 1, but also, as I discussed on Monday’s call, Oceanwide Skipjack 2 of a potential investment there.
Daniel Lerup
And at the moment, it’s 16 million euros, that is, 16 euros and 717 million Danish kroner that I mentioned, we had insured through interest rate swaps on short-term progression projects in the United States, i. e. the northeast portfolio and Ocean Wind 1.
Operator
The next one comes from Kristian Godiksen’s lineage at SEB.
Christian Godiksen
My consultation therefore takes account of Danish plans for open doors. What if you can only give more details about the milestones you want and approvals, etc. , to achieve IDF?And also, to clarify, he said he intended to build the broadcast. also. So will it be its own long-term transmission?Or will we have to give up later what is the style of transmission?
Pliers of fools
Yes. Thank you for your question. The – still is – is still a very early stage, however, we truly and firmly hope that there will be a genuine path to accelerate consent and approval here. And as we said, it can be anything that can really be – the first commissioning can take place as early as 2027, 2028, which would necessarily be at the same time or faster than the first centralized tender or the next centralized tenders in Denmark that have already been awarded.
The next step, therefore, would necessarily be for the Ministry of Climate to have to approve the allocations. So they went through the DEA’s hurdle and the legal hurdles to it. So, therefore, the allocation so far, they are viable, however, it asks for ministerial approval, which we believe has a very smart chance with nations. And in this case, the largest offshore developers in the world and one of the largest in the world go hand in hand. But that’s what it would take to pass, and we can only see it take place in the next 2-3 months. When it comes to streaming assets, the fair answer is that I just don’t know.
Daniel Lerup
And, of course, it’s also too early to tell, but we hope it’s part of the scope we would have to build and invest in the streaming asset. But in relation to property in the future, I think it’s too early to say how we’re going to think about it. But of course, it’s a large portfolio of projects. So our thinking might, of course, be that it would make sense not to tie up too much capital there.
Operator
Our next one comes from the lineage of Luis Boujard of OVH.
Luis Boujard
In fact, I have a query about the policy and more particularly about the comment you made during the presentation. I think he said about overseas activity that it will remain covered almost entirely in 2023. And at the same time, he also said that he is expecting to continue to see the compensation effect on the portfolio for next year. I hardly see where that can come from. Because if it comes from the wind, of course, for next year, it is a little early to know what will happen on the wind side. So do we deserve this to come from IFRS nine and indirect coverage?, could you perhaps quantify what the magnitude of this potential compensation effect we deserve to expect for next year’s earnings in the Offshore division might be?
Daniel Lerup
So, my point was that when we look at our offshore wind business, we are almost completely covered through P50 production by the end of 2023. But if you look at a portfolio point where you also look at onshore plants and combined heat and power, we are, of course, below 100%, about 70% to 80%. But that doesn’t replace the fact that we have superior coverage at sea, that when you look at this specific segment, if you have low wind speeds, faint and buy hedges. If we have maximum wind speeds, then we would sell it on the market at market prices at that time.
Pliers of fools
So to do that, to verify that it’s potentially clearer, Luis, what Dani and we are saying is that around next year or until the end of 2023, there is the threat of a combination of benefits like we’ve seen this year. , where we have higher revenues on land and bioenergy and a relative decline offshore. If this happens, this production decreases and costs are high. That’s why we consider the overall threat profile in our earnings for next year to be very low. . But next year’s threat of a combination in which we will have another year in which our profits will be below what might be called the herbal level, especially for the foreigner, is still there.
It’s basically based on wind because wind is the threat to that. But beyond 2023, this is also why we discussed in the presentation that, this is where those degrees of policy are due to our – to the fact that we are not changing our heads are now and we will put in place a new framework of coverage, then we will return not only to a higher but also solid point: A top and solid point of benefit for the organization, but also much more predictable and superior for offshore in particular. So that’s what we, that’s what we’re saying. In general, at the point of organization, the threat goes down, however, the mix of revenue source is still a threat that can replace next year, however, from the age of 24, this threat will be significantly lower, if that makes sense.
Operator
And the next one comes from the lineage of Lars Heindorff of Nordea.
Lars Heindorff
In addition, a consultation on the policy. Dan, I think you said at the beginning that you were going to replace the policy framework, which means shorter and shorter policy periods over the long term. And just conceptually, I wanted to ask you how that would be compatible with your ability to. . . – cannot say a guarantee, however, its purpose of achieving the 150 to 300 basis point hole between IRR and WACC in the long term.
Daniel Lerup
Again, those are very long-term assets with many years and decades of profits. Therefore, the coverage of your case is not the wonderful determinant of spreads. So, I wouldn’t expect that, and we’d also look at, in cases where we have exposure to traders, even corporate PPAs as PPA products where there’s no volume threat like it does in currency hedges.
Pliers of fools
Therefore, our overall technique for maintaining a very high percentage of contract or regulated revenue remains intact. So here we are: in an overall year, we’re still around 90%. And we will continue as we did with Hans for CFD type contracts. – and where we have trading volume, if we can get into hot PPAs, we will continue to do so. So, that’s something that we, at the point of organization and for our investments, don’t really see: that technique and the ladder canopy, in no way have a significant effect on the predictability of our profits.
Operator
And the next one comes from the line from Deepa to Bernstein.
Deepa Venkateswaran
So, I just wanted to take a step back and now I just wanted to talk about the partnership you announced with CIP for the five-gigawatt projects. Is it green hydrogen or what do we want?And, in general, do you also see something like this in countries other than Denmark, where they also do not compete for kebaleases?
Pliers of fools
Is. . . But I think what we want, obviously, to answer the previous question, what we want is to have ministerial approval that those projects can be built, and then what we would look at with the combination of what can be injected into the network and also because there is now a lot of strength for the X projects in Denmark that are underway. planning. Some of the ones we’ve worried about some of them are through the boat, and some of them are through third parties. And so, of course, we would paint with the possible withdrawals of those giant projects, adding what that would mean. for predictability of benefits, etc.
All of this would move into the business case calculations, which deserve to be physically powerful before an FID. So, it’s about talking to our OSI about what can and deserves to go online. Any PPAs that can be particularly strong and prospectively more: our highest perspective here, what are the deals that can be made to force X projects that are already planned or that can be planned knowing that this green force will come for sure?
Deepa Venkateswaran
And do you see something similar in others because it might be a less difficult or less expensive way to get seed leases?
Pliers of fools
That’s anything: one of the goals, apart from honesty, is to make sure that the Danish government feels very comfortable with our 2 corporations to go ahead with those open-door projects. Also, for example, the German government has already stated that it will have a significant percentage of open-door projects, and if we can see if other governments, especially in Europe, can see that the Danish government, supported through our 2 corporations, is moving forward rapidly, we expect this to open many more doors, so to speak, to those open-door projects, not only in Denmark, but especially in Germany, but also potentially in other countries. We therefore see it as more than just a Danish company, but as something to be a kind of gateway to streamline open-door products in Europe, which, unfortunately, still takes time to settle and plan centralised tenders.
Operator
The following comes from the lineage of David Paz of Wolf Research.
David Paz
Just one comment: I see two components here, either about the United States. What is the prestige of your feedback for the Northeast and Ocean Wind projects?Would you rank them at the bottom of the 150-300 basis point range?Because I know you said they were under pressure, but just tell us where you stand. And then the component of the moment is, given that we now have the Inflation Reduction IRA Act, what is this possible accumulation that you see in the U. S. ?U. S. abroad and then in the U. S. ashore.
Pliers of fools
Thanks David. No we can comment on the type of retroactive titles for quick projects. But they are, as we have said before, they are, none of the 2 projects you discussed are at this level where we need them to be. , that’s why we’re proceeding to paint on those backrests, adding top-notch measures. But it’s as close as possible. Like us, as we said last time, after the current quarter, we said that the type of our offshore projects, we were, according to the project, in a significant double-digit number of fundamental problems to improve the business case.
But there are so many moving parts, including, also, obviously, interest rates and therefore WACCs, which is something we’re working very, very to make sure we’re doing what we can in cases. But unfortunately I can’t approach him. But, and what we’re saying is perhaps just to load a quick commentary on this on the ground through the PTC deal and expansion. This is anything where we also see significant feedback on the ground.
And just commenting on land, which is one of the reasons why this continues to be exciting is that we have a transparent site of innovations because of IRIA. But we’re also seeing in Europe and the U. S. that due to the short-term nature of onshore, we are seeing PPPs rise and continue to rise in one type of curve exactly equal to inflation, we continue to see, in the other, for example, turbines. Returns are intact or even advanced on land lately, which is why those investments are still very.
Operator
The next one comes from Vincent Ayral’s lineage at JPMorgan.
Vicente Ayral
Yes. I have a very fast follow-up in relation to coverage. Typically, utilities tend to start the year in the year covered at 80%. It tells us that for offshore wind, it is already fully covered for our P50. by 2023. And he knows from the beginning of the year that pulp poses were extraordinary, and he bought at a wonderful cost the delay in Hornsea 2. So what’s the explanation for why we’re landing at this point where we’re basically Am I’m still too covered by offshore wind in particular for next year?And I’m just suffering to perceive what brought us here. Any color in it would be welcome.
Daniel Lerup
Oui. Et I perceive that question, of course. And the concept is that we worked with a canopy ladder for five years for over a decade, where in the first 2 years we had a canopy percentage, which is very close to 100%. And when we started to see volatility in: in electric power costs at the end of 2021, we stopped rolling that canopy ladder because we knew we’d have to reduce our hedge in a volatile market so we can do what we can to avoid having to buy back much-loved hedges.
So, our question to ourselves at that time, when the values of electric energy began to increase, of course we did not know that the values of electric energy would become so significant. So of course we had an internal discussion about whether we lowered the policy point the first 2 years. But here the value of electric power has not increased significantly. We probably would have reduced it. It is, but we have been trapped in this very strong construction in electric energy values. And secondly, it’s for the offshore component of our business. So we also have ground power plants and combined heat and power, where they have greater exposure to electrical power also in short years.
And when you take the entire portfolio, we’re more established: in the remaining 10% of the market exposure we have on the company, we have a policy percentage of about 70% to 80%.
Vicente Ayral
But what long-term policy point do you need to have?I mean, it’s one hundred percent or 90% of the P50, it’s probably too high. We found that wind volumes were particularly below the overall level last year. Are you advancing your objective policy? Even if it takes a few years to get there?
Daniel Lerup
So we’ll be, as I said before, back with more important points on this. But one thing is very clear in this very volatile electric power value market, it will be a lower percentage of coverage and also a shorter period. that we will cover at least the offshore component of our business. But remember, it is: everything we’re talking about here is only about the other 10% of our income. The first 90% of our revenue is based on a long-term regulated or contractual basis as it occurs. So that’s just the last 10% we’re talking about here.
Operator
The next one comes from Mark Frese of Credit Suisse.
Marc Fresney
When it comes to coal combustion, the remaining coal combustion in the cogeneration portfolio is obviously unwanted from an ESG perspective. I think its purpose is to prevent burning coal, this year or at the end of the first quarter. Can you remind us where we are in this coal burning and when you could expect to be able to say that you have burned your last ton of coal and that it is now just biomass, wind and 2x electrical power?
Pliers of fools
Oui. Au place, Marc. We are – surely you are right. I mean, the 2 boilers we were talking about in KubiandStusto, have already been removed. So they were off. They are now back in service. And surely you’re right, ESP, which was the last coal-fired power plant, was completed to be retired until the end of the first quarter of next year. At that point, we would have run out of coal entirely. We will be left with a very, very small percentage of gas, which is essentially for the start-up of biomass power plants and the emergency type of the systems balancing plant that we have in Kuni.
With the new order we got from the Danish state, that is, until the summer of the 24th. And, unsurprisingly, everyone we’ve spoken to in Europe hopes that next winter will be the last possible emergency winter. At that time, we will have either in terms of LNG biomass and other sources, we deserve to be out of this emergency: energy emergency. So we don’t wait and we will, honestly, we’re going to fight hard to make this bigger. just as we, I think we discussed briefly in the presentation, remain firmly committed to our carbon impartiality and Scope 1 and 2 of 99% impartial carbon, adding no coal burning until 2025.
Operator
Our next one comes from the lineage of Jenny Payments City.
Jenny Ping
Immediately after Mark’s consultation about coal exposure. Have you had any discussions with white power leaders among the blank power index applicants about how they are going to deal with coal exposure now that they have it or will they keep it open?Is there a threat of exclusion? Or have you ever been exempt?Any clarity on that would be great.
Pliers of fools
No, I don’t think we had any kind of exemption to that. But I am sure, given the transitory nature of this, where we can show that this is an order from the Danish state that is not something worth having. An impact of curtains. But let’s make sure we quickly follow up on this and get it through our IR team so we can say it more firmly.
Operator
Our next one comes from the lineage of Peter Bisto of Bank of America.
Pierre Bisztyga
A quick set-up on your recent landed farm in the U. S. In the U. S. , the dollar product type consistent with kilowatts is less than 1,000, which is quite consistent with the CapEx you may have spent on those projects. So, a very small kind of money making there. Is that correct? And if so, why so low?And then you can just repeat the amount in billions that you have constant interest rates for your U. S. pipeline?USA? I didn’t hear it properly.
Daniel Lerup
Therefore, interest rate swaps on the U. S. pipeline are not allowed to do so. U. S. populations make up a little more than $2 billion. So, about DKK 16 billion to DKK 17 billion, therefore, $2 billion. And on the land side, I think it’s vital to stay in the brain to stay in the brain: this excludes the project investment tax. So it is preserved, so to speak.
Operator
We have questions. This follows in the footsteps of Lars Heindorff at Nordea.
Lars Heindorff
Ask about your extension. He previously discussed that he is weighing the final results of the tender in the Netherlands, and there are also some others in progress, and there are still a lot of transition staff to come. I think it has already gained about 3 gigawatts this year. He’s been very vocal about the plans he has, and he does, if he calculates that he can accumulate 3 gigawatts on an annual basis without needing additional capital. So if you earn more than that, or maybe put it Another way, how much additional profit will you be able to manage without expanding capital?
Pliers of fools
Yes. Thank you Lars. We can calculate it with earnings because, in principle, they may only have other CapEx expense profiles, etc. Therefore, some of the victories we could get in the coming years could come quite late, or even after 2030. . But what we said is that, on average, we, to get to our, and now we’re talking in particular about the sea, to get to about 30 gigawatts by 2030, we would compare it to the launch of our CMD last year, we would like to get an approximate average of 3 gigawatts consistent with the year to be in time to build this until 2030. That’s right, and yes, you can translate it as meaning that the fully funded plan of about 50 gigawatts through 2050 is what we said was fully funded and still is.
So if we see a burnout rate far beyond that, then you’re right, that would mean we give even more priority to offshore or that we want to raise capital. For example, and we are able to win Holland Coast West, whose result we expect in the coming weeks, then it is an automatic signal that we will want more capital. It’s not something you can say.
Operator
And there are no additional questions at this time. I will speak again with Mads Nipper for closing remarks.
Pliers of fools
Oui. Et, I just need to thank Daniel for fighting the sore throat and all of you for your smart questions. Always smart questions, and if you have more questions, you know our IR team is here to answer them. Thanks a lot. . Stay and have a wonderful day.