Bonheur ASA

OSE:BONHR

Earnings Call Transcript

[Anette Olsen, executive]

Good morning, everybody, and welcome to the First Quarter Presentation for Bonheur. My name is Anette Olsen. I am CEO of Bonheur and Fred. Olsen & Co.

And with me today, I have Richard Olav Aa, our CFO, and he will do the first part of the presentation as usual, and then the CEOs for the different segments will come and present. And we will take the questions and answers at the end.

So Richard, over to you.

[Richard Olav Aa, executive]

Yes. Thank you, Anette, and also a hearty welcome from me to this first quarter presentation.

We have a mixed quarter. On one hand, we have an improvement in our operating result with NOK 132 million, which, of course, is positive. On the other hand, we have had some wind farms that have not operated as capacity due to technical issues, and we have had a canceled cruise for Balmoral due to the geopolitical situation in the Red Sea. And obviously, without these issues, the operating results could have been better. So again, it's a mixed report this time.

I will quickly go through the main events in each segment as they will be thoroughly covered by my good colleagues. Starting with Renewable Energy, where we have a small year-on-year improvement on the EBITDA, but we have to remember that first quarter '24 was a very low wind speed quarter. On the very positive side, we have seen higher power prices in the U.K. more than compensating the very low power prices in Northern Sweden, where there are severe issues with the trapped power in Northern Sweden due to lack of transmission capacity from North to South, which Sofie will come back to.

Like I said, generation is low this quarter. It's 21% lower than the P50 estimate, which is the kind of midpoint estimate for wind given historical wind resources in the various countries. The observed viewer of this presentation will note that we now report this including compensated curtailment to have a more clean number compared to the technical issues where we also then include on generation what we actually get compensated for. This is a trend. We see that the governments will compensate for curtailment due to the big impact of renewables in the grid. So we think this is a better way to present the figures going forward. But then the 21% deviation is then really related to low wind in the quarter, in particular in Scotland and Norway, but also due to technical issues that we also come back to.

Very good. Mid Hill that was out for half of last year, commenced operation back in 25th of January. And also very good in the quarter that the 2 big projects that FORAS have undertaken, Crystal Rig IV and Windy Standard III, which are CapEx programs of close to NOK 3 billion are progressing on time and budget.

Moving on to Wind Service. Despite only 57% utilization for Bold Tern and Blue Tern, we have a strong improvement on EBITDA from NOK 174 million to NOK 280 million. And also the 2 yard stays for Bold Tern and Blue Tern have went well, which Haakon Magne will also come more back into in his presentation. Also in the segment, we agreed in the quarter in March to sell our 50% stake in United Wind Logistics to our partner, and that was closed 30th of April.

Moving on to Cruise, and we don't have a separate slide on Cruise in this deck because the main things on Cruise are actually covered in these bullet points here. It's results clearly lower than where it should have been and also lower than we expected. The main reason for the lower result is that we had to cancel one cruise for Balmoral, long cruise to Asia that was going through the Red Sea area. And due to the geopolitical situation, we deemed it unsafe to conduct that cruise. That is the main reason why the occupancy is only 63% as Bolette and Borealis have operated as expected in the quarter. So it's really one main event in this quarter, and that is the impact of this canceled cruise for Balmoral that we were not able to replace with high-paying guests on replacement cruises. Booking numbers are up 11% compared to last year, and that also includes the weak first quarter. These are the full year for '25 and '26, and we also started to selling some World Cruises into '27. So that's 11%.

We have utilized the market turmoil in the last months to hedge 75% of the estimated bunker consumption, and we have hedged that in pound sterling. On the Other investment, we see an improvement of [ NOK 25 million ]. The main driver for that is NHST, which continued to perform much better than in the past and had an EBITDA of positive NOK 38 million (sic) [ NOK 31 million ] in the quarter compared to a negative NOK 3 million in first quarter last year. There are also some interesting trends around Fred. Olsen 1848 that Per will cover more in his presentation, but we see now on floating that the technology we have developed BRUNEL, finally, we see that the market start to appreciate the big benefits of that technology. And we see that also on the floating solar side that it's really picking up in Southeast Asia.

Yes. Despite having a few issues in this quarter, like I said, it's a quarter with improvement compared to first quarter last year with NOK 132 million. And it really supports this long-term trend that we present now in each quarter, where we are -- where we came out of COVID and the recovery in energy prices, but also the strong performance in the Wind Service segment, where we've been able to lift our 12 months running EBITDA between NOK 3 billion and NOK 4 billion. And we see this quarter actually add to that trend with a small tick up in this quarter due to that you're replacing fourth quarter last year with an improved NOK 132 million. So it's supportive of this trend we have seen and the 12 months rolling EBITDA now stands between NOK 3.5 billion and NOK 4 billion, as you see here, which is more than a doubling of the level pre-COVID.

On the numbers, we have covered several of these, but it's maybe important to note a few things on the revenues and the margins. And on the revenue side, we are more or less in line with the revenue last quarter with a drop of NOK 77 million, and it's really in the Wind Service where the revenue drop is the biggest of NOK 109 million. While on the other hand, the EBITDA in the Wind Service improved by NOK 106 million. That is related to the Shimizu contract that has a much lower margin than we have on the vessels that we own, Blue Tern and Brave Tern and Bold Tern. So it's purely a mix effect on that score. The lower revenue on Cruise is really only related to the issues on Balmoral. And the variances on the EBITDA, we already have covered.

Then on the consolidated figures, we've been through the revenues and EBITDA improvement of NOK 132 million. Depreciation is higher. That is related to that we're now starting to depreciate both cranes or upgrades on the Tern vessels. So [ full weeks ] see higher depreciation. Net finance this quarter is on a very normal level when it comes to net interest, but we have some unrealized currency effects related to internal loans. They will fluctuate up and down each quarter. On the first quarter last year, we have some very positive unrealized effects. I wouldn't pay too much attention to those unrealized effects, but rather the slide will show later on the cash and debt in the group on external level. Tax cost is lower that we are not in Taiwan this quarter where we paid tax on the operation.

Final slide from my end is the group capitalization per first quarter '25. As you remember from the fourth quarter presentation, we presented then the capital allocation framework, which is closely linked to our financial policy. I'll not repeat the financial policy and the capital allocation framework in this presentation, but rather spend time on the figures. On the figures, there are no material changes from last quarter, but it just confirms the policy. If we look at the 100% owned entities on the top, we have at the end of first quarter, a cash position of close to NOK 5.2 billion and an external debt of close to NOK 3.5 billion, so a net cash of slightly more than NOK 1.6 billion. And as you see, the subsidiaries control 100% of Bonheur are all net cash positive and cash and external debt in Bonheur is matching around NOK 3 billion.

Where we have significant debt is in Renewable Energy, and that is related to the 2 joint ventures in Scotland, where we have optimized the capital structure according to the financial policy and the capital allocation framework by taking in very competitive short-term -- long-term project debt and also competitive priced equity by partners. So there, we have a net debt position of close to NOK 4.4 million (sic) [ NOK 4.4 billion ] on the 2 joint ventures. And on the Wind Service, where we don't control 100%, which is UWL, Global Wind Service and Blue Tern, cash and debt is fairly matching. We have presented in this report on Note 8, where you can see the effect of UWL going out of the balance sheet. So here, it's included and it's also included in the numbers in this quarter. It will go out in the second quarter. And from the Note 8, you can see what will go out on the asset and the liability sides from UWL going forward.

My final remark on this slide is very important to link this to the policy and that we walk as we talk when it comes to the numbers related to the policy.

So by that, back to you, Anette.

[Anette Olsen, executive]

Very good. First company to present is Fred. Olsen Renewables with CEO, Sofie Olsen Jebsen.

[Sofie Olsen Jebsen, executive]

Thank you. The highlights for this quarter for Fred. Olsen Renewables is that production is unfortunately below estimates due to low wind and technical issues. We've also seen the construction of our 2 ongoing wind farm projects is progressing well and that the power prices have reached a 2-year high, but might be weakening in the short term. You've seen this slide before. It shows all of our projects and the pipeline. No highlights there this quarter. However, I could mention that the development pipeline is progressing well.

Over to the market. On the right-hand side is an overview of the power prices in the markets that we are in. We have seen that the average prices reached a 2-year high in February. And as mentioned, there is a possibility for a weakening in the short term. I think in general, we see that when exiting a winter season, there is a lower demand and the demand that is or the residual demand would then increasingly be covered by cheaper renewables. So the prices will then more or to a greater extent be affected by resources like mostly solar and hydro going forward. We do also see that there is a potential impact on prices by the tariffs introduced, also industrial activity, especially in Germany, which is a motor in Europe and by potential increased geopolitical uncertainty.

Over to production and to give you some more details there. The generation was below estimates, mostly due to low winds in Scotland and Norway, curtailment and downtime. We have seen significantly reduced turbine availability on our wind farm Crystal Rig I, close to Edinburgh. I think we are, together with our service provider, working very hard to restore production levels and to establish a reliable time line for full recovery. The Mid Hill Wind Farm, which I talked a bit about last quarter, was back in operation on the 25th of January after an external transformer failure. And we have seen negative prices in Sweden in periods. Hence, Fabodliden and Hogaliden have been stopped.

Just to give you an update on the construction projects that we are progressing. Windy Standard III is progressing well. We are building out 88 megawatts of wind power here. And the tree felling is progressing together with an establishment of a construction compound.

Moving over then to Crystal Rig IV, which is a bit more progressed in the construction. Here, the -- all the anchor cages are installed. This is the base for the foundation, the gravity-based foundation, and we have done most of the concrete pouring of the foundation. We've added a picture of a toll on this slide because I'm quite amazed traveling to all of our wind farms of the continuous environmental measures that we are doing, both on construction projects, but also on the operational wind farms. And in this example, we -- there is a toll migration ongoing. So we close the road to make sure that they can pass safely.

To sum up, production is below estimates. The power prices have reached a 2-year high, and we see that the construction of Crystal Rig IV and Windy Standard III is progressing well.

[Anette Olsen, executive]

Thank you, Sofie. Next, Lars Bender, presenting Fred. Olsen Seawind.

[Lars Bender, executive]

Thank you, Anette. Yes. And worth highlighting for Fred. Olsen Seawind in this quarter is that we, for our Muir Mhor project, have now more clarity on the grid situation, which I'll come a bit back to later. Also worth highlighting is that we see continued support both in U.K. and Ireland for offshore wind, especially in Ireland, we've seen a new government come into place in Q1, which I'll also touch a bit on later in my presentation.

If we start in Scotland and Muir Mhor, as I've alluded to before, we have submitted our consent application last year in Q4. We're naturally following this very close. We have an expectation of an onshore consent award this year and offshore next year. A project like Muir Mhor in the U.K. needs 2 conditions to be fulfilled in order to bid into a CfD auction. One of them is to have a final consent and the other is to have a grid connection. Therefore, also positively, we've seen this quarter that our grid position is now clear with a radio connection to shore. On the back of that, we are fully engaged in the U.K. Connections Reform in order to get prioritization for our project. Positively, the U.K. government is now working with really getting grid to the projects as they progress. And with a project like Muir Mhor, that is one of the front runners, we are naturally positioning ourselves to be in that queue.

Overall, we've seen that progression of grid, progression of the CfD regime in the U.K. is progressing well. It gives us faith in the market. It gives us faith in Muir Mhor being a good project to develop for floating offshore wind, and we remain focused to be one of the first movers in floating offshore wind with our project in Scotland.

If we then move to Ireland, we have also on Codling submitted a consent application last year. We are following that close and are naturally in close dialogue with both stakeholders and authorities on that. As I mentioned in the beginning, in Q1, a new government took office. We see a government which continued its support and ambitions within offshore wind. Naturally, for us, that is key and very important that we have a continuation of the policy from before, but also a very predictable and stable policy within offshore wind. So we are naturally happy to see that. We also had a step forward for our project on a more detailed project level since we now have a foreshore license in place. A foreshore license is basically a permit to do site investigation. And in order to progress the design of the project, we need to do further site investigation as a natural part of the development schedule of Codling project.

This naturally ties very well into the other work that's ongoing in the project where we are preparing for procurement, where we're preparing for getting the scope and design in place on the back of the final consent determination on the project. So overall, in both Scotland and Ireland, we've seen good steps forward on our projects, and we see also environments with continued support for offshore wind.

So with that, back to you, Anette.

[Anette Olsen, executive]

Thank you. Per Arvid Holth will now present Fred. Olsen 1848.

[Per Arvid Holth, executive]

Yes. Thank you. So we will do an update on floating wind, both on the market seen from the bottom up from the technology developer, and then we'll look a bit on this floating solar market and status on our project BRIZO.

So yes, so next one, please. So on the market for floating wind, we see that there is currently a dynamic in that market, and that dynamic is really driven by some of the projects coming to a stage of maturity where key decisions really have to be taken. And we see that the U.K. projects are leading the way. And that is key decisions on technology, that is key decisions on supply chain and on contract structures. So we see a couple of effects of this, which is relevant for us. One is that we see that more parties are looking at the turbine floater as one unit, and that is -- has been our view for a while.

And we also see that the larger EPCI wraps are being pushed and that favors the larger EPCI companies that we need to relate to. So in this stage, then conceptual solutions really have to be brought forward to documented facts. And for our solution, BRUNEL, we see that as a benefit. BRUNEL has a basic design certificate at a mature design level, really meaning that BRUNEL's performance is documented and verified by a third party as a fact. We also see that implementing a 15-megawatt turbine is a big turbine to implement on a floater. And from our perspective, having started with a 15-megawatt turbine from the start is a benefit, and that also gives BRUNEL good scaling capabilities.

So when you come to these floaters, there's been quite a lot of them introduced over the last years. So that's been a market with a lot of competition. So the question is, is there any consolidation? From our side, yes, there is, but not necessarily a name, but certainly in function. So from our side, we have looked at the semisubmersible concept from the start, and we believe in that. So that's a prerequisite for this slide. We see -- I've highlighted 2 features here, which I think is important. One is that we see more and more designs being balanced. So that means that the buoyancy point and the gravity point need to be aligned for better motions.

For a single -- for a fixed mode single tower design, then most of these designs are moving their tower into the center. And you see that on most of these concepts now that they have a tower center design. Another one is also related to these huge turbines that you need stiffer towers that means also heavier towers. And we see the concept of so-called Stiff-Stiff tower -- towers being implemented more and more. So from our side, for BRUNEL, BRUNEL has been balanced from day 1 and having dual towers being a single point more dual tower design that allows us to use the more traditional Soft-Stiff, so-called Soft-Stiff towers that's used in both fixed wind as well.

So that concludes the perspectives on floating wind, then we move over to floating solar. And looking at the market there, then we see that this market is growing. When it comes to utility scale large developments, then Asia is really leading the way. It's been Philippines, it's been Indonesia, and it's been India initially. But we also see now further countries like Thailand and Vietnam announcing projects for large-scale floating solar. We see growing attention for smaller and medium-sized developments in replacing generators on [ iron ] communities.

And Europe is also moving forward, but it's more slowly. In Northeastern Europe, North and Western Europe, we see that grid connection is key for the business case. So that favors local offtake and it favors hybrid setups. In the South and Southeastern Europe with a better capacity factor, we have a better -- sorry, we have a better -- more flexibility in the business case. So that is a positive. And then we see a large potential in hybridization with hydro dams and then particularly in areas where you have dry and wet seasons.

So finally, moving on to the next slide, then a couple of points as a status update on our project BRIZO. We have this quarter completed quite a comprehensive tank test at SINTEF OCEAN in Trondheim, which has confirmed expected motions, integrity and mooring loads. And then we see that we get good cost reductions on working the supply chain and through configuration management of our system.

So that was it. Thank you.

[Anette Olsen, executive]

Thank you. Haakon Magne Ore, CEO of Fred. Olsen Windcarrier, please.

[Haakon Magne Ore, executive]

Thank you, and good morning to everyone. First quarter, I think, was a step back to a more normal quarter. We had vessels coming out of planned yard stays, so activity increased. On the market, we continue to see the same trends that we have focused on for the last year. There is limited vessel capacity available medium terms, but we see a volatility in demand side, primarily driven by the challenging we see in the offshore wind value chain. So that is creating a somewhat more volatile market.

If we then go over to the activity in the quarter, so we had Bold Tern that completed yard stay in the first half of the quarter. It was strengthening the half of the vessel to make a more generic sea fastening for the 15, 16-megawatt generation turbines. Then it went straight on contract with Saipem, preparing to be part of a monopile drilling campaign on the [indiscernible] project. Brave Tern that commenced finally, the NNG project early January. I'm very proud to say that this is a tricky site during the middle of the winter, and we completed ahead of P50 the program, just a little testimony about the competence in the organization and the vessel post upgrade. That vessel will now most likely go into yard late this quarter to do the same upgrade as we did on Bold Tern.

Blue Tern remain on the Vestas O&M campaign until middle of February before it went into yard. It has been working more or less back to back for the years. So it really needs some maintenance. That yard stay ended early May, and the vessel is now mobilizing to do an O&M campaign for Siemens in May. That is a replacement for a canceled turbine contract because the project, which was supposed to install turbine for has been delayed by 2 years. Blue Wind started on the Hai Long project installing the first turbines late this quarter.

If we then go over to the financials, as I said, we are taking a step towards more normalized activity. 2 vessels coming out of yard. So we had 57% contract utilization. That means that we were able -- we sold 57% of the days in the quarter, and that was basically all the days that we had available apart for transit and yard. When we was in operation, we had 98% commercial utilization. Again, strong proof of a strong operational quarter -- yet another strong operational quarter. On the financials, we had revenues slightly north of EUR 46 million and an EBITDA of close to EUR 25 million for the quarter.

Then we go over to the market and the backlog. I think if you look at new contract award in general, year-to-date, it has been somewhat below normal pace if you look at new turbine installation contracts. We have seen several contracts award in general, but most of them are linked to delayed projects or major O&M campaigns on the back of quality issues with the turbine. FOWIC secured one contract this quarter, and that was more a standard O&M contract for Blue Tern [ for 100 ] days in 2025 and 2026.

On the market side, again, back to what I said initially, there is limited vessel availability in the next years, but there is some volatility in demand. So there is again, the market will then be very affected by, again, the timing of this volatility in demand in the medium term. If there is a match between a vessel and demand, you will see some fluctuation in the day rate. Longer term, I think we have pointed out, we see that the last years, the offshore value chain has had an issue. We have seen cost increasing. There has been capacity and there has been quality issues. That is, of course, impacting the business case to the developers, which again shift demand out to the right when they are working to try to get the business case in place. But again, this has been the case for 2 years and has always been part of this business. But what we have seen maybe is that, that trend has accelerated somewhat in the last month. On the positive side, I think we continue to see high tender activity, especially if we're looking longer out in time.

So I think that was the prepared remarks from me. I'm happy to answer questions afterwards.

[Anette Olsen, executive]

Thank you. So we are now moving into the session of questions and answers. So please, do you have some questions?

[Operator]

[Operator Instructions] We will now go to the first question. And your first question today comes from the line of Daniel Haugland from ABG Sundal Collier.

[Daniel Vårdal Haugland, analyst]

I actually have a couple of questions, but I think I'm going to limit it to 2 at first, and then I'll get back in line. So my first question is, we've all kind of seen Orsted's decision to halt the Hornsea 4 project this week, and they are citing increased costs and supply chain risks on execution of that project. Now that can obviously be project specific. But I was wondering if you can comment on if anything has changed with respect to Codling or whether you are kind of seeing any similar effects in the supply chain and cost picture? That is my first question.

[Anette Olsen, executive]

Yes. I think, Lars, you can answer this.

[Lars Bender, executive]

Yes. Thank you for the question. I think, firstly, it's important to appreciate also what you said yourself that projects are very different in nature. They have different seabed conditions. They have different distances to shore, different wind profiles, different designs. All of that results in different [indiscernible] CapEx and OPEC profiles and projects are also under different regulatory regimes and different CfD regimes, which result in different revenue profiles. So to really have a meaningful opinion on Orsted's situation is very difficult. And it's also very difficult to compare the situation Orsted is in with Codling.

What I can emphasize is that we remain confident in our Codling project. Codling is a fundamentally strong project. We have been very clear on a flexible development strategy for Codling, where we will be able to progress that project faster if we feel that is the best opportunity or alternatively delay it. That allows us to limit pre-FID commitments to a minimum. It also allows us to keep a very cost disciplined project profile. On one side, that protects the project. Secondly, it also allows us to capture new value by introducing potential new technology down the line to increase the value of the project. And we remain confident in that strategy. So I think I hope that answers your question.

[Daniel Vårdal Haugland, analyst]

Yes. And obviously, I wasn't alluding that these projects are similar in that sense. I think on the CfD, the prices look a bit same, but other factors are obviously different. My second question is that in your accounts, you write that FOS has issued loans reflected under other financial fixed assets to the Codling JV. So 2 questions there. Can you say approximately how much Bonheur has lent to the Codling JV? And second, what is the carrying value of the equity stake of the Codling JV on your accounts now?

[Anette Olsen, executive]

Is that a question for you, Richard or Lars?

[Richard Olav Aa, executive]

It's maybe a question for me, but we need to take some time to get to the exact figures. So we're not prepared to do that on this call. But yes, we'll have to come back to that. Yes.

[Anette Olsen, executive]

Okay.

[Daniel Vårdal Haugland, analyst]

Okay. I understand. Would be just at least be interesting to know approximately kind of the amounts at the later stage when you have those numbers just kind of -- yes.

[Operator]

Your next question comes from the line of Helene Brondbo from DNB.

[Helene Brondbo, analyst]

Yes. I would just start by adding to Daniel's previous question when he brought up Hornsea 4 and Orsted's comments about like a more expensive value chain, higher risks, et cetera. And I fully understand that, that does not necessarily apply to Codling [ 2 ]. But I was just wondering in terms of what do you see in the supply chain industry these days, where do you sort of see the largest bottlenecks, if any?

[Anette Olsen, executive]

I think there is a lot of things that is happening in the value chain, Lars. Can you take that?

[Lars Bender, executive]

Yes. I can maybe -- thank you for the question. I can maybe try to add on to my question from before and say, well, I think Orsted got a CfD, I think, roughly 8 months ago, and now they then said they cannot progress the project. That is unfortunate for the industry, of course, overall that we have these project delays or cancellations, as Haakon Magne also alluded to. When we look at the supply chain now, it's correct. We see supply chain being tight in some places, and we see it being less tight in other places. It is very dynamic and it is volatile, as Haakon Magne also said. On the positive side, for a project like Codling, we've also seen, for example, a slowdown in the American market. That's potentially not positive for the industry as such, but for a project that is looking for capacity, that will have an impact, of course, on that assessment.

So I think it's very difficult to comment specifically on where is the supply chain tight. We monitor it very closely on Codling. We see in the period we are looking at that there is supply available for a project like Codling. We have a large-scale project, which is interesting for the supply chain. And I will also say that over the last year to 1.5 years, it's probably our estimation that the tight supply chain has become a bit less tight than it was actually earlier to put a comment to that.

[Anette Olsen, executive]

And maybe also to add that when you have a tight supply chain, there are also developments going in the positive direction on the technology side.

[Lars Bender, executive]

Exactly. We see new capacity coming into the market, and we see new technology coming into the market. And back to the point I said before, what is very important from a development perspective is that we are flexible on how we execute the project. What we want to avoid is being tied into a schedule where we have to make or are forced to make short-term commitments because then you can end up in a situation where you are positioned poorly towards the supply chain. And that's been our strategy, which I've repeated a couple of times and which we've had focus for now actually for a while in Fred. Olsen Seawind, and that will continue given the market volatility as it is now.

[Helene Brondbo, analyst]

Okay. I have one more question on the onshore side. I have noticed that the topic of zonal pricing has come more in the U.K. these days. And I was wondering if you could shed some light on how you assess this potential change in policy and how you sort of assess the risk for your Scottish wind farms given their location inside the U.K.

[Anette Olsen, executive]

Sofie, this is a big debate. I don't know if you can give a quick question to this, but...

[Sofie Olsen Jebsen, executive]

Yes. Thank you. Definitely. The discussion of zonal pricing and locational marginal pricing is part of the review of electricity market arrangements that's going on currently in the U.K., and that is a big debate or sort of topic and reform. I think we see -- we are following that debate closely, of course, and influencing in whatever way we can. We are taking part of industry bodies and different groups and also talking to senior politicians directly. We have been very clear with the government and others in our views that introducing zonal pricing is negative in the U.K. in terms of what they want to achieve in the Clean Power Act 2030. It will increase uncertainty, and it will also lead to less build-out of renewable energy. So that is sort of the very helicopter view.

I think it's too early to comment specifically on how it will impact our specific wind farms, but we are, yes, quite firm in our view that we are recommending the officials not to implement this reform.

[Helene Brondbo, analyst]

I understand it's early days, but have you gotten any signals about any like potential grandfathering of existing projects? Because at least my view is that it's sort of crazy to change the framework conditions after investments have been made?

[Sofie Olsen Jebsen, executive]

I think it remains too early to comment or know actually about that. We have received signals that they are looking to close or decide on the zonal pricing before the AR7 round, which is the Allocation Round 7, which is the upcoming contracts for difference auction in the U.K. So that is at least a positive thing that will give certainty to the participants of that auction.

[Operator]

Your next question comes from the line of Sindre Sorbye, Arctic Asset Management.

[Sindre Sørbye, analyst]

Yes. Just 2 topics from -- or 2 questions from my side. First, forecast for offshore wind installations have continued to decrease nearly quarter-by-quarter for the last 2 or 3 years. Most recently, Orsted canceled more than 2 gigawatt project. To put it bluntly, can you promise that you will not contract any vessels now? Have you shelved any plans of possibly doing that?

[Anette Olsen, executive]

Haakon Magne, this is a perfect question for you.

[Haakon Magne Ore, executive]

I assume that you're talking about a new build turbine installation vessel. Is that correct?

[Sindre Sørbye, analyst]

Yes, yes, of course. Yes.

[Haakon Magne Ore, executive]

I think as part of the Bonheur Group and the Bonheur policy, we never give forward guidance on what we are doing. But I think as we have said that we are closely following the situation. We have a long-term strategy to remain a leading player within this segment. We have a strong operational platform. We have a strong financial platform. We are debt free, and we can take opportunity when they arise. So I don't -- it's the same answer. We are closely reviewing the situation.

[Sindre Sørbye, analyst]

Okay. Secondly, on the -- on renewables, once again, there is, let's say, some technical issues. I'm aware that the transformer issue was not your fault, so to speak. But 4 or 5 of the plants are now more than 20 years old. Should be -- we be worried that, let's say, the technical conditions are starting to put, let's say, pressure on reliability? And would you expect repowering or doing something to mitigate that?

[Anette Olsen, executive]

Yes. Sofie?

[Sofie Olsen Jebsen, executive]

Thank you. It is correct that our wind farms is getting older. And I think that is actually quite an exciting phase for us because it means that we are moving into the full life cycle of projects where we are now looking at repowering to newer -- the potential of newer larger turbines, replacing the existing ones, which is quite an exciting prospect. So they -- we are maturing these prospects of repowering, and we'll, of course, comment on any projects as they are in that stage. I think with regards to our standards of operations, we have high standards of operations. I do -- it's like the machine rooms in the vessels actually where you want everything to be spick and span and very clean.

And I've actually been climbing quite a few turbines myself lately and see that even though we have older turbines, they should still look ships shape and be operating well. So that is the sort of standard that we are striving for, and that remains a key priority for us and focus area at the moment.

[Sindre Sørbye, analyst]

Okay. Finally, one question more for renewables. The situation in Northern -- mid and Northern Sweden with persistently low power prices, would you say that your, let's say, medium-term price expectations are lower now than a couple or when those plants were decided built?

[Sofie Olsen Jebsen, executive]

Thank you again. I think in general, we see Northern Sweden as a very attractive market for onshore wind in terms of the wind resource, lack of people living there and the stable regulatory regime, which is quite positive to onshore wind. So I think the low prices and extreme capture discounts that we see now is due to the trapped power and the sort of lack of grid transmission between the Northern and Southern zones. We know that the TSO, the Svenska Kraftnat has quite a lot of focus on this and are looking to build out transmission lines between the zones. And we do -- our belief is that if they are able to sort this out in the longer term, Sweden -- Northern Sweden will be a very attractive market going forward.

[Sindre Sørbye, analyst]

Yes. And do you have any penalties when you -- you can turn off the turbines rather than taking the cost of negative power prices, right?

[Sofie Olsen Jebsen, executive]

That is correct, and that is what we have done this quarter. I think it's also worth mentioning that we are looking into entering into ancillary services where you are then getting paid, for example, to -- when you are curtailing that you might start some production in order to balance the grid. And those imbalancing mechanism markets are proving quite attractive in Northern Sweden, Northern Sweden at the moment. So that could potentially be a new revenue stream in the future.

[Sindre Sørbye, analyst]

Okay. Would that be kind of a short-term arrangement? Or is it like a longer-term contract where you reserve capacity for the grid operator?

[Sofie Olsen Jebsen, executive]

You don't reserve capacity longer term, but you have to do some work in the beginning in order to enter that market. And once you are in, you can sort of help balance the grid on a general basis.

[Sindre Sørbye, analyst]

Yes. And that would be a fixed tariff plus money for the power delivered.

[Anette Olsen, executive]

I think probably this is a bit detailed right now. But certainly, we can come back on it.

[Sofie Olsen Jebsen, executive]

Yes. We are -- we can definitely go more into detail about that.

[Operator]

Your next question comes from the line of Anders Rosenlund from SEB.

[Anders Rosenlund, analyst]

I have a couple of questions. My first question is on the United Wind Logistics, which you sold and where the sale was closed and you provide some details in the Note 8 of the report. But could you tell us how much revenues UWL generated in 2024? And how much of that is in your 2024 revenue report or revenue line?

[Richard Olav Aa, executive]

Anders, sorry, we cannot disclose that. We have a long-term partnership with our partner, and we don't disclose the details on revenues and so on. But what we have tried to provide you with is the balance sheet effects of -- in Note 8, and that is as far as we can go. So sorry about that.

[Anders Rosenlund, analyst]

Okay. My next question is on the Renewables segment. Were there any high price leases in Q1?

[Sofie Olsen Jebsen, executive]

No. And they were only very negligible. I can't pronounce that word. So no.

[Anders Rosenlund, analyst]

Okay. I'm not sure how to pronounce levies either, so that's fine. On Blue Tern, has the crane on Blue Tern been upgraded? Is -- or am I mistaken assuming that, that is the last vessel to potentially be upgraded and broadened?

[Richard Olav Aa, executive]

No, I think you are correct. The crane has not been upgraded to do the 15-megawatt generation. There is a plan and a possibility to do it. But I think for us, it's more an option if we select to do it. Again, that's more strategy and capital allocation and the market, of course.

[Anders Rosenlund, analyst]

And given the order backlog for '25 and '26, you're not assuming that, that will take place during '25 and '26 or...

[Richard Olav Aa, executive]

I think just if you look at the lead time to get a new crane, that is quite long.

[Operator]

Your next question is a follow-up question from the line of Daniel Haugland, ABG Sundal Collier.

[Daniel Vårdal Haugland, analyst]

So Richard, I have one question for you. Now that you sold UWL and the cash position will kind of be even better than it already is, do you -- and I think I asked a similar question on Q4, but do you have any updated comments on what kind of opportunities you see for capital allocation going forward?

[Richard Olav Aa, executive]

Yes. Thank you for that question, Daniel. Yes, there will be -- well, we closed the transaction in April. And obviously, then we have received the funds for our shares. I would say in a longer-term perspective, if we go back in history, we have now been operating for close to 180 years. And we have to be -- and also according to our financial policy and capital allocation policy, we have to be utterly resilient both to cater for downturns, but also be able to grab the opportunities that may arise going forward.

So in that respect, close to NOK 600 million up and down on the cash, which is approximately the cash proceeds from UWL of shares and shareholder loans doesn't make that much of a difference into that. We have to remember that we are positioned in growth industries, which are very capital intensive. And just an example now, the 2 projects that Renewable Energy have undertaken, Crystal Rig IV and Windy Standard III, those are gross CapEx of NOK 3 billion. An installation vessel that we have discussed is a CapEx of NOK 4 billion to NOK 5 billion. So in this respect, I don't think the NOK 600 million on UWL really moved the needle in any direction when you look at this both up against our policy or long-term positioning and also the CapEx ticket item of the industries we're in.

[Operator]

Your next question comes from the line of Helene Brondbo from DNB.

[Helene Brondbo, analyst]

I have one more question related to the wind farms in Scotland. I see you have 3 consented wind farms. And during the previous AR6, you bid in 2 projects into that one and got a quite good price, I would say. So my question is, do you plan to -- what are your plans in terms of AR7? Are you planning to bid in these projects? And are they ready to be bid with the consents in place?

[Sofie Olsen Jebsen, executive]

Thank you. I think I will comment on the -- whether we bid and possibly have one if and when that is done. But what I can say is that what we do see with these new or upcoming allocation rounds in the U.K. is that in order for the U.K. government to reach their goals for 2030, the upcoming allocation rounds will have to be quite attractive. And I think the U.K. is a main market now in Europe focusing on renewables, and that is very attractive.

[Helene Brondbo, analyst]

And I also just wondered if -- how you sort of look at the possibility of bidding in potential repowering projects into these rounds? Is that a possibility for you?

[Sofie Olsen Jebsen, executive]

Yes, repowering projects can also be build into -- bid into the CfD rounds as they are basically new projects just on being built on sites where there have been wind farms before.

[Operator]

There are currently no further questions. I will hand the call back to the room for closing remarks.

[Anette Olsen, executive]

I can only say thank you very much. That concludes our session here today.