One surprising hindrance to the construction of hybrids has been a slip-up, similar to a typo, in the 2023 Electricity Market Act.
In the Act, the definition of a connection line was written in such a way that production units and electricity storage facilities located on different properties may not be connected to the same electricity grid connection line.
“At least for us, that slip-up has slowed down investment decisions in hybrid power plants,” says Mika Jantunen, CTO of Ilmatar.
The law change was made before May Day. The new version will come into force at the beginning of July. Hybrid projects will start with a bang in Finland.
And here are new comments from Pauli on this good news.
We see it as positive that Merus Power is growing also in the area of high-margin power quality solutions in addition to lower-margin energy storage solutions. The order puts upward pressure on revenue forecasts, but we do not currently see a need to change earnings forecasts or our estimate of the share’s fair value. Our current earnings forecast for 2025 is, in our view, quite demanding, although the order now received supports the probability of the predicted profitability turnaround materializing.
My “two cents” contribution in response: Having looked at offers from these, the difference between MP and C is at least that Cactos’s equipment is intended for three-phase power connections/around 400 volts, whereas MP’s can be connected to a 1-20 kilovolt connection. Wärtsilä has traditionally been considered to supply larger battery projects.
Enico is one of Merus Power’s competitors, if only Finnish companies are considered, and operates partly in the same markets.
Nw Storm operates in Finland as a French company.
In addition, equipment from various “low-cost production” countries can be found to some extent in Finland.
Technology company Merus Power announces that it is carrying out a directed share issue in an accelerated book-building process. A maximum of 600,000 shares will be issued in the share issue. The amount is based on the authorization granted by the general meeting to the board of directors.
The company aims to raise two million euros in a share issue directed at domestic and international institutional and other professional investors.
According to Nordnet, Merus currently has 7,673,416 shares. Does this result in approximately 7.25% dilution, which is not a massive change, however.
I don’t believe in dilution, because this means capital for the company, which is used for productive investments. Unless dilution now directly means a mathematical change in the ownership percentage.
In our opinion, the share issue raised capital for the balance sheet with reasonable dilution. In our opinion, it is difficult to make significant interpretations regarding Merus Power’s current year forecasts based on the arrangement of the share issue. The company has grown rapidly recently, but at the same time, profitability development has been subject to uncertainty. Achieving a turnaround in profitability would be important for the company to be able to finance growth with internal cash flow in the future.
In the EU, solar power apparently became the largest form of electricity production for the first time in June. This is also a kind of milestone.
In the electricity system, renewable energy, especially solar power, is now increasing rapidly. Batteries are quickly growing alongside this, as it is beneficial for solar power producers to shift their production from midday to more expensive hours using batteries.
This is probably related to Merus in that the growth prospects for the battery business are good. Hopefully, the company can profitably get involved in it.
The battery storage market certainly exists, but the products are likely standardized. Merus specializes in its customized solutions, so the question is how big Merus’s market is.
Merus Power’s 1st international energy storage project.
This news was expected, but I personally expected it to be in a Nordic country.
Perhaps it’s good that it’s not in Sweden, as Finnish companies often seem to have difficulties there (Kamux, Talenom, L&T…)
And I consider the project size of 2.5 million to be suitably small for the first international practice.
An interesting week ahead for Merus Power investors, as the early-year results will be out in a week.
Here are Pauli’s comments regarding this recent news.
The company received its first electricity storage order from Poland, outside of Finland. The order is moderate in size, but an important breakthrough for initiating the international growth of the business. Electricity storage units, which account for the majority of the company’s revenue, have so far been primarily dependent on Fingrid’s frequency regulation market. Expansion into new markets could, in the long term, stabilize the business through diversification of demand. However, the order does not affect our revenue forecasts.
Here is Paul’s pre-company report as Merus releases its H1 results next Thursday.
Merus Power will report its H1 half-year review on Thursday, August 21st. We expect the company’s revenue to grow strongly compared to the weak reference period, especially supported by the order backlog for energy storage systems. We also anticipate an improvement in results, although they are still expected to remain loss-making during the seasonally weaker first half of the year.
This is excellent: We only need to deliver what was previously promised, and we’ll be on the growth path presented in the previous Inderes report, which leads to an increase in valuation.
