Positive news for Swedish offshore wind park

Hexicon has announced that the County Administrative Board in Västra Götaland has recommended, with certain modifications, that the Swedish Government approve Freja Offshore’s application to construct its offshore wind park, Mareld. This news marks a significant milestone for Hexicon’s Swedish project portfolio and supports our estimates that these early-stage projects will continue progressing positively and be gradually divested before reaching Final Investment Decision (FID). However, we do not make any changes to our estimates or valuation at this time.

In 2023, Hexicon’s Swedish joint venture with Mainstream Renewable Power, Freja Offshore, submitted three permit applications to the Swedish Ministry of Climate and Enterprise, totaling 7,500 MW, with responses expected in 2024. These include Mareld (2,500 MW) on the west coast, Dyning (2,500 MW) on the east coast, and Cirrus (2,000 MW) off the southeast coast in Sweden. Hexicon has now announced that the County Administrative Board has returned a recommendation to approve the Mareld wind park application with certain modifications. Next, the government will take a final position on the application. If approved, Mareld will become the largest offshore wind farm to receive a positive response in Sweden.

Developing in the right direction

We view this news positively as it indicates that the project is moving towards FID, which the company has previously communicated is expected to be reached in 2028. Should the government approve the application, this will likely reduce project-related risks and increase its value. Additionally, we believe this will position Hexicon, which we still believe needs financing, better to either sell parts of the project probably at a good return or further develop the project, which would require continued high investment but could also potentially yield a higher return in the future. It is important to note, however, that the project is still in an early stage and has not yet been fully approved, though the latest news indicates promising progress.