Morphic Annual Report
2007/08
1 The Year in Brief 4 This is Morphic
5 Vision, Mission, Business Concept and Goals 6 Chief Executive’s Review
8 Building on Unique Skills 10 The Global Hydrogen Vision
12 The Hydrogen Society is Already Here 14 The Driving Forces behind the Energy Market 16 Morphic Systems
22 Morphic Wind 28 Morphic Impact 34 Other Businesses 38 Strategic Development 40 Personnel
43 The Morphic Share 47 Six-year Summary 48 Directors’ Report 56 Income Statements 58 Balance Sheets 62 Cash Flow Statements
64 Statements of Changes in Equity 65 Notes
89 Audit Report
90 Corporate Governance Report 94 Board of Directors and Auditor 95 Senior Executives
96 Defi nitions 97 Addresses
Information to Shareholders
Morphic’s press releases and reports are distributed through Cision (www.cision.se). Annual reports, other reports and statements and press releases can be ordered directly from the company by request to Morphic Technologies AB, Gammelbacka vägen 6, 691 51 Karlskoga, Sweden, by telephone +46 (0)586-673 90 or by e-mail at info@morphic.se. All currently available information can also be found at www.morphic.se.
Annual General Meeting
The Annual General Meeting will be held on October 20 at 1:00 p.m. at the Göteborg Convention Centre (Hotel Gothia Towers), Mässans gata 24, Gothenburg, Sweden. In accordance with the company’s articles of association, the notice of AGM is published in daily newspapers in Sweden and at www.morphic.se. It provides information on how to give notice of attendance. Shareholders with nominee-registered shares should instruct the bank or brokerage managing the shares to temporarily register the shares in their own name at least two banking days before the record date, October 14.
Financial Information
The Board intends to propose that the Annual General Meeting change the company’s fi nancial year to the calendar year.
Provided that the AGM approves the proposal, the current fi nan- cial year will be shortened to comprise the period May–December 2008, with the following reporting dates:
• Interim report for the period May–July 2008: September 17
• Interim report for the period May–October 2008: December 19 Further reporting dates will be announced after the AGM. The reports will be available at www.morphic.se as of the date of publi- cation. The annual report will also be sent directly to shareholders stating that they wish to receive fi nancial information.
IR-Contact
Johannes Falk, Senior Vice President, Investor Relations Phone: +46 (0)586–673 93
E-mail: johannes.falk@morphic.se
Contents
This document is an English translation of Morphic Technologies AB’s Annual Report for the fi nancial year 2007/08. In the event of any discrepancies between the original Annual Report in Swedish and this translation, the former shall have precedence.
16 22 22 28
• Net turnover was SEK 356.7 million (143.7)
• Operating loss SEK –106.9 million (–67.9)
• Earnings after tax were SEK –97.7 million (–67.0)
• Cash fl ow after investments was SEK –38.9 million (–55.0)
• Earnings per share were SEK –0.65 (–0.52)
• Consolidated cash and cash equivalents at the balance sheet date were SEK 146.1 million (186.5) and the equity/assets ratio was 66% (73)
• At the balance sheet date the Group’s order book was worth SEK 696 million
Key fi gures 2007/08 2006/07 2005/06 2004/05 2003/04
Net sales, SEKm 356.7 143.7 38.6 1.8 9.2
Earnings after net fi nancial items, SEKm –100.2 –66.7 –24.6 –16.6 –10.8
Earnings after tax, SEKm –97.7 –66.9 –24.6 –16.6 –10.8
Return on capital employed, % neg neg neg neg neg
Equity/assets ratio, % 66 73 84 61 50
Average number of employees 163 113 44 12 9
The Year in Brief
Sharp Increase in Orders
At the balance sheet date Morphic’s order book was worth SEK 696m, which is a sharp increase on the previous year.
Volume Order for Fuel Cell Flow Plates
In fall 2007 Morphic received its fi rst two volume orders, worth about SEK 196 million, for series production of fuel cell plates used in powering consumer electronics.
Acquisition of Foreign Companies in Energy Systems Through the acquisition in late 2007 of the three energy technology companies Helbio S.A., Exergy Fuel Cells s.r.l.
and AccaGen S.A., Morphic has secured access to the most critical components for the development of its energy system.
Test Center for Fuel Cell Components Opened in Japan In February 2008 a test center for the production of fuel components was opened outside Tokyo in Japan. One of the world’s fi ve largest automobile manufacturers has already booked the facility for the fi rst six months, and several other car makers and consumer electronics man- ufacturers have booked time.
First 3 MW Wind Turbines Delivered
In April and May 2008 Morphic delivered its fi rst 3 MW wind turbines in Sweden, to Lysekils Energi Vind AB. The two turbines will generate about 16 million kWh per year.
Listing on the OMX Nordic Exchange
On March 4, 2008 Morphic was listed on the OMX Nor- dic Exchange Stockholm. Following the listing, trading in Morphic’s B shares was transferred from First North to the mid-cap segment of the Nordic Exchange.
Stronger Ownership Base
With the aim of enabling further ventures, primarily in wind power and energy technology, Morphic conducted two private placements during the year, raising SEK 264.7 million in cash before issue costs.
Events after the End of the Financial Year
After the end of the fi nancial year Morphic has acquired 80 percent of the Norwegian wind power company Scan- Wind AS, signed a statement of intent with Vattenfall on a wind power partnership, concluded a partnership agree- ment with the German wind energy company Kenersys and received an order for ten 3 MW wind turbines from Skellefteå Kraft, the fi rst major installation to be built in an Arctic climate. Several key positions in the Group have also been fi lled through recruitment, including a new CEO for Morphic Wind and a Group-level Director of Human Resources.
from costly and damaging energy
We will achieve
to free and clean energy.
a radical change
This is Morphic
• Strong improvement in turnover and earnings in Contract Production and Ship Propulsion
• Component processing order in telecom
• Several strategic orders in contract production and hydroelectric power
• International launch of the SensActive® materials handling system
• Acquisition of the materials handling company Euro Industrial Automation AB (EIA AB) Contract Production – component processing
based on adiabatic softening as well as heavy mechanical processing and maintenance and servicing of hydroelectric power stations.
Ship Propulsion – production of high-quality ship propellers.
Automation Technology – development and sale of systems for materials handling and automation.
Other
Operations *
• Acquisition of the energy technology companies Helbio S.A., Exergy Fuel Cells s.r.l. and AccaGen S.A.
• Critical components for the energy system secured
• Intensive product development
• Order for energy systems from Greece
• Demonstration facility installed in Karlskoga, Sweden
• New CEO – Mats Reimark from GM Development and sale of energy systems
that represent an entirely new way of con- verting, storing and using energy from renewable sources. The systems allow for stable, local, and environmentally sustain- able production of electricity.
Morphic Systems *
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16
• Sharp increase in turnover and orders
• First 3 MW wind turbines delivered
• Partnership agreement with wind turbine maker Kenersys AG
• Acquisition of ScanWind AS
• Statement of intent with Vattenfall AB
• New major order – ten 3 MW turbines to Skellefteå Kraft AB
• New CEO – Erik Göthlin from Chromalox, Inc.
Production and sale of 1–3.5 MW and larger wind turbines. The company can provide individual turbines up to entire wind parks for onshore (wind classes IEC 2 and 3) and off shore (wind class IEC 1) locations.
Morphic Wind *
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22
• Two volume orders for fl ow plates in consumer electronics, initially valued at SEK 196m
• Another production plant, adapted mainly for the automotive industry, operational in Karlskoga
• Test center opened outside Tokyo in Japan
• Recruitment of heads of sales for Europe and North America
Manufacture of fl ow plates for fuel cells using a unique, patented technology called adiabatic softening. Two production plants in Karlskoga and an emerging global sales organization.
Morphic Impact *
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Page
34
Business area Business Signifi cant events 2007/08
Morphic provides fi rst in class energy systems which capture, store and convert renewable energy. The Group combines unique expertise in systems development, hydrogen technology and fuel cells with leading production technology.
Morphic now has about 230 employees and conducts operations in six countries: Sweden, Norway, Japan, Greece, Italy and Switzerland. The head offi ce is located in Karlskoga, Sweden.
The company’s B shares have been listed on the OMX Nordic Exchange since March 4, 2008.
In August 2008 the company had about 25,000 shareholders.
* The name of the business area has been changed as part of the ongoing reprofi ling of the Morphic brand.
Core business – What we do
We develop systems that capture, store and reform renewable energy to electricity for industry and private users.
Mission – How we do it
We have an everyday commitment to create revolutionary solutions for clean and effi cient energy.
Vision – What we want
We will achieve a radical change from costly and damaging energy to free and clean energy.
Goal
Morphic’s overall goal is to generate the strongest possible return for the shareholders in the form of value growth in the company, dividends and spin-offs of independent businesses.
Financial Targets
• The Group’s overall objective is to achieve profi tability.
• In a longer-term perspective, Morphic’s target is to achieve an annual turnover of around SEK 10 billion by 2012.
The Group’s long-term operating targets are described in the sections dealing with each business.
Strategy
Morphic’s strategy is designed to ensure that the business areas
• are market leaders in their respective areas
• have a clear focus on environmentally friendly solutions, advanced development and quality
• are run as independent and fi nancially viable units
• develop through organic growth and complementary acquisitions
• are run as wholly or partially owned units based on ongoing assessments of those factors that optimize the unit’s ability to raise capital, competitiveness, synergies and industrial partnerships.
The operational strategies for the business areas are described in the relevant sections.
Turnover 2006/07 (%) before elimination of intercompany transactions
Morphic Systems, 0 (0%) n Morphic Wind, 32.9 SEKm (19%) n Morphic Impact, 1.3 SEKm (1%) n Contract Production, 18.5 SEKm (11%) n Ship Propulsion, 97.8 SEKm (56%)
Automation Technology, 0 (0%) n Other, 24 SEKm (14%)
Total 174.5 Turnover 2007/08 (%) before elimination
for intercompany transactions n Morphic Systems, 7.9 SEKm (2%) n Morphic Wind, 204.4 SEKm (55%)
Morphic Impact, 1.6 SEKm (0%) n Contract Production, 36.4 SEKm (10%) n Ship Propulsion, 112.1 SEKm (30%) n Automation Technology, 10.8 SEKm (3%)
Other, 0 (0%)
Total 373,2
The Group’s net turnover in 2007/08 increased by 149 percent compared with the previous year, primarily due to increased sales in Morphic Wind where Morphic is now delivering the orders received.
The sharp increase in oil prices in 2008 has proved an unpleasant yet necessary wake-up call for many – private individuals, businesses and governments. All of a sudden economic aspects, not just environmental aspects, have become a strong driving force behind investments in alternative energy. Many renewable forms of energy, including wind power, have now become competitive even in terms of production costs. As technology contin- ues to advance and volumes increase, this trend will become more pronounced.
Core Business in Three Parts
Morphic’s core business is in the area of energy technol- ogy – fuel cell components, wind power and energy sys- tems. It is in these segments, which are expected to expand rapidly, that we will grow. Developments in 2007/2008 and at the beginning of the new fi nancial year confi rm that strategy. We have acquired businesses that produce key components in wind power and energy sys- tems, we have established key partnerships in our wind power and fuel cell segments and have recruited individ- uals with the right cutting-edge expertise.
Biggest Potential in Energy Systems
We have rapidly built up a platform in fuel cell-based energy systems. In August we acquired 55 percent of the shares of the Greek energy technology company Helbio S.A. In November we acquired the Italian fuel cell maker Exergy Fuel Cells s.r.l and in December the Swiss energy technology company AccaGen S.A. Through these three acquisitions, we have secured access to all key components – reformers, fuel cells and electrolyzers – in the energy system being developed by the company. Morphic’s energy system represents a cost-eff ective way of convert- ing, storing and using energy from renewable sources.
Energy systems is also the segment in which Morphic has the greatest long-term growth potential. The fi rst big area of application is systems that replace diesel generators for powering telecom base stations.
Volume Order for Flow Plates
The commercialization of products based on fuel cell technology is now a reality in certain areas. One of the fi rst applications is in mobile electronics. This is a seg- ment that is driven by a continuing need to cut running costs rather than purely environmental factors. Using fuel cells in cell phones and portable electronics, for
instance, creates opportunities for signifi cantly longer run times and faster charging than is possible with today’s battery technology. Rapid progress is also being made in the automotive industry. Most of the world’s major car makers are working intensively on developing fuel cell-powered vehicles, which they aim to commer- cialize in a near future. Surging gas prices and the grow- ing importance of having a strong environmental profi le are two main driving forces.
Our patented technology, involving the use of adiabatic softening to produce fl ow plates – a key component in fuel cells – is highly competitive and is attracting growing interest. During the year we signed our fi rst two initial volume orders, worth a total of SEK 196 million, with com- panies operating in the consumer electronics industry. We increased our marketing activities in Asia, the US and Europe and scaled up our production capacity to meet a sharp increase in demand. Our new test center in Tokyo, where customers are off ered test series production prior to the transition to series production, has been booked up for many months.
Complete Wind Power Portfolio
Our wind power business has seen strong activity.
Through a license agreement with Kenersys of Germany and the acquisition of ScanWind of Norway, we have now secured a complete portfolio of turbines for various cus- tomer requirements and climates while at the same time expanding our market. Signifi cantly, we now own a turbine construction with a big potential for off shore installations – an area that is expected to grow very rapidly in the next ten years. We have also achieved many synergies in the manufacture and sale of turbines. We believe we are in good position to retain our current market share during the continued rollout of wind power in Sweden, and we have opportunities to capture signifi cant market share in Norway, the Baltic states and other markets. We are also able to fully exploit existing capacity at our production plants. Prospects of achieving profi tability are improving as order volumes increase. Our latest major order – ten 3 MW wind turbines for Skellefteå Kraft – will be the fi rst major installation in an Arctic climate and will be followed by many others, both onshore and off shore.
Market-leading Expertise
Morphic is growing rapidly. Not just through the addition of new companies and businesses. Building tomorrow’s
We Have Tomorrow’s Energy Systems
We no longer have to wait. Tomorrow’s energy system is already here.
Morphic’s system for converting, storing and using energy has the
potential to play a major role in ensuring the supply of energy in a world
that is becoming increasingly dependent on local solutions based on
renewable energy.
energy systems also requires that we are able to recruit people with the right expertise who share our vision. In the last few years we have successfully recruited a num- ber of key individuals in the Group, including new CEOs for our wind power and energy systems segments, a new Human Resources Director and a Group CFO. We need to remember that Morphic is a knowledge company. Con- verting our expertise into leading and competitive busi- nesses has been our strength ever since the company was set up in 1999. With the organization we are now building up, we will be able to continue to deliver on our promise.
The aim is to realize our long-term goal through market- leading expertise and a sustainable, human attitude.
Short-term Insecurity – Long-term Strength
Our strong off er has the capacity to reap successes in the long term. In the short term, however, we will continue to be aff ected by market-specifi c events. Since wind power is our largest business area, pending a breakthrough for fuel cell technology and a broad launch of our energy system, delayed permit processes and other events had a signifi cant impact on revenues. Yet strong activity in 2008 – the acquisition of ScanWind, our partnership with Kenersys, a statement of intent with Vattenfall and a major order from Skellefteå Kraft – have improved the outlook for our wind power segment. The company has achieved the structure it needs to secure a leading role in environmental technology. We believe Morphic’s prospects of achieving its long-term growth target are on track.
Listing on the OMX Nordic Exchange
Maintining a high share price in the short term when revenues and earnings fall short of expectations is always diffi cult. Nor is it our task. Our task is to create conditions for long-term growth by systematically securing deals, components and expertise within the framework of our strategy. A key part of this strategy was our list- ing on the OMX Nordic Exchange in March 2008 – a stamp of quality. Another positive development is that the share of institutional owners, both Swedish and foreign, has increased. A stable, long-term ownership base is a key factor in ensuring that we can continue our rapid expansion.
Morphic’s future looks bright. We have the strength we need to build an established company in energy technology.
Karlskoga, August 2008
Jonas Eklind President and CEO
Jonas Eklind
Job: President and CEO of Morphic Technologies AB Age: 45
Background: Physics degree from Uppsala Univer- sity, degrees in marketing, businesses economics and management from MIT Boston, USA and other univer- sities as well as broad experience of leadership in technology-oriented growth companies. Before join- ing Morphic, he was Group Director in Kitron Swe- den.
Special: Keeps fi t by practicing martial arts such as Thai boxing, martial jujutsu, Brazilian jujutsu and Krav Maga.
Key skills: Has helped set up and build several companies from the entrepreneurial phase into stable and profi table industrial businesses.
Why did you set up Morphic in 1999? What were your personal motivations?
Kurt: 1999 was a natural year in which our respective networks were ready for a new phase in a technological development that had been going on for fi ve years. Our motivation was, then as now, to make use of a unique set of skills and local conditions to provide tomorrow’s tech- nologies.
Morphic currently has about 230 employees, operations in three continents and more than 25,000 shareholders.
How did you manage to grow so fast?
Peter: Fast? We think things have advanced much too slowly, but, yes, we are defi nitely on track now. The key to our success, which is now rooted in the organization, is probably our stubbornness and our strength of will, as well as our ability to convert a vision of tomorrow’s tech- nology into reality.
Is Morphic’s system the energy system of the future – both for the renewable energy market and for Morphic?
Kurt: Absolutely! Marrying effi cient wind turbines with unique fuel cell systems is the future. This enables us to exploit renewable energy, store it and use it when it is needed. The goal is to ensure that the system is cost- eff ective compared with all energy produced from fossil fuels, even electricity from the grid. Then each user will be able to decide for himself whether he wants to be con- nected to the grid or not. He will have the option of investing in his own local energy system, and can deliver the surplus to the grid. Before this becomes a reality, our energy system will make a reality of a number of other applications. The system can replace today’s diesel standby generators and it can also be used to supply power in developing countries in places that currently have no access to electricity.
You have stated that all energy can be clean and free – explain!
Peter: As long as the authorities refrain from putting a tax on the wind or the sun, the “input fuel” is free to use.
The electricity need of each user is provided for by adapt- ing the size of the system. The world is literally inundated with clean and free energy.
Is the hydrogen society a realistic vision? How will the transition take place?
Peter: Vision? Wake up, the hydrogen society is already being introduced in many parts of the world. Sweden is a long way behind but that doesn’t mean that we are des- tined to always stand on the sidelines and look on. In Morphic we will take our responsibility and ensure that the hydrogen society will get off to a fl ying start also in Sweden and that our nation makes its mark on the map again in terms of renewable energy. In the longer term hydrogen technology will be one part of the total, entirely green energy technology, where synthetic liquid fuels will also play a key role.
Give us an idea of this future, based on the everyday life of an individual human being, both in the industrialized world and in the developing countries.
Kurt: In the developing countries the main task is to rap- idly achieve sustainable development, i.e. to introduce energy systems which drastically change the everyday lives of individuals in healthcare, food handling, schools and many other areas, so that the countries themselves can change and create conditions for a humane life. And of course vehicles that do not destroy the environment, for the freedom of the individual and the functions of society.
Peter: In the industrialized world the challenge is to get away from the antiquated idea that energy can only be produced and distributed on a large scale and that we have to use dirty solutions such as coal power, fossil gas (also called natural gas) or nuclear power. The world is full of clean energy in the form of wind power, solar power, hydroelectric power and biogas, which can provide for the needs of an entire society and give individuals an active choice. This will ensure that future generations will be able to live in a clean world, which is something that we have always taken for granted.
What is required to achieve this radical change? From Morphic, from businesses and from our politicians?
Peter: Sustainable development is about making wise decisions together and facilitating a development which, step by step, will lead us in the right direction. Politicians are guided by what the voters want, and unfortunately the result is often very short-sighted. In the end it’s about taking personal responsibility and contributing in some way.
Morphic was founded in 1999 in Karlskoga, a Swedish town with a high concentration of industrial and engineering fi rms. The men behind the founding of the company were Peter Enå and Kurt Dahlberg, with unique experience from SKF and Bofors.
Building on
Unique Skills
Morphic will ensure that Sweden makes its mark on the map in renewable energy.
Kurt Dahlberg
Job: Founder and Board member of Morphic. Part-time employee as ambassador in the parent company.
Age: 65
Background: M.Sc. in Engineering (electronics). Twenty years in systems and market development at Bofors, has since founded several businesses.
Special: Many years’ experience of system engineering.
Key skills: Good nose for cutting-edge technology and knowledge and the ability to combine the two.
Peter Enå
Job: Founder and Board member of Morphic.
Age: 39
Background: M.Sc. in Engineering (mechanical engineer- ing) from the Institute of Technology at Linköping University.
Head of Department at SKF in Gothenburg, Business Development Manager at SKF North America, President and CEO of Morphic Technologies AB
Special: Board member of ProEnviro, environmental research in the Swedish Foundation for Strategic Research (SSF) and Board member of Hydrogen Sweden.
Key skills: Good intuition in business development and a strong will to achieve changes that matter.
Around the world large-scale research eff orts are being made to realize the hydrogen society, often through part- nerships between governments, organizations, research- ers and businesses. The technology exists. What is needed now is the infrastructure and commercialization.
According to a study conducted by the International Energy Agency (IEA), global investments in hydrogen and fuel cells totaled $4–5 billion in 2004. Since then, investments have increased signifi cantly, not least due to major investments in Asia.
An international partnership has been created called the International Partnership for the Hydrogen Economy, IPHE. The partnership is aimed at coordinating and streamlining research, development, demonstration proj- ects and the commercialization of the technology needed for the hydrogen society. Several European countries, the United States, Australia, Canada, Japan, New Zealand, Russia, Brazil, South Korea, China and India have signed up.
In the EU the support provided for hydrogen and fuel cell projects has increased signifi cantly in recent years.
One major project is HyWays, which is aimed at develop- ing a European action plan for large-scale use of hydro- gen as an energy carrier.
Sign-off for Major European Partnership
On May 30 the European Council of Ministers approved the Joint Technology Initiative (JTI), which will be led by representatives from European industry, including Volvo AB and StatoilHydro. From 2008-2017 a budget of about €1m will be invested in accelerating the market introduction of hydrogen and fuel cells in Europe. The goal is to ensure that the technology becomes commer- cially viable in the next decade, and the money will be invested in research and demonstration projects.
In the Nordic region activity in hydrogen-related activ- ities has increased in recent years. Iceland, for instance, has a vision of becoming the world’s fi rst hydrogen econ- omy, and Norway and Denmark have adopted national hydrogen strategies. In Sweden the fuel cell sector is still limited, but it is growing. In 2007, Hydrogen Sweden, an organization that works to promote hydrogen as an energy carrier in Sweden, was formed.
Major German Hydrogen Initiative
In February this year the German government founded NOW, a national organization for hydrogen and fuel cell technology, which will coordinate and channel research eff orts in transports, stationary energy supply, standby power and many other applications. €500m has been set aside for research and development in the next ten years.
The total German investment, from government, organi- zations, businesses and users, is estimated at €1.4m.
In the Ruhr Area an initiative called H2NRW, Hydro- gen North Rhine-Westphalia, has been launched. The aim is to create the conditions for a hydrogen economy, and there is talk of replacing the old coal industry in the area with a new, modern, green hydrogen-fuel cell econ- omy. Another objective is to increase the share of renew- able energy in line with the EU’s aim of ensuring that renewable energy accounts for at least 10 percent of the energy system by 2010.
In London a project called the London Hydrogen Part- nership (LHP) has been launched. LHP has drawn up an action plan which, through initiatives in London, aims to realize the overall goal of introducing a national infra- structure for hydrogen based on renewable energy. The business sector has been drawn in, and it is hoped that this will help to ensure faster growth for this green tech- nology.
Massive US Investment in Hydrogen Cars In the United States investments in hydrogen have assumed the character of an alternative to the Kyoto pro- cess. The US Department of Energy has started the FreedomCAR project and the Hydrogen Fuel Initiative, a major fi ve-year government research and development initiative aimed at bringing forward a commercialization of hydrogen-powered fuel cells for cars and electricity generation. The FreedomCar project, a research partner- ship with three Detroit-based car manufacturers, is seek- ing to determine whether hydrogen cars can be produced on a large scale by 2015.
In April the California Air Resources Board, the state’s air pollution control agency, decided that the six largest automotive manufacturers that sell cars in California need to sell at least 66,000 plug-in hybrids and at least
The Global Hydrogen Vision
One of the big challenges of our time is to ensure the supply of energy while limiting the impact on the climate and reducing polluting emissions.
Hydrogen and fuel cells will play a key role in the necessary transition
from fossil fuels to clean and fl exible energy.
7,500 electric or fuel cell cars between 2012 and 2014.
Car buyers receive discounts of up to $5,000 if they buy cars running on alternative fuels. 150 cars from a group of eight car makers, DaimlerChrysler, GM, Ford, Honda, Hyundai, Nissan, Toyota and Volkswagen, are currently running on Californian roads in the California Fuel Cell Partnership, an alliance of 31 organizations working to develop hydrogen-powered fuel cell cars.
Korea Aiming for Hydrogen Economy by 2040
Korea’s vision is a hydrogen economy by 2040 in which hydrogen accounts for 15 percent of the country’s energy consumption and half of all cars are fuel cell cars. The government expects that its support for research and development will have created a new energy sector around 2020 and that this energy industry will then continue to grow. Current research projects focus on the production and storage of hydrogen, and on developing vehicles, power plants and applications for portable technology.
The vision even includes fuel cell-powered robots.
In Japan 26 companies are members of JHFC, the Japan Hydrogen & Fuel Cell Demonstration Project, which has been set up by the Ministry of Economy, Trade and Industry. The project tests cars, buses and disabled vehicles produced by Toyota, Honda, Nissan, Daimler, GM, Suzuki, Mazda, BMW and other car makers.
In China the government is funding a large number of long-term projects in the fi eld of hydrogen and fuel cells.
The projects will continue until the technology has achieved a broad commercial base. The country’s major automotive manufacturers are also conducting tests to evaluate the possibility of developing production plat- forms for fuel cell-powered vehicles.
In the United States investments in hydrogen have assumed the character of an alternative to the Kyoto process.
Hydrogen can be used to store, transport and generate energy.
There is a lot of fl exibility, since the hydrogen can be produced from many different energy sources. Hydrogen is also an unused byproduct in many chemical industries.
Today, hydrogen is mainly produced from natural gas but it is in the use of renewable energy from the sun and the wind for electrolysis of water, or reformation of biogas, that hydrogen ful- fi ls its most important function as an energy carrier.
The technology involves conducting hydrogen and oxygen through the fuel cell, which generates electricity and heat through a chemical process. When hydrogen is combusted in fuel cells no carbon dioxide is released into the atmosphere;
the only emission is clean water.
Fuel cells can replace combustion engines in vehicles and can also be used in stationary systems to supply energy for resi- dential use. They can also be used in small portable units such as cell phones and computers, as power units in pleasure boats and in place of diesel generators. A fuel cell system is more than twice as effi cient as today’s internal combusion engines.
Fuel cells are also quieter, as there are no moving parts.
Read more on page 20
Facts: Hydrogen and Fuel cells
The fi rst series-produced Honda FCX Clarity fuel cell car rolled out from the fac- tory in June 2008. In the next three years the company will produce 200 vehicles, which will initially be available to selected leasing customers in the United States and Japan. FCX Clarity has a range of about 400 km (270 miles) and top speed of almost 170 km/h (106 mph).
California has a network of 24 hydrogen stations, which serve a few hundred prototype cars.
GM is planning to produce several hundred hydrogen- powered fuel cell cars for test runs in Europe, Asia and North America. Together with a number of national governments, the company will seek to determine what the infrastructure of a hydro- gen society would look like.
GM's goal is to become the fi rst car manufacturer to sell 1 million fuel cell cars.
Ford Fusion has set a new speed record for fuel cell cars. achiev- ing a speed of 333.5 km/h (207.3 mph). So far, 30 units of the test model have been produced.
Toyota has launched the Toyota FCHV-adv, a more advanced version of its pre- vious fuel cell car, which runs on hydrogen. The fuel cells in the new model are 25 percent more effi cient.
The car has a range of 830 km (519 miles) and can oper- ate in temperatures down to 30 degrees below zero.
The H-racer toy car from Chi- na’s Horizon Fuel Cell Technol- ogies is selling like hot cases in the US. In addition to a car, buy- ers receive a solar panel and a small gas station in the box.
In Reyjkavik hydrogen buses have been used as ordinary town buses since 2003.
One 50 kg tank is suffi cient to drive the bus for about 200 km (125 miles), which corre- sponds roughly to an average shift for a bus driver. During the journey the hydrogen is stored in roof-mounted gas tanks under a pressure of 350 bar.
In California all three publicly funded mass transit compa- nies use hydrogen buses in regular services.
A Canadian fuel cell company has man- aged to insert a small fuel cell into a cell phone from Motorola. The phone has been running on the fuel cell for six months, without batteries. The fuel cell is powered by a small hydrogen tank, which is refi lled periodically. The com- pany has developed a charger but envi- sions a future where users are also able to recharge their phones at charge points in electronics stores and other outlets.
Canon has patented a small fuel cell that can be used in cameras and other small electronic devices.
Sony has presented a fuel cell in which 10 ml of methanol is suffi cient for watching 14 hours of movies on a mobile device.
Toshiba has presented plans to mass produce fuel cells from March 2009.
The Hydrogen Society is Already Here
Series production of the Honda FCX Clarity
1 million
fuel cell cars
Boeing has fl own the fi rst ever manned fuel cell, a two- seated Dimona motor glider with a wingspan of 16.3 m.
The plane ascended to an altitude of 1,000 m using a combination of bat- tery power and hydrogen- powered fuel cells. At the right cruising altitude the pilot disconnected the bat- tery and fl ew at a speed of 100 km/h (62 mph) for 20 minutes using only fuel cells.
At Munich Airport hydrogen is used daily as fuel in the buses that transport passengers to their planes. In the last ten years the buses have been fi lled up with gaseous hydrogen thou- sands of times without problem.
The fuel is produced on site through electrolysis. Munich Airport opened the world’s fi rst fully automatic hydrogen gas tation already in 1999 in part- nership with BMW, whose hydrogen cars are also used at the airport.
Read more:
www.fuelcelltoday.com www.vatgas.se www.h2fc.com www.hyways.de www.hydrogen.org
www.alternative-energy-news.info TeliaSonera is testing fuel cells as an
alternative to diesel in its mobile base stations. Using hydrogen-pow- ered fuel cells as standby power, a base station can be kept up and run- ning for two weeks, which is signifi - cantly longer than with the current system.
British Gas wants to start producing fuel cell-powered boilers from the beginning of next year. The company says the new boilers will cut CO2 emis- sions by 50 percent and reduce bills by 25 percent. The fuel cell boilers provide both heat and electricity.
In the US homeowners can reduce their tax by installing fuel cells.
In Venice, Italy the regional government has set up a Hydrogen Park. The facility cost
$40m and provides energy for 20,000 homes.
Panasonic-owned Matsushita will be offfering fuel cell systems to home- owners in Japan from April 2009.
The world’s largest plant for production of hydrogen is to be built in Abu Dhabi.
Samsung is working with the US fuel cell maker HydroGen Corporation to sell sta- tionary fuel cells to the Asian industry.
HydroGen is said to have developed tech- nology which in future will make it possible to build fuel cell power plants with outputs of up to 30 MW.
World’s largest hydrogen plant in Abu Dhabi
Cell phone
without battery
Boeing fl ies
on fuel cells
The Driving Forces behind the Energy Market
Rising energy requirements and the need to reduce carbon dioxide emissions are some of the reasons why global demand for renew- able energy is expected to increase by an average of 9 percent per year up until 2030. Meeting the increased demand will require investments of $2,500 billion in renewable energy sources.
Global Demand for Electricity to Double by 2030
In the next 50 years the world’s population is expected to grow from 6.5 billion today to 9 billion. Combined with generally improving living conditions, the need for energy, not least electricity, will increase considerably.
Alternative Forms of Energy Increasingly Competitive
2003 2010 2015 2020 2030
Estimated Global Electricity Consumption, 2003−2030 (TWh)
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Source: EiA (Energy Information Administration)
Crude Oil Prices, 1988−2008 (USD per barrel)
0 30 60 90 120
Break-even levels for alternative energy sources:
Wind power, onshore 49
Biomass 113
1988 1995 2000 2005 2008
Source: HSBC, Green is the new black, 2007 Wind power, onshore
t
The price of electricity from renewable energy sources has fallen sharply thanks to techno- logical advances, increased competition and advances in production. At the same time, prices of oil and other fossil fuels have increased. Many renewable forms of energy have now become competitive even without grants and subsidies.
Break-even levels for alternative energy sources (USD per barrel):
Wind power, onshore 49
Biomass 113
Wind power, off shore 144
Fuel cells 278
Solar cells 484
Energy Supply an Increasingly Important Security Issue
In recent years energy supply has become an increasingly important security issue. In several of the world’s major economies, including the US, the EU and China, demand for energy exceeds domestic supply. Increased investments in renewable types of energy are therefore seen by many nations as a means of securing the country’s access to energy and thereby reduce its dependence on other states.
Greater Awareness of Changes in Climate
The relationship between emissions of carbon dioxide and changes in the climate is becoming ever more clear. In the EU the goal is to ensure that renewable energy sources account for 12 percent of electricity production in 2010, increasing to 20 percent by 2020 (Source: www.
europa.eu). National energy targets, increased investments in research and development and deregulation of energy markets are some of the initiatives.
China’s Growing Oil Imports, 1965−2005 (thousand barrels per day)
0
1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
1,000 2,000 3,000 4,000 5,000 6,000 7,000
1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
Consumption Production Source: Sasol, HSBC
1,000 1,200 1,400 1,600 1,800 2,000 Average temperatures, 1000−2010
Scenario for global warming
Source: the UN’s scientific climate panel,
the Intergovernmental Panel on Climate Change (IPCC) -0.4
+0.8 0 +2.0 +3.2 +4.4
Morphic Systems is the business area in which Morphic is deemed to have the biggest long-term growth potential.
Morphic has achieved a leading position in the fi eld and now has the knowledge and the products it needs in all key areas of technology to effi ciently produce complete energy systems.
A basic principle in the production of our normal, 50 Hz alternating current (AC) electricity is that the elec- tricity generated must be used immediately. The storage of energy takes place before the electricity is produced, in fossil fuels, water reservoirs and uranium rods. Renewable energy such as wind and solar energy cannot be stored prior to electricity production, and so no batteries have been created that are effi cient enough to store electricity from sun and energy to the extent necessary to compen- sate for the long periods of weak winds and darkness.
Morphic’s Energy System Offers a Solution
Morphic’s energy system solves the storage problem by converting the generated electricity into hydrogen or liq- uid energy carriers that can be stored and used to gener- ate electricity in a fuel cell at a later time. The advantage is that the system enables local production of electricity at a predetermined cost while at the same time increasing the amount of energy produced from existing sources of renewable energy.
In the fi rst case, the systems function as sustainable, cost-eff ective alternatives to diesel generators and other systems in locations that do not have existing infrastruc- ture for the supply of energy. In the second case the sys- tem can be used to supplement the effi ciency of existing sources of renewable energy. Because the systems make it possible to store the converted energy, the rate of energy extraction increases tangibly, and it becomes possible to achieve an even production of electricity.
Fuel Cell-based System for Alternative Energy Forms The energy system that Morphic is preparing for series production consists of two separate hydrogen-producing energy converters:
a) An electrolyzer, which is fed with electricity and produces hydrogen by breaking down water.
b) A reformer, which can be fed with biogas (methane), bioalcohols (methanol, ethanol) or other hydrocarbons to produce the high-quality hydrogen that is required in fuel cells.
These two hydrogen generators can be used either sepa- rately or in combination, depending on what forms of energy are available. If electricity from a wind turbine or solar cells is available, the electrolyzer is used to produce hydrogen. In case of a longer interruption in the supply of wind- or solar-generated electricity, the reformer can be switched on, using a fl uid fuel such as methanol, which is easy to store and transport.
Hydrogen is stored to the extent required by the appli- cation, and used to power a fuel cell, which produces electricity.
For the energy systems, Morphic is planning to develop small to medium-sized wind turbines of up to 500 kW, applying the same standards of quality and performance as for the Group’s larger 1 MW turbines.
Business Model
Morphic’s business model in Morphic Systems is based on sales of complete systems and individual components.
Morphic provides the know-how and access to critical, patented components. Other parts of the system are sourced from the Group’s partners.
In terms of the value chain, Morphic provides all stages: from development and production of individual components to sales of complete systems.
Morphic’s fuel cell energy system – which is based on tomorrow’s technology for climate-friendly, renewable energy – opens up entirely new opportunities for the production and storage of electricity with minimal environmental impact.
Through the acquisitions of Exergy Fuel Cells s.r.l., Helbio S.A. and AccaGen S.A., the Group has secured access to the most critical components.
Morphic Systems
Financial performance, SEKm
2007/08 2006/07
Net turnover 7.1 –
Operating profi t/loss –26.1 –
Mats Reimark
Job: President of Morphic Systems Age: 47
Background: M.Sc. in Shipbuilding from the Royal Institute of Technology in Stockholm, Sweden, then various positions at SAAB Automobile and GM, most recently Director of Hybrid Engineering at GM Pow- ertrain Europe. He has also helped set up an organi- zation for calculation and simulation at SAAB’s engine development department.
Special: Likes to build knowledge organizations.
Key skills: The ability to think in big systems.
Strategic Acquisitions
Although sales have been initiated on a limited scale, operations are still in a start-up phase. In late 2007 Morphic acquired the three foreign energy technology companies Exergy Fuel Cells s.r.l., Helbio S.A. and AccaGen S.A. The acquisitions have secured Morphic’s access to the most critical components of its energy system. This makes it possible, for instance, to integrate a reformer, electrolyzer and fuel cell into a single compact unit that is both easy to use and cheaper to produce in large numbers.
Intensive Product Development
Each of the acquired companies has an existing product portfolio, but these are currently being harmonized to ensure optimal use of the available expertise and improve cost effi ciency. After consolidating the product portfolio to focus on energy systems, the main off er will consist of integrated energy systems with an initial emphasis on non-grid solutions for continuous operation, primarily with a view to replacing diesel generators for telecom base stations. Solutions that combine standby power with cost-eff ective electricity generation from renewable energy will also take priority in the product range.
Marketing Strategy
The market is potentially very large, and Morphic expects that it will open up in three stages as the Group’s energy system matures in terms of accessibility and price.
These stages will be determined by the lifecycle cost of the electricity generated by alternative systems.
The strategy is to mass-produce energ y systems for large customers, primarily the telecom industry. Sales will primarily be made through systems suppliers and telecom operators, which perform local installations and service base stations. Morphic will also collaborate with organizations and businesses involved in distributed energy generation that combine aid projects, for instance, with electrifi cation of healthcare facilities.
In a second stage, when the variable costs for the energy system, including any subsidies, are lower than the cur- rent price of grid electricity, a potential market is created
that consists primarily of businesses with access to biogas and a need for continuous operation. These include large farms, wood processing, waste management and sewage treatment works. Energy systems based on biogas are con- ceivable, but it should be possible to supplement these with wind power. They will be sold directly to the end customer as well as through subcontractors and distributors. Other potential investors in this establishment phase include steelworks, hospitals and banks and other users that with a strong need to ensure continuous operation.
Finally, when the cost optimization of the energy system has reached a suffi ciently advanced stage for electricity produced with the aid of any available subsidies to become a direct competitor to grid electricity, an end user market will open up. A modular energy system can then be mar- keted as a cost-eff ective alternative for household elec- tricity and heating. Sales can be conducted through established distributors, e.g. those which currently distribute heat pumps and white goods.
One major potential market at component level is fi lling stations for hydrogen – a market that is expected to grow in line with the development of hydrogen-powered vehicles.
Production Strategy
All components in Morphic’s energy system are devel- oped for large-scale production. The initial production volume will be handled through the Group’s own produc- tion resources. For larger volumes, partnerships with external manufacturers will be established. Coordination of service and after-market needs for energy systems will be provided through Morphic Systems but local servicing will mainly be provided through partners and subcon- tractors’ service organizations. To ensure cost control in components, strategic acquisitions may be implemented.
Demo Facility and Test of Wind Turbine
In fall 2007 a demonstration facility where wind power is combined with fuel cells was installed in Karlskoga.
As part of the continued development of Morphic’s energy systems, the company will also be testing a proprietary 20 kW wind turbine this fall in the toughest possible conditions on the Swedish island of Öland.
Greek Order for
Fuel Cell Energy System Delivered
Morphic has delivered an energy system for converting biogas from sewage water into electricity and heat. The buyer is Patras Municipal Corporation for Water Supply and Waste Water Management in Greece. The system, which produces 20 kW of electrical energy and 20 kW of heat, was completed in June 2008.
– Sewage purifi cation is only one area in which the combined reformer-fuel cell system can be used directly. Incineration plants, refuse stations, industries and agriculture are other priority areas. This installation is an important reference facility in our global marketing activities for Morphic’s energy systems, says Professor Xenophon Verykios, President of Helbio.
Competitors
Energy systems is a dynamic sector that is still in a devel- opment phase. A lot of research is being conducted, pri- marily at universities and grant-funded research insti- tutes. Most of the research centers on grid-connected solutions and is conducted primarily in countries with generous subsidies for green electricity, such as Germany, Spain and the United States. There is a large number of players, of varying quality, working on the various com- ponents of the energy systems but very few that focus on the energy system as an integrated product. As regards energy systems used in conjunction with existing renew- able energy (e.g. wind turbines and hydroelectric sta- tions), there is practically no competition. Morphic’s sys-
tem is designed to be used as a means of increasing the output generated from existing energy sources. However, in respect of the system’s role as an alternative to diesel- powered generators there is greater competition, espe- cially from the large number of manufacturers of diesel generators.
Long-term Goal
Morphic’s goal is to become a leading supplier of high- effi ciency energy systems for local production of electric- ity and hydrogen using renewable energy sources. The priority application area is systems that replace diesel generators for powering of telecom base stations and other installations.
The Market for Energy Systems
The potential market for Morphic’s energy systems is expected to be large. The market for systems for local production of electricity can be divided into two catego- ries – areas with infrastructure for electricity generation and areas without infrastructure for electricity genera- tion. In the fi rst category Morphic’s system can be used for generating electricity from energy derived from treat- ment works, recycling plants and small-scale industries.
In the second category Morphic’s system can replace die- sel generators, cutting customers’ electricity costs.
In those cases where the systems are used to increase output utilization at existing wind, hydroelectric and solar power stations the market consists primarily of energy companies, wind parks and individual organizations/pri- vate individuals that have invested in their own wind tur- bines. Morphic mainly targets customers in Europe.
It is hard to estimate the size of the market, since the technology is new and untested. However, in Sweden alone there are around 1,000 wind turbines that could be equipped with the system. The systems can also be used to replace diesel generators, which represents an addi- tional market. Although the initial cost for Morphic’s energy system is higher than for a diesel generator, the system becomes competitive relatively quickly, since no fuel needs to be added.
One major potential market, primarily for electrolyzers and reformers, is hydrogen stations – a market potential that depends on the transition to hydrogen-powered vehicles.
Morphic Receives Center Party’s 2007 Environment Prize
“Morphic is a company that can show the way for others. The market for environmental techno- logy is big, and this type of business is absolutely necessary if we are to meet the environmental challenges we face. By providing solutions that help build sustainable energy systems, Morphic sets an excellent example of how the rest of us can become more climate-savvy,” Claes Väster- teg, the Center Party’s environment spokesman, says.
The jury’s statement: The company was founded in 1999 and has grown rapidly in recent years. Its business is very much in line with the key focus areas of the Center Party’s environ- ment policy. Morphic is focusing explicitly on developing and selling systems that make a contri- bution to the sustainable production of energy.
Indian Company Orders Electrolyzer
In April 2008 AccaGen, the Swiss energy technology company acquired by Morphic, received an order for a 250 kW electrolyzer from India’s largest iron ore producer, National Mineral Development Company of India, NMDC.
Small-scale Turbines
Wind power provides the primary input energy in the system. Morphic has developed a robust and reliable wind turbine with a maximum output of 20 kW. To satisfy the requirements of demanding customers, the turbine has a direct drive generator, adjustable blades and modern control and security systems. Maximum eff ect is reached already at wind speeds of 9 m/s (20 mph), ensuring a good average eff ect even in moderate winds.
Electrolyzer
Highly effi cient, patented electrolyzers are used to separate water into hydrogen and oxygen.
The hydrogen can then be used to fuel Morphic’s fuel cell-powered energy system.
Reformer
The patented technology consists of “reformers”, which convert liquid and gaseous fuels such as alcohols and hydrocarbons into hydrogen. The strength of this technology lies in its high level of effi ciency, low production costs and, perhaps most importantly, the opportunities it provides to produce hydrogen locally.
Fuel Cell
Highly effi cient fuel cells for stationary energy systems and standby power units enable stored electricity to be reused by using the hydrogen to generate electricity and heat.
The generated energy is converted together with water into hydrogen, and can then be stored. The production of hydrogen takes place in an electrolyzer, where an electrical current is led through water, which is broken down into hydrogen and oxygen. The oxygen is released into the air and the hydrogen is then conducted into a tank for storage. Alternatively, hydrogen can be produced by reformation of hydrocarbons.
A fuel cell enables stored electricity to be reused by converting hydrogen into electricity and heat. The only waste product is water, and the process is virtually noiseless. The output voltage from the fuel cell is converted electronically into normal grid voltage, 230V/50 Hz.
The Energy System: How It Works
Helbio – Reformer
The Greek energy technology company Helbio S.A. is a leading provider of systems for cost-effective and environ- mentally friendly production of hydrogen using ethanol, biogas or other renewable fuels. The core component of Helbio’s patented technology is the “reformer”, which con- verts liquid and gaseous fuels such as alcohols and hydro- carbons into hydrogen.
The strength of this technology lies in its high level of effi - ciency, low production costs and, perhaps most importantly, the opportunities it provides to produce hydrogen locally.
Two of the factors that have long been obstacles to a wider distribution of hydrogen technology are thereby eliminated – high production costs and diffi culties linked to distribution.
The company has 12 employees and has its registered offi ce in Patras, Greece. The President of Helbio is Xeno- phon Verykios, who is also professor of chemical engineer- ing at the University of Patras.
Morphic owns 55 percent of the shares of Helbio Holding S.A.
Exergy Fuel Cells – Fuel Cells
The Italian company Exergy Fuel Cells s.r.l. specializes in developing and manufacturing high-effi ciency fuel cells for stationary energy systems and standby power units.
Exergy Fuel Cells is one of the companies in the industry that have made most progress in preparing for large-scale series production of fuel cells. Apart from fuel cells, the company also offers manufacturing processes for series production of individual components as well as complete fuel cell systems.
The company has its registered offi ce in Bologna and employs 16 people. It is led by Angelo D’Anzi, who has wide industrial experience from several previous posts, including in the vehicle industry. In 2000 he set up the fuel cell com- pany Roen Est Sr., from which the current business evolved.
Exergy Fuel Cells is a wholly owned subsidiary of Morphic.
AccaGen – Electrolyzer
The Swiss energy technology company AccGen S.A. was formed in 2003 and has since achieved a leading position in the development of technology for storing energy from renewable energy sources, such as solar, wind and wave power and biogas.
The company’s core offer consists of a range of patented high-effi ciency electrolyzers for separating water into hydrogen and oxygen. In recent years AccaGen has been focusing on developing the electrolyzer into a standardized product adapted for major industrial and energy-related customers. Major global returning customers include Linde, the state-owned South African energy company ESCOM and PDVSA, a state-owned oil company in Venezuela.
The company, with registered offi ce in Mezzovico, has 11 employees. The founder of AccaGen and current Presi- dent is Roberto Dall’Ara, who previously led the company Opto Speed S.A. In 2000 he was named Swiss Entrepre- neur of the Year by the Swiss Economic Forum.
AccaGen is a wholly owned subsidiary of Morphic.
Xenophon Verykios, President of Helbio.
Angelo D’Anzi, President of Exergy Fuel Cells, here seen on his fuel cell moped.
Roberto Dall’Ara, President of AccaGen.
Following the recent expansion in Morphic Wind, Morphic now has a complete portfolio of turbines for varying customer requirements, wind conditions and climates.
The potential market has also been greatly expanded.
In addition to licenses from WinWinD and Kenersys, Morphic now owns its own turbine construction with a major potential for off shore and coastal installations.
Signifi cant synergies can be achieved in the continued production and sale of turbines. Morphic’s own produc- tion plants can now be fully exploited, and particular emphasis will be placed on securing components for coming volume deliveries.
Partnership with WinWinD Oy
Morphic’s production and sale of 1 and 3 MW wind tur- bines is conducted in partnership with WindWinD of Finland, the world’s third largest supplier of 3 MW tur- bines. The range includes individual wind turbines as well as complete wind parks. In the partnership with Morphic, WinWinD is responsible for the technical solu- tion while Morphic handles sales, production and service.
Morphic has an exclusive right to the technology in the Swedish market and a non-exclusive right in the Nor- wegian market. Since the partnership was initiated in spring 2006, 29 turbines worth at total of SEK 968 million have been sold to customers in Sweden. Of these, 8 had been delivered by June 2008.
Partnership with Kenersys AG
In June 2008 Morphic concluded a partnership agree- ment with the global wind turbine maker Kenersys. The agreement gives Morphic sole rights to sell and market Kenersys’ 2 and 2.5 MW wind turbines in the Nordic and Baltic markets and a non-exclusive right in Poland. The turbines are manufactured at Kenersys’ production plant in northern Germany and then transported to Sweden.
All related services, including production of the towers used for Kenersys’ turbines, are delivered from Morphic’s plant in Sweden. In the longer term Morphic may start delivery of towers to Kenersys also for turbines outside the Nordic and Baltic markets. Morphic will be responsi- ble for the operation and maintenance of Kenersys’ tur- bines in the above-mentioned territories. The scope and
terms of the agreement are very similar to the agreement that Morphic has concluded with WinWinD.
Acquisition of ScanWind AS
In June 2008 Morphic acquired 80 percent of the Norwe- gian wind turbine maker ScanWind Group AS. ScanWind manufactures and markets wind turbines with capacities of 3.5 MW or more that are specially designed for the IEC 1 and IEC 2 wind classes, locations exposed to extreme wind conditions and tough climates, such as costal areas and off shore locations. ScanWind’s turbine is designed for maximum production, durability and reliability, provid- ing a superior ratio of electricity production to weight.
The acquisition broadens Morphic’s product portfolio in wind power and opens up entirely new markets.
In connection with the acquisition of ScanWind, Morphic signed a statement of intent with Vattenfall on a partnership for development of ScanWind’s wind turbine for off shore locations. If the partnership proves success- ful, Vattenfall intends to conclude a framework agree- ment with Morphic for volume deliveries starting in 2010.
Morphic intends to gradually expand its production capacity for its deliveries to Vattenfall and other custom- ers.
Competitive Products
The principal competitive advantages of WinWinD’s turbines are their effi ciency – the highest in the market, high operating reliability and short lead times. In Win- WinD’s construction the traditional gearbox has been replaced by an energy-absorbing bearing and a planet gear that is insensitive to imbalances in energy transmis- sion. This reduces wear and tear, prolonging the life of the turbine and ensuring good profi tability. It also speeds up the production process and reduces problems relating to component supply.
Morphic’s wind power business is growing rapidly in a fast expanding market. In spring 2008 the fi rst 3 MW turbines were delivered, to Lysekils Energi Vind AB, and in Lake Vänern the fi rst lake-based installation in Sweden is currently being built.
Morphic Wind
Financial performance, SEKM
2007/08 2006/07
Net turnover 199.0 32.7
Operating profi t/loss –22.0 –4.4
Erik Göthlin
Job: President of Morphic Wind Age: 41
Background: M.Sc. in Mechanical Engineering from Lund, Sweden and Lausanne, Switzerland. Head of Sales, ABB, USA, Head of Division ABB Power Sys- tems, Switzerland, Managing Director of the Chromalox Group’s international operations in the UK, France and China.
Special: Direct, energetic, analytical decision-maker with a strong sense of order and a keen fi sherman.
Key skills: Long experience of installations in elec- trical production and distribution.
