Fastned BV (FAST) Q2 2022 Earnings Call Transcript

Fastned BV  (AMS: FAST) Q2 2022 earnings call dated Aug. 11, 2022

Corporate Participants:

Michiel Langezaal — Chief Executive Officer & Co-Founder

Victor van Dijk — Chief Financial Officer

Analysts:

Emmanuel Carlier — Kempen & Co. — Analyst

Hans Pluijgers — Kepler Cheuvreux — Analyst

Marc Hesselink — ING — Analyst

Axel Stasse — Berenberg — Analyst

Presentation:

Operator

Hello, and welcome to the Fastned Half Year Results 2022. My name is Jess, and I’ll be your coordinator for today’s event. [Operator Instructions] I will now hand over to your host, Michiel Langezaal, CEO, to begin today’s call. Thank you.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Thank you, Jess. I would like to welcome to everyone on this call, as well as to our webcast viewers. Today, we will present Fastened’s results for the first half of 2022. The presentation used during this call is also available at our Investor Relations website, which is, ir.fastnedcharging.com.

On the title page, you can see a picture of construction work from last week of a big charging station that we’re currently realizing on the outskirts of the city of Bochum in Germany. A charging station with 10 charging positions, close to a motorway junction that handles more than 100,000 cars each day. Also, there is a large restaurant and we’ll have a big fenced playground for kids nearby to make a fast stopover for families to create experience. This station is exemplary for the many, many stations which we will be commissioning in the coming months. And that is why I wanted to show you this.

Slide 2, please. With reference to the information provided in these slides and discussed during this call, please take note of the disclaimer.

Slide 3, please. My name is Michiel Langezaal, I’m the CEO and one of the founders of Fastned. Victor van Dijk, our CFO, is also present in this call. Together, we will today present you our webcast. Today, I will elaborate on the highlights of the first half of 2022 and talk you through some market developments that are relevant to Fastned. And of course, I will give you an update on our progress over the past months. That said, I will keep it light, given the short amount of time since we presented a deep dive on our pipeline on Charging Day.

Victor will take you through the financial results for the first six months of the year and elaborate on the developments on the electricity markets, which continued to be turbulent, as you know. After our presentation, we invite analysts to ask live questions. And we intend to take, for this call, roughly an hour until 12 o’clock noon.

Slide 4, please. The past six months have been very exciting, but also challenging. We held our first ever Capital Markets Day, charging demands reached new record highs. Volatility in the energy market increased even further, and our construction team has been readying itself for a record breaking year. The battery electric vehicle market continues to break records, with 2022 not being an exception. And this growth drives our revenue, which almost tripled compared to last year. Half year revenues are already at the level of full-year revenue of 2021.

To capture this market growth you need many large charging stations. In the first half of this year we worked both on the many and the large aspect. We built 23 stations and we installed many additional chargers at existing stations, which brings the average number of chargers per station now at 4.5. Large stations allow for a better customer experience and have better station metrics. The stations that we recently opened also tell this story. Hamilton is the largest charging hub in Scotland, and another example is the recently opened Energy Superhub Oxford, Europe’s biggest charging up.

Utilization increased from 7.2% in the second quarter of last year to 10.1% in the second quarter of this year. This increase is driven upwards by the rapidly growing number of electric cars on the road, and vice versa driven downwards by the additions of chargers to our stations to prepare Fastned for future growth. When compared on a like-for-like basis, utilization of Q2 this year is even higher, at 12%.

The last highlight I want to mention here is the bond issuance we did. In June, Fastned raised nearly EUR23 million with the issue of new bonds. In addition, investors have extended over EUR7 million worth of investments from ordinary issues, bringing the total issued amount in this round to nearly EUR30 million.

Slide 5, please. Looking at the share of new cars sold, in each of the markets we operate we see the following. The percentage of electric cars among new cars sold is increasing in all Fastned markets, and the Netherlands continues to lead the pack by about a year or more. The fact that the Netherlands is a leading market provides Fastned with a competitive advantage. In a leading market customers have a higher expectation earlier, this puts us ahead of others in the learning curve.

Important to note as well is that, although, the car manufacturers have put in place massive electric vehicle production targets, and are constantly releasing new electric vehicle models to the market, they have underestimated the demand. Several car makers are signaling to be sold out for the season. And although I know that in the short run some production is impacted by the Ukraine crisis, there is fundamentally more demand for EVs than supply. And this is putting in place the basis for an even further accelerated growth path. So yes, we’re very bullish on the number of electric cars we’ll see around for the coming years.

Handing you over to Victor, who would like to say something about Slide 6.

Victor van Dijk — Chief Financial Officer

Yeah. Thanks, Michiel. Also from my side, welcome all. So, where are all these cars coming to the market going to charge? And we talked about it on the Charging Day. We know people are and will be fast-charging more and more. This is due to newer adopters having less ability to charge at home, hence fast charging becoming more convenient, because it becomes faster; and more available, because there are more stations.

So where does all this fast charging happen? And as we said on the Charging Day, we can draw some lessons from the Netherlands, as it is the most advanced charging market in Europe, with the most chargers per electric vehicle available, both fast and slow. We firmly believe that people want to fast charge where they drive, because it’s simply convenient. It is the same reason as why petrol stations on motorway sell way more volume than petrol stations off-motorway or in villages.

So let’s look at some data. If we look at fast charging locations in the Netherlands, the top right pie chart, Fastned operates about 130 stations, about 20% to 25% of the fast charging locations in the Netherlands. Then there are also others that also operate fast charging stations, either off-motorway, at hotel locations, at McDonald’s locations, or at petrol stations, whom are off-motorway.

Fastned has 20% to 25% of the fast charging locations, but we actually do more than 60% of the fast-charging volume in the Netherlands. This means that Fastned locations do around 5 times more sales than the average locations of others. This is to a very large extent driven by the fact that we operate the highest traffic locations in the Netherlands, which are the Dutch motorways. Without canopies we are visible for literally millions of drivers passing by our 130 stations each day. And we are very easy to reach.

Of course, we also offer an outstanding charging experience, which enables and amplifies sales. People want to charge where they drive, that is why you need high traffic locations with visible stations and a great concept to capture this market growth.

Michiel Langezaal — Chief Executive Officer & Co-Founder

So thanks, Victor. So locations are key to running a successful charging business, but there is more to it. The charging concept or charging experience you offer is a big differentiator. Summer traffic with many people that just started driving an electric car, going on their first long distance trip, puts even more emphasis on this. Just imagine, you recently got a Volkswagen ID.4 as a new lease car, and you put the French Riviera in your navigation. With fewer charging stations in some of the regions on route, this can mean getting stuck at a charging station that is out of order, or having serious difficulties to start charging session. When the next stop is a Fastned station delivering a flawless charging experience, this leads to very happy faces and great customer feedback.

I will not go into detail here on what delivers as great service. For those who are interested, I would like to invite them to watch the Charging Day presentation that is on our Investor Relations website. For those that just like to hear summary, Fastned scores are 4.4 out of 5 on Google Location reviews, and that score is the best in the industry. And this is the result of the many elements that together make up a great charging experience. A unique in-house design team that has designed hundreds of service areas to include charging facilities, a tech and databased approach to network operations, and in-house software development team with more than a decade of experience, and knowing every nut and bolt of the stations we’ve built and operate, instead of outsourcing realization and maintenance to contractors.

Can we go to Slide 8. To capture the upcoming growth of the electric vehicle market, Fastned is investing in bigger and larger charging stations. And we’re picking up speed when it comes to our building base. In this year we will build at least 65 new stations. And halfway in the year I can confidently say that we will meet that goal. In the coming years, we want to further increase our build base to 100 stations per year. And those stations will be bigger in size, just take for example the stations at Oxford Energy Superhub, or that of Hamilton in Scotland, as I mentioned earlier. These recent openings offer 8 and 10 chargers respectively, where cars can charge up to 300 kilowatts. This means that it takes, on average, about 15 minutes to charge enough electricity for 300 kilometers of range.

Slide 9, please. And there are more such stations in the construction program for the coming months. I already mentioned the opening of a large station in Bochum in Germany a couple of weeks from now. And our construction teams are working hard to open many new stations in France before the end of the year. For instance, this one on the right of the picture, Aire de Vemars Ouest, a very large service area north of Paris, which, as you can imagine, has thousands and thousands of cars passing by each day.

Slide 10, please. At the end of June, we have 358 locations acquired, 208 of those locations have been realized and have stations in operation today. Our goal is to have 400 stations operational by the end of 2024 and 1,000 before 2030. How do we get from those 358 to 1000? That is something we talked about in depth on Charging Day.

Here, I would like to give a quick update on progress in some of our key markets. France, 2021 was about private highway tenders. This resulted in a 20% to 25% win rate for Fastned, a great result. Currently, we’re focused on the realization efforts of these stations, of which we’ll see a lot in the coming half year. This year is about developing relationships with real estate owners and getting traction on the public highway network. We’re very happy to report the first results, two large charging stations on the outskirts of Paris.

Germany, as mentioned before, two big tenders ongoing, one for charging on 200 currently unserviced resting areas. And the second one for 900 fast charging stations across the country off-motorway. Important to note is that these tenders are not a typical off-the-shelf concession tenders. The first one is more of the construct, operate and maintain type, whereby exposure to kilowatt hour sales is more limited. And the second tender is about the markets delivering locations, whereby the government is providing financing. We expect decisions on both these tenders in the final quarter of this year and the first quarter of next year. Of course, in parallel, we continue to work on other ways to develop our network. In order to accelerate, we’re running a project that aims to make more advanced use of data and location scout to increase the number of leads.

For UK, investments in long-term relationships with real estate owners and developers are starting to pay off, with a very healthy pipeline of leads to be converted in the coming months. And additionally, we’re pursuing the first freehold acquisitions, so buying a location. And this will contribute to reducing the rollover risk of the portfolio of locations.

On that note, I would like to hand you over to Victor, who will dive into the financial results of the first half this year. Victor? Yeah.

Victor van Dijk — Chief Financial Officer

Thank you, Michiel. On Slide 10, we’re looking at station economics. We clearly see the effect of demand growth. Revenues for Q2 2022 more than doubled versus Q2 2021 levels for our average station. This is mostly driven by Corona recovery from Q2 last year and by an increase in the number of electric vehicles.

The guidance for revenues per station of more than EUR400,000 in 2025 includes Q2 station revenues are along that growth path. This growth is driven by electric vehicle fleet penetration and, therefore, electric vehicle traffic, about 2.5 folding between now and 2025, and driven by station sizes considerably growing due to increasing charge speeds and larger batteries. Our top five station gives a peak into the future. This already has 3 times more BEV traffic that is located at a motorway with 3 times more general traffic than the average station. This results in close to EUR0.5 million in annualized revenues for this station. The guidance for operational EBITDA margin of over 40% by 2025. Operational EBITDA margin is going in that direction, with an increase to 26% in the second quarter versus 19% in the first quarter of this year. Also, there the top five stations shows the potential. With higher revenues and higher utilization, its operational EBITDA margin is at 47%.

Slide 11, please. Then on energy prices. We know that energy prices are spiking currently, which has an effect on our current price to customers and our margin. What is important, however, is that any impact on our margin has a limited impact on our investment case, as the fast majority of volume is several years ahead of us. We expect margins to increase again in the medium term. That is what we show in the left graph. Energy prices are elevated currently, but are expected to come down over the next few years, as shown by the forward energy markets. These forward prices are underpinned by the renewable energy production cost continuing to decrease, and current renewable energy cost levels are below the long-term forward price as shown here.

We also know that our current sales volumes are relatively low compared to later years, so any impact right now has a small effect on the investment case, I just wanted to highlight that metric. At the same time, there is value and relative price stability from a location acquisition perspective and from a customer brand perspective. We balance those elements in our price decisions. And after further energy price increases in recent months, we increased our price from 1 August by EUR0.05 per kilowatt hour, excluding VAT on average. Further price increases will be evaluated on a monthly basis going forward.

Slide 12, please. Looking at last year’s P&L on Slide 12, as mentioned, revenues related to charging nearly tripled to EUR12.6 million. In the second quarter of 2022, we are at an annualized run rate of EUR27 million revenues related to charging, showing strong growth continues. Gross profit was up 120% year-on-year, despite being affected by the increase in energy procurement costs. Network operating cost increased, but network operating cost per charger, the more relevant metric, was relatively stable.

Operational EBITDA per station and overall was up more than the respective revenue numbers, again, showing the intrinsic operational leverage in our business model. Revenue growth leads to more operational EBITDA growth as the network operating costs are relatively fixed, and we have spare capacity. Network expansion cost increased as we are gearing up the organization for increased growth in network development. This increase in the network expansion organization has led to continued growth in a number of stations added to the network.

We built 23 stations in the first half of the year and are gearing up to increase that number significantly in the second half of the year. That came with a capex outlay of EUR23 million. Underlying net profit was negative at EUR10.4 million, as planned at the current pace of EV adoption.

Handing over to — handing back to Michiel.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Slide 13, please. To complete our presentation, I would like to reiterate the targets that Fastned included for 2022, and repeat the longer-term objectives that we communicated on Charging Day.

Can we go to Slide 14. This finalizes our presentation. I would like to thank you all for listening during this hot summer day. And we’re looking forward to hearing your questions. And for that, I would like to hand the word back to the operator. Thank you.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from the line of Emmanuel Carlier from Kempen. Please go ahead.

Emmanuel Carlier — Kempen & Co. — Analyst

Yes, hi. Good morning, all. Thanks for taking my questions. I have three to start with. So, first of all, on the new station openings, in H1 you announced 23 station openings versus the guidance of above 65 station openings. I know that it is always a bit seasonal, so typically you have much higher numbers in H2. I hear you say that you are very confident to reach the 65 stations. But I would be happy to hear a little bit more reasoning behind why you’re so confident to make that number.

Then the second question is one on the gross profit margin. So, if I look at July and August, based on my calculation, I think the gross profit per kilowatt hour would drop towards EUR0.31 versus the EUR0.38 in H1. I’m just wondering if my math is correct why you’re not raising prices more, or is it just a timing thing?

And then the third question is a quick one, is on the financing. So, the EUR50 million to EUR75 million financing that we target, is there any update you could guess on your current thinking on type of financing or timing of financing? Thank you.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Yeah. Thanks, Emmanuel. I’ll start with the one on new stations. I think I’ve already mentioned a bit about is on France. So, we won a lot of tenders in France and we built a lot of stations in France in the second half of last year. We were basically seeing that in France, our construction this year, is basically completely back-end loaded for the year. So, that is a very large chunk of the amount of stations that we’re going to build.

Secondly is, if we look at the acceleration, let’s say, of our building base that we started to work on after the fundraising in Q1 2021, you see a lot of the results of an elevated, let’s say, build base. We see them in this year and especially later in this year because of the procurement sort of period for grid connections often being six months or even longer, up to a year, leading to connections basically coming online now. And if we look at the construction pipelines for the whole schedule, and we say we basically see a significantly larger list at 65, so we’re very confident that we’re going to make that. So, it’s a very practical list of sites over the coming months leading to that figure.

So maybe then to Victor on profit.

Victor van Dijk — Chief Financial Officer

Yeah. On gross profit margin, in the preceding — in Q2 we expanded our margin a bit versus Q1, with energy prices being lower in May and June. And over recent months, weeks, energy prices have gone gone up again, and we increased our prices 1st of August on the back of that. And we will review prices on a month-by-month basis. So, definitely there is an effect of the time lag there. Then going towards —

Emmanuel Carlier — Kempen & Co. — Analyst

Victor, if I may ask on —

Victor van Dijk — Chief Financial Officer

Sorry, go ahead.

Emmanuel Carlier — Kempen & Co. — Analyst

Sorry to interrupt, but if I may ask on the margin. What is the reason you didn’t put up the price more? Is it basically that you increased the price because you thought, okay, based on the July average price with the price increase, which we cover the gross profit margin. But then, in August, the price went up even more. Is that the reason? Or is there anything else like maybe the company [Indecipherable] could be an impact on volumes or something?

Michiel Langezaal — Chief Executive Officer & Co-Founder

I think it’s not that simple. It’s only related to wholesale prices, right, so we’ve also seen VAT changes, for example, in the Netherlands. So we basically try to take into account several things when looking at price adjustments.

Victor van Dijk — Chief Financial Officer

And I think also [Indecipherable]. We mentioned, we did increase the price from 1 August. We didn’t see an impact on volumes. There is also, yeah, value in sort of staging price increases and not going at it all at once. Also because it’s unpredictable where the price levels will go, and they could recede again. Yeah, so sort of doing a price increase all at once in one go, is s probably too simplistic way through to look at it. That’s why we said we’ve increased the price 1 August, we’ll evaluate every month. And yeah, so that could lead to further price increases going forward depending on the energy price situation.

Emmanuel Carlier — Kempen & Co. — Analyst

Yeah, that makes sense. Thanks. And maybe then the final question on the financing.

Victor van Dijk — Chief Financial Officer

Yeah. I think there, basically we don’t have an update versus what we said on Charging Day. So we are looking at s various options, various timelines, various combinations. So yeah, I can’t give more of an update than what we said on Charging Day.

Emmanuel Carlier — Kempen & Co. — Analyst

Okay, thank you.

Victor van Dijk — Chief Financial Officer

Thank you.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Are there other questions?

Operator

The next question comes from the line of Hans Pluijgers from Kepler Cheuvreux. Please go ahead.

Hans Pluijgers — Kepler Cheuvreux — Analyst

Yes. Good morning, all. Also a few questions from my side. First looking at the network operating cost per station that went up from EUR19,000 to EUR24,000. Is that purely driven by additional charge per station? Or do you also see, of course, some inflationary impact there? Which could give maybe some guidance for the second half.

Secondly then going down the P&L, the guidance for the network expansion cost, also you had a quite significant increase, you had quite a lot of people. I think you mentioned that you are, of course, investing a little bit ahead of the growth. But also, could you then give some guidance for the second half of this year, maybe also into 2023, how do you, let’s say, see the expansion of your personnel in that field?

And then looking at Q2, you added nine wins in Q2. If you could maybe give some background there precisely owned activity, what are, let’s say, any material tenders on the market which you are involved in, but you didn’t get anything? Or if you could mention backgrounds about around the nine wins in Q2.

Victor van Dijk — Chief Financial Officer

Yeah. Let me start on net operational cost, net of development cost; and then Michiel take over on the wins.

So network operation cost, we really look at it at a per charger basis. We think that’s the best way to look at it. And there we increased the number of chargers on our stations considerably. And as a result, the network operating cost per station increased. But yeah, on a per charter basis it increased by about 4%, so that’s relatively in the margin and relatively stable. Then on network expansion cost.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Maybe I could add there. I think important to note is that the large part of that network operating cost is grid fees, right. So that’s regulated, and inflation on that BU we’ll see that significantly later on. The question is, of course, like how much, but it’s not going to be this year.

Victor van Dijk — Chief Financial Officer

Yeah, so that’s about a quarter of those network operation costs. Then there’s — half of that is basically the staff running the network and office cost and associated cost. So yeah, there is —

Michiel Langezaal — Chief Executive Officer & Co-Founder

Hikes in there.

Victor van Dijk — Chief Financial Officer

There we don’t see at this stage inflationary cost, that could could happen at some stage, but we haven’t seen it yet.

Then on network development costs. Yeah, also there, if you look at, for instance, on a last 12-month basis, network development cost divided over the number of stations we’ve built over the last 12 months, then that’s probably the better way to look at it then just [Indecipherable] those costs over the — at the 23 stations we built this year. So indeed there is an expansion of the workforce that will deliver stations in the second half of this year and more stations next year. So, if you look last year, the network development cost divided over number of stations built, were about EUR150,000, EUR160,000, yeah, that could go up a bit, but nothing dramatic. So, hopefully, that gives a bit of guidance there.

Michiel Langezaal — Chief Executive Officer & Co-Founder

And then on the pipeline, on the one end I think it’s important to note, let’s say, the signing of those deals that comes in a bit volatile. So, in the Q1 figures we saw those big sort of tender result deals in France. In Q2 we see several sort of one-on-one location deals coming in. I think if we look at that for the second half of this year, there’s, of course, several large tenders ongoing, take for example that s in Germany. I think if we look at what we have in the pipeline, we see a very healthy pipeline in the UK, which we are working hard on to materialize towards contracts. That’s mostly sort of a one-on-one side-by-side risk. So we expect good numbers there.

I think if we look at, yeah, let’s say, new markets that we put on the agenda. So, France, Italy, Denmark, we’re working hard on, let’s say, the discussions with authorities on shaping those tenders, what needs to happen, preparing for that. But most likely it won’t lead to contracts in the coming months. We see tenders, they often are published, then they take a couple of months to, let’s say, to be about the application process and the handing in. So we’re going to see more of that probably in 2023 then in the second half of this year.

Does that give you a bit of color on the tender and wins topic?

Hans Pluijgers — Kepler Cheuvreux — Analyst

Yeah. And maybe a follow-up on that one. So that means, in principle, let’s say, in Q2 there were no major tenders where you were involved in, which you didn’t, let’s say, have success in. And so, also in France, I understand there are no material new tenders coming up in the coming months.

Michiel Langezaal — Chief Executive Officer & Co-Founder

No, we haven’t seen much in France. That might happen in the second half of this year, of course, because there’s always stuff coming up. But I think it’s also important to note that there is a time lag. So depending on what means winning and the application process, yeah, what’s in our lead flow, let’s say, that is not in the list of signed sites, right.

Hans Pluijgers — Kepler Cheuvreux — Analyst

Yep, I understand. Okay, thanks.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Cool. Thanks. Any other questions?

Operator

The next question comes from the line of Marc Hesselink from ING. Please go ahead.

Marc Hesselink — ING — Analyst

Yeah, thank you. First question on the — coming back on the gross margin. I believe in the past you said there is a bit of a sort of a target to get to a gross profit per kilowatt hour of EUR0.45, around that number. Is it still fair to assume that, maybe with a time lag and maybe with sometimes the benefit of price going down, you’re still targeting that level. So, whenever prices move down you might move down a little bit less to move towards that number.

The second question is on the revenue trend that we’re seeing. In the past you also tried to normalize a little bit for the impact of COVID. If I’m doing that, I think that from the revenue growth you can more or less split it between 50:50 COVID recovery and to the just improvement of the underlying business. Is that also the way you look at it?

And then third question is on — actually on the working capital. So you had a bit of a working capital outflow. Normally, I assumed that the business is more or less working capital neutral when you grow, given that a lot of people just pay immediately. Just can you give an update on that, is that the timing why you had some outflow there? Or is there something changed there? Thank you.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Let me start on the gross margins. So, indeed, in the past we have sort of EUR0.45 per kilowatt hour levels in Q4 last year, and Q1 this year we have EUR0.36 per kilowatt hour levels in the current energy markets. And I think also on chartering we indicated that we expect when prices come down again — energy prices come down again, that we’ll expand our margin from there. We haven’t provided a guidance, whether it’s EUR0.45, EUR0.40, or something else. But if you think when prices normalize to levels we see in the current forward prices for 2025 northwards, there is way to expanded margin again.

Marc Hesselink — ING — Analyst

And then maybe on revenue trend, I’m wondering if that’s sort of split between COVID and non-COVID, whether that is still something that we can make and also want to make. I think it’s — we basically look at the revenue progress that we’re making and I think we’re happy with that. But yeah, making a special split between COVID and non-COVID, I’m wondering if that’s still possible.

Victor van Dijk — Chief Financial Officer

Yeah, I can maybe add something on that. I think, I also mentioned, part of the revenue increase is from — or the main contributors are indeed recovery from from COVID and electric vehicles, and more electric vehicles in the market are re driving around. And I think it’s, yeah, fair to say that it’s probably 50:50 between that sort of things. So I agree more or less there. And then there are sort of things like at revenue our sales price increase, but that’s a much smaller amount.

And then going towards working capital. I think, yeah, if you look at our working capital, it is a relatively low number. So it is, to a small extent, driven by revenue growth right now, and it’s more driven by specific time lags. So I think it’s — right now it’s — in the end it will be — I agree with you, it will be relatively neutral. But it’s hard to read anything out of sort of the fluctuations we see right now. There we that very specific courses. So it’s hard to determine a trend on that right now. But overall I agree with you, it should be relatively neutral because we — our energy is built after we sell it, and also we bill our customers either that pay directly or we bill the charger operators also after the sale is made [Indecipherable] imbalances are absolutely neutral. I hope that answers your question, Marc?

Marc Hesselink — ING — Analyst

Yeah, it did. Thank you.

Victor van Dijk — Chief Financial Officer

Thanks.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Any other questions?

Operator

The next question comes from the line of Axel Stasse from Berenberg. Please go ahead.

Axel Stasse — Berenberg — Analyst

Yeah. Good morning, everyone. Thanks for the presentation and taking my question. I have a few on my side. Can you please elaborate a bit more maybe on the tenders and the pipeline in Germany? How confident are you basically on how positioned is Fastned to the 200 unserviced areas and 900 stations of highway? Any more information on this would be the highly appreciated.

The second question is more related to the larger stations that you’re currently installing and building. Are you afraid to see utilization rates going down on the group level, which then can, I guess, affect group financials in the short term, and hence increase your requirements of funding?

And then the third one was the following on Emmanuel’s question on electricity prices increases. And if we look at the forward curve in 2023 and 2024, can we expect still further price increases going forward? Because if you look at the Q1 presentation earlier this year, where forward cure was down in Q2 at EUR0.24 per kilowatt hour, and today for Q4 we are around EUR0.45, EUR0.47. So can we, yeah, actually fairly you just assume that you will increase prices, tariffs even further?

And last but not least, EV charging manufacturers such as ABB who have struggled a lot to deliver these charges to operators. Is this something that Fastned has seen with Alpitronic, for example? And also, have you — has Alpitronic, for example, increased prices for these chargers recently? So, how is Fastned’s negotiating power here? Thank you.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Thanks, Axel. Maybe to start with the energy market. I think if you would have asked, sort of, people last year, like what do you expect this is going to be, sort of, the price for electricity a year from now? I think it would have been basically glass full, right. So, I think saying what’s going to happen in the coming six months, I think that is not necessarily a very good idea. I think we’ve seen what the forward prices are. I think we should, on a regular basis, review that. I think we’ve also said, like with what kind of metrics we’re looking at that review. I think that’s probably more, sort of, realistic way of looking at the future, then saying what we think will be the future, given the geopolitical climate and what is affecting what’s happening here.

Maybe, Victor, you want to add anything to that?

Victor van Dijk — Chief Financial Officer

No, I think it’s okay.

Michiel Langezaal — Chief Executive Officer & Co-Founder

So maybe that’s sort of a bit of color on that. I think if we look at our Alpitronic chargers and maybe more broader, the whole supply chain of, let’s say, what is needed to build these stations. I think, let’s say, from operational perspective we do see issues and we’re working on that. So, the Ukraine crisis, the post pandemic startup of supply chains globally definitely, yeah, puts us to some challenges. On the other hand, I think what we’ve done is building, over the last decade, all these supply relationships. And we know those nuts and bolts of our stations very, very well. We work with these suppliers very long term already. So, what we see is that up to now we’re well able to manage these, sort of, difficulties. So, I think operationally we think we will be able to manage.

I think when we’re looking at pricing, I think, what we see with all the inflation elements basically, or the majority of them except energy purchasing that they are lagging. So we do expect prices to go up on some elements of our stations, we’re tracking that. We don’t see it, let’s say, at a direct level today. Alpitronic is working on future technology, as all charges manufacturers. We’re discussing prices with them, but it’s very difficult to say much about it today. I think, yeah, if we look at tenders, and especially in Germany to give you a bit of — to try to give you more color on that. I think what the difficulty with Germany is, is that this tender isn’t an off-the-shelf tender.

So, I think we’re very well positioned to take part of it. And we see very positive messages from people we talk to, we would love to have you being part of the build out of infrastructure in Germany. I think if we look at the positioning, it’s a tender that’s quite complex in-house being constructed. So, there are several lots, you cannot have more than so many lots. And we — and they want to have so many parties in there. So the construct is that, by definition of the tender, they already need at least so many parties in the market. And if we then compare that to how many parties are active in the market, that gives us a very good winning position.

On the other hand, yeah, the question of course is, where re in the end — sort of the metrics of that tender will lead to and whether that’s something that we really want to take part in. So we’re under discussions to push this into the right direction. And yeah, we will have to see in the coming six months how that materializes. Does that give you color, Axel, on that topic?

Axel Stasse — Berenberg — Analyst

Yes, thank you.

Michiel Langezaal — Chief Executive Officer & Co-Founder

I know it’s not a sort of a carved in stone story, but it’s — as you might say, sort of, it’s something that the government really wants to see happening, but they may be made it a bit more difficult, which doesn’t help them at the moment. The question is, what can they do at the moment to resolve those things.

Axel Stasse — Berenberg — Analyst

Okay. And then on the last question with regards to utilization rates, and then the group financial in the short term.

Victor van Dijk — Chief Financial Officer

Yeah. So we already communicated on charging that we’re building bigger stations. And the last budget was about seven charges per station. So that’s already taken into account. And I think it’s a reflection of the fact that we expect certain utilization. We try to optimize when we build the station we don’t want to be expanding its within five years. But that also means, when we build biggest stations, we do think that the utilization within the first five years goes to a certain level. And then after that, that utilization might drive us to expand that. We’re basically optimizing based on our expectations from utilization. And I think, in fact, we’re building larger stations because we expect basically more sales per location per station in the current phase of the transition to electric vehicles. But we see it as a positive thing, and of course we need to fund that. But yes, the in the case we go from charging, we took that into account.

Axel Stasse — Berenberg — Analyst

Okay. Very clear. Thank you very much.

Victor van Dijk — Chief Financial Officer

Thank you, Axel.

Michiel Langezaal — Chief Executive Officer & Co-Founder

Any further questions?

Operator

The next question comes from the line of Hans Pluijgers from Kepler Cheuvreux. Please go ahead.

Hans Pluijgers — Kepler Cheuvreux — Analyst

Yes, a few follow-up questions. First of all, coming back on the German tenders. Yeah, I understand what you’re saying, there’s s still the discussions also going on, and still let’s say the condition a little bit maybe to change in your your right direction. But do you also then maybe not see a risk that this tenders, though, the outcome will be maybe delayed somewhat? Could you give maybe some feeling on that?

Michiel Langezaal — Chief Executive Officer & Co-Founder

Yeah, I think delays are — many tenders get delayed in this industry, and I think that is partly logical. Because if you look at the French examples as an example, those toll road operators they have in total 360 highway service areas. And on average, they give out concessions of 15 year lifespan. So they do normally, let’s say, 30, 40 contracts for a petrol station at maximum in the year. Last year, they needed to do more than 100 for just charging, sort of, environment. I think that is, sort of, largely problem that we see in Germany as well. They knew that they needed to create a tender, they did that. They’re trying to manage timelines, but the feedback that they’re getting from the market is that, yeah, with hindsights are maybe some things to reconsider. And that of course puts the timeline on the pressure. I don’t know whether it’s — I think that provides a bit of color on what we’re expecting to see there. Does that answer, Hans?

Hans Pluijgers — Kepler Cheuvreux — Analyst

Yeah. Not that much, but I understand of course it’s very difficult also for you to precisely predict on that. then coming back, well, actually coming back on to new markets. You mentioned Italy and Denmark, but also just Spanish flag is in your presentation, and you also discussed during the Capital Markets Day. But if I look at currently, let’s say, a lot of let’s say tenders or let’s say a new construction is going on, or let’s say license has been given to existing location, so mainly along also petrol stations. So, could you give maybe some feeling how do you see the Spanish market going forwards? Or do you see anything changing in that approach by the government?

And another follow-up question also on the rollouts for the second half. You mentioned that — previously that grid connections, especially in Netherlands, there could maybe some delay and we’re still rolling out. How do you see that at the moment also potentially impacting your plans for the second half?

Michiel Langezaal — Chief Executive Officer & Co-Founder

Maybe just to start with those new markets. I think if you look at, for example, Italy, we’ve been working on that, let’s say, on the consultations with the authorities on policy development for charging stations on those motorways. And what we see is that a lot of input that we’re providing on how a good tender system could work, that is resonating. So we see that those toll road operators are currently being issued with regulation on needing to tender out these rights for charging stations. And that has to be public open tenders, so basically all parties have the same options to take part.

There is markets where we see that other things happen, for example Spain making it obligatory for petrol stations to put that on the charger. So we do have a lot of public affairs work to do there to do there to explain sort of the logicalities for open public tenders to issue those concessions and the value that that brings to accelerating the energy transition. Because if you see basically allow someone or say to someone, put down a charger, then they call a local — let’s say, in the most extreme case a local installation company and that excludes the whole box down. And then then what do you do?

And that’s what we’ve seen with a lot of petrol stations in the past. So, we’ve got work to do there. I think if we look on a European-level on the policy landscape, I think we see step by step that work on accelerating the transition and open public tenders that is getting traction. And that is very, very good for Fastned.

Victor van Dijk — Chief Financial Officer

Yeah. I think maybe one thing to add on Italy, for instance. In the policy framework they focus a lot on quality of the charging infrastructure, 70% of the tender outcome is related to that. And I think, we think that’s extremely good for the market because quality is a big, big issue in fast charging throughout Europe. So we’re very happy that that is the leading selection criteria. I mean, I think also Fastned scores very well on those criteria. So, like Michiel said, we’re trying to develop policies in countries, helping governments with that, and we make a [Indecipherable]

Hans Pluijgers — Kepler Cheuvreux — Analyst

Okay. And delay on grid connection, you discussed at your previous presentation, how is that — how do you see at the moment?

Michiel Langezaal — Chief Executive Officer & Co-Founder

Hey, can you repeat that again, sorry?

Hans Pluijgers — Kepler Cheuvreux — Analyst

In previous presentations you discussed or you pointed out that you see some, especially in the Netherlands, maybe some delay in connections to the grid. How we are seeing that, let’s say, that developing over the last few months? And how do you see that for the second half?

Michiel Langezaal — Chief Executive Officer & Co-Founder

Yeah, we’ve been pushing a lot for connections in the Netherlands. I think that’s also why we see that maybe construction in the second half of this year will be more — the construct volume will be more than the first half of this year because connections are being ordered a year ago. I think, yeah, going forward, this will be an issue in many countries, simply because the energy transition is putting a strain on the grid. Vice versa, with our experience with all the work that we’ve been doing, we’ve been creating very good relationships with these grid operators. That puts us at a advantage compared to parties that want to start maybe with the development now. So there is, in that sense — yeah, the cable that we created through those sites today, that is a scarce resource. And that allows us to deliver exponentially kilowatt hours to that markets. So, did I give you a bit of color on that topic?

Hans Pluijgers — Kepler Cheuvreux — Analyst

No. A little bit. Thank you.

Michiel Langezaal — Chief Executive Officer & Co-Founder

What are you looking for more than this, can I –?

Hans Pluijgers — Kepler Cheuvreux — Analyst

Well, indeed, what you’re saying, that’s of course you provided detail on the grid connections, let’s say, request or license for the second half have been already requested by the year-ago. So, in principle, it means that you don’t see any issue for the second half on the grid connections in there. Is that a little bit how we should read it? Or maybe for the future do you think there could be still an issue?

Michiel Langezaal — Chief Executive Officer & Co-Founder

I think we will expect issues of grid connections in the second half. Vice versa, we created a significant buffer in our projections. So, we’re managing that and basically became even more prudent in our outlook in that sense.

Hans Pluijgers — Kepler Cheuvreux — Analyst

Yeah, that makes a bit more clear. Thanks.

Victor van Dijk — Chief Financial Officer

Thanks, Hans.

Michiel Langezaal — Chief Executive Officer & Co-Founder

On that note, I think it’s a good moment to round up. And I would say, enjoy the last weeks of summer. And I hope to see you all in the third quarter call.

Victor van Dijk — Chief Financial Officer

Thanks, all.

Operator

[Operator Closing Remarks]