A2A S.p.A. (A2A) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. This is the Chorus Call conference operator. Welcome, and thank you for joining the presentation of A2A for the results of the first half of 2022. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Renato Mazzoncini, CEO of the A2A Group. You have the floor, sir.

Good afternoon, everyone. I think you have received or seen the presentation. I will go through the presentation very rapidly so that we can then have a Q&A session. Let me tell you that we are very good because of the results of the first half of 2022. Page 3 of the presentation, you see a number of highlights of the period under review. Now we always have the 2 pillars, energy transition and circular economy. As to the energy transition, we have completed the upgrade of the Cassano plant, 70 megawatts have entered the capacity market with delivery in 2022. Then we have accelerated the use of renewable energy sources. As you know, we completed the acquisition of 3 new and 4 new of Ardian. And since we have completed the acquisition of Volta Green Energy as well, these are developers. At this point, we have the initial outlook of this investment through the Matarocco plant in Sicily, which is a wind plant, 30 megawatts where we have orders, and we start the EPC part of the construction. As to the network, what we can say is that we now have up and running the substation -- the primary substation of Rozzano. Please remember that in our plan, we have a strong investment and enhancement and strengthening of the electricity network with installed capacity from 1.7 to 2.7 gigawatt. Milan is here a very important to contribute to the energy transition process and therefore, to enable further electrification. We have, as in the pipeline, the construction operation of another 8 primary substations. A very technical things, but with a good impact. Then we have completed with a lot of satisfaction the closing on sale of minor nonstrategic assets, one to the consortium of Acea, Ascopiave and Iren that offered an enterprise value of EUR 127 million, with a good contribution of 30% to the RAB. These were minor items. These are gas items where we have minority stakes. And there was no goal to further invest in the gas networks of those areas. As to the circular economy, we have signed an agreement with BTS, an agreement with on Biogas partnership that has been reported in the press quite widely. The goal is that of constructing and developing together these plants, and we have a strong commitment on biomethane and therefore, we believe that this partnership could further enhance and strengthen this development. We continue our commitment as well for the water purification cycle. We have opened another purification plant for 6,000 inhabitants in the Brescia province. As to sustainable finance, that you see at the bottom of the slide, the 55% of our debt is now aligned to parameters to ESG parameters. You know that we have a plan to make this value grow and to reach 80%, 90%. And in particular, by anticipating the '23 targets, we have issued a sustainability-linked bond of EUR 500 million and a green bond of EUR 600 million. So EUR 1.1 billion of sustainable finance linked to ESG parameters. Page 4 of the presentation. Now these are the highlights of the period, the MSD margin, which has grown considerably versus 2021, EUR 370 million, a capacity market, which has entered the new plants, which we didn't have last year. And then the scenario effect where, I guess, you have a few questions to ask later on, the scenario effect has played positively. And then the scenario effect and the volatility of the market has been given us the possibility to have very good results in our trading portfolio, EUR 46 million. And then the disposals of the minor nonstrategic assets. On the same slide, you also see the downside of the period, which represented the -- by the margins of the energy and gas retail. Well, this can be explained clearly. But we should see this later on. And then the hydroelectric production affected by the drought, minus 36% of hydroelectric production. And then the gas distribution where we have a regulated WACC, which is lower than expected. And then government measures to low decrease issued at the beginning of the year and then the restore decree and the [italy profit decree] or the windfall tax on excessive profits. While this decrease, we should see later on have had a limited impact. Page 5, you see the results, which I guess you have already seen from the press release. Let's forget revenues, which at the moment are only source of problems. What is it to be outline perhaps is the EBITDA where versus 2021 has grown, both the reported and ordinary EBITDA has grown by 3%, which shows that a company like us because of different businesses can have a natural hedging among different businesses. And so the downside that we have seen like the reduction of energy and gas retail margins are compensated are made up for -- by the positive results of other business units. Now overall, we have a net income, both reported and ordinary net income, which are very similar to the value of the same period in 2021. There are certainly differences that we shall get into later on, specifically. Let me tell you that last year, within the net income, we had a number of tax-related items, which in 2022, we had the asset disposals but then we'll clarify all this. As to the net financial position, as you can see on the slide, bottom right, you see a change by EUR 409 million versus the same period of last year, which is related to the change of the scope of consolidation. Now in this period, the acquisition of 3 new and 4 new and Volta Green Energy minus the disposal of minor assets brings about a difference that you see here, which mostly experienced the overall difference in the net financial position, Page 6 of the presentation. You see what we said before that the different business units kind of make up one for the other. The-- you can see that the EBITDA is going well, but we have a compensation of generation waste smart infrastructures is helping make up for the loss of the market minus EUR 113 million. The EBITDA is growing, thanks to the electricity production of WTE and in the smart infrastructure. So we have positive results because of the sale of heat from district heating. Now all of this, thanks to a tight control on costs. And thanks also to the improvement of operating activities and the overall work of all the business units, lead the EBITDA to be improved by EUR 19 million between the ordinary EBITDA of 2021 and the ordinary EBITDA of 2022. I'll ask Filippo to give us the detail of the different business units.

Thank you very much, Renato. Let's move on to Page 7, generation and trading. Here, we have recorded a very good performance, which together with a smart infrastructure and waste environment has allowed us to make up for the contraction of the market. In the second quarter, bio-generation has confirmed a similar growth that we had recorded in Q1 bio-generation in Q1 reported EUR 41 million plus EUR 44 million recorded in Q2. So 57% overall of growth, EUR 85 million of ordinary EBITDA in first half. Now Q1 saw an improvement of the same period last year, thanks to the capacity market contribution, plus EUR 25 million, the trading portfolio, which in the first quarter recorded a EUR 27 million of contribution, 3 factors. First of all, the volatility observed in the commodity market; the second, the exceptional price levels recorded in 2021 already. And then a short liquidity recorded in some moments of the quarter. And then we have a positive scenario, which is covered by our own hedging, EUR 5 million in the period. And then EUR 4 million related to the contribution of the wind and photovoltaic plants related to the acquisition of 3 new and 4 new second quarters. Such effects were made up for by minus production hydroelectric power, minus 31%, EUR 40 million. Now if we look at the main drivers of this growth, 57% of the ordinary EBITDA are related to what we can see here, EUR 148 million with a growth of EUR 44 million. And then the capacity market, the EUR 60 million, we have then the plus EUR 44 million of trading and a positive scenario, EUR 31 million. On a 6 months period, minus hydroelectric production, 670 gigawatt hours have impacted, negatively EUR 70 million. Then let me also report a negative factor on the gas portfolio, which is related to the energy scenario. As to the generation in the first half of 2022. The group has a hedging position of 60% fixed price coverage has a price -- sales price of 60-megawatt per hour, whereas CCGT 50% hedging and a coverage spread of around 10 hours per megawatt hour. If we look at 2023, the fixed price generation, hydroelectric, 50% with the price -- sale price, 130-megawatt hour, whereas the CGT production 6% and the spread, which is about 10 hours per megawatt hour. If we move to Page 8. Now the market -- Page 8, you can see the difference, EUR 113 million, of which EUR 88 million in the first quarter, minus EUR 25 million in the second quarter, 80% of this reduction is related or is due to the first part of the semester. In the first quarter, we had an absorption of margins and then a positive impact of [initial]. I do apologize, but the speaker is reading a text, which I do not have and its full of numbers. So please, can you please communicate that I'm having difficulties following him. Total customer base on the mass market has gone above EUR 3 million, EUR 2 million on the free market. The fundamentals of this business unit are very sound. Overall, the main drivers of this reduction are related exclusively to a reduction of unit margins, EUR 110 million. EUR 38 million had already been budgeted, and will be reabsorbed between this year and the next 2 years, EUR 60 million of this reduction are related to the different profile of customers between what was actual and what was planned. And this is mainly due to a very high and volatile price context. EUR 22 million are related to what we paid to Terna. And then EUR 59 million of positive impact are related to the commercial activities. The operating costs related to higher activities of the period cost went up by EUR 13 million. Let me move on to the -- next slide, Page 9, the Waste Business units confirms the very good results of the first quarter and an overall ordinary growth of 26% 42% EUR 42 million EBITDA growth. Q2, the energy scenario has provided a contribution of EUR 11 million was partially made up for by the lower availability of WTE Brescia and Acerra because of maintenance, EUR 4 million. The net contribution of the WTE of the group was positive, plus EUR 7 million. The growth drivers in this 6 months where waste treatment with greater results, EUR 44 million more than last year. And then as far as waste collection, minus EUR 3 million, the drivers are mainly cost increase for the fuel of our vehicles and the loss of a tender in the Varese municipality at the 1st of January 2022. Moving on to smart infrastructure. Now here, you can see a growth by 3%. Ordinary growth, EUR 9 million absolute values. In Q2, the growth was similar to the one recorded in Q1. Let me remind you that here, we had a growth by EUR 5 million. And in the second quarter, second quarter, it grew by EUR 4 million. Heat and public Lighting, very good results that was made up by the contraction of a gas because of the lower regulatory work approved by the regulator at the end of 2021 and because of higher concession fee because of the item of Milan in the first half of the year. There is a positive contribution on the reported result, a EUR 50 million one-off relating to the accounting of previous tariff items related to 2010, 2011 for IH ATEM water cycle. Let's move on to the next slide from EBITDA to net income. The P&L recorded a net income, a profit of a lower profit versus the same period of last year, EUR 30 million of D&A above what we had EUR 351 million because of the CapEx or investments made between investments made in the period and because of the acquisitions made. And then greater net provisions, EUR 10 million. Such change is related to a provision to risk provisions because of the increase of revenues of the companies of the retail companies, especially the energy companies, which were partially made up for the releases because of the increase of rates. And at this point, I'd like to point out the policy of risk provisions. And in the first half of the year, there is no delinquency rate on the part of our customers and the cash in on the part of customers are quite good. Page 12 of the presentation, you can see the CapEx and how these have changed despite the fact that 2021 was a particularly good year when it came to the growth of investments versus 2020 and also versus the history of A2A. We closed the first half of 2022 with a further growth of industrial investments. You can see that the growth is limited when it comes to maintenance CapEx, whereas we have quite a good portion of the development CapEx, around 6% of the overall CapEx. With a breakdown of CapEx, meaning 80% of CapEx connected to SDGs. On the right side, you see that the two business units where most of the CapEx were made are the networks and waste. In the Waste Business unit, we have a number of plants that are being completed for instance, Parona, Lacchiarella and the Cavaglia plant for the treatment of urban waste and then a good progress in Brescia on the fumes line to recover heat for district heating and a number of minor plants. As to networks, we continue to make strong investments in water and electricity network for the reasons I mentioned before. And this leads to EUR 241 million of investments related to the infrastructures. And -- now the breakdown between energy transition and circular economy keeps the proportion we have in the industrial plan, 60% of the CapEx related to energy transition and 40% related to the circular economy. Here you need to remember that we have investments made in water and district heating. At this point, let me ask Mr. Filippo to move on with the next slide 13. Here, you can see the net free cash flow, starting from EUR 708 million of EBITDA. We reached a net financial position, a variation of minus EUR 474 million for the following reasons: Change in net working capital, EUR 108 million. Such change was negatively impacted by an increase in gas inventories, increase or change in oil and coal inventories because volume effect. Now this negative impact was made up for by debt and lower credits for retail gas and is hitting because of seasonal effects and commercial credits. And then we have other debts. Now this cash generation shows other liabilities and assets, EUR 290 million. Now there are a number of factors, mark-to-market commodity prices and increase of tax credits. The M&A perimeter had a negative impact of EUR 409 million. Here, you have acquisitions of renewables and others made up for the sales of nonstrategic gas assets. And then EUR 463 million of cash, cash out. And dividends EUR 283 million and EUR 221 million positive contribution of property disposal. Now EUR 269 million are related to temporary effects that we should see in the next slide. So here, you can see Page 14 of the presentation, you see the temporary items related to the working capital. And these are mainly due to government measures at EUR 269 million. Then we have government, EUR 130 million and scenario in volumes, EUR 139 million related to the sales and purchase of commodities and stock of raw materials and you see impact EUR 139 million net of these temporary effects. And considering the positive contribution of property disposal and the change in perimeter. We get to a minus EUR 17 million versus EUR 148.4 million of the previous year. Well, let's now proceed with the last slide where we confirm the guidance for 2022 that we gave you at the beginning of the year. And you see the EBITDA range of EUR 1.4 million to EUR 1.45 million and net order income between EUR 330 million, EUR 370 million. At this point, Renata, I would ask you to start the Q&A session, okay?

We can now start the Q&A section. I remind you that conference call will last at the must for an hour. This is the Chorus Core conference operator. We will start now the Q&A session. The first question is by Javier Suarez of bank Mediobanca.

I have a few questions to ask. The first one is on the debt item. I was wondering whether the same impact that you see a temporary effect, the deterioration of the working capital. What is your expectation from here to the end of the year? Have you seen an improvement? And what is, in your view, the best expectation for the temporary absorption of the net working capital. Do you have a reasonable guidance to give us when it comes to the net debt by the end of the year? And what do you -- and what about the net debt EBITDA ratio from here at the end of the year? Second question on the supply business. There is -- there has been a deterioration in Q2. The situation is still very difficult. The company in Q1 said it would launch a number of managerial action to improve the situation. Can you give us a greater detail of your commercial activities? You are growing the number of customers. What kind of actions are you going to take in the second part of the year so as to make sure that the supply activity goes back in to become profitable? And then second thing, can you help us understand the adjustment that you make between the adjusted net income and you reported net income, I think, EUR 186 million of difference. Can you please detail those amounts.

Thank you very much, Javier. Now the first question on the debt, I will leave the floor to Patricia so that she will answer. As to temper effects. I think there will be a recovery by the end of the year, as to prices and government as will depend on the scenario. We hope that -- if things go well it will project on results at the end of the year. As far as the -- Brescia in the market is difficult to forecast in this moment if the price problem kind of results, all of this will disappear. As far as I think that the effects are lower than we expected. As to the guidance on the debt by not considering a hybrid issue, the markets in this moment do not allow us to go on with this initiative. We expect to have a net financial position around 4.6% that would give us more or less EUR 3.1 billion, which means that we would have been able to manage the lot of issue of the hybrid debt with the good management as of cash. As to your question about supply, I confirm what we said during the conference call of the first quarter. Now considering what was occurring, we had a number of actions we launched a number of activities to recover the situation. We have had no unilateral resolution of contracts. Now we had envisaged a certain imbalance with the biannual fixed contract fixed-picture which give us a little bit between EBITDA 2022, 2023 and 2024 apparently, which explains part of the difference that we had already factored in our plan. What is occurring in this moment is an imbalance due to greater consumption of customers that have a low fixed price contractor we have renegotiating contracts. We have renegotiated 80% of the contract with meaningful customers and this will have an impact on the second part of the year. And then the churn effect. We've had a reduction of the churn rate from 15% to 10%, which has brought about a further imbalancing. What we are doing at the moment in order to make our customer base grow. We have now gone beyond the 3 million customers. We have more than 2 million customers in the free market. So this is the obvious result of our activities. We have reduced the index contracts. I'd Say, to the favor the befit of customers in this moment, blocking the price at such high prices would not be favorable to them nor would it be favorable to us. Such is a kind of a win-win solution that help us not have further risks. Let me tell you that we expect a considerable recovery in the second part of the year of the supply margin, supply business margin. And this is one of the factors that allow us to confirm the guidance. I ask Filippo to answer another question.

Thank you very much, Javier, for the question. As to 2021, EUR 330 million that you reported data. The ordinary net income is adjusted by EUR 138 million. This is due stabilization of the benefit of deferred taxes of last year to align the tax balance sheet. And then here, you need to take into account that EUR 23 million of withholding tax and EUR 7 million of third parties rate, EUR 138 million of overall adjustments. As for the first half of 2022, EUR 138 million of reported million euros of net income to EUR 178 million, EUR 142 as stabilization of ordinary items. In particular, EUR 180 million of net capital gains because of property sales, EUR 34 million of capital gains for the disposal of nonstrategic items. And then two items that make up one for another, EUR 9 million of value taxes because of government measures and another item of EUR 9 million reimbursement of Europe taxes on previous year, that make up for the other EUR 9 million.

The next question by Stefano Gamberini with Equita.

I have a few questions asked actually to ask this guidance of EUR 0.46 billion of debt very interesting. We are more or less at the same level that we are now. So second part of the year, what kind of CapEx level are you going to have? There is also a second part of the year, the factor related to taxes and then working capital, let me explain. If I understood well, the issue was the price level of commodities, In Q3, cut prices have further gone up if we consider gas scenario, electric scenario that goes on like this in the other parts of the year. So I'd like to know what is going to happen in terms of net income? And how do you explain this based on the scenario that you projected? And then a risk on hydroelectric production. You mentioned a coverage of 80% fixed price for the second part of the year. Then you said 90%. So what are the terawatt hour that you sell at a fixed price for hydroelectric production? And how many do you expect to actually have? And what is the unbalanced risk, meaning losses like the ones that happened to ENEL. Do you have a contingency plan about this have you somewhat worked out how to avoid buying on the market at the electricity that you cannot produce for EUR 100 per megawatt hour versus EUR 70 at the moment? And then what kind of solutions are you taking into account for your debt? You have very strong CapEx. You have a very interesting dividend policy? How can you manage all of this during 2023, in particular? I wonder what kind of investments are you making? Are you going to reduce investments? And what about your dividend policy? Is that at risk? Because I believe the main objective set of remaining investment grade as a company.

Now let me take your first point, and I'll split it in three parts. Certainly, the overall CapEx between national CapEx and M&A. So well, this is -- we are trying to use to keep debt under control. A couple of figures. 2020, EUR 900 million, 2020; EUR 1.7 billion in 2021; 2022, our budget was above EUR 2 billion. So EUR 400 million more than 2021, made partly between industrial CapEx and M&A, EUR 1.3 billion M&A is EUR 800 million -- sorry, EUR 800 million of industrial CapEx, EUR 1.3 billion of M&As. Now the M&A deals that we have done are certainly satisfactory, strategically. Thanks, 3 new and 4 new and Volta Green Energy deals that. We have further strengthen our position for renewable energy sources. Actually, we met the business plan goal 1 year in advance. And then we have also a strong position for distributing in Milan, which is certainly better controlled when you put together production and distribution. Now we don't have, however, other M&A deals inside and this brings about good savings when it comes to M&A's forecasts. And then industrial CapEx. Very good level in 2021. We're not going to further push here. And all of these maneuvers lead to a cash out of EUR 400 million for investments certainly has a good effect. Would you like to say something about the working capital?

Yes, in Q4, there will be a seasonality effect, which is included in the projections that we are working out. Our projections are aligned with the current values. Now if they did not move from the values from current prices, there will not be a step factor. But of course, if there is going to be an increase in prices, there may be an impact on that as well. But there is a seasonality that we need to take into account. Let me go back to your third question, Stefano, because they are connected. There are two things which remain well established. We want to remain a strong investment-grade company and therefore, the prospects of a negative outlook. We've already set of getting out of a negative outlook as soon as possible. And then the other pillar is our dividend policy, which is not being questioned. The question here is usually made the three variables. And it is clear that unless the temporary effects on working capital do not go down. We shall resort to the leverage that we -- or the level that we communicated when we announced the business plan, I said all of our capitals are all development investments should there be the need to change that. We could do that because this is what we can do and on which we can actually do something. Now the S&P indication is trajectory indication. Now to improve the indicators in 2023, but also in 2024 and complying with the targets that were indicated. Well, to do that, we shall remodulate, rebalance the investment of the CapEx plan. We had some money that we could use in the third part of the year. If we take the plan and we divided that in three parts, '21, '22, '23, '23, '24, '25, '26, '27, '28, '29 investments in this part would go down the FFO net debt ratio goes going up to 28%. So rebalancing the investments in the period. Well, that is the instrument that we can use to make sure that our two pillars remain well-established, sound dividend policy and investment grade. But we are ready to reaccelerate hopefully, when things improve, when prices go down for us or for the company, for the mass market for our customer, for wholesale as well. Now Filippo?

Now hydroelectric production. Let me remind you that the forecast of the group are at the moment 3 terawatt hours is expected to the production of the year. If drought continues and water reserves remain low, we can expect a further reduction of our hydroelectric production. At the moment, our guidance is related to these levels of production, 3 terawatt hour. Now because of this, we can say 1.4 terra in the first quarter and 1.6 in the second. Last year, the production was 1 terra above 4.2 terawatt hour for the group. As to the generation, there are two different data in the press release, we have reported the period between July and December. In the next 6 months, the percentage of coverage is 81% fixed price production, EUR 70 per megawatt hour price. If we look at the annual data comprising also the first part of the year, the coverage percentage goes up to 90% and the price remained stable at EUR 70 per megawatt hour. So we expect not to have a scenario that brings about losses in the hydroelectric business. Let me try and understand. Now 1.7 terawatt hour of production. And then -- sorry, EUR 4.6 billion of debt with the absorption of working capital at lower prices of energy, I believe they're not at the current prices because you do not expect the price of gas to reach EUR 200-megawatt hour. Well, the estimates was made with the prices at the end of June. My personal expectation is that between then and now, with the differences in things and what we see in Europe has led the prices to go up, and we expect prices to go down in August. We expect that this is going to be reasonable in September, if we get there price of gas of EUR 200 per megawatt hour well factors and companies that will not be able to reopen up the summer holiday. Gas problem is certainly problem around the world. But I mean the current exaggerate. EUR 4.6 billion, however, are related to very high prices that were at the end of June. So we have not included the other pick prices that we had in the last 15 days. Let me add something else about the coverage of the second 6 months. Now over and above 1.6 terawatt of hydroelectric production you needed to consider another terawatt covered at fixed prices. So the terawatt become 2.6, 1 terawatt from TU and 1.6 from terawatt from hydroelectric power.

Next question from Antonella Bianchessi with Citi.

I have a very simple question to ask. By looking at your guidance, you expect the EBITDA to double versus what it was in the first half of the year. But then you said that prices for hydroelectric production have gone better. Generation prices are going to be higher, retail market has to improve. Is there something that is missing? Or are there any other problem that was not mentioned? Another question about gas. Now in Italy, storage levels are going up quite well. It's likely that the storage levels are going to be filled in August as well. Now our minister said that we will reach a storage level of 80% before expected. Do you think that this will have an impact on prices on the PSP, disconnecting this from what is happening or what happens in Germany? Which have other dynamics.

Now let me take your question. The first question, Antonella. What I can say is I do see a second part of the year, becoming more positively. Well positive in the first but months have been very, very difficult. And therefore, I prefer to be prudent and cautious. Now you ask me if I see more risks in the second part of the year, then opportunities. What I can tell you that I see more opportunities. We keep the guidance that we gave before and let's see how things evolve. As of today, there is a piece of data that we tend to sterilize a bit more is that of MSD and also the trading results data. We have never had a trading result like this year. And last year, we had a few million euros. This year below -- sorry, above EUR 40 million. So very much related this to very high volatility, but you can't bet on volatility in the second half of the year, our forecast and this is a lower trading result. The same applies to MSD, incredible result in the first half of the year. We've been used over the past years to see MSD is going very well and thinking it would not go better but it has gone better. So the technical answer that I can tell you is that the improvement of the market and which therefore remaining unchanged the other things in the second quarter -- in the second half should improve and the results could go above our guidance. And all of this, however, takes into account the normalization of MSD and of the trading results. But to summarize, I see more opportunities than risks. As to the storage level, we are above 70%. August consumptions are quite low. Whatever we get is stored. So storage level of 70%. So we'll get, at the end, a very good storage levels, whether this is sufficient to disconnect our gas price to that of Europe where it depends on a number of factors. If values remains high perhaps Europe should consider taking a common strategy. And this is what I expect from the market. I expect to see a common European answer to meet the problem of very, very high prices. I think it is unlikely that Italy despite being a very -- or a major consumer, disconnect its price mechanism from Europe. What I see more likely is that overall, Europe manages have its voice felt before the beginning of September because if prices remain at this level, the problem is not only that of A2A, but for the whole industrial world, the companies have to reopen up the summer holidays.

The next question by Davide Candela, Intesa Sao Paulo.

I have a question about the extra profits. Now do you think that what has been implemented in the first part of the year can also occur going forward, like what has happened in Spain because price energy remaining high. And then -- can you tell us something about the WTE, your expectations for this year and going forward? And then the development of renewable sources of energy, wind, especially in the Sicily, can you give us the CapEx that you have to make for the development of this plant in Sicily?

Now when it comes to the regulations or measures that are going to be adopted by our country by the government. Well, at the moment, I -- allow me to say, I would know. We all see that the prices of energy are high. The government decision has to find a way to protect consumers, and I'm sure it will. It will also depend on the curves of the price that we should see. If we were to observe in the next few months, starting in August, signals of pricing going down. I think that the government may step in with a number of temporary measures. But if at the same time, we see prices going up very high, and the expectation is that the prices remain high for a long period of time, the government will have to deal with it. But at the moment, I can't make forecasts at this -- all of this -- within our plants, we do not factor in renewable energy sold at EUR 400 per megawatt. This is only the answer I can give you. As to the other question about the plant in Sicily, this is a plant which has 8 wind turbines, 30 megawatts. So we are speaking of 3.5 megawatt per turbine, EUR 40 million of overall investments, EUR 1.2 million, EUR 1.3 million megawatt of investment -- sorry, EUR 1.2 million, EUR 1.3 million per megawatt of investment and we expect quite a good wind expectations, 2,000 hours of wind under for good production. And as to WTE, the coverage strategy. We do not have a different coverage strategy. We have an overall portfolio coverage strategy. The -- what I said before about the coverage before and the prices 2.3, 2.6 terra. This is what we have calculated and there is a price difference.

The next question by Emanuele Oggioni, Kepler Cheuvreux.

I have a question about the storage of A2A. You mentioned the national data for storage before 70%. But in your case, how much have you ensured in terms of procurement to supply for coal thermic year also for 2023, but also to meet the requirements of CCGT plants. And then the hedging for 2023, you mentioned hedging for 2022. I'd like to know if you have hedging estimate for 2023, WTE and hydroelectric percentages in prices and then CapEx. In order to reach the guidance of EUR 4.6 billion of net debt -- debt, you have rebalanced your CapEx as well or potential like cash-outs for acquisitions in 2022. Can you give us a guidance here, therefore, of organic CapEx for the end of the year. There is the EUR 446 million of H1, how much are they going to be at the end of the year?

Emanuele, I will start from the last question, and then I will give the floor to Filippo for the details of storage. The data that was given before is not that of the country, but it's A2A. I'll give you some detail. EUR 1.1 billion of industrial CapEx set by the end of the year, versus the expectation that was EUR 1.3 billion. That was our budget. So a reduction of industrial CapEx by about EUR 200 million. And then M&As are going to be shifted EUR 100 million. When I said EUR 400 million that contributed to maintaining the NFP at EUR 4.6 million. These are the EUR 400 million. We're speaking of CapEx values that are above the industrial CapEx of last year, there were slightly above EUR 1 billion. As to storage and hedging, as Filippo can give you the detail certainly. Now in this case, the A2A position when it comes to storage, has seen a storage of 435 million cubic meters with a storage of around 70%. As said, to the requirements and needs of thermal production and [ even ] requirements. I can say that the overall requirement of the gas portfolio, we haven't closed the commercial campaign for this year, EUR 5 billion of cubic meters for the group. As to the position, it's not covered for the next winter, Q4 2021, 1 -- Q1, Q1, '23, 1,423 million cubic meters overall. As to the coverage percentage. I think you were talking or asking the coverage for 2023 and prices as well for a second. As to 2023, for 2023, we have a coverage of 55% production fixed price, EUR 130 per megawatt hour. Thermal production hedging is -- has a coverage spread of EUR 10 per megawatt hour. For fixed price production, we do not discriminate between hydro and WTE production. So the strategy, which has been announced is supplies to both types of production.

Last question, a follow-up by Stefano Gamberini with Equita.

Well, let me step in because I'd like to have a comment on the spark spread. Do you have any advantage in this situation? Or do you have any stoppage plans investments? If I'm not wrong, we have 300 megawatts of new capacity for renewable sources of energy and then important investments for the Waste Business unit. Can you give us some color here? Do you have something which is still to be authorized? Or do you still have something in the pipeline? And then -- the asset rotation speaking of EUR 2 billion of the asset rotation, do we have to expect some disposal? You sold 30% at premium at [europe]. Do we expect something else there?

Now as to our vision on the dark spread. Our vision is of a positive vision for next year and the trim spread in July has recorded positive data. It's a positive view for both. Now going forward, we have a problem of availability on the survey plant, which in the 6 months of the year, has stopped operating for a week without a negative effect on the group. Of course, we still have the issue of water availability or scarcity, which may have a direct effect. When it was a very extreme case, days in which water availability was very low, very, very limited number of days. The thermal production result is positive anyway in our case. Certainly, we need water. We need water rainfall in general, but in our plans, we have a plant, which is still not operating in this space. Back there, it's very difficult to say that we're not going to see rainfalls going forward for many, many months ahead. If that could occur, we would have problems in our plans. Now as far as authorizations are concerned, we don't have problems of authorizations. We have, on the contrary, the opposite issue. As to the Waste Business, the past few weeks, we received an authorization of a plant in beds providence of Brescia, production of 7 cubic meters of biomethane, which is to be added to the LaCierella plant and Cavaglia. Now overall, EUR 250 million of municipal urban waste management capabilities. So a very important asset within this business where we were a bit weaker. The same applies to the effect that we are completing the authorization process for Corteolona, and we see no problem there. As to the thermal production, we have won the auction for Monfalcone plant, 70 mega Cassano, 560-megawatt at very interesting prices. Monfalcone, we are waiting for the final authorization and decision by the regional authority, which is expected by next week, and therefore, the process is going to be closed. In Cassano, we expect things to be completed within the end of the year. Meanwhile, we have a number of projects for renewable source of energy. In Sicily. We have a greenfield, the one we mentioned before, in Maggiore have another plant. So the renewable sources of energy is growing and the measures recently taken by the government, simply favor this kind of activities. Where we have authorizations and where the construction of building sites are open, we should see no slowing down of our CapEx. You may see some slowing down of the plan, where investments are related to something which has not been authorized, but the -- we have room for maneuver, and we can tolerate some delay. As far as asset rotation is concerned, I am not going to tell you anything else, is positive. Thank you very much. So thank you. Thank you very much. We now have to conclude the conference call. Thank you very much for your questions and attention. Investor Relations is available for any request for clarification you may have. Thank you. and I hope you have some good holidays also because the autumn is going to by then committing. [Statements in English on this transcript were spoken by an interpreter present on the live call.]