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

Ladies and gentlemen, good morning. Thanks for attending the presentation of the Strategic Plan 2024-2035. It's a plan which ideally takes the relay from the January 2021 Strategic Plan. We have a busy agenda. Without any further ado, I would like to mention that we will be presenting with Luca Moroni the results of 2023. After which, we have started the strategic plan presentation with Mr. Mazzoncini. The Q&A session will be placed at the end of the presentation. I hand over to Luca Moroni.

Thanks, Marco. Good morning, ladies and gentlemen, and welcome also on my side. We'll start with the results of 2023, a year which has marked records in terms of group results, both in terms of profitability, margins, sustainability, financial soundness and sustainability. Let's start with a distinctive feature of the year, as it's always is the case of positive factors and the negative drivers. We have had a very good year from an hydraulicity point of view. We have been able to manage proactively the energy scenario, with a very effective hedging policy on the price of commodities. We have also been able to enlarge our customer base later during the market business unit. We have a plus 420,000 customers, also thanks to the award in the tenders for safeguard protection for other utilities launched at the end of 2022. Our RAB investments have enabled us to grow the RAB. So also the margin arising from the RAB. And we maintain our discipline when it comes to net working capital and our net financial position as a consequence of that. We have seen less production by thermal plants and a normalization of the ancillary services market, with the margins on MSD. Let's look at the results. They have been very positive. We had already shared the EBITDA performance, EUR 1.930 billion, growing by 30% vis-à-vis 2022. Net profit, EUR 635 million, which is really a notion result with an increase by 67% versus previous year. And the acquisition also of flexibility in finance with NFP/EBITDA of 2.4x, with a net financial position closing the year at EUR 4.7 billion. We had already seen during the year, the performance of the various business units. The increase in margins is mainly due to Generation and Trading and also Merchant business. Generation and Trading, as I said earlier, we have had a very positive performance in industrial generation. A positive performance also in Trading, with great capacity and ability to manage commodities' prices with a view to hedging to extrapolate better margins. Very positive Merchant performance, recovering fully after a difficult 2022. In 2023, we have been able to express good margins, also after the crisis that had characterized 2022 with the closing down of some suppliers, and hence, the search among customers for more structured and reliable partners. So the market has repositioned itself and we have been able to manage the situation positively. On the top of that, the award of orders in the safeguard market has allowed us to have a better marginality. We have invested in customer base retention doing targeted actions so as to retain customers, which due to certain antitrust decisions had seen a renewal of their offered prices at a time when there was a record in these prices. Also the Waste business unit is positive. We are investing in new plants, and also the grid network business is growing, thanks to the CapEx to the investments in RAB. Here, we see very quickly the various business units. You see an important increase in production from renewable energy sources, plus a 35%. Good performance of hydroelectric plants, and overall wind and photovoltaic solar plants that we have in full swing in our fleet after the acquisitions from Ardian portfolios. Some shrinkage when it comes production of CCGT. And energy scenario, which is now stabilizing itself. We have EUR 100 PUN single domestic price. And as I said, the MSD margin has reached the mean levels that are comparable to the period before COVID, before 2020, when there was also the energy crisis. The market is growing. We have 420,000 new customers. We are growing sales of electricity and of gas also, with higher profitability on an average and also with higher volumes that we are selling. Waste business unit. I would like to draw your attention to the 15% increase in material recovery, which is a very important reference driver when it comes to our targets of circular economy. And we have a positive waste collection performance. In the previous year, we had suffered from high energy prices, from the cost of fuels for our corporate vehicles. Here, we are closing the gap. We are recovering. Also thanks to orders we have been awarded after tenders in some territories, not in the reference territories but in neighboring areas. And also in flagship areas like Liguria region, Aosta Valley, Portofino, just to mention some names, where we have been awarded orders with good marginality. Positive performance also of Waste Treatment, where the increase in marginality continues to be sustained and is very rewarding. Also thanks to investment in new plants in 2023, we have had full operations of 2 plants, 1 in Piedmont and 1 in Lombardy, and also a new line of WTE, always in Lombardy region. Smart infrastructures, so the grids, we see an increase in margins both in electricity and in gas grids, and also in water cycle. There is some decrease in district heating here. Last year, we had benefited from an extraordinary situation relating to deferred taxed assets. This business had benefited from this situation. This positive effect is no longer present. The reason, some tourist city effect. And here, you see the acquisition that we have performed in plants, so we have acquired from [ CEF ] for management of heating in Milan airports. So you see the RAB increases by 15% in electricity and by 7% in gas. So in line with our investment expectations. A quick look at what is happening to the P&L from EBITDA to net income. Here, you see [ 1.9971 ] depreciation, EUR 800 million, increasing by about EUR 80 million year-on-year due to the effect of new CapEx and of perimeter. EUR 151 million risk provisions, plus EUR 60 million versus last year. Last year, EUR 50 million due to a release from a fund for a post mortem items due to the increase in interest rates. So this has been actualized and the fund was the result of more controlled 2022, hence, the release. This was a one-off phenomenon. Financial charges, EUR 139 million. You see the net financial expenses. This is due to volumes and rates. Combined, we have the bond placed in 2022 and in 2023, with a rate that was aligned to market rates with smart operations, of course, but at a higher cost than in previous times. I would like to remind you that we closed the financial year with an average cost of debt of 2.5%. Taxes, EUR 221 million, reflecting a tax rate of 25%, normalized 29% as in previous year. Here, the difference is due to a positive extraordinary one-off item relating to taxes, and we closed with a net profit of EUR 635 million. And here, you see the EPS, EUR 0.21 per share. CapEx here, we have on the industrial CapEx, excluding M&A in 2023 that have not been very significant value-wise. Here, you see EUR 136 million, with an 11% increase in CapEx mainly in grids and in generation. In grids, due to the CapEx in distribution of electricity first and foremost. And in plants, with a start of the revamping project for Monfalcone plant, which will be replaced with the CCGT, which will be operated with the blending of hydrogen and gas in the future. And then we have the percentage of CapEx, which is in line with target, 72%. And with the EU Taxonomy, always 72%. Investments dedicated to the energy transition account for 70%. And to circular economy, they account for 30%. Then we have a net free cash flow, EUR 1.2 billion after having maintained thorough management of the net working capital. Here, you see taxes, the extraordinary contribution due to solidarity, EUR 122 million. As a matter of fact, we have self-financed our CapEx. We have completely done it, and this is something we will discuss also later. And here, you see the change in net financial position EUR 425 million. It's well controlled, well managed, and it gives us a very positive contribution to financial sustainability, also considering the growth of the EBITDA. That's all on my side for the first part. Questions will be asked at the end of the presentation. Now a short break. Afterwards... [Presentation]

Good morning, everybody. Thank you for being here. So please feel comfortable because since I have a Strategic Plan 2024-2035 to tell you about, it's going to be a lot. But it's going to be interesting also to see through our eyes how we see the future of energy transformation, energy transition and the circular economy of our country, an important part of Europe and of our world. So let's start just giving you the actually right closing of the first plan, January 2021, when we presented the first 10-year plan 2021 indeed 2030. And we were in the pandemic period. It was not possible to make a presentation like today and with the attendance of the others. And then, of course, we had indeed some perplexities. So actually, for the credibility of Strategic Plan 2024-2035, I will start actually say about the [indiscernible] plan is finished and in '28 -- 2020, EUR 700 million CapEx, and now we have EUR 1.6 billion in the period '21-'23. And we have a comparison with actual, what we have actually done and what we had planned. We said EUR 5 million CapEx, and we did EUR 5 million CapEx. And we had said that with the plan, we had to reach EUR 1.6 billion of EBITDA. In 2023, we reached to EUR 1.9 billion. And actually, we had this data net of the scenario effect. And of course, we were also lucky regarding the scenario effect. So we had our plan now with the figures of the scenario numbers within the plan 2021, EUR 1.7 billion is a result. So we have indeed overcome the plan also in the EBITDA. And we had closed 2023 with EUR 400 million in net income, and we have reached EUR 500 million net income, and we have reached over EUR 600 million. But again, net of the scenario effect, we have overcome the old plan, and we have increased 40% and 90% plus with the scenario effect. So we're very proud of this figure, 24% of the total shareholder return. This is really very good value in the period '21-'23. And as Luca was mentioning before, we did that with various factor, financial discipline. The ratio is at 2.4 net debt EBITDA, and we thought 3.3. But that was another world. That was the year 2020, and so there was a different cost of our money at the time, and we know that we have become stricter indeed. And also in this case without the scenario effect, we would have obtained 2.7%. And we have seized several opportunities to refinance the debt at very good conditions in the good years. And now we have adapted that by 70% is ESG linked. So ESG debt linked, meaning a sustainable debt with a good duration and a good cost. And on investor point of view, we have said that we would have reached 3.3 million customers, and we have reached 3.5 million. And we said that we would have sold green energy, 6.7 terawatt hour, we have sold 6.7 terawatt hour with indeed an installation of wind and solar of 0.4 gigawatt, and we have reached 0.6 gigawatt without the hydroelectricity. And then we have said that the RAB in electricity next year would have reached EUR 900 million, and we have reached EUR 1 billion. So just this year in our electricity RAB, we have reached 3x investment we did in the 2020. So from EUR 70 million to EUR 200 million. So regarding Waste, we had 0.9 tonnes of treated industrial waste. And we have grown a little bit less than forecasts. This is more related to industrial decline we have experienced in 2023, and not so much to our performance. Continuous improvement in the water cycle leakage in our network. So we have indeed improved, very much increased indeed in our investment and also in the RAB for water. And other important investments for certain aspects related to ESG. We had rated 21% of women in managerial positions, and this is not easy in a technical company such as ours. We have the objective of 23%, and we are at 26.4%. And now we have a 30% of ESG criteria in our vendor rating. So we are really doing a very good work also in our supply chain, so that the supply chain can follow us in the decarbonization process. And we're talking about 2,000 suppliers for 2 billion purchases. So our Plan 2021-2030, can be archived. And we're very proud, now it's in the records. So we did very good things. And we have this transformation of the growth into a Life Company. We had announced in January 2021. And then in talking about our plan 2024-2035, we start from this. This is the agenda. I will talk about the vision. It's quite mandatory if you look out to 2035. But 2035 is really the day after tomorrow. But we need some vision for that, and then we will explain to you the strategy we will implement and the financials as well. And as I said in 2021, this is a real plan. This is not a vision plan. This is a plan in which we have included all the things the economics, investments, CapEx, EBITDA and then IRR. So all the investments from now to 2035. Why 2035? Because there are very important points at European level. Just to mention, for instance, a phaseout of electric vehicles. That is a symbol of electrification of consumption. The greenhouse and then the waste, the target of 65% for Europe of indeed differentiated collection with a fixed percentage to landfill, only 10%. And so as we did for 2030, the objective was to have a near with certain fixed points with respect to our targets and European strategies that we implement and we follow. So let's start from the vision and from the fact that the concept of a Life Company, I'm sure you remember that we are interested in the purpose of what we do and not in the means. It's not that we tell you that we bring electricity, water and gas, that we deliver on that, but we deal with infrastructure for the environmental transition of the we'll now implement environmental transition, and we will solve indeed a decarbonization plan. If we don't plan investments and we don't carry out the investments for the year 2050. And we all agree on that. So without being too depressing indeed, this is a starting point. We are in a situation where we have 2.4 celsius degrees increase in Italy versus [ 18 80 ]. We had to stay below 1.2, 1.5. And in 2022, it has been raining and we are have for hydraulicity. But we lost 36 billion cubic meter of water in our, indeed, falls. And it's not that we have recovered them, so we lost all that in the underground resources. And so we cannot afford wasting water. We have a pollution level but before raining 20 days ago, there was an environmental alarm and a prescription to reduce traffic and pollution. And we are in a situation where in the oceans, there is an estimate of about 1 tonne of plastic per 3 tonnes of fish. And then the waste cycle, we are indeed delivering landfill 11 billion cubic meters. And to landfill size, the same as the dome of Milan. And then the overshoot day, and if you use the overshoot calculator for us, it was the 15th of May 2023. So we have exhausted, indeed, the planet resources. This is to say that we should tackle the problem, and we should think about our vision and our way forward. And if you want to be a Life Company, you need to tackle these problems, and try and solve some of these problems. On the other hand, we are helped by the fact, for instance, from these indeed thermal situation, thermal scenarios. We see we have a plus 30% expected peak of power. This is the Italian average. And in our region and the good part of Lombardy, we have a plus 50% estimate. These are the big gigawatt distributed 55% 2020, 71% in 2040. And then also that PNIEC that has been approved by the new government. So we will have 131 gigawatt renewable in 2030. And in 2040, 177 gigawatt. So triple the power of our ES. So as I have recently said to investors, so concern of an overcapacity, that is 1/3 of the rhythm that we should have it to reach the PNIEC goal. So I do not understand that concern. Regarding the circular economy, these are the goals for 2035. 65% of recycle. So 75% of differentiated collection. If you don't do that, it's not possible to have a 65% recycling rate. So just to try and solve those problems, we have scenario that luckily enough, the plan at a high level we have in our country includes plans to tackle those problems. So A2A provides this contribution with this Plan 2024-2035. So let's have a look at some macro data. So what do we expect we will be in 2035 implementing this plan. Here, we have some macro figures. We will see some of them in details, but we won't have enough time. It would take probably a couple of hours, but we would do that in the following roadshows. So we believe that we will reach EUR 3.4 billion electricity network RAB. We are starting from EUR 0.7 billion in 2020. We have started seriously investing consistently with [indiscernible] plan. And the acquisition we have done that we have announced of and network gives us boost, doubling our network, and we expect to reach EUR 3.4 billion electricity network RAB in 2035, 5.7 gigawatts in installed renewables. And then from 5.1 million to go to 7.3 million tonnes of waste treated. So to increase also in our waste compartment. And then we have planned EUR 22 billion CapEx from now to 2035, which is quite significant. And this is indeed the maximum speed at which we can actually move in a safe way with our net cash flows, maintaining indeed our commitments, our financial rigor and so on. So this will lead us to a constant growth of EBITDA, so over EUR 3.2 billion and to overcome EUR 1 billion net income. So there are 3 elements that I would like to underline. On the one side, when I presented the plan in 2021, I stressed very much on the smart infrastructures fact, because indeed A2A is a Life Company investing for ecological transitions, where we do wind pane and electricity network, or a biomethane plant. We are doing all this to have the ecological transition. So the big part of our EBITDA comes from a remuneration of our CapEx. So that is why our plan is very much CapEx driven. But I should not forget customers, because before there was the idea that A2A was a service company, and that's why I underline that aspect, but we should not forget that the goal of these infrastructure is our customers, people and companies on the territory where we work. And of course, decarbonization remains the polar star. This is somehow one of the elements of our plans. And the other element on which we have very much thought over is the future fee development. So we are in a historical age where it is quite evident that there is some resilient EBITDA for the future, and less future-resilient EBITDA. So we have to be sure to invest in something that is really future fit. So that in 2035-2050, A2A is even stronger than it is today. Hence, we need to pay attention to where we are investing. Do you remember the pillars on the left-hand side? We have energy transition, and on the opposite side circular economy. And in between, we have people and business. I was telling you that we have a decarbonization drivers in 2017, with the Science-based Target Initiative, we have certified our emission factor. If I remember correctly, we were at 417 grams of CO2 per kilowatt-hour produced. The target was to reduce that by 2030 to 223 grams. This has been confirmed. We have decreased by 30%. And we have an estimated decrease based on the planned CapEx of 65%, emission factor wise. In these terms, what have we done, what are the targets we have achieved, what are the planned targets. We have closed and stopped the coal production, except for 2022 when the Italian government had decided to maximize coal production. Our Monfalcone plant has been producing for a short period, then we have closed it down. In Monfalcone, we have the conversion to capacity market, the new CCGT production with high efficiency. We are working very much in district heating to develop it with a decarbonized heat. And in 2023, 85% of the distributed heat in Brescia. So 85% of the city is heated, and this was done with a decarbonized heat coming from the WTE plant from the CapEx made in the WTE plant. So we recovered the heat. We have invested EUR 100 million. We have been using these exhaust gases. And then the collection to the 2, to [indiscernible]. The 2 still working plants in the city of Brescia. We are developing district heating also in Milan, using also a reconversion of heat. We are no longer using gas. We develop the network and use heat only where we find decarbonized heat. We are closing agreements with data centers in Milan with incredible energy consumptions, huge consumptions. So there will be a threefold increase in the terms of capacity absorbed by data centers. They produce heat, and this heat can be used for decarbonized district heating purposes. And then almost 2 terawatt-hour of solar and wind production starting from scratch. In our plan, the target is set at near zero Scope 2 in 2026, to reduce by 60% Scope 3 upstream fuel, where, as you know, this is connected to electrification of the fleet. We have a fleet of about 5,000 vehicles, including Amsa, [indiscernible], Unareti and other company fleet vehicles. This is an important target. We have planned a carbon capture plant. Of course, carbon capture will be a central topic in the next few years. We cannot get completely rid of methane, carbon capture remains an important element. And assisted by the capacity market, we want to reduce the production from CCGT. This is a very important target by 2035. When I say future fit strategy, this is what I mean. You see the macro trends and the investments we are performing. Decarbonization is a macro trend. And on the opposite side, you see development of renewable energy sources and CCU as planned, which has a very important budget value. Energy security, this is an overarching topic because the development of renewable energy sources has an impact on stability of the system. So we have a capacity market storage. Monfalcone and many other investments are supporting that. And then we have electrification, so development of electricity grid, development of e-mobility, circular economy. We have here energy recovery. We are doing that in waste to energy plants and biomethane plants and also material recovery, we are growing very much in this important area. And then water safeguards, without wasting time, of course, we are the only player today who is strong both in hydroelectric and in water cycle, and we deem that water is really a great value. Here, you see an estimate of the CapEx of the EUR 22 billion future fit. How much we are investing in assets that we will still have in the next 30 years, so we have a rate of 90%. EBITDA relating to future fit part of our company is now 77%. In 2035, it's going to account for 90%. And in our opinion, this is extremely important. EBITDA is not all the same. Let's now look at the strategy here. There are some elements of how we are implementing our plan. We have the breakdown into circular economy and energy transition, as it's always the case. We have EUR 6 billion in circular economy. Here, you see energy recovery, waste to energy, biomethane, material recovery, water cycle and district heating that is on the left-hand side, because we develop it with a decarbonized heat so circular economy. Energy transition, EUR 16 billion. Here, we have development of electricity grids, renewable energies, customer base and energy flexibility. Let's break down this CapEx according to another KPI, so high or low volatility, that I know is very important to use, so market EBIT -- market CapEx versus low volatility CapEx. Low volatility includes, of course, of the regulated business, so under ARERA, and what we call contractualized business. We have received this order from AMSA, 10 years of contract with them, with a set of CapEx and very low volatility. Or district heating, which is regulated from this year onward. It's almost regulated, we might say. If we add low volatility, energy transition and the circular economy, we reach 44%. 44% of CapEx with low volatility, 56% with market volatility. So [indiscernible], we have renewable energy sources and CapEx of A2A Energy in the customer base. Let's now look at the growth over the strategic plan time freight. So circular economy, we have proposed a plan and we have some anchoring points, we have 2023. Then the turning point in 2026 and then 2030 and 2035. In between, of course, we have development year-on-year to attain the target. And there are some anchoring points, some milestones, and circular economy is growing with a linear grade to reach EUR 1 billion EBITDA. Here, you see the energy transition starting with EUR 1.4 billion. In 2023, EUR 2 billion. So EUR 600 million circular economy, and EUR 1.4 billion in energy transition to reach more than EUR 2.2 billion. In the first slide, we had EBITDA to 35, so greater than EUR 3.2 billion, which actually refers to this part, where we have more than EUR 2.2 billion. Business model for circular economy, some snapshots of it. Waste in the waste part, the strategic target until 2035 is to exceed 4 million inhabitants served, with over 2 million of waste being collected. As Luca said earlier, we have acquired in this period 2 -- actually, we have received 4 orders, 2 in Ligurian, 1 in our [indiscernible] region, which is quite significant because they are out of the territory, which means we have a pretty dynamic business. We want to maintain the right hedging between collected waste and processed waste. We are very strong in waste treatment. We still need to grow to some way in waste collection. So as to be on the safe side that we have enough fee stock for our plants. 3 kilowatt-hour of energy equivalent produced. We are talking about electricity and thermal energy from our plants. So Milan energy, of course, most of all in Milan and in the city of Brescia for district heating. Water. It's quite interesting to observe that in the old plan, we had assumed a phaseout of some concessions that were supposed to be transferred to the public company which had been set up in the province of Brescia to acquire our concessions at the expiry date. Some concessions have -- were actually implemented. They are in the business plan. They had ruled out this option for new concessions, and this has changed in the scenario. In 2035, we are talking about area of this network of EUR 1 billion. So we will have to make some considerations about the options that we have in taking over from larger utilities. So we consider to maintain 600,000 inhabitants served to absorb the leakages. So we will reach 13 cubic meters of water leakage per kilometer per day. And here, you see the smart meter objective, 86%. We are talking about these smart meters which allow to detect water leakages in our networks. Total processed waste, in light blue you see industrial waste and urban waste in green. So for sure, as of today, we are still a player that is mainly focused on urban waste. But we are also growing in industrial waste. Why? Because this is the part where we see more industrial concentration in the next few years, not because of the quantity of produced waste in Italy will grow in that segment. On the contrary, urban waste consider of the packaging, European packaging directive, if the word goes in the right direction, there should be a decrease in the volume of waste we all produce. For this reason, we are shifting towards industrial waste. We have acquired plant from [ Terna ] in Crotone, Calabria region. We are developing a WTE plant like the Filago, Bergamo province for industrial waste, because we want to be leaders in industrial waste treatment. The target is EUR 3.9 billion cumulative CapEx in 2035, EUR 0.75 billion EBITDA until then. And the target is to reach zero waste to landfill. Now we are sending to landfills only the ashes from the WTE plant, and we are working also on that so as to reduce as much as possible through end of waste products. There is a specific project with Mapei company to use for construction applications. And here, you see business innovation project at [ Maine ], there were robots helping us to assemble the exhausted electricity devices so have to optimize production. So as far as people and business are concerned, we are working for them. We have reorganized the value chain for industrial waste. We had a situation where we were large players. But checking on the web and searching for the least of players to specialize in disposal of industrial waste, we were ranking 20th. So we hadn't a clear vocation for that. So we have a sub-holding now. We have redone the commercial and visibility part. We have got organized so as to provide consultancy management, services end-to-end to our commercial customers. And there is much room for growth, also because we have plans, while the subjects or the entities doing that were actually intermediaries between waste -- industrial waste producers and A2A with waste processing plants. We have optimized the value chain, and there is much value to extract from it. And here, you see the growth. We have assumed EUR 1.4 billion cumulative CapEx with EUR 0.3 billion EBITDA in Industrial Waste treatment until 2035, we will be more visible as for plan and waste that is a topic we have to manage. So the overshoot today, there's something we need to do. We are already working. For instance, through composting, glass processing, ashes are -- the ashes from the WTE plant. We are working in wood, in plastic waste, partly also in paper waste that you see, whether we can still optimize the value chain with a target of increasing the share of waste to material produced directly by our group. And here, you see the target we have set for our sector, EUR 700 million CapEx for that and EUR 100 million EBITDA until 2035. As far as Water is concerned, we have EUR 1 billion RAB until 2035. Today, we are investing -- you see 2022, '23, we are investing EUR 130 per inhabitant. Average in Italy is about EUR 60 per inhabitant. And in Europe, about EUR 100 per inhabitant. So we are above the European average to try and close the gap. Remember, 47% water leakages we have in Italy on an average. There are not many ways to solve that. You just need to replace 6-year-old water pipes. The authority greatly appreciates this investment, which doesn't have a huge impact on pricing, on our tariffs. And it's very interesting for us because we will reorganize remuneration in Water. And this is, for sure, a very attract, very important business for us. And we are also working with -- advance the technology. Target. Now let's talk about the energy transition part. And the objective is to reach 10 terawatt hour renewable production. We start for about 4 terawatt per hour of hydroelectricity, and we have a growth of our gain renewables as the objective to overcome 10 terawatt per hour in green energy with a customer base over 5 million customers. So we will talk about that. Another objective we have set for the grids in the energy transition, for our infrastructures, concerning the EUR 4 billion of RAB, we will have indeed 34,000 e-mobility charging point. We have reached the level of indeed city plants that allows us to develop e-mobility in Milan, 2,000 points in Milan of the 4,000 we have announced for the first 2 years. So we have indeed saturation rate of the first installations are done that are the double compared to the normal charging points, although we don't have the dedicated position and place and we should think about that. And 2.1 million electricity PLD. That is the sum of what we had before and what we have bought from Enel. So this is the operation we have announced, indeed, in the last few days just not to get you bored. This is a very important operation for us. So probably you know that both AGAM-ACSM are developing electricity metric. They started about 100 years ago. And one at the beginning of the year 2000, we have signed a decree, [ AEM ], the Milano networks, whereas, Brescia and then there is an acquisition of [indiscernible] in Brescia area. So the lighter blue area is the A2A historical part is about 1 billion RAB and 1 million [ PODs ]. So considering that the development of electricity networks regarding regulated assets was the nicest we could long for, I decided to go to Enel and check whether they were interested to actually sell us widening of our area, of course, around us to generate, indeed, operational efficiency. Because if you widen the network around us, of course, this generates a lot of benefits, you may imagine. And then luckily, we are in Lombardy, we are in Milan and Brescia, the provinces. So there's a rationale that coincides with the fact that there is a network that is particularly important with significant developments. Because in these 2 territories, there is a growth of [indiscernible] power peak, versus 30% growth in power peaks in Italy, so all throughout the country. So we bought 17,000 kilometers of cables and network, and 60 primary substation, 9,500 secondary substation. We are talking about value of above EUR 5 billion reconstruction. So a huge network. So this allows us to then be, by far, the second Italian operator in energy city networks. But in terms of distributed power, we are in the class of the top 20th in Europe. Probably we are in 17th in the ranking of distributors in Europe. And then we believe we will close the -- 31st December 2024, we will close it. And I will explain you why, because the closing requires some time because you have to actually move the physical station, because the energy passes from one network to the other. So the toll, so to say, measuring energy flows between A2A and Enel was in the boundary of the city of Milan. And we need to move the toll outside, and you do that installing meters, moving the networks. So we have done the easiest part so far, and now the -- the electric, technical part is involved. So we will have the electric technicians doing the hard work to establish the new boundary between A2A and Enel. So we have estimated that the closing date for the operation will be the 31st of December 2024. This 10% that remains with Enel as the rationale of the stewardship, meaning that there must be a collaboration to improve and maximize the performance of the systems. We have already done twice in 2023 in Milan and Brescia. They have been already absorbed by us, and there is a very good collaboration with Enel. Then we will also see, and also Luca will talk about how we will fund and finance this acquisition. Of course, we start with 2.4 basis. That is very good. So one part of it will be funded with our cash flows, and we have realized certain assets where we have the availability of allocate minority capital and the part of equity that allows us to close this operation quite safely. So very good. So I am very happy about that. I think that this is a historical operation. And for many reasons, it is a very unique, quite unique operation. Concerning future fit EBITDA, for sure, this is all will come from these networks. So the strategic rationale was future fit EBITDA and operational synergies, about 5% operational synergies between our networks, and all CapEx are indeed eligible for European Taxonomy, and that was another very important element for us, also in terms of financial costs and the quality of service. Because we have acquired a very interesting network that has a very good performance. Indeed, even last year, it was rewarded by ARERA, last year. But of course, the seniority of that allows us to make substitutions. We have planned important investments, so that there will be a CapEx absorption operation, because of course, there are certain assets that need to be replaced. But I still guarantee a very good performance. The network was very well built at the time. The Italian network was built from the '50s until late '80s. And then for 30, 40 years, no investments were done anymore. But now, of course, the DSO has a different rationale. Because if you think about [ 1.2 million ] wind and solar panels around the company, of course, makes a difference for the DSO. So we have power peaks and increase in consumption. So another big flow of investments starts where you can do it for 2030. So we have estimated a very important CapEx absorption, as you have read in my interview, it is like buying a kind of field where we can actually see there for the next few years. And indeed, actually collect a lot, gather a lot from that field. So we have EUR 1.4 billion cumulative CapEx only in Enel network. And on ours, there will be EUR 2 billion more, a little bit less than EUR 2 billion. So very important CapEx. And the interesting thing is that on this network, we have a cargo of RAB of 10%. So considering ours, we reached 11% with an EBITDA 2035 of EUR 200 million. And if we go to 2050, we reached over EUR 350 million. So here you see when we have indeed -- when I launched the plan in 2021, this was one of the slide. I'm also an electrical technician, so I have a great passion for that. So we had a CAGR -- a RAB from EUR 7 million to [ EUR 1.9 billion ]. And now with this operation, we have reached a very important growth. And you have seen 2 terawatt per hour. And Milan has a density of distributed electricity that is 5x distribution in Rome, and this tell you about A2A even before this acquisition was higher than Acea. Although Acea had 1.2 billion PODs, because the intensity of energy distributed in Milan is huge. So of course, even on this, there is innovation. For instance, that [indiscernible] station, that substation. And you see when the trains was under the water 2 weeks ago, then if you have heavy rain, those cables that were planned, indeed, years ago that have not the idea of absorption and say you have flooding on the water, substation -- the secondary substation are under the street, and it's right there under our walkway. So we have this problem. So we have indeed invented these underground secondary substation that can stay under the water for hours, like in the u-boats, and this is just taken out and replaced. And therefore, the resilience of the network so for this future fit idea, this innovation, is something that has been requested to us also from other parts of the world. In RES, we have a growth of solar energy and wind energy, EUR 4.6 million CapEx in 2035. And I'd like to underline the fact that we have speculated that we have a pipeline of 1.8 giga, quite balanced between wind and solar energy. Substantially, we move on the greenfield. So the biggest part with a greenfield, not to leave any value behind. And we have a very important part of middle stage. You know that this is a classical way of classify the pipeline. So we have 350 mega per year to be authorized. So we are just actually moving according to this plan. And what is important that we are doing this in a very balanced way among the regions throughout Italy. So also concerning their commitments in the various regions and [ modern ] share is very important because this allows us to have a development of photovoltaic indeed plants also in the Northern region. Because the commitment in PUN and the single price is very important, we are building a plant in [ Sulivenese ] Julia, Santo Stefano, and the entire energy produced is immediately consumed. So it is then quite easy to reach a very interesting prices, PUN. And then, what we still have is that we have a generation portfolio that is a very integrated and balanced. In 2035, we have a production of CCGT in terawatt-hour, that goes up according to PNIEC policies. So the hydroelectric that goes up as a result of the planned investments, about EUR 1 billion investments in hydroelectric. And of course, to maintain the concessions. And then we also have growth in the wind power, also with repowering of plants we have acquired and on the portfolio, and the solar plant and the wasted energy with 2 terawatt per hour with a fixed cost. Let me just show you something interesting that we -- considering our energy scenario. Let's see whether I can be effective in explaining it. Our waste-to-energy plants produce 8,000 hours of energy per year. The base load is concentrated in areas where there is a premium on the PUN, on the single domestic price. There are days -- in Italy, we have 6 billing areas, so 3 Northern and Central Italy, and then 3 in Southern Italy and in the islands. This is unique because the energy transmission grid cannot completely transfer energy from one end to the opposite. So it's just like having 6 separate countries. We have different zonal prices. You see the PUN in Puglia can be EUR 0, while in Northern Italy, you can have EUR 180. This is what is happening, right now. Therefore, it's very important to keep in mind that in a country like Italy, it's no longer possible to think in a logic where you take the average PUN and multiply it by produced volumes. You need to be more granular. 2 terawatt hours of energy produced mainly through WTE plants mainly in Northern Italy, where we have the most production. Here, you see the base load referring position of energy premium. Solar, we have a balanced situation between Northern and Southern and Italian Islands. Not programmable. So it should be discounted from the PUN because it's not programmable. Wind energy is mainly concentrated in Southern Italy and in the islands. So there is no wind blowing in Northern Italy. It's not programmable, but the production profile is very different from the solar one. So it -- you never have a discount on the PUN in this case. Hydro and CCGT, they are both programmable, 80% is in Northern Italy. And here, we have a premium on the PUN on the single domestic price, those doing dispatching, dispatch energy when they have the right prices. A result of all that, what are our main levers? Technological diversification, we have all generation sources, so we can leverage on that. We have hedging and PPAs with our customer base, you know that we have launched the mass market PPAs. They are doing very well. So we have a strategic dispatching capacity, and we have the capacity market. So this is the reason why we don't need to turn to production to plants from undercapacity market. So we -- this allows us to produce at the right time pricewise. The result is the average of the last 5 years. So we have a 10% premium on the national power price on the PUN. Our achieved national power price that we got in our financial statements, considering the national PUN, is plus 10% thanks to this effect. So in this plan, we have therefore assumed a change in the scenario between EUR 85 and EUR 100 of PUN national power price and we know we are systematically getting there, thanks to our energy dispatching and thanks to our generation fleet, with a 10% premium on the national price. Customer base evolution. There was some astonishment also on our side concerning closing of the bids of the tendering processes for other usages. We had been awarded many orders at good prices, and we were growing as a consequence of that significantly and, most of all, sustainably. In the last tenders, we have maintained our corporate style. So in areas that were interesting for us, we have submitted our bids. Most of all, where there was less awareness. And we have submitted bids at positive values. Frankly speaking, considering we are talking about customers who have profited from the safeguarded market, it's not easy to assume that there will be very -- become very dynamic. That's quite unlikely. So investing a lot of money in individuals, in consumers, the only logic for this investment is that after 3 years, when they get out of the safeguarded market, you can start telling, even if they are not specific commercial propension, so there was no rationale for doing that, we have submitted bids at positive values. We were probably the only ones in Italy. We have been awarded Palermo, Napoli, Naples and higher orders, 3 important orders in 3 important Italian cities, where we had low awareness. And at this point, we continue to develop the customer base with the tools that we have proved we can use effectively. And we need to be sensible to some extent when it comes to products. And this is probably what is missing in the industry, the PPA in mass market that have been sold. Starting from February 6 to end of February, we had already received 7,000 new contracts. Last year, we had launched on to the market 10,000, consider that the scheme is PPIs, A2A generation to energy. A2A Energy has green energy then that it can put onto the market. After that, since there was excess demand, we have opened for another 5,000. We have stopped the sales until February. There was no more green energy available. And this year, we have restarted with the target of having 50,000 new contracts. So we had assumed 5,000 per month. We are talking 10-year contracts. But as a matter of fact, we are proceeding very, very quickly. Despite the very different price last year, the pricing was different. We had a PUN at EUR 200. Now we are at EUR 90. The mass market price is still EUR 119, has not changed per megawatt hour. But despite that, we are selling them very, very successfully and very surprisingly also. And then we have -- we are also working with -- in all of our channels. Let me just show you very quickly the main channels. In 2023, we have acquired on the market 700,000 new customers. And of course, that's the results of a churn at rate. So here, you see the net figures Luca was describing, 400,000 customers. The digital channel is growing a lot. So none -- and the other innovation introduced 2 years ago by A2A, this is growing very successfully. So we assume between 2024 and '35 to have acquisitions in digital channels. You see the bar chart is our call center, which is an internal proprietary asset with our effective and trained employees. And through also the stores, the stores are needed to promote awareness all over Italy. Track record in acquisitions is very sound. We have doubled the digital acquisitions over the last few years, and we continue to grow here in digital. Brand awareness, we have travel data since 2020. Now we have a brand awareness of 58%. It used to be in 36% in 2020. And in previous years, it was even lower. So as of today, we have a very important lever linked to brand awareness and a low market share, as it is quite obvious. So we have a market share of 6.9% and awareness of 58%. So these 2 figures therefore give us very good assumptions to grow 14% per customer service stores in 2030, because we are still in a world where digital seems to be working well. There are customers who want to be fully digital, other customers who want to have brick-and-mortar stores for these services. Most of all, in certain regions, where we are less well known, we are implementing this double strategy. We are -- we feel we are on the safe side when it comes to attaining the target in terms of customer base. As you have seen earlier, CPO charging points, I have already made an announcement earlier. I don't want to dwell upon it. For sure, this is another innovation implemented by our company. It will be difficult to think we can develop CPOs today with CapEx per single plug that is very high. We have selected the opposite model. When giving the brief for discharging station, I have said I need a plug, which costs on EUR 0.1 of super fast CapEx, 100 amortization. This is 1/5, so it's nevertheless quite a good result. And this was necessary have a capillary development without dedicated installations. If you have a CapEx of EUR 100,000 per station, you need to have a dedicated approach, while if you have a CapEx of EUR 1,000 per station, recharging station, you can allow yourself to wait for electrification of the fleet to grow. Preliminary results are very, very promising. Let's now talk about financials with Luca. Luca will be presenting the financial part.

Thank you very much. So some figures. We have already taken a quick look at figures with Renato before me. Let's look at these figures, let start with CapEx. As you know, our business model allows us to maintain a limited risk and to have proactive management of our business in a sustainable perspective. In this plan, in the 3 years between '24 and '26, we have EUR 1.5 billion CapEx like-for-like, which is fully in line with what we had told, with the promise we had made when presenting the plan. So this has been maintained in November 2022. I'm referring to the previous plan, EUR 1.7 billion. There's a difference of about EUR 200 million per year due to the net effect of the cash outflow of EUR 1.2 billion for the acquisition, offset and mitigated by opportunities we have already identified in corporate assets. So as to open up to minority shareholders and to collect capital for the residual part, as we will see later. Thanks to financial sustainability we have attained, we have enough time to consider all opportunities to collect the financing of the market, also the opportunities that will enable us to maintain a strong commitment and protect our rating with the attendant rating metrics, of course. In terms of EBITDA, we grew with a CAGR of 6% until 2035, and the CAGR is 9% until 2026. So we will achieve -- we will overcome EUR 3.2 billion in 2035. And we will reach EUR 2.2 billion in 2026, which is another milestone inherited from the previous plan. In 2026, we had a target of EUR 2.1 billion. Here the delta between EUR 2.1 billion and EUR 2.2 billion is the EBITDA expressed by the networks we have acquired from ENEL. Profitability will exceed EUR 1 billion, the net income until 2035. In this bar chart, it will reach 0.6. If we deduct the scenario effect as we have done for the EBITDA, starting from 0.5 in 2023, we will, therefore, have a CAGR between '23 and '26 of 10% and until 2035 of 7%. Let's go back a while to the CapEx breakdown. This is a very central topic to us. Renato before me has mentioned that he was telling about the breakdown of this EUR 22 billion CapEx we have in the pipeline. This is a slide you have already seen in the old plan, with the only difference that, compared to the old plan, the part that we considered as low volatility, so regulated or contractualized, increases to 44%. The justification of that is a different mix of CapEx between regulated business, contractualized business and merchant business, most of all, CapEx in the electricity grid. The merchant share, 56%, is a merchant business, merchant part, with very limited risk. Because as we have seen also earlier, it consists of activities with an intrinsic natural hedging, generation, different technologies. We have seen how there has been an effective offset also under special circumstances as the drought, for instance, in 2022, where this offsetting mechanism with the thermal energy has proved to be very effective, the same in 2023. And also in Waste, we have feedstock, collection and waste treatment plants, and also offset between generation and customers offsetting. So it's merchant, but the risk profile is very, very controlled. And these CapEx generate an EBITDA which is well balanced between EBITDA with low volatility, accounting for 50% in 2026, and it any way remains in a very sustainable range throughout the arch of the strategic plan. How do we allocate capital? We have 3 main pillars. A strategic pillar, which has been extensively described by the CEO. So we look at the macro trends, energy transition and circular economy, with a target of maintaining a limited risk profile. We have a financial pillar, of course. So we want to have predictable cash flows -- predictable and stable cash flows with a target spread between average cost of capital and IRR for our projects of at least 200 basis points. And it should be sustainable, last but not least, enabling us to attain our ESG targets. So decarbonization, fighting climate change, attaining a recovery of material of waste. So I just go back 1 second with the objective we have set of, indeed, a target of, indeed, a return on investment above 9%. Sorry, I just progressed too far in the slide. So all these, by maintaining rigor regarding our debt profile, here it is, so on our debt profile, the NFP/EBITDA starts from an important flexibility situation, 2.4. And then there is also a period of growth as an effect of the investments we have planned, and then goes back again to 2.4. So again, regaining a significant flexibility. So quite solid, sustainable financial profile that will never goes above 2.8. And thanks to the various mitigation actions we will implement, again with the clear objective to stay in the range indicated by the rating agency for the credit rating, so 25% as an average. And indeed, this does not consider the fact that we have increased in some percentage points of the regulated EBITDA, but remains within these ranges. So in terms of cash flows, we will be able to dedicate as many as EUR 15 billion to growth. So of the EUR 22 billion cash flow generated, so taking away the part dedicated to CapEx maintenance, EUR 15 billion remains for growth. And EUR 15 billion is a quite important amount that guarantees a quite good flexibility in case of need. And this gives us a great comfort in terms of cash conversion rate after the maintenance CapEx, around 50%. And as I said, the objective is to have an investment with an average ROI of 9%. So let's talk about debt. We have debt mix. So this is a very prudent approach. We manage the due dates required in advance, and you see here that we have speculated to come from a fixed rate of 87% of our indebtedness to 70%, exploiting the opportunity of the decrease of interest rates that should take place in the next few months, so that we can work with this debt mix in a prudent way to actually have an appropriate debt cost. And the cost of debt is -- should be at 3% by 2026 as in the previous plan. And we are committed to keep below 3% in 2035. Well, in the last plan, it was 3.5% in 2030, with an average duration of our debt above 5 years. In terms of funding needs, EUR 7.5 billion, of which EUR 6 billion are for the refinancing of our due dates and only EUR 1.5 billion financial funding to fund growth. So funding, that will be more and more made of sustainable instruments. So financial that is sustainable financially, as G bonds that will rate 100% at the end of the plan by 2030, with a very reasonable growth since we are starting from 70%. So the dividend per share policy to close DPS policy will be in the plan now with a growth of at least 3%. 3% is the floor level, and we see this immediately made with the proposal we will put forward to the shareholders meeting, with a growth of 6% of the dividend year-over-year, so '23 over '22. Thanks to the very positive results we have reached, so with the objective to actually share our good results with our shareholders. So the final slide before Renato's conclusions. First, the guidance for 2024, we will reach EUR 2 billion EBITDA and a net income of about EUR 0.57 billion, EUR 0.59 billion. So I think this is a quite clear message. So you won't see the one in front of the EBITDA of A2A, I can guarantee you. So regarding the closing remarks, I would like to make just a couple of take-home messages, which are quite important regarding the waste or environment part is a quite important commitment. Regarding the social part, so within this plan, we have EUR 120 million in what we have called the neutrality project. We believe this is -- that the first problem for our country is the birth rate, then the climate change because we have a demographic situation, which is quite bad. And considering the statistics, we have 37 million people compared to the 60 million in 2060. So looking at the year 2060, we have tried to see whether the big companies can provide the contribution. So we have done a benchmark among all the big operations in Italy to see which are the family policies. And we have actually included in our plan everything that can be the sum of all the other companies, and it would be an increase of the cost of EUR 10 million per year, but we hope this will give us a result. And I'm sure and hope that all of the big companies will follow our examples. Of course, also, the site has to provide a contribution, but also the company. Also the growth, 40% of women in managerial positions is still one of our objectives. So regarding the governance for our ESG targets, I'd like to highlight this. Nowadays, and indeed, this explains as to why our plan goes to 2035. This is the environmental word. From now to 2030, we are working in our plan to 2030. So 76% of our CapEx is either ongoing or authorized, so either in progress or authorized. So we actually look forward. Regarding energy transition, CapEx, '24-'30, EUR 8.3 billion, and by 68% is either authorized or in progress. And this explains to you why we are actually dealing with a plan to 2035. Otherwise, we get bored because most of the purchase are being already authorized and planned. And of course, this is quite obvious. If you think about Monfalcone plant that we are building, that was planned 3 years ago. So now we have the on-site works. And of course, in 2 years, it is going to be operating. So of course, it is quite important to have this long-term vision when you have to build such important plants. So to give you this data, to tell you that the plan is very solid and robust and, of course, we have projects that also go beyond '21-'30. But just to give you an idea of what we have done in our Plan '21-'30, the deployment of this 3 years, but we have already planned and authorized projects for the coming years. For instance, surge in primary substation, the CCGT in Monfalcone, and then 30-megawatt plant -- the wind plant authorized, the solar plants authorized for over 100 megawatts and so on for the renewables part. So the very strong take-home message is that we have very much with our feet on the ground. Our [ hard day ] is, of course, in the sky in the future, but we still thinking about what we have to do now. And we need to take authorization for the energy environment situation, so you need 7x bigger pipeline to be able to do what you need to do, because you know our country is like that. And once you know that, you actually take the required steps. And I'm talking about the previous plan that lead us to these objectives. The new plan consolidates the growth. This is a CapEx driving plan as already done with that. You see EUR 2.2 billion and -- EUR 2.02 billion, that was a negotiation because I do not want to go below EUR 2 billion. And so of course, the rationale is that already in 2024 to reach EUR 2 billion, means to be -- they did not advance compared to the plan. In 2026, we should reach EUR 2.1 billion. And now we are EUR 2.2 billion. So we are exceeding the objective 2 years in advance. We have a very important hedging levels for the 2024, and you might have questions on this and also for the 2025. This is quite interesting, and this allows us to keep on track with this very robust profile. And this is very important 90% future fit to CapEx, and this is not easy. We're very proud of that. So I'm aiming to be at a company's hours managing EUR 1.5 billion cash flow and aiming to manage EUR 1.5 billion per year of future fit assets. So when you have big cash flows, you also need products in which to invest. And there should be a very significant future fit projects, a great attention -- as Luca was saying, great attention to WACC and IRR, the 7% EPS CAGR and a 6% dividend yield. So our shareholders should be quite happy. Thank you very much, and we are now ready to answer your questions. So be happy if someone can take my chair.

Francesco Sala, Banca Akros. Congrats for the results. Three questions. Can you share the hirings and acquisitions in WACC and infrastructures until 2026? Second question about retail. Do you see a margin squeeze in the last few months? Is margins are declining, is there more aggressive competition, more aggressive bids? Third question about energy generation. Can you please share with us your assumptions in terms of capacity market and MSD, so as to help us model also this component?

Let's collect more questions and then we will answer.

I was interested in your comment. You have said that your assumption is a PUN between 85 and 100, and you consider to attain 10% on top of that. Can you confirm that this is your statement? And what is your assumption for 2025 and 2026? Very interesting, the Slide 35. If I have understood correctly, the CapEx you're assuming in 2024, 2026, you are assuming an asset protection to fund the purchase of ENEL assets. If this is the case, can you please help me understand whether this dilution linked to the disbursal is included in your EBITDA and net income estimate? Third question refers to the estimates you are making until 2026 concerning net income and EBITDA until 2030. They look quite similar. In 2026, EUR 100 million more EBITDA, net income and EBITDA look the same in 2030, with -- compared to the previous plan. So what are the -- are you considering a different composition, a different breakdown of these figures? So less contribution from generation, more contribution from supply, from the networks. I would like to understand what is the underlying distribution and mix for the EBITDA and net income. They look quite similar in '26 and '30.

Paolo Citi, Intermonte. Two questions on generation. First question about renewables. I think compared to the old plan, there is probably an acceleration in growth shifting towards the second part of the plan as opposed to the first year. So 2.8 until 2026, with a limited growth, starting from 2.6. Can you please comment the draft circulated, the [indiscernible] decree? So about EUR 80 per megawatt for the tendering process. Is it a low level? Is it adequate also considering the bidding processes we have in Europe? Talking about Generation and Energy Systems, how do you see the potential development of new-generation nuclear energy in Italy?

Stefano Gamberini, Equita SIM. Echoing Paolo's question, I would like to understand about the [indiscernible] when this is approved. Do you consider that there will be a strong acceleration of CapEx in renewable energy sources? We haven't seen that so far. Many say that there is an issue with authorizations. And also visibility for a plant is by far higher after you have a 20-year at EUR 85, rather than in the merchant segment. So in your opinion, is there a risk to see these plants installed. So we are talking about plants, which will be operating in 2030, 2035 through [indiscernible]? Or do you still think there can be a shift so that we -- these targets are not attained? And then the scenario assumption in 2026 and '30, what's the assumed singular energy price for gas, for electricity? And third question, the CapEx in network, EUR 1.35 billion that you will have to pay between '24 and '25. You tell us that the CapEx difference is only EUR 600 million, net of the impact of dismissals. If we also include higher CapEx in the new grids, most of it are -- is funded as new stewardship and transfers. So what's wrong in my calculation? How do you maintain the level under 2.8? And then a question about the market. We have seen the breakdown of generation and market. Can you help me understand, in 2026, where you see the market in terms of EBITDA, vis-a-vis the EUR 360 million that had been included in the previous strategic plan?

Maybe we can now answer.

Emanuele Oggioni, Kepler Cheuvreux. I have some questions for you. First question, about the retail market. I have seen, doing a quick calculation on the number of expected customers in 2026 and 2030 related to the target EBITDA in your plan. There is an increase in profitability per customer as opposed to 2023. And I would like to understand what are the underlying assumptions and what is the visibility when it comes to increased profitability on the retail market, on the free market? And then concerning the vertical integration concept, the growth that you expect from the resale and sale to end customers in terawatt hours of electricity. So it's assumed to grow in a more sustained manner than internal production of electricity. So it looks as if -- I know it's not easy to add new renewable capacity, but it looks as if it cannot keep a pace, not because of internal problems, but because of general Italian problem. So the coverage with electricity sold to end customers, that is produced internally, gradually reduces over the time of the strategic plan. Can you please expand on that? And then I have a question about 2025, the first milestone where you have full contribution to the EBITDA of the acquisition you have made in ENEL networks. Can you give us additional information about the EBITDA, an evolution of EBITDA in the first years of the plan?

Maybe you can start answering. Let's cluster these questions you have submitted. Let's start with the WACC.

For WACC, we have moved in the wake of continuity with the values ARERA have expressed at the beginning of this year. For the deflector, we have considered a rate of about 3.5% in the first year and then a decreasing rate to reach 1.4%, 1.5%. For the MSD, it has -- we have closed 2023 with about EUR 140 million, EUR 144 million. So the forecast as per previous plan is a decrease to a level of about EUR 90 million, EUR 100 million, so a gradual decrease year-on-year. 2024, about EUR 120 million, then EUR 100 million. And then the value will stabilize between EUR 90 million and EUR 100 million. Should we follow the sequence of the questions? We have a question about the PUN, the asset rotation. Let's talk about retail. You should consider that 2023 has been a strange year because there was a very good recovery in margins better. 2023 has also seen relevant CapEx in customer retention to realign the customers. So we have launched a campaign. We have invested the EUR 60 million to allow our customers who had the wrong positioning due to -- linked to the ratio between fixed price renewal of contracts, where we could not get in touch with customers. Because of antitrust restrictions, we couldn't reposition them at variable price, so they have been renewed at a high fixed price. Once I have realized that they had a wrong market positioning, we have launched a campaign to reposition them, and this has cost significantly. And it was a one-off cost we are not going to incur in 2024. This is the reason for the growing marginality. As a matter of fact, there will no longer be this significant item of cost, which has had a strong impact on 2023. It will impact only partly in 2024. Then there will no longer be such impact. Our customers are all moving to variable price agreements, so we will no longer have this cost for repositioning the customers. As of today, we continue to have a low churn rate and a very robust, very solid customer base. We foresee continuous growth of the [ VAS ]. So the only reason for shifting, for changing to free market, the real difference is you have a customer with whom you can discuss and negotiate beyond commodities, and it's a win-win approach associated with the free market. So this is our target. And if we see the performance in the first months of 2024, this is very reassuring. And the same applies to the PUN, to the single domestic price power. We see a scenario ranging around EUR 90, as I said earlier, ranging between EUR 85 and EUR 100. We will see where it's going to end up. It's not always easy to predict. There are many factors influencing that, one of them being industrial production. And there are positive signals coming from the Italian Statistical Institute. But for sure, we are in a situation where, in 2024, we have a coverage of 70%, with a value of EUR 160, EUR 165. So we are already looking at 2025. For 2025, we have per 25% at 35 year generating EUR 10 per terawatt hour at fixed price above the PUN, the domestic price and then 10% overall throughout the plan, which is the empirical figure that we have systematically, we have taken the last 5 year time horizon to have a statistically robust values based on our dispatching capacity and other places where we have located our energy production and of course, also with the contribution of technologies. So all in all, this is a robust scenario. We have run this scenario, or EUR 110. Even if the Italian base PUN is lower, even if, it stands at EUR 85. There will be no problem to reach this to attain this target, this value. Talking about the assets and asset rotation considering that operation. As a matter of fact, what do we expect? We, as you know, we have very valuable assets. We could talk about the grids. We could talk about waste or renewable energy sources. In a company like A2A, we have high diversification and very valuable assets. So it's easy to find minorities contributing with significant equity. But, it's not that we need in terms of stewardship to do CapEx in grades, with this minority transfer, these support of the acquisition. But the EUR 1.4 billion CapEx that we have assumed in this grid is contained is envisaged then included in our ordinary cash flows. So we are assuming that the amount that we need to maintain a solid rating, a solid equity is between EUR 600 million and EUR 700 million. All the rest -- so there the value, the difference between EUR 1.35 billion, and the CapEx in this 10 years are all included in our CapEx plan, which is fully funded through our cash flows. And let me just anticipate part of the answer to [indiscernible] asking about the evolution of the EBITDA. If you remember the previous plan, the CapEx mix between Energy Transition and Circular Economy, it was more balanced. We had 60-40. Now we have 76% and 16%, respectively. Why that? We have shifted more investments towards electricity grid. So CapEx in electricity grid being the driver for this and balance. So it's true that there is a change in nature in breakdown and composition of the EBITDA in the next years of the strategic plan, we reduced production to CCGT. There is a change in MSD. We have growth of renewable energy sources, and we have significant growth of electricity and water RABs. So we will have a different mix. What can I tell you then? The company has taken a quantum leap so from EUR 1.2 billion to EUR 2 billion between 2020 and today, we have reached a plateau of EUR 2 billion . We will reach EUR 2.2 billion in 2026 with a downturn scenario that is partly offset by hedging and also by the fact that our CapEx generates about EUR 100 million growth in the EBITDA, EUR 100 million EBITDA growth every single year and consider also the EUR 100 million contribution from Monfalcone starting from 2026. So this mix generates continuous growth. We have also renewable energy sources. So there was a question about that. It is absolute true that in our plan, this has shifted forward because we want to do Greenfields. So we have done Octopus acquisitions that we needed to become a recognized player and now the big value comes from the fact that if I don't pay EUR 500,000 for installed megawatt tower of capacity. I need to do projects with my pipeline, and this requires some time delay. The ForEx for sure is useful, better to have it not to have it. And it is sufficient for the wind power, probably not. They have underevaluated the indexation. We had for the wind power, the photovoltaic prices going down whereas there is a hard time with winter plan. I think that ForEx decree is not going to push so much on RES. So there won't be development enough. So they will indeed revise the ForEx decrease. So when we have a decree to have a good data to push to the development of RES, it's going to be important. And so I hope that what the various category association they're doing now fully they are producing results, about EUR 110 per megawatt hour in the electric payroll. So this is quite important there is a great attention towards hydro electricity. But the development we have given to RES, which is not a monster development because it is a well-balanced development compared to other CapEx, and I believe this is absolutely sure because we have assumed a development that is consistent with the rest of the group's capital, EUR 22 billion CapEx of [indiscernible] on RES. And we will do that for sure. So this is quite sure we are not concerned about that, but I don't expect that ForEx decree generates acceleration on RES.

Oggioni was also asking about the contribution of ENEL Networks starting from 2025. There, the growth of EBITDA has been done in a weighted way compared to investments and considering the new [ RES ] regulation and not to create indeed faster money, EBITDA, but to create slow money EBITDA derived from growth in RAB as an effect of investments and therefore, growth of remuneration return from EBITDA from 2025 EBITDA starts with a good level of about EUR 100 million. And then there is a growth of 10% per year as we have already seen in our presentation. And as I said before, as investments are developed we will then reach values that as an average would be about EUR 120 million in the plan period and after the plan above EUR 220 million as an average. So just to make calculations that indeed have been circulated lately regarding the EBITDA I think it is more correct to look at the period of development. The average development period of this network and the EBITDA that can express an average because this is indeed, this is project with very important developed opportunities and value extraction. As a consequence, for the fact that this is a regulated asset.

So you should consider that a comparison between '23 and '26 between old and new plan, there is a decrease of about EUR 100 million generation, EUR 100 million decrease in the market. And indeed, we have and income much higher from the market and also a growth of about EUR 100 million on networks on the infrastructure as a consequence of the purchase of ENEL Network. And of course, the composition needs to be reviewed and will have a different profile for sure. And the concern is the nuclear power. My position on nuclear power is the following. As I've already said, in various public situations, nuclear power of this type. So we are talking about a reactor of about 200 or 300 mega. So [indiscernible] and oligopoly setting because of the operators that I can deal with such an asset are very few, and we are among those very few because you need to have mega investments with very sophisticated technology. So I could say that if the decision is for nuclear power investment rather than have so many competitors for solar panels, we will be just the 3 companies, they're doing generation. But I don't think this will happen in Italy for 2 reasons. The first reason is because investments are very high because there mass reactor of 200megawatt costs about a couple of billions and no one would build it without indeed the support of the state -- so public support. So I have a hard time to think that nuclear power is finance because no company would invest EUR 2 billion in a plant that is directly competing against RES because to actually recover the cost of EUR 2 billion you need a base load, but the base load would have hours of the day with a very low price. And it is also quite evident for that same reason that would compete with RES market and they would stop the development of RES. So in general, I am in favor of indeed Visa because in Europe, it's going to be difficult without nuclear power, but I would focus out to where there is no RES potential, and there are many countries without RES, without Mountain, Wind and Sun. We are a country -- we are third country the hydro electricity and also with Spain and Greece. We have a lot of sun and also a lot of wind in the islands. And we also have a lot of waste and rather than exporting waste or indeed they'd actually disposing them to landfill. We could cover very much with WTE plants. So we should think about European planning for sure, nuclear power is useful but not in Italy. My answer is no for development of nuclear power in Italy. Have we missed any answer to your questions?

Oggioni probably was also asking or maybe a part of this question.

The topic was terawatt hour of production. It seems that we have more grain power sold than produced? That was the question.

So that the growth of terawatt hour sold to the final market. Energy Supply business is a much higher than the additional capacity that you can have from solar and wind plants. So the vertical integration between generation business and the retailer market, so would go down.

So you should consider that we have the objective of reaching 10, 11 terawatt hour of our production of green energy. Then we have our indeed CCGT production that will work by modulation rather than baseload production. So when we think about our hedging between production and customer base. We always think about RES production at fixed prices. That's why we have thought about PPAs and in the mass market, where there is a big, indus production and for many industrial companies to close the PPAs for the part of RES production. So this part of hedging, so green energy and customer base. If we look at how we have the green energy, we are 6.7 terawatt hours. So with the growth of the sale of green energy, and our generation that is quite aligned, quite balanced. And we should also say that the mass market part is very important because it is a very stable with higher margins compared to B2B because our PPAs with mass market provide greater margins compared to B2B PPAs. So historically, we also have a very significant B2B part with big customers and also in the energy crisis period that was an important lever because many important operators abandoned, as you know, or actually they're not satisfied their customers. And so we had a greater customer base, but this customer basis that A2A Energy also manages through trading because this is a variable price contract and therefore, nowadays, there is not the situation of anything that we had some time ago because big customers also actually operate at variable costs, variable prices. A2A Energy sells more energy than we produce about the hedging part we are interested in is a green generation and customer base, especially mass market capable to close the PPAs. So we have 2 million customers with mass market PPAs absorbing 2 terawatt hour alone. And so that is a big part with indeed mass market PPAs. As so we are thinking about mass market PPAs, normal PPAs to reach 50% of the green generation that is covered by PPAs with the best margins possible. And then we also have 2-way PPAs. So you have seen the announcement of an agreement with Infinity and also other agreements. So we acquire PPAs from generators and with through the new platform, the new Infinity platform, we put them on the market. So some years ago, anyone who had wind plant or a solar plant that was on the market was sold. But now that there is a higher volatility also in prices, if you don't have an energy management, you cannot do that. Sell more and more frequently entities owning assets come to us and are available to actually solve the asset in terms of production to create platform that can be done only by company with a structured energy management. And that is for sure part of the development.

So I wanted to go back with the figures. Is it right to say that your solution for 2026 for price -- sales price of the production before it was EUR 130 2026, EUR 110 for 2030? And so with a decrease of EUR 20 per terawatt hour.

Yes, it is like that.

And the second question was, so strategically, this is a company doing development on renewables that are not so flexible, especially with regards to solar energy. So that 10% of historical premium could be a fair assumption that this premium should go down over the time? So meaning that you have so much production that is not a flexible, especial solar energy, why these 10% should be sustainable over the time?

For two reasons. Because the solar power development is balanced between North and South. So if you take a solar plant like the one we are developing 6-megawatt in [indiscernible] that has a price that is higher than PUN and also the case, it is a fundamental not to develop the entire wind plants in the South or in the Islands. So we are working a lot to find development opportunities in Northern Italy, where the area prices -- logistic price is much higher. So the solar might have an average PUN because historically, since we have not developed so much the solar power plant because that was mainly developed in out of Italy. So we don't have so much many megawatt tower in Southern Italy, and the new developments are being done in the North as well. So this is a balanced mechanism. So solar power that will have an impact of about 20% or even less or 20% of our generation that should maintain an average PUN level, so neither discount or a premium. So if you think about this territorial aspect and the solar percentage in our technological mix because if, we, if you are in a situation where the solar power actually has a lower PUN since the PUN remains as an average, it means that someone else has a higher PUN, and this is hydroelectricity. So if indeed the gap between those having to discount on those have been a premium, it's important to also have the higher part of the curve. So and if we have a worsened discount for the solar power, where we'll have an improvement as a premium in hydroelectricity or in thermo hydroelectricity.

How do you justify, and what is the reason why you are positioned to add a different price level than the indeed form a curve? So when you do this you don't look at the forward curve because you don't think that is a stronger price signal for what could happen 2035. Can you work on that? And I was also interesting in the strategic issue. Why a company selling assets and not reducing CapEx intensity? So, if you say, you accelerate on CapEx, but you also sell assets. Why don't you just delay or why don't you just reduce CapEx rather than selling assets? And then the last question was on the multiple you paid on the annual assets. So when you think about the multiple that is general how do you thinking about IRR and your investments? When you do your figures, so what assumption do you do to have an IRR that is interesting for you in terms of cost of capital?

So regarding the assumption of the curve, so we also work on forward curves, but we work on the curves on our pool achieved. So what we need to do to actually have a correct representation of the figures that we see, so concerning the PUN achieved. So it is different from the basic PUN rather than regarding the national flat price. I don't think we are the only company doing it. But every time we actually represent the data of PUN to the Board of Directors we have the basic PUN and the achieved PUN because it depends on the number of plants you have this PUN may change. So EBITDA curve, and we have indeed people doing this as their job, and we start from a general scenario. And on this, we then consider our PUN achieved with respect to our plans, for instance, we take each plant, the GCM plant,and we may think about the PUN for that plant, whereas you may not have the tools to be so granular. We do this granular work. So the curve we consider is a curve based on our plans.

And regarding the IRR of ENEL project, for sure, we have built a model where we have paid a smaller premium to ENEL compared to the return ratio. And then we have identified opportunities to recover an important part of this premium with synergies we will implement. So in the end, the IRR won't be very different compared to the regulatory IRR, I wouldn't talk about asset rotation. We have just talked about partnerships. So we're not selling, so pieces of our business units of our business with respect to your question concerning the capital intensity of investments. We have evaluated that selling a minority share on certain identified assets allows us to gain or to keep that financial flexibility also to protect our rating. And at the same time, to develop the growth. We have expressed through indeed the employment of cash flows coming from the management. So this is quite balanced and consistent with a very high flexibility and development CapEx that gives us flexibility to actually calibrate over the time indeed of things need to be correctly calibrated, but our reference point remains to maintain a financial sustainability and metrics and credit parameters protecting our rating.

Let me just add there something. You cannot evaluate ENEL network with a simple multiple because doing so when the whole plan is CapEx-driven, cash absorption and growing EBITDA is a function of RAB. The only metric you can use for these assets is DCF. So negotiation with ENEL for the sake of simplicity was a discount rate. We have a regulatory 1 post tax of 5.9, if they had sold at 5.9 they would have transferred the asset at 0 value for ENEL. So it wouldn't have made any difference for them. So negotiation has been on a point on some points on the fee that ENEL being owner of the asset has decided to retain. Negotiation was early on that. We have never used multiple logic it wouldn't have made sense over the time wind, the multiple is 6.2. Does it make sense? You can take the average EBITDA of the plan, 24-54 we have taken CapEx of 54% EBITDA at EUR 380 million, you start from EUR 100 million average multiple is 6.2%. But these are methods that are not really applicable in that case. So this was the real negotiating topic. Where do we recover the 0.05% WACC that we have lost? We recovered through synergies 5% to 10% through synergies that we can deploy and thus recover. And we can also recover thanks to our future ability with the new tiers to find and become even more effective. So the target we set for ourselves is to make sure that also this CapEx has a return that the return on investment is aligned to the regulatory one. And I can tell you that question to which we would like to get an answer is considering we are talking about unique assets here. There is no specific market. It's a unique was the attractive rate to be taken to be considered. So these assets can express profitability over the next 10,000 years for future generations. So this has been the starting assumption considering the fairness opinion, the rate is significantly lower than the one we have paid considering this logic. We are happy of how we have been negotiating. Of course, ENEL has retained a fee, but we have managed to get a positive result and a reasonable rate also for us. Why don't we reduce the CapEx? The answer is in the first 10 slides in the vision we were sharing earlier. There's no time to slow down. We cannot reach decarbonization goals until 2050. I would rather open up to minority capital and find an Australian pension fund which could be in Australian or any other pension fund we don't have any negotiations yet. But this is just to tell you that they might allow us maintain the speed of the pace because my impression is in Italy, in Europe, we are progressing too slowly considering the target we have. We shouldn't slow down it's better to find a travel made, allowing you to keep the pace and to continue the growth path.

And then there's one more question. A follow-up questions on my side. From outside, it's difficult to understand how generation margins can be attained. The EBITDA in 2023 was EUR 1.1 billion. So integrated margin 2026 is EUR 1.1 billion. What are the movements underlying that you have sold that EUR 170 in 2023 megawatt per hour in 2026, and there is a decrease. Are there any other elements to be considered to maintain the same value? Can you help us understand the data you were sharing about the market and energy generation? Second question is the scenario were different then your less per megawatt hour, what would be the sensitivity of the EBITDA? And then about waste. If I am right in the previous plan, there were WTEs to be acquired also through international operations. Do we have any visibility on what is going to happen between '27 and '30. So authorized CapEx or CapEx in progress. Can you help us understand how you are going to accelerate in waste? Can you expand on that? Can you share information about the new projects? I don't know [indiscernible]. Is it an attractive WTE project? And last question about hydroelectric concession. I remember last time you had announced there would be an extension of hydroelectric concessions. Now the bidding process has started, and we don't know yet what could be the future evolution. Can you help us understand that? So what's your assumption until year-end?

Waste. Let's talk about waste first. Let me just mention a couple of projects. We have received an award in the bidding process to revamping or implement the [indiscernible] WTE plant, which was managed by [indiscernible], we have been awarded the order, so a new WTE plant connected to district heating for [indiscernible]. We are now in the planning stage. And these are projects to be implemented until 2030. Then we have revamping of waste-to-energy. We have bought a plant with authorization of 150,000 tons, great profitability. It's another building site, which will start operating next year it will take 36 months to be completed, then we have Corteolona, Pavia, and other WTE plant after a long process for changes and amendments. We are now completing the process. So without mentioning Rome or Sicily easily because these are delicate project, we have anyway authorized projects in our pipeline. We have significant projects that have already been authorized so far. And then there was also another question about the bridge. There is an decrease in PUN in domestic power price, descending curve in '26. We have Monfalcone with EUR 100 million EBITDA. Generated the capacity market, It's a plant with 870 megawatts. We have won the capacity market for the full capacity with EUR 50,000, EUR 48,100 probably per megawatt per installed megawatt. So it's a quick math. We assume that it will start operating with about 5,000 hours of operation, then there will be a decalage in the next few years Monfalcone for sure in energy generation will offset. You have the descending effect of the PUN which is offset by hedging in '24 pricing in '25 and then rebound in '26 through the start of operation of the Monfalcone plant. And then there was also another question, Stefano, about the hydroelectric energy? You know that here in Lombardy, we have more than 1,000 megawatts of installed capacity, there was a bidding process well, for players, it's a hydroelectric plant, which is very, very small in size. And there is a rationale in that. The rationale depends on the fact that, as you know, Lombardy region has a guidance and ENEL has -- is interacting with the Italian government and is bringing forward the hypothesis of the fourth way. So reassigning the concessions as a return on investments. On CapEx, and this is the way which will be used also for the future. Why wasn't this part of the low decree on Energy? It's still in the low decree about competition, one of the milestones of the resilience and recovery plan in Italy. So in the context of negotiations about the flexibility of the resilience and recovery plan [indiscernible] hydroelectric could be one of the topic to be debated. It is political willingness that has not changed vis-a-vis that choice and the fact that instead of bidding concessions at [indiscernible] for megawatts to some extent, already gives an answer. So this is a signal which has been conveyed by the fact that it is necessary to find an answer, and this is triggered necessarily but here in [indiscernible] region where bids were withdrawn there have been discussion on IRR and other topics and pending issues, preventing shorter-term bidding processes. So as of today, in our plan, we have envisaged EUR 1 billion investment CapEx in hydroelectric energy in the way continuity. Considering the bidding processes. And then I could give the same answer I was giving a couple of days ago, giving an interview to [indiscernible] about electricity. So when you have the second player in a situation where you are very robust, very well organized, I don't see bidding processes as negative in themselves. When it comes to hydroelectric energy, that's more negative because of the timing for the concessions is 2029, so that's wrong timing. We are in a situation where we need to invest today to strengthen the hydroelectric capacity. We now have a flow of orders to the lakes, which has been modified for topographical reasons. So these structures are dating back to 80 years ago. They are no longer to date considering glaciers melting and what has happened in the last few years, in terms of climate change to attain a climate target, hydroelectric is central item. So we need to start investing right now. We cannot wait untill 2029 when the bidding closes and reassignment in 2035. Otherwise, CapEx will only start after 2035 it's going to be delayed for Italy as a country. This is the reason why we have assumed consistently with an interaction with institutional representatives, some growth in production. As you have seen from EUR 3.6 billion to EUR 4.1 billion that's the assumed increase. As though instead of a decrease, we assume growth linked to the CapEx we have.

Okay. We would like to thank you very much indeed for attending. And if you have any other questions, don't hesitate to contact the Investor Relations office of A2A. Have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]