Corporación Acciona Energías Renovables, S.A. (ANE) Earnings Call Transcript & Summary

Good morning. Welcome to the presentation of ACCIONA Energia First Half 2023 Results. I will make a brief introduction with a few points I would like to highlight and then pass on the floor to my colleagues, Rafael Mateo, CEO; and Arantza Ezpeleta, CFSO. I believe ACCIONA Energia is now a better company than when we did the IPO 2 years ago. Higher value, larger scale, more profitable, better and more pipeline and on the right track to prove our capacity to execute the 2 gigawatt a year of new capacity target. All in all, as I say, a better company than 2 years ago. Our investment activity is accelerating rapidly with 2.2 gigawatts under construction and 1 gigawatt of secured projects that will enter into construction in the next 12 months. So we are on track to deliver 1.8 gigawatts of installed capacity by the end of 2023 and very confident that we can at least install the same amount in 2024. From then on, we believe that we have the means, the pipeline, the balance sheet capacity, the supply chains, the manpower and the know-how to continue installing north of 2 gigawatts a year in the foreseeable future. 2023 is the year when we prove our capacity to add new profitable megawatts at the pace announced at the IPO, which I expect will ease the negative market sentiment that has been holding our share price back over the last 6 to 9 months. Of course, there are other renewable sector-wide investor concern. Inflation, interest rates, CapEx costs, supply chains, deglobalization policies or network congestion are undoubtedly challenges to be considered. In our case, we believe we have all those challenges sufficiently under control. Undoubtedly, we have experienced some delays in achieving our growth targets. But then again, '22 was a very unusual year with all the above-mentioned problems in their epitome. The war in Ukraine, total disruption in the global supply chains, anti-circumvention chaos in the U.S. PV market, regulatory instability, the PGM connection collapse, markets getting acquainted with inflation and interest rates hikes, all in an environment of unusually high energy prices that we all saw as temporary, thus somewhat making us victims of our own success as the levels of profitability would be very hard to match in future years. The ultimate change in the power price methodology for the current regulatory period in Spain has added to widen the delta relative to last year. But let me try to send a message of common predictability. In my view, the long-term outlook for the industry remains very bright. First, mega trends. The fight against climate change is more urgent than ever. There is an ever-growing number of countries committed to take measures. Social awareness is higher than ever, and we have the technologies available to transform the model. Also, energy independence has become a key strategic aim in many countries as the war in Ukraine has made it -- has proven necessary. All of this is leading to unprecedented policy support, privileged access to finance, economic incentives to develop the less mature technologies in the context of strong electrification of the global economy. We believe supply chain problems are pretty much over. And notwithstanding CapEx and financing cost, returns remain healthy as energy prices have settled significantly above pre-COVID levels. We are delivering profit above market and our initial expectations -- market expectations and our own initial expectations, in the order of EUR 600 million more EBITDA in the period '22, '23 and enjoyed exceptional ROCE in the last 2 years, return on capital employed. With respect to capacity additions and the commercial activity, we will be adding 3 gigawatts of total capacity since the IPO by the end of this year, that's 2 years ago, and signed around 8 terawatt hours of PPAs in the last -- in that same period. In terms of our 20 gigawatt target by 2025, the one that we announced at the IPO, we are approximately one year behind. But our projects are still here with significant new additions to our pipeline, and we will deliver in 2023 more than 3x what was on our business as usual annual growth in the IPO -- before the IPO. We believe we will be able to maintain and increase -- a similar pace of growth in coming years while being very selective and disciplined in terms of risk, returns and our balance sheet. We have invested EUR 3 billion since the IPO, and our net debt -- EUR 3 billion since the IPO, and our net debt has only increased by EUR 1.1 billion since. It is, I believe, too harsh from the market to attribute negative value to this. And in terms of paving the way for future growth, we have selectively opened new markets in Southeast Asia and Latin America and strengthened our presence in our core Australian, European and North American markets, which, as you no doubt are aware, are poised for tremendous growth. We are also positioning ourselves in additional emerging technologies such as batteries, hydrogen or floating. And of course, we are preserving our investment-grade credit rating and our balance sheet strength, which in the current volatile world, it is a very important competitive advantage. As for ESG, we have obtained ratings systematically at the top of the rankings. And I dare say, we are a sector benchmark. We work to ensure long-term economic, social and environmental sustainability, always sticking to our core values while also strive to maximize our short-term delivery. At the second anniversary of the IPO of ACCIONA Energia, I reiterate I firmly believe that the company has made great progress since that date, since the listing. And the general market environment is looking as good, if not better, than 2 years ago. As you see, I am optimistic despite a significant disconnect between the reality of the company and what seems to be the market perception judging by the stock price. I'm confident the markets will soon recognize the progress made in the last couple of years and in the exciting future that lies ahead of us in ACCIONA Energia and the rest of the group's sustainable infrastructure business. Thank you very much. Rafael, the floor is yours.

Thank you, Jose Manuel, and good morning to everyone. Let me please start with the key headlines for the period defined as the operating profit level, but power prices coming off the peak of the energy crisis we saw last year, especially affected by the untimely changes in the Spanish regulatory banding mechanism for the regulated assets. I'd like to mention that although the current price levels are more moderate, they are still being very good prices with around EUR 100 per megawatt hour expected for both 2023 and 2024. So we still have a very good year 2023 and at least another 1 or 2 years of elevated power prices. The Spanish generation EBITDA in the last 6 months of 2023 is not very different from what we had for the entire year before the COVID. In 2023, we are seeing the benefit of the balanced hedging and contracting we did last year, looking in very rich short-term prices for 2023, more than EUR 160 per megawatt hour, and also securing significant long-term PPAs at very attractive prices backed by our existing Spanish generation fleet, both the short-term hedges and the long-term PPAs with much better prices than we expected in our IPO plans. The output remains below long-term average, especially because the poor global resources mainly in hydro. We increased our stake in Renomar and the Spanish wind company where we have owned historically 50% with our partners. The company owns 494 megawatts and its average production is 1.1 terawatt hour. This is not a big acquisition. It's basically normal course of our business, a very natural thing for us to do as this asset that we developed in the past, and we are operating since the start now we are pleased to take the opportunity to increase our stake to 75% in this high-quality portfolio of wind assets as one of our partners decide to exit. We have paid just under EUR 120 million for the 25% of the stake, and Renomar had significant net cash position, implying that we are able to trade below EUR 0.9 million per megawatt with a fantastic asset base. The transaction is generating a significant capital gain in the year that is helping to compensate at the bottom line the operating results. In the next few slides, I want to focus on our construction plan for the current year and also for the increase in visibility for 2024 and 2025. I will also provide you with our update financial expectation for the current year 2023. Starting with the construction plan 2023. As you know, our commitment is to install approximately 1.8 gigawatts of new capacity in the year, which is very concentrated in 2 geographies: North America and Australia, with ongoing U.S. solar projects such as Fort Bend, Union, High Point, Red Tailed Hawk and our largest project under construction, the MacIntyre wind farm in Queensland, Australia. We are broadly on schedule with a busy second half of the year, but on a schedule. During the past 6 months, we completed the installation of 442 megawatts, and our construction schedule is back end-loaded, planning 650 to 700 megawatts constructed in each of the next 2 quarters. Starting with MacIntyre in Australia, we are currently in full by an erection with 38 machines of 5.7 megawatts each completed as of June and in the process of increasing our current installation rate of 10 to 12 new turbines per month. Yesterday, we had 47 turbines or 270 megawatts already erected. In the U.S., in contrast with the disruption in module PV supply that we had in 2022 aggravated in the past by the anti-circumvention issue, this year, the things are going very much better. Although we had at the beginning of the year some potential delays with one of our Chinese supplier, which was anticipating the problems within the U.S. border, today, we had been able to resolve well early in March, procuring more from our new Tier 1 manufacturer coming from India. Today, our module procurement plan for Red Tailed Hawk in the U.S. market has even accelerated by a couple of months, which means that we are receiving all the modules for the project. And if everything goes according to the plan, we could potentially even increase the planned installation at this site from the initial 150 megawatts in the year to 250 or 300 megawatts in this year 2023. In Spain, we are expecting to ready the construction permits and local license imminently to start working on the sites as soon as we can. In Peru, we are on track with our Marcona wind project. Looking at the big picture, we have a lot to do in the next 6 months, and there are obviously some challenges, but also some upside opportunities. And we are really very confident that we will be able to reach the target of 1.8 gigawatts new capacity installed at the end of the year. This is at the top of my list. We are extremely focused on completing the plan for the year, and we have the capabilities to deliver and to maintain this new pace of growth going forward. Turning to the Slide #8. We have been very busy evaluating many projects in the last few months, approving more than 1 gigawatts of new capacity as well as rejecting or postponing opportunities in some markets that today were not matching our expected return targets. At February at the full year results presentation, we were showing to you 1.2 gigawatts of identified capacity addition for 2024, basically comprising the tail end of MacIntyre, the Red Tailed Hawk, the first part of the Aldoga PV plant in Australia, a couple of wind projects in Australia as well as a bunch of new Spanish assets, which had, after a long wait, obtaining the environmental approval. As of today, the total fully secured capacity for 2024 stands at more than 1.7 gigawatts with the addition of Forty Mile wind farm in Canada, 280 megawatts in the Phase I, another 160 megawatts of PV in Dominican Republic with very high PPAs, more than $90 megawatt hour of PPA, and some additional Spanish projects. We have included also in the chart, 413 megawatts PV project in India that we are securing in the next weeks, in which we'll add 125 megawatts extra in the 2024 construction schedule with the rest of the project delivered in 2025. We are also increasing fast visibility -- no, yes, the visibility of 2024. We are increasing the visibility of 2025. And we have already a very good idea of what projects we are going to build in 2025. In the slide, we show you the expected regional split. We are not showing you the names of the project as yet as some of the projects are in the internal process of getting the final investment decision. But they will be approved in the next few months, and they will start to fill the activity in the next years. That is including additional solar in the U.S. in the PGE market, potentially batteries and other battery storage in ERCOT in Texas and potentially some projects in the U.K. market. In India, I mentioned the large solar project we are securing that will contribute both 2024 and mostly 2025 in terms of capacity. In South Africa, we are advancing with a view to contract and build 3 wind projects totaling around 325 megawatts and considering also a new battery project for the next tender in South Africa next month. In Australia, we will complete the final 185 megawatts of the 433 megawatts Aldoga project. So we have additional good visibility of a couple of PV projects in Central America, adding more than 200 megawatts and same in Croatia with our project solar PV Promina with 183 megawatts. And in Iberia, we have a significant pipeline of solar projects, mostly hybrid, and we are considering only the most efficient for now or the best contracted. With all these projects, we have secured, as I said before, not just 100% of our capacity for 2024, but most of our new capacity to be installed in 2025. So we think we have today very high visibility of at least 1.8 gigawatts in 2024, and we can do without any doubt today another 2 gigawatts or more in 2025. With that, we will reach our IPO target of 20 gigawatts by the end of 2026, sometime in the early 2027 as the latest. We expect to reach and stay at the 1.8-gigawatt mark in 2023 and 2024, which is a well-balanced target for us. And then we will increase to our increased speed of around 2 gigawatts per year. We are living today in a world of plenty of opportunities for investment and higher power prices, but also with more uncertainty for permitting, for grid access with higher and more volatile CapEx and higher interest rates. Even the module prices -- the PV module prices are falling strongly. Today, each project has to be analyzed in its own merit. It has to fight its own case. There are not blanket green light for any particular region in the world. We can say that achieving the right returns is easier in some geographical areas: Australia, the U.S., Spanish for wind; Spain for hybrid PV. But in other markets, we may have to develop to be ready for the current moment. This is the case of Brazil today, where we are waiting for the current moment or in some markets, we are postponing projects that we don't see today our required return. We can do that because we have a well-diversified pipeline and a well-diversified geographical presence in several markets and because we are not in the race to growth at any cost. We will grow in the future at unprecedented rates. We have the origination and the execution capacity for a run rate of 2 gigawatts or more per year, and we want to capitalize on our increasing momentum. But we will grow at the right pace at the speed that we can digest from a financial and a credit perspective point of view and always protecting our highly profitable existing business. We are, for example, considering some sizable development opportunities in battery storage or in utility scale floating offshore in the future that will significantly increase our capacity plans in the next few years. To accommodate the run rate of 2 gigawatts per year or more in our balance sheet, we will be open in the future when we need it or when our financial ratios demand it. That is not today. We will be open to alternatives, such as minority partnership or as well as selective rotation of mature assets if it would be the case and the opportunity. In the next slide, #10, and with respect to the outlook 2023, we have today half of the year behind us. The Renomar deal secured in the medium for power prices stabilized around 100-megawatt hour mark. In this context, our current EBITDA expectation for the full year is in the range of EUR 1.2 billion, EUR 1.3 billion based on Spanish fuel prices of around EUR 100 per megawatt hour in consolidated output for the global fleet of around 22 terawatt hour this year, taking into account the low hydro output for the rest of the year. In June, in the past month, the unexpected and extraordinary review in the Spanish regulatory price assumptions, the change of parameters for the current 3-year period had a significant negative impact in our expectation. Nevertheless, it's just an accounting effect, not affecting cash, not affecting the value of the company. And we will recover in the future this positive accounting effect in 2026 in the year -- in the following years. The Renomar transaction is contributing both at the operating profit level and at the bottom line, on top of the capital range generated by the revaluation of the company as it becomes today fully consolidated in our accounts. All in all, this EBITDA that we are projecting for 2023 is still above the levels that we expected at the time of the IPO despite of lower output in the year and less investment in 2022. This EBITDA implies a significant growth relative to 2021 that was already a very good year if we look through the absolutely exceptional 2022. In terms of net investment cash flow, we expect to be close to the EUR 2 billion, and the net debt-to-EBITDA ratio will be around 2.5x. Finally, I like -- I want to share with you some decisions I have made with respect the top tier of the organization. In the light of the rapid growth in size, in geographical footprint, in new, more renewable technologies and more activities related with the energy transition, I want -- I need to reinforce the operational control of our global businesses. For that, I have created a new position -- a new Chief Operating Officer position designed to supervise all the global and operating activities of the company. That's a position that will be assumed by Arantza Ezpeleta from next -- August 1. Jose Entrecanales will assume on the same date the role of the Chief Financial and Sustainability Officer on top of his responsibilities in the Strategy and Corporate Development. Congrats to both. Arantza and Jose will work even more closely and more directly with me, supporting myself in the most relevant operating and financial matters and decisions. Thank you very much, and let me hand the floor to Arantza to review the financial and operating performance during the first half of the year. Thank you.

Good morning. Thank you, Rafael. Let me quickly run through the key financial and operating figures. Revenues fell by 20% to EUR 1,760 million as a result of lower prices in generation and supply activities. Generation revenues fell by 24%. EBITDA is down to EUR 686 million, falling by 25%, in line with revenues. Generation EBITDA in Spain is down, while international improves. Earnings before tax are flat at EUR 567 million despite decline in EBITDA and a slightly higher depreciation charges thanks to the Renomar revaluation financial charges that are not increasing significantly and the partial reversal of the power concerns that we mark to market through the P&L, which last year contributed a significantly negative result and this year is a positive contribution thanks to lower market prices. Net investment cash flow of EUR 1.5 billion is twice as high as in the previous year balancing the strong acceleration in our growth. Net debt increases by around EUR 1.5 billion to EUR 3.5 billion, reflecting the front-ended profile of our investment this year and the payment of the dividend. We expect net debt to be lower at year end. With respect to the key operational figures in this slide, let me mention that consolidated capacity stood at 10.8 gigawatts, growing by 1.5 gigawatts, out of which almost 500 megawatts are related to the consolidation of Renomar. Consolidated output grew by 2% to 10.5 terawatt hours, while the average price fell by 26% to EUR 86.2 per megawatt hour, which explains the 24% decline in generation revenues. Availability improved to 95.8%, and contracted output stood at 77.3% for the period. With respect to the ESG metrics in Slide 13, on the social side, we report a large increase in staff due to integration in ACCIONA Energia of the ACCIONA Group renewable energy O&M services company around last year. We increased the number of women in managerial positions and decreased the accident frequency index. On environment, the alignment of our CapEx with the taxonomy stood out. Emissions increased due to the change in methodology for leased vehicles that go from a scope 3 to scope1, and we will mitigate this later in the year by reducing the scope 2. Waste to landfill increased due to boiler cleaning waste and removal of contaminated soil. Zero used blades go to landfill, and we are working on a pilot to reuse blade materials. We have also increased the voluntary tree planting in a major way. On governance, on track to audit 100% of our critical suppliers by year end. We approved a new ethics channel policy for the protection of those who report on regulatory violations and corruption. And finally, we published our unique impact financing framework, which is very innovative and introduces a local impact component to enhance both sustainability linked as well as green use of proceeds instruments. In Slide 14, you can find detail on the breakdown of the EUR 1.5 billion of total investment during the period with EUR 1.1 billion of gross CapEx concentrated in the U.S., Australia, the Americas and Spain and over EUR 400 million of net CapEx deferral. A significant part of it represents the payment in January for the Cunningham Battery Storage System agreed at the end of 2022 and disbursed in early January. In Slide 15, we show the cash flow for the period. Operating cash flow amounted to EUR 383 million with negative working capital reflecting, in part, that we paid back the excess regulatory income cast in during 2022 and which was provisional and dependent on the final government calculations which were published very late in the year. Financial results increased from EUR 40 million in the same period last year to EUR 52 million, reflecting higher net debt and higher average cost of debt. Net investment cash flow of EUR 1.0 billion has already discussed, and then the payment of the dividend for EUR 230 million. The acquisition of Renomar brought around EUR 100 million of project finance debt and EUR 161 million of cash to our perimeter. That takes debt before IFRS 16 to EUR 3 billion and to EUR 3.5 billion with IFRS. With respect to the debt position, I would highlight the higher average cost of debt during the period, which increases to 4.3%, with the cost of corporate debt at 3.35% and projected at 8.5%. Our cost of debt is gradually reflecting the higher base rates, which have increased by 250 to 300 basis points in the last 2 years or so even if the spreads are under control or even lower in terms of incremental financing. We have roughly 50% of our debt variable as we prefer to have a balanced position and not to lock in the current high rates for the long term with a view that as inflation pressures ease, at some stage, interest rates may correct. With respect to the average debt maturity, it has increased mainly as a result of the Australian dollar corporate facility device for MacIntyre project, which has a 16-year door-to-door term, which was possible thanks to the restructuring with CESCE, the Spanish Export Credit Agency under its green policy. We issued our third benchmark green bond in euro at the end of April, a EUR 500 million 7-year bond with a coupon of 3.75%, implying 78 basis points over mid-swaps. It was another very successful transaction on the back of our profile as pure-play renewable energy company with top ESG credential and investment-grade rating. We tend to trade and price tighter than similar rated companies. For your review, we include a summary of the Spanish power market dynamics in this slide, much lower prices than the previous years with the first half of 2023 at EUR 88 megawatt hour versus EUR 206 megawatt hour in the same period last year in a context of declining energy commodities of the peak. The blend of actual prices so far this year and forward suggests a price of close to EUR 100 megawatt hours for the year as a whole, and this has tended to stay relatively stable in recent months. And prices in the forward market in December are higher than the realized price in December 2022. Forwards for 2024 are around at the EUR 100 megawatt hours, and they have traded between EUR 90 to EUR 105 per megawatt hour for a few months now. Hydro reserves for the country remain below 5-year averages in another very dry year. In Slide 18, you can see the main driver for the Spanish generation business with revenues down 32% to EUR 569 million. Output is up by 3% to 5.1 terawatt hours with lower proportion of regulated given the very high prices in the last couple of years, which has been, in turn, contracted to maintain a highly visible profile. The average achieved price falls by 34% to EUR 112 megawatts, reflecting the lower wholesale prices uplifted with a significant benefit from the hedging carried out for the period and with limited impact from the regulatory drivers. The gas clawback during the period amounts to EUR 19 million, which is why the achieved price in the unhedged volumes for the period is EUR 7 megawatt hours rather than close to EUR 90 megawatt hours. In the next slide, the total EBITDA in the Spanish business declined by 38% to EUR 419 million relative to an exceptional first half in 2022 of EUR 676 million. Generation EBITDA fell by 36% to EUR 430 million with lower prices and some impact from the lower output when we exclude the new assets as well as the regulatory change we have already mentioned. The contribution from the new assets and Renomar in aggregate mitigates part of the effect of the lower prices. In Slide 20, you can find some statistics on the markets we operate as well as the evolution of commodities and the main exchange rates that affect us. I would note, the button of very high prices globally during the mid-part of 2022 and how that has corrected following the path of energy commodities. With respect to the key drivers for international generation revenues, volumes are up by just 1.4% with another year of weak resource, more than compensated with the output from new assets. The average price falls by 8% to EUR 62 megawatt hour with prices declining in all markets except for Mexico, where we had high income from capacity payments. Generation revenues declined by 7% to EUR 334 million. Total international EBITDA grows by 14% despite the lower revenues thanks to lower repair and maintenance costs relative to the previous year and to the nonrecurrence of the impairment of the Moura power station at Portugal at the end of its feed-in tariff period, which reduced the equity accounted contribution at EBITDA level. And with that, let me hand back to the Chairman.

Okay. Thank you, Arantza. We're going to go on to the Q&A. We have a long list of questions, which we will be -- we will try to answer.

Okay. First question comes from Flora Trindade, Enrico Bartoli, Oscar Najar, CaixaBank, Mediobanca and Banco Santander [indiscernible] in the coming years, what are your expectation regarding returns? And whether we can detail the percentage of Spain on target additions until 2025? So Rafael?

In Spain, we are going to add in the next period '21 -- 2025 something around 1 to 1.5 gigawatts. That means something around 15%, 20% of our total global installed capacity for the period. That's clear that we are very -- mainly, we are going to invest in wind, all the wind that we can. We are considering, when we decide to invest in wind, the profile, we prefer wind or night wind profile in order to compensate and to capture better prices with positive covariance. In terms of return, we are maintaining our spread, our financial discipline in all the projects that we are constructing in Spain and in the rest of the market. And according with our solar new capacity to install in Spain, we are initially considering the hybrid, looking for the most efficient hybrid projects in terms of OpEx, in terms of CapEx and always contracted as generated.

Let me add that we are -- we remain to be very strict in our return expectations and our return policies. And all we do in Spain and elsewhere is abiding to the 200 -- north of 200 basis points margin. In Spain, we have approximately 5-point something WACC, 0.4, 0.3, I'm not sure exactly where. And all our projects unlevered and after-tax are -- we are returning above the 200 basis points, which should be 7.5, 7.6. So yes, we remain disciplined on that...

That's clear. Thank you.

Okay. And I'd also like to add that I don't see -- we don't see the amount of new installations in PV going to the levels that PNIEC has projected, the national plan for energy and climate, because investors will, of course, as you are being sensitive to, are also sensitive to the possible impact on prices. So unless there is a new significant source of demand, which, by the way, I think, can be the case in the front of the hydrogen which, as you know, we are starting our plant in Navarre with very interesting price expectations in terms of our cost of hydrogen. So we believe that actually can become a reality as a source of significant demand, which, of course, would offset what now seems to be somewhat excessive capacity installation contemplated in this national plan. So going on to question number 2, which comes from Flora Trindade in CaixaBank, asks whether taking into account the acceleration of CapEx and doubts on the evolution of prices in Spain. Will you consider asset rotation? Well, asset rotation will always be considered selectively and of course, when we exceed our balance sheet capacity. And by that, when -- I mean, when we exceed our investment-grade protection, so balance sheet capacity will be determined on investment-grade protection as a very strict rule. So if that were to happen, we would indeed consider asset rotation, but that's not predictable, that doesn't look likely soon. We do -- we may selectively, as I say, consider streamlining some countries. So concentrating on strategic countries, and therefore, maybe rotating assets in regions where we don't see scalability and, of course, in any event where we see a very high price offer that also will be a consideration. Question number 4 comes from Enrico Bartoli in Mediobanca and says, how much was the impact in first half '23 EBITDA from provisions related to the new reference price in Spain for regulated assets? Any additional impact expected in second half of '23? Arantza?

Yes. So as you can imagine, we are not happy at all with the change in the regulatory parameters halfway through the year. It is very difficult to plan, to budget, to communicate to the market when the regulatory review for the current semi period takes place in the middle of the year and not in December when it should have been done. The impact of this change in the banding adjustment is in the order of the EUR 200 million, which would have significantly offset the P&L impact of lower prices. This is, of course, as we have mentioned before, noncash value neutral is just changing -- it just changes the timing when you receive the revenues coming from the regulation and does not have any impact on current or future market revenues or regulatory income. In general, and as per the other regulatory accounting effects, the Spanish regulation accounting system is quite complex. I will not enter into the details, but just to mention that on the basis of the power prices estimates for 2023, today, the changes -- and the changes in the perimeter, the result of the regulatory assessment has ended up being relatively neutral.

Thank you, Arantza. Question number 5 comes from Fernando Lafuente at Alantra. And it says, have you considered a share buyback program given the trading of the stock, which is not far from the IPO? Let me answer that. Yes, indeed, we are seriously considering this possibility. There's, obviously, a very clear arbitration in terms of the fact that our megawatt in terms of stock buybacks would be valued at around probably below EUR 1 million when, as you all know, there has been transactions in the Spanish market very recently at EUR 1.8 million. So it's possibly the cheapest megawatt we can invest in is our own through share buyback. We do, of course, take into consideration the liquidity factor, the commitment to the rating agencies to maintain the rating -- the investment-grade ratings and our investment capacity in greenfield megawatts, which is what we do for a living. But yes, indeed, it is a consideration taking very serious thought. Question number 6, regulated generation volumes hedging. Why do you still consider Spanish-regulated output within hedge PPA given the strong volatility of results and cash flows recently? Would you change your hedging/regulated policy in this part of the output? I'm not 100% sure of the nature of the question. But I think what it intends to say, Arantza, is that why would we consider regulated assets as within our hedge to a PPA given the changes in the parameters and the volatility that creates. I think, this is what is meant.

Yes. I think I understand the question the same way. And I mean we still think that regulated Spanish output should be considered contracted. It is true that given the volatility of the prices in recent years, especially last year, but this was a very exceptional moment. There are like huge changes in the P&L, but we still think that the regulated Spanish output should be considered as contracted, no matter where. It works as regulated. It gives us a floor. So -- and very predictable cash flows despite this very specific and special -- extraordinary volatility environment.

Yes. And prices are around the 80- to 90-megawatt hour in this -- under the circumstances. So we believe it should be considered as regulated.

Yes.

Question number 7, on Chile and Australia. Lower prices -- sorry, Oscar Najar -- sorry, I forgot to say that the former question on generation volumes and hedging was from Fernando Garcia at Royal Bank of Canada. The next question comes from Oscar Najar at Santander and Enrico Bartoli at Mediobanca. Chile and Australia, lower prices than in first half '22, what is the situation in these 2 countries? What can we expect in the coming years? And what may the solution be for Chile? Rafael?

Okay. Yes. In Australia, we had a very high prices in the last year due to the gas prices at very record levels due to the context of the Ukrainian war. Today, the prices are more normalized, especially for wind. And today, in Australia, we are offering wind profile PPAs at the level of close to AUD 100-megawatt hour. So prices are being normalized, especially for wind in a very high level. Going to Chile. Chile is living, as you know, a very complex situation, especially in the past year. Better situation in 2023 given the grid congestion in the -- between the north and the center of the country, especially because the delay in the promised investment in new transmission alliance from the government and the excess of solar capacity in the north saturating the nodes. In the northern situation was even worse in 2022 -- in the beginning of 2023 because the high prices of the asset because of the war. Today, the government is, knowing very well the situation, is working on the approval of the new law, the second time renewables law, that is going to modify the prices -- split the prices in between the different actors. The law is going to be approved at the beginning of 2024, and the situation will be mitigated and normalized in the future.

Australia. Yes. And let me add that the law is already going to parliament. So it's a tangible promise by the government. On question number 8, Spain normalized output. What would be the normal output in a fiscal year basis with the current assets in Spain in a normalized situation for hydro and wind? And that comes from Santander, from Oscar Najar. Rafael?

Yes, on the basis of existing capacity today in Spain and with the contribution from Renomar with the hydro that we have today, the total output is around 11.5 terawatt-hour per year. This is the annual output perspective.

Thank you. Question number 9 from Roberto Ranieri at Stifel. Can you give an update on the progress of the MacIntyre project in Australia? Why don't you, Joaquin, the Head of Project Construction, take that question? Joaquin Ancin?

Thanks, Jose Manuel. Yes, we are having very good progress according to our expectations in MacIntyre. We are advancing, I would say, in cruise speed in all the activities, so including civils with foundations and platforms tracked by erection, we have, as Rafael mentioned in his presentation, around 275 megawatts already erected, planning to finish with the 650 megawatts by the end of the year. In parallel, with very good progress also in the evacuation infrastructure for the substations and alliance to evacuate year end, we will expect to start the energization progress -- process, sorry, as scheduled on Q1 '24. So good progress on MacIntyre.

Thank you, Joaquin Ancin. Question number 10, also from Roberto Ranieri at Stifel. Do you see grid connection as an issue for capacity development and operations? What are the main issues on capacity development in general? Rafael, why don't you take that one?

Yes. It depends on the market. The grid connection is obviously -- could be a bottleneck for the expansion in new capacity. It depends on the market. In the case of Chile, as I said before, that is a big issue with the grid connection. It's not the case in Spain, not yet because the grid is very robust. But we are seeing the different issues that are affecting the capacity of development. The permitting could be an issue, especially because the permitting is being delayed because of lack of staff in the different government bodies in order to approve the environmental permits or even the social acceptance or the local acceptance could be an issue in some projects. This is not affecting to us in our development because we have -- we are also having a very early good approach to the new territories where we are going to install our projects as a new neighbor in the area and with long-term build of our stay there in order to improve the social and economical conditions of the area, adding the social acceptance from the beginning of the project. But this grid permitting and social acceptance could be an issue in order to delay the capacity addition.

Well, let me add, however, that our capacity additions have -- our projected capacity additions have contemplated that problem. And of course, we are assuming in the short run. In the long run, we don't know whether that is going to be -- the process -- the political process in Europe is to improve on that fact. So there is new legislation being issued to facilitate the permitting process. We still have to see what the result of that legislation is. Question number 11 from JBCM, Jorge Guimaraes. Why the working capital consumption in ACCIONA Energia in first half '23?

Yes. So approximately, we have EUR 200 million of outflow, of which almost half of it, as I was mentioning in the presentation, is related to paying back to the system the excess regulatory income that we have last year. You may recall that the regulatory income was cut last year given the high prices that were seen in the market. But the final resolution didn't come until late in the year. So we collected, so to speak, more than it was due, and we had to pay back. And that is related to do that, and the rest is just the normal course of business movements. And we expect towards the full year to have -- to improve the working capital figures compared to the ones in at this point.

Next question from Fernando Lafuente at Alantra is on Renomar contribution in second half.

Yes. So it could add another EUR 40 million to EUR 50 million of EBITDA in the second half relatively to what we would have had on an equity accounted basis, which would be around EUR 15 million to EUR 20 million of the -- in the second half of the year. I don't know if I should add into the details. I think that's what we should be getting compared to the equity accounted.

Yes, we haven't got much time. So I think if Fernando wants more detail, we can direct him.

Yes, we can just explain more in detail. Okay.

Question number 13 is what is our strategy in green hydrogen and electrical vehicle chargers? How much resources would be allocated to these activities? Why don't, Jose, you take this question?

The answer is we've been allocating significant resources to both initiatives. On green hydrogen specifically, those resources are dedicated to 2 joint ventures that we launched at the 1 -- 2 years ago, which is the joint venture with Plug Power, which has been making good progress; and another which we announced at the beginning of 2023, which is a joint venture with Nordex called ACCIONA Nordex Green Hydrogen. In ACCIONA Plug, the joint venture with Plug Power, we have built a significant pipeline of over 300 megawatts of electrolysis in Spain and Portugal, and that is progressing well with 1 project moving ahead at a good pace, which is a project in Navarre of 25 megawatts, which we expect to reach COD on in early 2025. And it's a project that we, as was mentioned previously, we think we can achieve reasonable levels of competitiveness even without subsidies. On the ACCIONA Nordex joint venture, that is an effort or an entity that seeks to develop large scale off-grid projects in different parts of the world with the -- in areas with exceptionally high renewable resources with the objective of reaching the lowest possible levelized cost of hydrogen. We are making good progress in a number of places, particularly in -- with projects in Chile, in the U.S. and in Morocco, and with a significant interest or early interest from both partners and potential offtakers. So positive developments in both. Regarding EV charging, we are convinced that the electrification of transport will happen. Our efforts are focused mostly in Spain up to date. The electrification needs to accelerate significantly to reach the objectives set in the national energy plan to reach the 5 million EVs that need to be on our roads by 2030. So we are convinced that this is a growing industry and one that will -- already represents a good opportunity. We're investing still relatively modest amounts in 2023, around EUR 15 million. But we expect that to grow significantly, and we're starting to look at opportunities to internationalize that business and grow in other countries where we have an existing footprint.

Thank you. And final question and to finish on time is from Alberto Gandolfi at Goldman, who says -- who asks with some degree of skepticism, I believe, how can you end at 2.5x net debt to EBITDA if in first half you are at EUR 3.5 billion? And if it is because CapEx is H2 in the second half -- is lower in the second half, how can you head towards 1.7 to 2 gigawatts annual additions, if your CapEx is slowing down? Arantza?

Well, first, you have to consider, and we have been mentioning it through the presentation, that some of the CapEx payments are front-end loaded. And also, you have to consider that we have also the dividend payment. Second, we expect significant proceeds from the tax equity investors and partners on the second half of the year. And also remember that I just mentioned that we also are expecting to have improvements in the working capital. That's why we will reach to that figure.

And let me reiterate that CapEx is not slowing down. It may just be lower in the second half than in the first half, but it doesn't mean by any means that it is slowing down. Thank you very much indeed. And that's it for ACCIONA Energia. We will, in a couple of minutes, start the ACCIONA Group presentation and Q&A. Thank you.