EDP Renewables, S.A. (EDPR) Earnings Call Transcript & Summary

Hello, and welcome to 9 months 2020 EDPR Results Presentation. My name is Val, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Mr. Rui Antunes, Director of Investor Relations, to begin today's conference. Thank you.

Thank you very much. Good morning, and good afternoon to everybody. And we are here today for the 9 months 2020 results presentation of EDPR. We are going to do this as usual. We'll go through the highlights of the period, some detail on the results, the business plan update, and then we can start with the Q&A session that you guys can ask questions to us for us to provide you more information. So I'm here with Rui Teixeira, and I will hand over to him for the big highlights of the period.

Thank you very much, Rui. Good morning, and good afternoon, everyone. And just briefly highlighting across the 3 strategic pillars, how EDPR, what was our progress within the first 9 months of the year. So as you know, our strategic pillars fall into: a quality asset base; definitely a selective and profitable growth agenda; and also a self-funding business model. So on the quality assets. Availability, high, 97%, pretty much the same level as 9 months last year. Nevertheless, load factors, short of what we would expect, both in terms of what is the long-term average, but also slightly short of the same period last year. So 29% load factor versus a 30% load factor in 2019. This naturally impacts on the revenues. Here, we see the total EUR 1.2 billion of revenues, and it's 8% reduction year-on-year. Partly, this is driven by the reduction or the low load factor but also mostly by the fact that we -- driven by the sell-down from 2019. So it's a change of scope. Actually, if we were to exclude the impacts of the sell-down scope, revenues will be growing 1% year-on-year. We will see, and Rui Antunes will get into more detail now on the impact that is driven by capacity, a positive impact by price. And effectively, the negative impact from low wind resource during this 9 months. On the OpEx side, adjusted core Opex, a 3% increase year-on-year, but this is primarily given that we are anticipating some of the costs that are related to the fact that we have very growth targets, actually 2.2 gigas under construction. So effectively anticipating some of the OpEx that we'll have to realize in any way. And that's why we are having this impact on a year-on-year basis. So finally, I would just also like to highlight the low-risk profile that we used to manage the portfolio. Again, it's part of the strategy. 95% of our revenues are fixed for 2020. This is of September 2020. Good and very positive impact from the hedges that were done in Spain. As you know, we have some machinery exposure with some regulatory protection. But still, it's important to manage our merchant exposure in this market. And it was the result of these hedging strategies and the low-risk strategies enabled us to have a very positive impact of EUR 42 million year-on-year. And even if you were to exclude the sell-down in terms of price, pretty much flat vis-à-vis last year, including the sell-down, of course, 2% reduction. But if it was not for the perimeter change, it will be flat. So again, this shows the quality of the portfolio in terms of the risk dimension and the low-risk profile that we used to manage the entire fleet. On the growth side, I think definitely, news are very positive. So as of now, we have 6.1 gigas of capacity already secured to meet the business plan targets. In addition to this, the acquisition of Viesgo operating removal asset at 0.5 gigas. You may have seen yesterday, European Commission released its report with an unconditional approval of this transaction in what concerns competition or antitrust, which is very positive. So basically, this provides us with visibility that we will be closing this transaction until the end of the year. Today, we have -- or at least from as of September 2020, we have 2.2 gigas under construction. So definitely, I think this shows an unparallel execution of this business plan, tremendous merit for the EDPR team. Also, we have created the JV for the offshore projects. Right now, it's a 5.3 gigas portfolio on a gross basis. With the creation of this JV and the transferring of the assets or the projects to the JV, we generated EUR 200 million capital gain. So again, also, this is a good reflection of the value that is created through the development of these projects in the offshore. Our EBITDA reached in excess of EUR 1 billion, EUR 1.074 billion. This is a 12% reduction year-on-year. Again, most of this is coming from the sell-down in 2019. Also a little bit lower in terms of capital gains on a year-on-year basis. But net profit reaching EUR 319 million. Again, here, the reduction is primarily driven by the sell-down in the perimeter change. But also, this has been partly offset by financial expenses and taxes. And Rui Antunes will be addressing that in a minute. On the self-funding business, also good performance, EUR 2.3 billion of sell-downs between 2019 and 2020. Out of this, EUR 1.1 billion were signed since June. This is excluding offshore, so well on target -- on track to meet our targets. On the net debt and tax equity, we reached EUR 4.5 billion on the balance sheet, so that's an increase of around EUR 380 million year-to-date. And of course, I mean, this is just a reflection of the growth of the company and what we have done in terms of achieving and meeting the targets for the business plan. Nevertheless, of course, we are optimizing the cost of debt and the cost of the tax equity partnerships. Debt at 3.5% versus 4% last year. And average tax equity investment cost of 6.7%, pretty much stable vis-à-vis last year. Still on the tax equity, and also this is, as you know, absolutely key to capture the value in our U.S. projects. On average, EUR 352 million of tax equity closed year-to-date. And of course, very advanced in terms of executing the deals, the tax equity deals for the 2020 project. So with this, I think, hopefully, we provided some of the highlights of the period. And I would hand over to Rui Antunes. Thank you.

Yes. Thank you, Rui. We can move to Page 7 and start the results detail with the capacity installed. So today, we have a portfolio of 11.5 gigawatts. Over the last 12 months, we installed almost 900 megawatts. During this period, there was one sell-down, September to September, so the Brazilian project, the Babilonia that we announced to the market. And then, we have some small dismantling. There are some wind farms that we are repowering; and where this effect of dismantling before, we bring better and more efficient turbines. So today, we already have as well 2.2 gigawatts of capacity and construction. So this bodes well with our plan that we want to step-up next year and the following to higher numbers in terms of annual installations. We'll get there by the end of the presentation. And I think it was a very good progress through September. And so let's see until the end of the year. We know that we have some small delays in capacity, as we have already explained in the previous quarter due to the COVID-19 disruption, especially in the supply chain. But the company -- of course, the company and these partners are doing what is possible to mitigate all those effects. Over to the next slide, Page #8. I think this is the negative highlights of the period. As you already know, load factors have been poor. We got to 29%. This was 91% of what we expect to be the first 9 months. We know that we had some [ led ] quarters since the beginning of the year, and October is the month that is giving us good signs. But these numbers that we are showing here have this impact of the low load factors since the beginning of the year. So 91% is 2 percentage points below last year as well. So we have some deviation here. Not much about availability because it was almost under 97%. There were some availability, of course, that could be higher, but most of this is generated by the wind conditions across EDPR fleet, especially in Iberia and in United States. Those were the 2 regions where wind conditions were not as expected. Page #9. Here, we see the evolution of the electricity production of EDPR, so it's a 7% decline. Of course, there is a discontinuity here because of the sell-down, the portfolio that we sold last year, especially the one in Europe that we sold at the middle of the year, 1,000 megawatts, and this generated a drop of 1.7 terawatt hour when we compare with last year. If we remove this effect, so the scope effect production have gone up by 1%, in spite of the lower load factor that, yes, created challenging for us to deliver good performance on the operating front this year. But despite that, so 1% removing the sell-down and was not a negative performance. Of course, this was offset by the new megawatts that were installed. You can see on the left, you see Europe, clearly, minus 16% because of the sell-down transaction that I mentioned. United States is plus 3%, so the new megawatts are able to offset the lower wind conditions. And in Brazil, was impacted as well by the sell-down in Brazil that was executed at the end of last year, beginning this year. So 20.4 terawatt hour of clean electricity that we generated, and we avoided 13 million tonnes of CO2 emissions in the first 9 months of the year. Moving to Page 10. We have here the prices. So this is the average price, so average price at EDPR, given that we are diversified throughout a lot of geographies today. Most of this is impact also from the production mix, and the 2% decline is exactly that. This was impacted by production mix. And last year, we have those wind farms that we sold that had an average price -- above the average price of our portfolio. Removing the sell-downs, prices have been flat. And even when we go to the individual prices of the wind farms, we see -- the sum of it, we see a positive sign in terms of evolution. Why? We're able to do a very good coverage before the start of this year in terms of financial coverage, in terms of hedges in Europe and United States, especially in Spain and U.S. markets, where we have some merchant fleets there. For example, in Spain, this coverage enabled us, the financial and the regulatory one, enabled us to have EUR 42 million more in terms of hedges when we compare with the same period of last year. So this explains clearly how could we have a flat performance in the prices when the energy markets or energy prices in the markets were dropping and had a big hit because of the COVID-19 crisis. Moving to Page 11. Revenues, also the same story, is a decline because of the sell-down. So there's a discontinuity here of scope one. Removing that one, revenues have gone up by 1%. We can see clear the drivers of revenues on the left, see that volume had a big impact because of the sell-down. Sell-down removes EUR 122 million out of the revenues. The wind resource, the lower wind resource removed EUR 57 million out of the revenues. Megawatt additions brought EUR 49 million more. So megawatt additions almost offsetting the wind resource here, but we had the impact of the sell-down, the change in scope. The selling prices, here, taking consideration the individual selling price of the wind farms, brought us more EUR 29 million. And I think the good coverage, hedging coverage that we did is very successful, and that's why we have a positive performance here. And in terms of ForEx and other impacts is almost flattish and is not impacting whatsoever the top line of the company. Moving to Page 12 in terms of core Opex. CapEx was up by 3%; reported total Opex, 4%. We'd like to look at the core one given that are the costs that we control, supplies and services and then personnel costs. But we also like to look at this on the unitary basis, so divided by the average megawatts in operation. This was up, on an adjusted basis, was up by 3% when adjusted by inflation and some service that we charge to some investors, some costs that we have, and we cross-charge those. So 3% is an increasing figure that we are having here, but this is very well explained by the fact that we are fronting some costs, especially HR costs, for us to be able to deliver the strong growth that we have ahead in the next year. So we are already building up the teams, and this is just a timing effect. Once these megawatts are up and running, we start to have -- we expect to start to have a dilution effect over the next years. EBITDA, on Page 13. So EBITDA in excess of EUR 1 billion. It's a decline of 12% sell-downs and then an impact of EUR 93 million. The difference in capital gains when we compare to last year, now it's a negative of EUR 26 million. You know that in this quarter, we had another capital gain because we sold Mayflower to OW. So the big offshore project [ at ] United States, we sold that to OW. We executed that transaction, and total capital gains for the offshore now amounts to EUR 200 million. We still don't have here the expected values for the transaction that we announced to the market, that Spanish -- with Spanish assets and the one with the U.S. assets. So expect those to be executed before the end of the year and expect also to generate value for the company until the end of the year, next quarter when we announce it. We can show the value that we can generate with these assets. So all in all, EUR 1.074 billion of EBITDA. I believe it's a robust figure. We still have more to come until the end of the year. But it's already robust figure taking into consideration the differences that we have vis-à-vis last year and the weak wind resource that we had since the beginning of the year. Page 14, making the bridge from EBITDA to net profit. And so EBITDA, already explained it. In euro terms, it's a decline of almost EUR 150 million. Depreciation and amortization, it's positive. So lower cost there bring us the extra EUR 5 million because also we've deconsolidated some depreciation costs when we sold the assets. Financial expenses, very positive evolution, so plus EUR 63 million when we compare last year. So it's twofold and it's lower average net debt when we compare with the first 9 months of 2019. And it's also lower cost of debt, so cost of debt today is at 3.5% for EDPR, and the last year was at 4%. Taxes. We have here a plus when compared to last year of EUR 35 million. We have a very low effective tax rate. Of course, there are some capital gains that go directly through the P&L without an impact in taxes. Some of it have impact in taxes like the U.S. ones; others don't have. Also, they have some positive offsets, especially in the United States. We have some positive offsets there that's enabled us to have a good performance on this line. In terms of minorities, we have plus EUR 21 million, so less costs, plus EUR 21 million to the results because this was part of the assets that we sold last year that had 49% of minority, those 1,000 megawatts. And also some wind farms where we have minorities had a lower performance when compared to last year. So all in all, this EUR 319 million of net profit, it's a decline until the first 9 months, but let's see how the rest of the year goes. We still, as I mentioned, we still have 2 transactions to close, and that will bring us value. October, as far as we are seeing it, is going well in terms of wind conditions. So I believe we have some good performance until the end of the year to report to you once we announce the year-end results. Page 15 in terms of the bridge of cash flow to change in net debt and tax equity liability. Retained cash flow of EUR 670 million, an increase of 5%. Cash investments, here, you see the growth of the company, so EUR 1.25 billion of cash investments. Expect this to keep increasing if we want to deliver the growth that we have planned. We delivered some dividends to the shareholders at first half of the year, EUR 70 million. And here, the other line is an effect, an accounting effect that we're already having, the assets that we announced to be sold. These are already moved to assets held for sale, so already deconsolidated the economic liabilities of these assets. So the part of the sell-down transaction is already in the books with the deconsolidation of EUR 250 million of economic liabilities. So all in all, this is what we have. Net debt but tax equity increasing, but it's normal given the big investments that we are making. I think we still have a comfortable figure in terms of balance sheet to -- for us to have room to keep growing. I'll hand over now to Rui Teixeira for the business plan details in the next section.

Thank you very much, Rui. And it's effectively about growth that I would like to address now. So as you can see on this Page 17, I mean, we have already 6.1 gigas of our business plan '19, '22 already secured, which means that effectively, we have 86% of the target of the 7 gigas target already under PPAs, either for CODs between 2020, '21 and '22. This mean -- I mean, when we look to the different geographies, it's very balanced, around 400 megawatts in the North American platform, around 300 megawatts in Europe and Brazil. So effectively just materializing the -- all the development efforts and the competitive projects that we keep on developing, either participating through tenders for the CfDs or just establishing long-term PPAs with the profit counterparties. So this is a good reflection of how we are already meeting the business plan targets, with a very high level, as I said, 86%, but also the different -- the balance between the different geographies. And as we move forward, I think it's important to highlight that when we think about this capacity being deployed on the ground. So by 2020, we should have some delays driven by the COVID-19, as this created some disruptions in some of the supply chains for specific projects. So we expect to have around 0.5 giga of delays in 2021. I mean, to some extent, these are compensated by the fact that we will be closing -- we expect to close the transaction -- the Viesgo transaction by the end of the year. So this year, we should be adding 1.6 gigas of operating capacity to the portfolio. And in 2021 and '22, we should add around 2.1 gigas in 2021, benefiting or impacted from the delays that are existing in 2020. And in 2022, the same, around 2.1 gigas, and this has to do with the different projects that already have PPAs with COD for 2022. We will -- I mean, we will be already constructing around 1.1 gigas, and that will be with the COD post 2022. So effectively, this really provides not only a perspective on how we are meeting the business plan, but also already with more than 1 giga capacity post the period of the business plan. So I guess, again, the big numbers are 86% secured. In addition to this, we have this acquisition of the Viesgo operating portfolio. So I can say that around 6.5 gigas of secured projects backlog by September. So a very comfortable position in order to meet the business plan. So as a conclusion, maybe just to highlight what we have been saying or summarize what we have been saying during this call and then open to any questions you may have. I think that the operating performance is impacted by the low wind resource, around 91% of the P50. So that's a reality that we are facing this year. Nevertheless, our risk profile and hedging strategies enable us to pretty much offset the market prices decline that we have observed across the different markets, which is, I think, a good reflection of the value of that low-risk strategy. At the EBITDA level and net profit ending the period with EUR 1.074 billion for EBITDA, EUR 319 million at net profit, a reduction vis-à-vis last year as a consequence of the low wind resource, but also driven by the change in scope with the sell-downs. Well on track in terms of growth. 87% of our 7 gigas target of additions between 2019 and '22. And in addition to this, we are, hopefully, getting to an end to the closing of this Viesgo acquisition. And again, emphasizing that the JV for the offshore is already created, so from now on, we will definitely see it as a big driver in terms of future growth. Even though, I mean, we do have this timing or delays when driven by the COVID effect is at now, we have 2.2 gigas under construction. And we should be deploying this year or bringing into operation this year, as I said, 1.6 gigas and then 2.1 for '21 and '22. And I think that throughout this crisis, and we have been able to demonstrate the solid business model that currently EDPR has; the ability to create value from our asset base through the sell-downs; and the ability to meet the very ambitious targets within the business plan in what concerns growth. So showing that we have really very sustainable business with a low-risk profile. And definitely, I think it's worthwhile highlighting again the strong presence that we have both in the North American platform, in Europe, in Brazil, particularly Europe and the United States, where it's likely that we will see some supportive policies towards renewables in the short term, either because of a real commitment to reach the carbonization targets, but also given the -- as we are seeing many governments looking at this type of investments as a driver or something that can change and be useful to recover the economy. So I think that we are on the right place on the right sector, fantastic team, very good portfolio of projects. So I think that we have capacity challenges ahead of us, but also we are delivering on those as well. So having said that, I will hand over to you for any questions you may have. Thank you.

[Operator Instructions] And the first question comes from the line of Fernando Garcia from RBS (sic) [ RBC ].

It's Fernando Garcia from RBC, actually. So my first -- I have just one question. In Q1 results, you say that you have secured 83% of the 7 gigawatts of installation that you expect until 2022. And now you expect 86%. So I mean, is -- I wanted to know if you can say this is a low number or maybe you are suffering as well some delays because of COVID in this securing of projects installation. And maybe one of the reasons could be some delays in the signing of PPAs. So I wanted to know, basically, if there is any delay there on what you expect going forward.

Okay. Fernando, it's Rui Teixeira here. Thank you for the question. No, we are not seeing any delays. I think it just had to do with the timing on how these origination efforts develop either on a bilateral processes or driven by -- probably by tenders set up by government. So as you know, I mean, governments still are pushing forward. So right now, there is an ongoing auction in Italy for CfDs. Just recently, there was one in Hungary. I mean, we are different -- we are seeing and participating in different commercial opportunities in the United States. So I would see -- I mean, I don't see this as any -- I don't see here any delay. I think it's just the timing of these processes, and so business as usual.

The next question comes from the line of Jorge Guimarães from JB Capital.

I have 4. Sorry for...

Jorge, could you speak louder, please? We're not hearing.

Sorry. Can you hear me now? Can you hear me?

A bit better.

Can you hear me better now?

Perfect.

Okay. Sorry. So I was saying I have 4 quick questions. Firstly, when should we expect CapEx estimates for the offshore projects for the Ocean Winds project? The second one, is it possible to determine, now that the operation has been concluded, what is the repowering potential of Viesgo assets? And namely, what would be the cost of that repowering per megawatt, if possible? Thirdly, just a clarification on the capital gain in the Q3. I believe it's EUR 55 million, so I'm doing just the difference between Q2 and Q3 value for capital gains. You mentioned this is just for Mayflower, but I believe that there is also -- the Portuguese floating project was not included. So I would like to clarify this. And to finalize a more structural one, is it possible to provide us with any view about your long-term development rate in terms of capacity per year?

Okay. Jorge, it's Rui Antunes here. So capital gain, EUR 55 million. So there were 2 assets transferred or sold to OW, so Mayflower and the floating, the WindFloat in Portugal. Mayflower makes the bulk of it, but yes, the other one also generated some capital gains there. About the CapEx estimates of the offshore projects, many of you are requiring some type of estimate of individual projects. We are not showing that today. Of course, we might show in the future once we have all the plan to present to you on the offshore part, but I'm going to leave that for a later communication. Repowering of Viesgo. It was told that, yes, there was repowering capacity or potential in Viesgo. Don't expect it to be immediately. We know that we have some projects that we are sharing with Viesgo that were the [indiscernible] ones. Those ones are the oldest ones that we're installing the [ 97 ]. So today, they have more than 23, 24 years, that is what they have today. So we can get to a conclusion. I don't' know. It's not going to be next year or the following, but we can get conclusion soon that we can start repowering those. There are other projects as well that we can start repowering in the future, before 2030. But let's say about repowering, don't forget that when we decide to make a repowering, we are foregoing the revenues of the old assets, and we are making the CapEx of the new assets. So what we forego in terms of revenues is part of the cost of the new assets. So economics need to fly, is what I want to comply. And despite of, yes, the new asset is going to be very productive, very good, much better than the old one, but the economics need to fly. And it's still an opportunistic when you do repowering today. It is going to have a lot of potential in the future once wind farms get closer to the 30 years. Some of them are going to live more than 30 years, and we get to a conclusion that we don't need to repower those wind farms because they are fine, they are not generating a lot of costs, and we can keep those. Other ones, we will make the economics and understand if what we are foregoing in terms of revenues offsets what we are saving in terms of new investments. It's not -- there's no rule of thumb today given that repowering is still just a small part of our activity. But of course, with the decline of the CapEx per megawatt that we are seeing that in wind is going towards below EUR 1 million per megawatt today is the way that we are seeing it. And we are seeing some savings, of course. Most of the structure is there. If you can save about 20%, I think it's not a conservative figure.

And Jorge, it's Rui Teixeira here. On your last question regarding the long-term development rate, right now, we have this business plan in place that is communicated to the market where we need to reach 7 gigas of new additions between 2019 and '22. And as I also shared for the last 2 years of this period, '21 and '22, we will be deploying around 2.1 gigas. But for the time being, I would not like to share any long-term targets. I think when the time is -- when the time come when we present a new business plan, of course, we will be more than happy to share that. The only thing I'd like to share is something that I think is pretty visible across different markets. If anything, this -- the markets, the different markets in terms of growth targets, they are, of course, very appealing. I mean, the sector right now is looking at very interesting growth opportunities, both in the United States, in the different countries in Europe and in the other geographies as well. But as I said, right now, our commitment is the 7 gigas in -- within this business plan. When we present a new business plan, of course, we will share our longer-term view. Thank you.

The next question comes from the line of Arthur Sitbon from Morgan Stanley.

I have 2. The first one is, I was wondering if you could provide an indication in terms of the year where we should -- we could start seeing positive contribution on earnings from the offshore wind JV. And my second question is actually still on offshore wind. What are the auctions that we should be monitoring for 2021 where, potentially, we could see some wins for EDPR and for the JV?

So in terms of positive earnings, you know that OW and today's -- as assets and -- the only asset that is in operation is the WindFloat. We have 2 assets under construction, so the [indiscernible] is not yet transferred from ENGIE to OW, was not yet sold. So that should happen soon. And we have the other end of construction which is Moray East, the one in Scotland, North of Scotland. Those assets should come online in '22. And I believe after that, we'll start. Of course, the first year is a ramp-up year. But after that, I think we can start to see some positive results coming out of -- especially from those assets that might offset all the development activity that OW has or is expecting to have. Of course, OW should follow the philosophy of the parent companies of the partners or sponsors, which is the sell-down philosophy. And the sell-down philosophy will start bringing also some capital gains through the -- through OW for both sponsors. So that is expected also to bring positive results. So don't expect already some of it because we don't have results from operating assets. Once we start to have by 2022, beyond that 2022, we'll start to see some offsets when we start to have sell-downs. And that will be -- I think we'll start to have, not immediately, but soon, we'll start to have those as well. We expect capital gains to come through OW. So I'm not giving a specific time frame or dates, but assume after operating assets will come online is when we start to see different numbers coming out of OW.

Okay. And regarding the second question, I mean, I think it's publicly announced, some of the auctions that are likely to take place between the end of the year, earlier next year, talking about the East Coast in the U.S.; U.K., around 4; ScotWind, I mean, there are other markets where there are also -- European markets where we have already visibility about potential time line for these auctions. So of course, then it will be a discussion that Ocean Winds, when and how, I mean, there would be any participation. But I would say that in terms of time line, maybe in the short term, these are the U.S. East Coast and then U.K. and Scotland.

The next question comes from the line of Sara Piccinini from Mediobanca.

The first one is on auctions. You say that you are looking also at the auction in Italy and a recent one was in Hungary, if I'm not wrong. So could you please tell which are the auctions where you intend to participate in the next 1 year? And in particular in Spain, when do you expect the next auctions to happen? And do you expect them to be highly competitive as in Portugal? And eventually, could this put at risk your participation? So just a general overview on the next auctions in onshore wind and solar in general. And the second question is on the U.S. Do you see any potential impact from an increase in corporate taxation? And would this change in your view, the evolution of tax equity investments?

Okay. Thank you very much. So regarding the auctions, my -- I mentioned the Italian one and the Hungarian one because they were just -- one is ongoing and the other one was very recent. Just an examples of governments putting up these auctions for additional capacity or for CfDs that ultimately allows for investment decisions to be made. But again, I just highlighted as examples of government keeping their commitments to promote or for the growth of this, both solar and wind installations in the different markets. Now just a quick comment about the Portuguese solar PV auction. Effectively, it was very competitive. It's also a type of auction with very low barriers for entry because effectively, I mean, want to be -- does not need to have neither a developed project nor interconnection to the grid. And therefore, that creates very low barriers to entry. So naturally, it's the type of auctions that you see that are more competitive. Of course, there is -- the other side of the coin is it increases the risk in terms of implementation. So that ultimately, these projects, see, they actually get built. But again, it's a trade-off. And we are not seeing that model in the other auctions. So typically, the different auctions that we are seeing either in Europe or some competitive bidding processes that we see in the United States, the offtaker, either being the government or being a private counterparty, they ask for a real project, a real developed projects, so projects that do meet the different criteria in terms of administrative permitting, in terms of energy assessment, either wind or sun, in terms of environmental impact studies and so on and so forth. So effectively, we tend to see the -- these auctions to be quite more demanding and therefore, more to developers that have already made their homework, developed with the projects. And of course, then where you can develop a more competitive project or not in order to be competitive in the auction and ultimately, a wind auction with a small premium versus the others. So that's why we keep on developing the pipeline in the different markets. Your specific question about Spain, we are expecting -- I mean, we are expecting -- the government announced that they still want to launch a tender or an auction before the end of the year. So we are expecting for that. There is not -- we don't have a lot of details regarding the -- what sort of auction will be, but we'll have to wait and see. If I think about the 2021 auction calendar for Europe, it's nearly 30 auctions that are already announced in the different markets. Some markets, we are not. I mean, for example, Germany, we are not in Germany, so -- but the markets as France, Italy, Spain, as I mentioned before. I mean, U.K., we definitely -- as far as the announcements are made, I mean, we do expect these auctions to come up. And of course, we'll keep on doing what we have been doing, which is develop projects, have competitive projects and then participating in these auctions. And hopefully, we are better than the others to get a premium. Thank you. In terms of corporate taxes, Rui?

Yes. So let's see what's going to happen in the United States. But if there's a raising taxes, of course, everybody is going to pay more taxes. We are not going to pay more taxes immediately because we have -- we're not tax payers today in U.S. We have net operating losses accumulated that will offset those that will go beyond 2030, okay? But of course, when you make all the calculations in terms of projects' profitability and the marginal incremental profitability of the projects if the taxes are higher, there's always an impact on the other way. Let's talk about if taxes are raised, we assume that it's the democratic party that take over the presidency and the senate. Also, we expect a big boost on renewables. I think today, already, with the current status quo, we are seeing that our business is very -- in a very good shape in the United States. If that status quo changes, could be even better, but let's wait for the details, and let's wait for next week to understand where this is going.

The next question comes from the line of Mikel Zabala from Bank of America.

Just 3 and a bit more of a thematic flavor on those. So the first one is your capital rotation strategy has been quite successful to date. Do you think there will be appetite for more disposals from the buyer side should you eventually decide to increase your targets in terms of megawatts? The second one is, over the past year or so, we've seen governments, both in the U.S. and Europe, increasing their targets for [ another ] deployment. But on the other hand, in some regions, solar and onshore have been facing bottlenecks, mainly around grid access and permitting. So do you think policymakers are sufficiently aware of these issues? And do you think they -- it's in their hand to fix those bottlenecks in the midterm, say, in the next 3 to 5 years? And the final one is, again, on -- touching on the bottlenecks here. There are a few markets in Europe where there's just the availability of sites for onshore, with good wind resource is quite limited. Just thinking here on the long term, if you were to add 100 of gigawatts to the mix, would you say, just thinking long term, that offshore wind and solar are maybe better suited or better position vis-à-vis onshore? And if so, does this change or influence in any way your development efforts for -- in terms of technology?

Okay. Thank you very much for the question. So in what concerns capital allocation and whether there is appetite on the buyers to keep acquiring these assets, I think the answer is, yes, we do see that appetite. We signed these last 2 transactions, both the U.S. portfolio and the Spanish portfolio, shortly after we came out of the lockdown period. So even through the lockdown, where, of course, I mean, we saw financial markets collapsing, still, we kept a very competitive process, actually 2 very competitive processes. And ultimately, we signed the deal shortly after this event. So this really shows the underlying value, the fundamental value, that these type of assets, long-term contracted renewable assets have. And therefore, if you ask me, I think that even in the context, as you know, of extremely low interest rates, this has an additional value. So I definitely see appetite going forward. I don't see this changing in the near future. Again, this relates to the fundamental value of these long-term contracted assets. When you refer to the bottlenecks, effectively, one of the bottlenecks existing today is the access to the grid. This is, in our view and across the different geographies, this is very much acknowledged by the different governments. For example, if you look in Europe, I mean, there has been a strong commitment from the grid operators, together with government to discuss about the expansion plans. Also in U.S., for example, the Vice President Biden in his -- during now the campaign, he referred to as the need to also increase investment in transmission in order to promote the investment in real assets. So this is understood, is acknowledged. I'm not saying that this changes from 1 year to the other. Again, these are assets or projects that also have -- they have long permitting time lines. But there are ongoing efforts. And I think there is recognition at the politicians level that this is something that will need to be overcome. So the answer is, yes, it's a bottleneck, but yes, it's being overcome in different ways in different markets. So I wouldn't see this as a showstopper in terms of the growth additions or stepping up the ambition in terms of growth in renewables. I think it's just another challenge that will have to be overcome. When you referred to onshore sites for wind and whether or not they're already used, well, first of all, let me say, I mean, it's definitely -- I mean, definitely, we recognize the value of having a diversified approach in terms of technologies. So that's why we have development efforts, both in onshore wind, in onshore solar PV and also on offshore in here, bottom-fixed and floating. Because we also see that at some point, we will start having this floating technology reducing the cost, and therefore, in markets with deep waters, like some of the coast in the Mediterranean, some areas in Asia, even in the Atlantic Ocean. I mean, these are markets where naturally, the floating offshore will prevail. So that's why first of all, we take this open and diversified approach to the development for the different -- in -- for projects within the different technologies, wind, solar, fixed and floating. Secondly, in what concerns wind onshore, again, the limitation to one extent can also be overcome by the fact that if the grid keeps expanding, then, of course, places that today would not be feasible or not economically viable to the connect to the grid, they will become so in the future. And secondly, as Rui mentioned before, at some point, we will have some repowering opportunities. So there will be growth driven by the fact that wind farms will be reaching its useful life, the end of its useful life. And therefore, we'll be able to replace those turbines by newer and more efficient. So there will be growth coming from there as well. So on the long term, I don't really see sort of an end to the potential growth in -- or abrupt end to the potential growth in wind onshore. But I will also -- having said that, of course, offshore will play its role. We are seeing this happening in Europe, some markets potentially in Asia and now more recently in U.S. And solar PV right now has a very strong position, and although it actually -- it uses much more land than wind, which at some point is -- can be a bottleneck for solar. But given the reduction in costs in solar, of course, it does make sense also to have that into the portfolio. But I think for EDPR, the way we see it is we need to keep development efforts in all -- across -- in all these technologies, and then just depending on the market and depending on the conditions, be ready to push forward with one or the other, the most competitive one. Thank you.

There are no further questions in the queue, so I'll hand the call back to our speakers for any concluding remarks.

Okay. So thank you very much for your time. It was a pleasure having you on this call. Again, I think we are showing very good results, again, from an operational standpoint, given the load factor not fantastic this year. But in what concerns the execution of the business plan where we are today,and the fact that we are in a sector with very good growth prospects, I think it's -- the teams here at EDPR here have been doing a fantastic job. Again, thank you very much for your attention, and we'll keep in touch. Thank you.

Thank you for joining today's call. You may now disconnect.