Enel SpA (ENEL) Earnings Call Transcript & Summary

Good morning, and welcome to Enel Capital Market Day 2026. Thank you, everyone here in the room and to people connected online. I'm here today with Enel's CEO, Mr. Flavio Cattaneo; and CFO, Mr. Stefano De Angelis. May I have the agenda, please. Our CEO will drive through the planned strategy, while the CFO will go deeper in financials. After the presentation, we will have a Q&A session. Now let me hand over to Mr. Cattaneo. Please?

Thank you, Omar, and welcome to our 2026 Capital Market Day. Let me start with the results we have delivered so far. Over the past year, we have executed all strategic actions we committed to delivering on every single target. The turnaround of the asset portfolio has been completed. Financial discipline has restored flexibility and improved. [Audio Gap] selective [Audio Gap] into net income has improved, reaching 30%. EBITDA increased by 5% per year and EPS by 9% per year. So far, we have implemented all the actions needed to improve group performance. Today, we present the next chapter of our strategy built on a proven track record and on our ability to [indiscernible] [Audio Gap] delivery. Indeed, during this mandate, our market capitalization increased by almost 50% [Audio Gap] of the energy [Audio Gap] external [Audio Gap] grow shareholders through dividend and share buyback as promised. We promised we delivered it. What we're showing today is achievable. Now we move on the energy context before focusing on the strategic drivers of our plan. Our vision is based on the trend of structural long-term growth in global power demand, mainly driven by data center and AI, electric mobility, robotics, automation and industrial recovery. This is a global trend, but actually growth will be different by geography and timing. Therefore, it's crucial to be fast in anticipating and exploiting local acceleration. This is why we are ready to deploy investment in [indiscernible] at the right time. Some areas [Audio Gap] are already showing [Audio Gap] in U.S., for example, [Audio Gap] after our demand [indiscernible] driven by strong [Audio Gap]. Once electrification starts, the change is sudden and fast. Our industrial vision is to increase investment in renewable generation just before markets accelerate, quickly adapting our move to market cycles. In fact, the growing gap between supply and demand in some markets will generate value creation opportunity for us. Being the first mover will catch 2 remarkable goals at once: improve our marginality and denounce our asset value. Indeed, we'll mostly leverage on brownfield opportunities with a faster time to market as demonstrated by the recent acquisition [indiscernible] megawatts. But why we think the market is mature? Because as you probably know, some utilities have already communicated the start of a robust asset rotation phase. Additionally, private equity funds are also starting to rebalance their asset portfolios. Given this evolution and considering our financial flexibility, we're in the best position to capture the maximum value. Now let's deep dive into our plan, please. Today, we'll present our strategy for the next 3 years and a 5-year pathway. We have already taken into account the full potential impact of the energy decree in Italy. On this matter, Stefano will give you more detail later on. So going forward, all the news will be either positive or neutral. Having said that, we'll start. As you know, our habit is to go ahead and maintain our targets. As I said before, now we are ready to accelerate growth supported by our financial flexibility. We'll optimize productivity by improving capital allocation and generating further efficiencies. In addition, we focus our investment in opportunity with visible returns. This will allow us to improve our EPS profile, while maintaining our strict discipline. Now we move into capital allocation, Slide10. In our previous plan, the need to reduce debt and achieve a robust balance sheet was the priority. Today, we're moving to the next chapter. Now after the financial flexibility, we are focusing on growth, maintaining a solid level of leverage, for sure below sector average. As you can see from the slide, financial flexibility will be allocated to brownfield to quickly expand the asset base where opportunities arise, reduce the execution risk and accelerating time to EBITDA, selective greenfield asset in renewables and grids and the last but not least shareholder remuneration. Moving on to our CapEx plan. As you can appreciate, cumulated investment are now EUR 53 billion, increasing EUR 10 billion versus previous plan. In renewables, we'll allocate capital according to returns, always selecting projects with a secured earnings profile through long-term PPA or covered by our customer base. We'll invest also on customers to reduce the churn and increase loyalty. As a consequence of these actions, all the industrial KPIs improved and the predictability of our result is comparable, if not higher, to a pure infrastructure company. Value creation going forward is visible also due to our low risk profile. In this slide, you can appreciate our capital allocation and strategic choices, ensure over 90% of our cumulative EBITDA remain protected and visible. As I mentioned before, all the impact coming from the decree have been already factored. This is reflected also in our FFO, more than 80% denominated in euro and U.S. dollar, significantly reducing cash generation risk. For sure, we can't overlook efficiencies. The result of our actions are already visible. We have been able to execute the 2023 efficiency plan 1 year in advance. Last year, we raised the bar, and now we're retargeting a 25% decrease compared to the 2022 baseline. Efficiency are front loaded and will enhance our profitability. On efficiency, we'll leverage also on AI adoption. We had 100% of application cloud based and all core processes digitalized. Another lever of value creation is data centers. As already said, one driver of higher demand will be data center. Being a key integrated player in different countries, we have a remarkable competitive advantage. Indeed, we can offer data centers operator ready to build site and a fast permitting process. Like other European players, we not only sell infrastructures but we can also offer connection with PPA included. We have already identified a strategic location, some of them are ongoing. Now let's move to our customer strategy. We are [indiscernible] focusing on [Audio Gap] but also other services [indiscernible] for example. [Audio Gap] to increase value of our [Audio Gap]. We are able to [Audio Gap] user-friendly digital company. As a consequence, this new commercial strategy will boost customers' value and reduce risk. Now we move to our planned target for the next 3 years. As a result of all these actions, we expect to achieve a further rerating in the group performance. Looking ahead, results will be [indiscernible] continue to grow at sustainable increase at a CAGR of 7% versus 2025 restated. In any case, you can appreciate that even considering the worst-case scenario at the end of the planned horizon, we will reach an EPS in the range of EUR 0.80, EUR 0.82. Let me now hand over to Stefano for a deeper financial [indiscernible].

[Audio Gap] in order to [Audio Gap] negative amount of [ EUR 200 million ] and [Audio Gap] government [indiscernible] suppose, let's say, subsidy scheme for the operator that was now reintroduced in late 2025. Then as Pepe Bogas remember very well each day, we have the 2x growth of the ancillary services bill in Spain that -- a fantastic bill of more than EUR 200 million, not just for Endesa but for all the players of similar size. Not being enough, we were also very negative here in terms of hydro performance of hydraulicity. [indiscernible] also in Chile, where they [Audio Gap] radical change [Audio Gap] performance achieved, so that was a growth of 9% [indiscernible] the start, let's say, in this way because I see a lot of adjusted performance here. And let me say a 9% growth, I want to underline because talking to you, sometimes, I understand that it's not probably so clear that we were the [ unique ] of presenting, let me say, high single-digit growth last 3 years in terms of everything, reducing our net debt. We moved from [Audio Gap]. So this was a result of the several action [indiscernible] here, some of the most probably relevant [indiscernible] during the completion of the disposal plan, we find here that was launched in 2022. We were that -- is that slide [indiscernible] probably. No, no, no, sorry. When we look at the reshape of our portfolio, for example, you may remember the focus that the company had on analytics products and services. Now you may see that we have completely reshaped that portfolio. We experienced a financial -- a relevant financial dream from debt activities and now the portfolio is completely moved on core business and core geographies. The efficiency plan was, as you remember, front-loaded, and we are now launching a second stage that we are calling not efficiency but productivity. Part of these programs was achieved, we have Mr. [indiscernible], thanks to a strong reduction on ICT cost, more than 30%. And achieved not only cutting cost on CapEx but with the shift to the AI software solutions and cloud native platforms, that will be the base for the next stage of the productivity plan because this is something that is progressing along the [Audio Gap] is that we do not make the results using the saving as part of the EBITDA. We use this money to increase the size of the investment. So the result was a result made from investment from savings. And you may see that in the Capital Market Day 2022, the company approved the at CapEx plan of EUR 37 billion. Now we are approving a CapEx spend of EUR 53 billion. And this will be the boost of our growth that we are presenting today, and this is the result, and we are in the condition to present this CapEx plan because of this action that was made each day, by also the persons that are here with me was very tough. We want to present a very fantastic plan today than we did [ agree ]. Unfortunately, we have to spend some time again in trouble. So the growth that you may see in the slide, on Page 22 is a growth based on 3 stages. The one is the growth that was presenting last year, then there is the overperformance that we realized. You remember that in 2025, we have an overperformance in the net income when we look at the guidance. And then there is the trigger of the EUR 15 billion of releverage, and this is distributed, EUR 10 billion in growth acceleration capital expenditures. Part of this in brownfield, part of this in greenfield, full dedicated to what we expect will be the driver of growth in the future that is renewable capacity. And EUR 3.5 billion today share buyback we are performing, we will start today another step of the share buyback of the holding company Enel SpA. And we are maybe -- is progressing in the Endesa share buyback. And we -- as you may remember, we already performed share buyback in Americas. Next. So what would be the results we are expecting, looking at our business unit and countries with this new plan. We have split the world into Taiwan regions networks, integrated margin and LatAm networks integrated margin. As you may see, we are in full of our potential in terms of CapEx, both for integrated margin and both for networks in Taiwan. We are full at our speed -- at the potential speed that we made use in LatAm for the networks. When we move to growth elevation, as you may see, we have full power into the integrated business, namely the renewable capacity, great focus in the U.S. where we see the potential for an anticipation of the growth we see in the market. And also, when you see 3 or 4 in the networks in Europe is also because in Italy, as you know, we are already at full speed in terms of investment while we expect Pepe Bogas to accelerate beyond 2028. As a result, we will have a balanced growth in terms of EBITDA. We will expect to increase our EBITDA more or less EUR 2 billion in the integrated margin and EUR 1.2 billion in the networks. The investment, as you may see, is well, as Flavio said, [indiscernible] was split between networks and integrated margin. Next. More than 75% will be invested in Europe, I'm referring to the networks. And here, we have also a focus on Italy as always also because the other company that had listed, we'll better explain the CapEx plan in the company. What happened in Italy? In Italy, you may see that we have a growth of EUR 7 billion in the RAB, the lower part of the slide. This growth was EUR 6 billion in the previous plan. The question that would be how much is the network fee. The network fee is -- the risk in this plan is just EUR 1 billion, but we have included the industrial CapEx that we transform into RAB. As you may see, the industrial CapEx have a very good shape in terms of transforming into RAB. So you have a better performance with the same amount of CapEx. And let me say, we have the items that we cannot secure that is the amount of the fee. If it would be more happy, it would be this figure. We are completely okay because we look at the total amount of CapEx results in terms of RAB and EBITDA. The reduction in terms of grants is another positive for the RAB because the grants do not transform, we have a marginality on the grants, but the grants will come back as cash as RAB. So in the 3 years of the new plan, we have more than EUR 1 billion of positive effects in terms of RAB transformation for the reduction of the grants. Next. These are the CapEx for the -- this is where we have, let me say, the re-rate of the CapEx. We have EUR 8 billion more of the CapEx in the generation. I think, here, Flavio has told you many things relevant to what I can tell you is that we continue to have a very strict financial discipline of this. We don't want with this target to move our close metrics of risk balancing approach. So we will continue to look at the basis points, having 200 basis points when we are looking at brownfield because as I probably told many of you, we adjust this result because we take into account the reduction in terms of risk. When you have the plant already built and when you have the PPA already signed, this cost something and will reduce approximately 100 basis points. We maintained the 300 basis points on the greenfield. And this is a plan where we come back to build, let's say, in this way because now we have the condition in terms of pipeline, we have made a very hard work also on the pipeline to reduce what we're not presenting in the future potentials. Now the pipeline is small, but it's very good. And we now find [indiscernible], for example, project in [indiscernible] that we are near to the final investment decision. As a result, you can see the strong growth in terms of terawatt hours. That is the base of our growth in terms of revenues and EBITDA. Page 26, this is to say, I read some of you saying, when you have brownfield, you do not have the control of the growth. This is not the first deal we made -- we announced in this last week. And just to remind that, for example, in the last 15 months, we made EUR 3 billion of acquisition, and we were not with the same intention that we have today. So as Flavio may remember to you, when we say something because we are very confident to do it. We participate to a huge number of processes in this month. We continue to be strict, and we are not in a hurry. This is important. And when we look at the presentation of our friends, I talked about the utilities, I see EUR 14 billion, EUR 10 billion of asset rotation. On the other side, we are a potential buyer. And my figure is small when compared to them. And you do not see the funds. The funds are rotating a lot of capital, especially in the U.S., where we have big size of investment from the equity funds. The approach is the same using this result. What is important here is the green part of the line when we buy something brownfield in U.S. where we experienced several problems, we buy contracted NPV that is what we call secured. This is what we call secured, not secured because we expect to sell something. It is secured because we have a contract that our friend Francesco Puntillo revised very strongly, I can guarantee you. So when we are ready to sign, it's really secured EBITDA and secured cash flow in our plan. Next. Here, we start talking about what happened in the last days. You know that when I was introducing the other friend, [ Mr. Ceppatelli ] is the energy manager in the group. We discussed a lot of time about the new, let me say, energy management model when -- now we prefer to sell the energy not through financial derivatives that we continue to use but to our retail customers, Francesco Puntillo. That is where there is the value because it's not the price that changes every day, it's a price that has a fair margin because we have a lot of cost to repay it. And these customers are in a resilient because they have a churn that tell you that they stay in the average 6 tier in our customer base. And in Italy, for example, in Spain also, well, we don't have PPA market, we don't have PPA market. It's very important to leverage on this customer base. This customer base -- have 70% of them have fixed contract where the price is an option for the seller, they have the option to sell, clearly. So I think it's a fair relation. When you look at the building block of what will happen in terms of volumes of energy we generate, this generate is matched with the existing customers, and existing customers today start to have 2, 3 years contracts. So it's not just 1 year now. This is something that Enel plays in the market, but also our competitor. And then you have the churn. So you have the new customers. What does it mean? If you look at the graph in the low left, this means that we follow slowly the market. We don't follow the market in this way. We follow the market in this way. You see the gray line means that I have a delay because today I signed a contract with some of you, and I used the pricing today, and you have a 1-year mandatory period of the pricing -- is mandatory for me, especially. Remember that the customer is always the potential exit of the churn. What happened in these days -- in the last, let me say, 2 weeks. In the last 2 weeks, we have a dramatic change, look at the forward 2027, 2028. And this is important, I have completed, to say when you [Audio Gap]. Today, the market already embedded and this started before the decree exchange in the forward scenario. Now we have moved into a scenario where we exchange the mind related to the EPS, but not because of us, because of the European community and not just before because of the Italian government. There is now a clear intention to review EPS, probably smoothing the growth in the next year. So when we was referring to an EPS of EUR 120 million, EUR 140 million, now we are referring to a lower level of EPS. And this is what we make in our exercise. Sorry, but this is the most important one to explain. Next. The impact, you may study, I will not pass through the figures. This is what -- the ERAP is very easy. It's more or less EUR 150 million per year. The other -- at the end of the day, it will be EUR 300 million net income impact in the worst year, that is the 2028 -- sorry, by the 2028, we do not have ERAP. So it's very complicated to make this calculation in terms of some, but remember, in 2028, we have EUR 300 million in terms of net income, but we will not have the ERAP impact because it's expired measure in 2027. What is important, we had EUR 2 billion of cash impact. We already introduced some measure in order to reduce this at EUR 1.8 billion. Next, please. So this is a plan where we have built each single building blocks. It's not how we will do EUR 10 billion. So in this slide, you may study later and ask Omar. I try to simplify our plan, that is a plan made by the list of actions, each one of these guys and also me and also [ Ralph ] our duty in order to realize this plan. Here, you may see, for example, impacts like -- I make a description of the greenfield, brownfield target. You see that here we have specific plant like the U.S. [indiscernible] project, we are going to approve in our committee probably in the next couple of months. We have the best that we are building in Chile and so on. So we have a very complex list of action. We have -- this is important. There is our plan taken into our figures, the decree. Because if you look at our plan, one of your question, always what do you think about the potential change in the pricing the retail market in Italy. Now we have assumed a significant reduction of this because we lost the floor of the ETS. And again, as I said before, we also want to reduce, let me say, the risk, the lack of control we have on the fee -- in the network -- concession renewable renewal in Italy. Next. The funds allocation, it is always the same slide, approximately EUR 50 billion of generation made through the FFO. EUR 9 billion coming from the -- also, we have asset rotation. We have more partnership because when we buy a portfolio of assets, sometimes we have -- they want to stay with us. So it's a sort of partnership that is embedded into the deal. The investment and the shareholder remuneration, Flavio will tell you in 2 minutes. I grant you what is the dividend policy we are going to apply the different -- the white box is the increase in debt that is approximately between EUR 15 billion, EUR 20 billion. Next, please. [indiscernible] when you take the [indiscernible], it's always the same story. We stay into the holding controlled financial plan. We continue to have a very reduced exposure to variable rates and very reduced exposure to currency that is not euro and just a portion that is related to the cash flow of our LatAm asset and our U.S. asset. I think that with this one, I have completed, and I can move back to Flavio.

Thank you, Stefano, for very clear presentation. Well, we are confident to restart and deliver visible returns. And also, let me say, also completely derisk this plan. For sure, we have today a low risk profile -- a better low-risk profile in comparison with the previous one. So our dividend policy remains unchanged. The visibility on '25 give us confidence to propose to the next AGM a DPS of EUR 0.49. Furthermore, the remaining EUR 2.5 billion on the share buyback program are an additional lever to further enhance shareholder remuneration and, as you've seen, we have just launched this morning another EUR 1 billion trance. Moreover, as you can see in the slide, in 2028, our EPS will be in the range of EUR 0.80, EUR 0.82, and the DPS will grow accordingly. Now let me show you our trajectory to 2030. As I said before, we're showing here a snapshot of the 5-year trajectory. Looking ahead to 2030, in generation, our renewable capacity is expected to grow at a CAGR of 5% and our grid regulated asset base will expand a CAGR of 6%. The leverage will remain below peers, and we'll continue to deliver sustainable growth beyond the 3-year horizon with an EPS CAGR of around 6%, all this maintaining our net-zero commitment. Indeed, we have already reduced our total emission by almost 70% since 2017, and we are already close to the target set for 2040. In 2040, 100% of our power generation will be greenhouse gas-free. Our commitment to net zero, we also preserve the social and economic context due to our just transition plan. To conclude some closing remarks. Today, we are presenting a challenging plan but credible and achievable. It's a plan built to restart and deliver further growth. We've also always overcome challenges. We revised our assumption and will deliver once again. Going forward, you receive only good news. Once again, we've not disappointed you. Let's open with the Q&A session.

Thank you. Let's start the Q&A session. Since we are short of time, please keep your question focused on strategic topics, no more than 2 questions each. I will take 3 analysts in a row. Before asking your question, please stand up, state your name and company name. So Alberto, Javier, Emanuele.

Alberto Gandolfi, Goldman Sachs. I'll ask 2 questions, and if it's possible, yes, and no from Stefano, so it's 2 and 0.1. So the first question is you're obviously using your balance sheet, but -- and I can see that most of your CapEx is going towards developed economies. Could you use also a bit more of your emerging market portfolio as a source of funding as a currency to accelerate the current strategic vision you presented very clearly today? The second question is, could you tell us the gigawatt, please, which is related to the 8 sites that you are negotiating for data centers. We have seen recent transaction at EUR 1 billion per gigawatt around Europe. So I was wondering. And the yes or no is Slide 29, you have a waterfall. This is for Stefano, EPS going to '28. Am I right in assuming that you're using current forward curves and EUR 300 million, EUR 400 million impact from the decree? Just yes and no, sorry.

Javier Suarez, Mediobanca. Three -- two questions from me as well. The first one is on Slide 27. When you are showing your expectation on evolution for electricity prices, could you be more specific on the assumptions that you are making on electricity prices in Italy, Spain, maybe key jurisdictions when building up your business plan? I'm interesting to see how are you assuming lower ETS prices impacting your electricity forward curve during the next year to come. This is a question on the numbers. Then the second question is maybe for the CEO, strategical one. What do you think are the likely movement the European Union may take to give Europe with more competitive prices? There has been discussion on possible changes in the marginal pricing system. You think that that is a road that the European Union may take and the implication for any of that change. And also I'm interesting to see on your proposal to make electricity price in Europe more competitive for industry.

Emanuele Oggioni, Kepler Cheuvreux. My first question is on renewables. You seem you are going against the tide, now increasing the CapEx as compared with other peers. So the question is the -- what are the drivers of this shift compared with the previous plan and we should increase the CapEx in regulated networks. So you are offsetting lower returns compared with the past, lower IRR, et cetera. This is the first question of these changes in strategy in renewables. And the second question is on the strategy in data center. So you could add more color on what will be your strategy? Previously, you mentioned using the previous plan and asset-ready model. So what is included in terms of CapEx, EBITDA, et cetera? And what is the main drivers of the revenue model of this part of the plan?

Okay. So we can start from Stefano.

So just to answer to the yes or no, it's not easy yes or not, but let me say that we -- as -- the most important thing is what is written there that is we have derisked, let me say, our projections in Italy because it's -- and I'm also answering to the other questions. We do not sell energy in Italy in the bull market. So let me say the scenario for us, it's an indication. We look at the calendar just because of our activities in terms of pre-hedging, but we sell the energy, we produce, we generate 22 gigawatts of renewable energy in Italy, and we have 22 gigawatts of sale, fixed price to B2C as small, medium enterprises. So we do not sell energy spot price. We use the calendar, we use the spot price to optimize our energy management.

Regarding the LatAm, we have mentioned in the presentation our availability to use the asset rotation. We don't exclude on top of this plan, the shift in some capital from south to north America, even because this is another move to derisk our capital allocation on top of our capital. Second question regarding the evolution price, the ETS. I don't think that Spain has particular risk because you have mentioned also Spain. We have Pepe Bogas, but because the component after the breakout is a little bit more the component of thermal production. But the Spain is in a long position, get produced without thermal. The thermal is very minimum. It's only for the security of the system. The impact is by 0 because it's gas-free emission, nuclear, wind, solar, hydro, as the problem is completely different. And also the morphology of land of Spain give a possibility to expand again in renewable. In my opinion, this country is quite -- very limited the impact on the ETS. Different discussion for Italy, for Germany, but France because there is total gas-free emission, but they need maintenance of the nuclear plant, you can -- it's possible to create some situation. In any case, we have assumed EUR 85 looking forward. As I said, Stefano, Enel is in a short position. We produce less than we sell in Italy. The question was Italy, Spain. Those are the countries -- we don't have any position in other country in Europe. I think the discussion can start, but our -- today, we want to show to the market a plan with no problem when there's an element. If it would be better you have a good news, only good news because we have included all the negative effect. This is important because -- it is important for our shareholders, but also for the management because today we remain concentrate for our growth. Obviously, the discussion will start because the element, the ETS is more also in Germany, not only in Italy. But regarding essential some categories of industry, only the industry that pay the full price. The other pay the bill at the end. And for example, in Italy, you pay the component of the grid, is one of the most cheaper in Europe. In any case, I'm not politician. I see the number.

Also, we have data center [indiscernible]

No, there was a question also on the -- it was trying to read that we are not believing more in, let me say, networks, I don't remember, but now we are moving to renewables. This is not -- we have saturated the CapEx potential in Italy. In Spain, we are discussing -- they are discussing in order to increase the cap, and in Latin America, we are also including all the cabins that is sustainable and needed for the quality. And we are investing EUR 26 billion. I remember that some years ago, we had a complete plan, 3 years, that was EUR 37, including all the business segment. We invest in renewable also because we have to remember that the return on renewables is good. It's 200, 300 basis points in networks. We are around 150, 200 when you have premium remuneration. Don't forget that this industry experience a problem with the return because they was not visible in the renewables. That's why we underline strongly our approach to the -- for example, to the brownfield activities. For data center, you have 3 potential that does enter -- play in your field. One is the data center that is the booster of the demand, fantastic. I don't need to -- but - with it, I don't need [indiscernible], but we push the demand, and it's positive for the market, okay. The second is the data center that want my connection, that was my side because I give time to market. This is what we like to explore, you have 2 model. That is, one is [ LWE1 ], that is spot sale. This depends on how much money and the net present value of the business plan. What we prefer is to have a structural relation, but it's not the structural relation that you may have with the role that is the buyer of electrons. This is the worst customer you may have. When I say I will sign in the PPA, I imagine the price because we know that is the boost of the demand, so we make a bid, and we received very good pricing. So I prefer to make contracts with smaller players than the -- I want to partner with him for my value-added component, not for the stupid electrons that made just a bid for price. So it's good. But in this case, we will not pursue this kind of data center partnership.

Our proposition is we have the site. The site, in many cases, is already connected. This is the value because the timing, expectations for the new connection is [indiscernible] in Italy. In addition, we have a good relation with the local authorities for obtaining permits and other things. If you compound this by the price of PPA is, let me say, not significant and significant, but they give us also the -- enjoy more money from the electricity because they obtain the possibility to start more rapidly rather than other solution. This is our business proposition.

So second round, so Francesco, Roberto and Peter.

Francesco Sala, Banca Akros. The first one is if you can give us an update on hydro concessions in Italy. There has been a lot of noise in the last few years. So I wonder whether you can give us an update. And second, it seems to me that in your plan you have included some outperformance of your electricity sales prices compared to your assumptions for the Italian electricity price. So I wonder whether it's a function of your energy mix or your hedging policies.

Roberto Letizia from Equita SIM. A couple of questions on the perimeter of the strategy plan with regards to the extension of the distribution concession as an example. So how do you treat it within the plan? Is it assumed that you're going to have it? Or is there an optionality that can generate additional investment opportunity when it comes? So just wondering to understand how you treated that? And also if you can clarify how do you treat the hydro concessions in LatAm, for example, for what we heard in the last weeks? And then very quickly on this thing also on the assumption. Is the EPS target that you provided, including the whole implementation of the buyback or just a part of it on the assumption as well, you presented the EUR 85 per megawatt hour price in Italy, but last plan that was in the region of 90% to 95%. So basically, you reduced EUR 10 per megawatt hour assumption for Italy. Is that the order of magnitude of the EPS impact that you embedded in the plan?

Peter Bisztyga from Bank of America. Two questions, if I may. First one, you talked a little bit about AI and how you intend to implement that in your business to reduce costs. I'd be grateful for a couple of practical examples of how that might work. And also, do you see any risk from AI in your retail business from the perspective that it could actually make competition harder or make it easier for customers to switch, for example? My second question is going to the waterfall chart showing the impact of the energy decree on your earnings. You show a EUR 400 million impact from the ETS and gas measures. Could you work us through the math of how you get to that EUR 400 million? What sort of impact on retail power prices are you factoring in?

Okay. So we can start from all the questions regarding assumption with Stefano. The question regarding the assumption.

Again, in our EBITDA regarding the power in Italy, you have to look at the scenario as a reference for the cost of the sourcing that is the base for the pricing of the retail. So differently, we never find the math. So Francesco, price [ has plenty to do ] than the other. What you look. You look at the forward because you have to cover your energy. We have the energy. So we also think about it, but we have to think like our competitors. You look at the calendar as a reference, we know that the calendar is not the future price. It's not the budget. In the slide that I had before, but that was talking a lot as always. You'll see I put the year minus 1 year minus 2 observation. I don't know if you can put the slide of the pricing that is very important. You see that the calendar have -- now that we have a situation back to normal, let me say, in the last 3 years, you may see that each curve 2028, 2027 and 2026 have the same direction. They grow when they approach to the present day. So what do you mean? That 85 will not be 85, if I'm perfectly okay with the figure, it would be higher as it was higher, you might look at the slide later. So that 85 is for us. The base in order to check the potential price that our customers may have in the market because we are the unique player in Italy that have 100%; more or less, we are a little short of the energy. But we do not have to make the mistake that I experienced of 20 years of considering the plant and the garbage spent in the best -- as something that is already spent, so I moved to the margin because the margin for us is very low. So we have to consider pricing made by Plenitude, made by Octopus and so on. So when I was referring to the -- look, 78, 86, 91, 97, 106, 110. This is the reality coming in the field. So the calendar in this world are -- when you look at 2 years, it's not like the financial market here. The generator want to cover the risk of the price. So they ask for the coverage and the market created a backwardation. It's not an expectation, it's a technical difference between demand and offer because we don't have PPA in Italy and in Spain, the PPA that we need. Nobody wants to sign PPA in Italy. You know why? Because the price is higher, they expect that we will blow not because the price is not good because that was not signed in PPA. Also because when the price was at EUR 60, why didn't they sign PPA because they always want to stay on the edge of the pricing curve and work on derivatives. Also in the other side, [indiscernible] Telecom was responsible for Energia. It was the company that Telecom Italia created to manage the energy. It was doing derivates, the same activity more or less than [indiscernible]. So don't think about the U.S. market, PPA is it's a story of financial -- a finance guy playing the arena of the energy, making price through a financial approach. Now the market has completely changed because the retail. Now look at the price, they look at the advertising, they try to understand the energy that is very complex. So when you look at 85, you have to keep in mind what I have to reduce the expectation of the retail price because we do not have any more the floor of ETS. the floor of ETS was my compatible, we paid energy approximately EUR 100 because they have to secure the result with spread for repaying their cost to acquire, their cost to serve and they have to cover the risk of the calendar, okay? So what we have done? We have accepted that the ETS will not stay at that price. It will not be EUR 120. So the energy price will reduce. Either way, that is a proxy for you to understand of the EUR 85, but the price of Francesca, that is the blue line, I will not tell you, but not because of you but because of my competitors.

Regarding the hydro, I answered 2 questions. One regarding hydro concession and the second one, the grid concession, but first of all, let me say, our hydro concession expiring in 2030. There is time. Have you seen our local municipality and Edison had signed an agreement with [indiscernible]. Now I don't know the evolution of this agreement is a green based on new concession and they stabilized a certain price for certain categories of industries. We wait and see, but we have not particularly worried about it because the evolution -- the timing, if no, the history of the SME sector, also the evolution and the volatility of this sector, government need to low price. Then when the average low price need high investment because it's not sufficient the low price because there is short of energy. And then when you have invest in CapEx, the price going up and they need another version of the cycle. It's -- 20 years is the cycle, you know the country. Concession for the derisk activity, we have put only EUR 1 billion because in our meeting with our shareholders, the discussion based on how many you have considered as fees for the renew and when we have put EUR 1 billion, we have reduced also this risk because there was another risk on top of that. Regarding LatAm, remaining only one discussion because in Brazil, all the other Serra, Rio de Janeiro are more or less completed the renew with no expenditure apart the CapEx for maintaining the concession. Remain in Sao Paulo, as you know Sao Paulo, we have had some trouble but all the -- our legal department and our subsidiary give to the authorities our ability because in this last year, we have a recovery of 50% of the quality of service. Of course, there is a particular situation because the infrastructure, the cable in Sao Paulo. Sao Paulo is -- there is not an underground cable, is completely on air and is into the tree, not close, not side. This is impossible because there is a storm, there is a special situation, it is impossible to avoid blackout. This case, we have, I think, a good discussion for propose to them a definitive solution, final solution for avoid this problem. Because in our opinion, it's not probably in P&L. In this case, if they remain in this kind of trees, it is only one able to manage, but it's not human, it's Jesus Christ because it's not possible, otherwise avoid the blackout. And it is important to understand that when you approve the CapEx, you need time for the implementation and other things and not always this time match with the expectation of the population. Taking in consideration today, they have the election. And no one of the party want to be involved in the discussion related to the blackout. At the end, we think we have in the right party. As I said in the last 3 years, we have to find a solution for Sao Paulo. Taking in consideration also that the Brazilian law considered in this case, for the asset, the RAB is about EUR 2.5 billion, the RAB, but the concession regarding only the asset of the company. This is an additional value regarding other share with generate or other. And the people and in this case, the valuation is much higher for a complete revision of the situation. And also in this case, we think we have done a complete risk for this investment in LatAm, I think.

And the AI one [indiscernible] opportunity.

But I don't see particular risk. We have 100% of our service then if one explains surely. But we have opportunity, for example, for the call center. Our digital company, LENE, we have just launched. Taking in consideration they have only one person for the call center. All the rest is completely managed for AI. Call centers, we give the service not with our employees but the external supplier. And for us, it is an opportunity. Of course, at such level, there is a risk, but this I don't think is for Enel, but for the country in general, because many kind of jobs are under risk in terms of number of occupation. If you explain surely, do you have a micro -- is that a microphone? [indiscernible]

As you have seen in the slide, we are moving with 350 applications that we produce in-house. We have a data factory with over 100 data scientists. I also remember we have more than 700 coders that work on the ICT model at a global level. Of course, we are reviewing all the processes of the companies trying to keep more effectiveness in the process and keeping out also more efficiency of course. If we speak about the market side, we have a level of digitalization of all the industry of Enel that is 100% in cloud, 100% of all the process are digitalized. And on the market side, we renew in the last 2 years more and more processes in terms of customer value chain. And we start also with LENE and other approach, that is reimagine -- process Reimagine the Business. So let me say, I think we are on track to compete with the most and important technology that come in the market.

Another flower for hydro concession, it's important to understand this. The current concession for the local municipality is already expired in 2010, 15 years ago. Now we have discussed how we can do that. This is the timing in Italy for this concession because there is also a complicated and complex relationship between the national government and the local government because there is the [indiscernible] Italian constitution that give totally the regional power about this material. And there is a little bit conflict on that.

We are the unique player in the hydro that do not have any part of our concession space. So we were saying we are not today -- in this moment, we have other also other concession to discuss as we are not, let me say, an active player there. It's not the moment to be honest. So you also asked about the PS bridge. In the share buyback, you see that there is 3, 4 because 3 is SpA, Enel SpA. 4 is -- there is the one that I do not control, let me say, directly in terms of execution. So let me say, you may consider for, if you consider also the execution of the full share buyback of Endesa, then it will depend on the price. But the price is not dramatic. We will not stop the share buyback because of the price. We are quite happy to have positive performance in the share. Regarding the -- again, the impact of the different price assumption, I explained another time, I think it's very important. That's why I put also -- there's a calendar. In the past, Enel Energia, it means Francesca Gostinelli sourcing was made at the spot price. I have to source the offer that I will launch tomorrow, and I will source myself at the calendar '28, '27 depending on the duration of the contract with the final customers. So the energy management was made the, let me say, the purchase in the department of Enel Energia. Now the Energia, Francesca says energy-- Bernabei at Green Power produces, so it's an industrial cost, it is managed by the energy management in order to optimize the portfolio that is very important because we can hedge, we have to manage their famous buffer hydro that in 2022 made disaster here. And when I talked about how we have a negative impact of the poor hydroelectricity in Italy, but we do not have a negative impact, strong negative impact [indiscernible] because as -- a lot of time, we maintain a buffer in the hydro that do not have the risk of being short from the hydro plants, okay? So what happened in this plan that I have to reduce not the cost that I don't know what will be of the sourcing made in the spot market, meaning calendars of the future time. But I have to reduce the price to the final customers because, as I sometimes tell you, if I have a reduction of EUR 5, it's EUR 10 in the bill of the customers. So imagine 2-megawatt hour of consumption. If I have to suppose a reduction of 25, that is the magic number that everybody have in Excel today, I have to review the pricing policy of Energia.

So for last -- Gonzalo.

Gonzalo Sanchez-Bordona from UBS. I have 3 questions. One is more generic regarding the -- I mean you sound very confident about the whole delivery of the plan, which we, I think, all appreciate. What is really the risk that something was wrong. And would you put a number to it? I mean, what is the maximum downs that you can expect in this plan, thinking about that, obviously, without giving us the details, I guess, of the potential things that could go wrong and I would imagine selling some assets that you are not thinking about today or having some changes in regulation or expectations regarding how things evolve on the regulatory side. And this brings me to my second question. On the Italian measures proposed last week, well, the key one, the ETS 1 is related subject to approval by the European commission. So what do you expect happens if that doesn't come through? Or I guess what is your expectation regarding that approval? And if it doesn't happen, I would imagine the Italian government would want to do something else in order to reduced prices. So what is your expectation on that? And then the third one is just a brief one regarding -- I mean, last time, you presented a plan, you talked about nuclear in Italy as a way of reducing prices. We haven't heard for quite a few months, I guess. So my question is, are there any developments there? Has the view changed completely? Is that something that the company is working?

I leave the floor to Stefano because what happened is a big question for the life, not only for [indiscernible]. Regarding our assumption and the possibility to EU don't approve would be a good news because instead of 80, 82 would be another number. We have taken into account the existing situation because otherwise it was impossible to have a discussion with you about hypothesis or other situation. Now we present a plan as if the decree was approved -- has been approved from the EU. In case there is modification of not approved, will be better. It's simple. Regarding nuke, we have just launched the company for studying the solution but now need time even because the technology SMR at the moment, the Chinese example and other under construction in Canada, I think, but there is not the decision -- the decision did not take place because need law for starting, for there is -- after the law to create the new agency, need to choice the site. It's not easy and need time because I know also the government because under incredible pressure, all the people said to them, you don't know nothing about the price, about the company, about anything. They have to take this action because otherwise, it was impossible because the pressure it has been strong about them. The evolution, I don't know, the evolution, in any case, not negative, more negative than we have presented. Stefano, regarding the risk.

Yes. Let me say the analysis is that we made -- we present to the Board of the company and analysis that make also not just the market, the financial stress, what may happen, the competition, the regulatory one. This year, we were ready to present also that in the last year, and we've not presented the, let me say, the risk analysis in our figure, we have prepared. Unfortunately, we have to manage the risk that was happening in our business plan. So in the last week, I'm sorry, but we have to work on the emergency of what may happen if. So we were not ready. So the big question there is, how much is the risk today of negative change in the price scenario in Italy, it's strongly reduced consider that the ETS have a lot of implications. We have a floor of between EUR 20 to EUR 30 that is represented by, if we eliminate the ETS, we will have the call that become the competitive generation in Europe. So we will have a dramatic change in the coal generation because it will become the most competitive source of energy in Europe, and we have Poland, Germany, we have freezed the carbon, but we have to -- we would to ask to the government, so can we move back to generate energy with the coal. Again, the risk is now reduced. Net-net, what -- summing up the analysis probably it works. If you sum all the impacts, you have some relief because it's impossible to have all the negatives, sometimes I think that is possible here. But okay. You have another, let me say, impact that is the same that we have today. So approximately EUR 300 million, let me say, that comes from other source, another EUR 300 million. But again, it's the sum of impacts affecting the financial cost, competition that is strongly reduced, price scenario. In the Americas, we have PPA signed, so honestly, the renewal of the PPA is not an issue today in the net income. In Spain, between the market scenario and the ancillary cost, the margin was strongly reduced. So let me say, we have a negative impact of that size, but impossible because probably a lot of players will die before us before -- it's how much you are great to resist to a negative impact on margins of some measure. So let me say another EUR 300 million if you want to consider what may happen in terms of negative regulatory implication also in the remuneration of the network in LatAm, in Spain. In Italy, it is quite defined.

So we have run off time, but obviously Investor Relations is available for any follow-up. Thank you very much.

Good day.

Thank you. Bye-bye.