Enlight Renewable Energy Ltd (ENLT) Earnings Call Transcript & Summary

[Interpreted] Good morning, everyone. Just a few days ago, Enlight has published one of the best quarterly reports in its history. This report basically follows the previous report, the one before, that was also one of the best we've ever published. And these results have enabled us quarter after quarter to basically increase our forecast for income and EBITDA for 2024. And these good results, of course, they are not random. They follow years of growth. We were in the stock market back in 2010, that was a public company. And year after year, we've proven ourselves as a successful company. But we will dive into these reports. And to explain how come the company is -- has been growing for so many years, and why we are so sure that we will continue to grow. We will try -- just one moment. [Technical Difficulty] It's really strange because at my side, everything seems to be working. So I really don't know -- okay, great, okay. So proceeding. Our great prerogative is to have Nir here with us, and he's been helping us to get to the place where we got to.

[Interpreted] Okay. Thank you so much, and good morning, everyone. Just like Gilad said, before we will dive in to our company activity and talk about our future prospects, we will start with the financial data for 2024. A bit of development of our historical background, of our financial reports for a few years back and then we will also talk about the future. Spoiler, the future is even brighter. So this has been a historical quarter, a very substantial. We've grossed the revenues of $100 million, an increase of almost 90% for profits as well -- for revenue, sorry as well as EBITDA. So it's due to a few factors, $25 million in 9 months for one project and additional projects that we have established, improvement in existing projects. Our operational activity is based on the ongoing activity with the deduction of expenses, taxes and the flow. The flow, of course, is one of the most important support for our growth and for our financing abilities. And these are the most important parameters that can provide the indication for our valuation. We also have the net profit. The core activity is reflected in the net profit. However, in the net profit, we also have additional parameters such as onetime revenues, financing activity. I will provide a few examples such as index differences, we have activities that are linked to the linkage with yielding of projects, we have ILS 2.8 billion. We need to understand that the financing expenses, we will see them later in the future and these revenues that will be linked to the index are calculated in such a way that we will see in P&L distribution of $13 million and additional financing factors such as noncash, basically, derivatives of our activity. We also protect our flows mostly because we have hedging and it's based to -- it's the base. So most cases, we have a match between the accounting results and the financial results. However, there are exceptions. And these exceptions, at times, can be seen in our P&L, such as the derivatives hedging for interest. If we talk about interest, of course, up until 2021, we've been doing hedging for almost interest 0. We also have changes in ForEx. So in net profit, we will see the volatility that is a bit different from the financial parameters. Company's KPI are revenues and EBITDA. These are the financial parameters that enable all of us to understand. Now net profit is -- it's not the KPI. But if we compare it to previous year, we've been providing net profit that are -- that is not neutralized for [ non-core ] items as well as the index. But if we neutralize the derivatives in P&L and ForEx changes, we can see that, basically, the increase in the net profit is also seen during these first 3 months. How does it seem during the last 9 months, our income is almost $300 million, EBITDA above $200 million, increase of 15%. 9 months were very strong, and some of the projects have contributed to the flow gradually during the year. I can remind you, quarter 3, $66 million and in the 9 months, almost $190 million. It also contributes to the net profit. This quarter, we also had almost $30 million gaps of indices for historical loans. If we look at the index during these past years. Now this impact is non-flow, but we really try that our hedging activity and ForEx rate activities not to be seen in the P&L, but sometimes there is mismatch and sometimes it's even for the better because last year, we've acknowledged $28 million as income as a result of ForEx changes, but we've also performed adjustments. So we've neutralized this noncore activity from the net profit, and we present the neutralized results to you with the changes of the index because they are substantial. There is a little mismatch between the flow and the P&L. So basically, as you know, we supply forecasts year after year for the substantial main KPIs to the investors, to the capital market, of course, revenues and EBITDA are very important. So quarter after quarter, we are really glad to improve our forecast. It's not because we were too conservative. We've been working in a very strict manner to come up with our forecast. But sometimes, we manage to even to surprise ourselves. During 2024 some of the projects were launched earlier and some of the things went smoother, so the revenues went up by 4% and EBITDA by 7%, $15 million and $70 million. And also EBITDA rate went up. It was about 70%, and now it's around 72%, which brings us to the forecast of the $376 million -- $362 million and EBITDA of $262 million. Gilad spoke about it. Financial funding activity. It's very intensive and important. This is basically the fuel that leverages the whole system. And of course, it's based our good and strong projects. And I would like to thank all the Enlight teams that really does the work simple for us when they go into the banks. Once you have good projects and good basis, funding is, of course, much easier. Only during these past 12 months, we've done a number of financial [ launches ] for $1.1 billion in both our geographical sectors, U.S., Europe and MENA. The [ rescoped ] in the U.S., PV projects in Hungary, wind project in Serbia and the cluster of storage and PV projects in Israel together with Bank Hapoalim. So our average gap is a little above 2% and the closures were done with 9 different banks. And this is an important point because one of the strongest points for Enlight and what really distinguishes us from the peer companies is that on every market, we know how to work with the most relevant banks that recruit in our fitting currency and the banks that are operating locally and it, of course, enables us to work in the best way. We also have commissions and structure. So we don't bring the relay of our bank to the local markets. We are working with the local banks, and it has proven itself as the best way to go. When you going into funding projects, you should work with the local banks, you will receive the optimal additions. Gilad?

[Interpreted] Great. So what would we like to show you? We would like to talk about the future. But beforehand, for just one moment, let us look backwards and show you that this growth that you've seen during these past 2 quarters, it's not random. And most of you here, you know our company for many years. And we can say 2 things about this growth. It's very fast and it's very consistent since the company was established. We took now time period back from 2018, but we can really look back at any period of time. How many companies do you know that the revenues are increasing 37% and EBITDA also linked, so that profitability increases in the same way, 38% throughout these years? How many companies do you really know that this growth looks exponential and not volatile with different crises along the way? This has been going on for many years. And what we try to show you mostly, it's the future. What do we do at our company that we've been growing for 8, 10 years. And why you will continue to see it in the future? I would like to see a few parameters that have been -- to show you a few parameters that have been developing the equity of the company has increased by $1.4 billion and CAGR as well, 54% increase. But also, we've been working on financial resilience, the true leverage, which is basically the ratio between debt and cap went down by 5% on average with -- throughout the years. You can see a few ups and downs here. But if you have it consolidated, all the debt, including the SGC, there also we have the decrease of 4% on average from year to year. You can understand that this is a very healthy parameter. The company is going stronger and from year-to-year, 40% are our parameters of growth, and we're talking about sales. You've seen the numbers in dollars, $360 million, which is ILS 1.4 billion. I'm talking about [ $1 million ] per quarter. But for me, ILS 1 billion of sales was a great milestone. But now we are at ILS 1.4 billion, but now we are also crossing a number of ILS 1 billion of EBITDA yearly. So we are really getting there. And now we will do the drill-down, and we will show you why it's happening. Let's look. When you look at only at the financial results of the company, this is what you see. It's a mountain. It's a beautiful mountain. But as of today, if you look at our reports, it has yielding capacity of 2.6 FGW that produce about $400 million of income revenues. In 2024, we will do $360 million, so -- because we've connected some projects along the year, and we've reported already the $400 million previously and forecast for 2025. This is more or less what you can see. Now before we were talking about sales, but what really was it at the core, it's the yielding capacity, the projects in commercial operation. This is what you see in EBITDA. And as you've seen, it grows every year in terms of yielding capacity increase of 66% along the years from 0.4 until 2.6, what you see today. But if you would like to understand the company, you need to look backwards and to understand that this mountain is just the top of the iceberg because the sales that you can see, this is just the top of the iceberg. This is the yielding part, but most of the company is below the surface, below the water level because we've been developing these projects, launching them into construction and then going to produce sales. So the largest machine, it constantly contributes to the growth of the iceberg. And what we will try to do today is really to use this opportunity to go beyond the quarterly reports and to show you the true value of the company. So we have 2.6 yielding capacity. What is really important, in the $400 million are guaranteed by the contracts that have been signed already. So if you will deploy this on 20, 25 years, you can calculate the numbers. But what do we see below, projects that are currently in construction. We've already finished the development, we will soon finish the construction for some. So in 1, 2 years, they will become yielding projects of 1.9 FGW. This is the capacity that you can see, and they will go into operation in 2025 and in 2026. Now of course, people I hear with us that work really hard for these projects to finish the construction phase successfully and to be launched into operation. And if we drill even deeper, these are the projects prior to construction, meaning the construction is flat for the next 12 months, projects can take between 3 and 7 years, usually 5 to 7 years. So the milestones of the development are already being finalized, and we plan the construction for the next 12 months so -- and additional 3.7 FGW will go into construction in this period of time. This is the so-called mature portfolio. So between this large iceberg, this is what we see now in operation, under construction and prior to construction. This is a mature portfolio. But look, what we see if we drill down because we are a greenfield developer. We have additional tier in this machine, it's called advanced development. This is what we plan to establish in 2026 because we have plans, 24 -- but were up to 24 months for construction. It means early 2026. And for additional 6.4 FGW, think about it. Today, we have 2.6. But what's planned for the next few years, it's additional capacity of 1.9, 3.7 and 6.4. This is not all. I've told you that this machine develops projects from greenfield. Also it takes 3 to 7 years. So we also have the development sector. These are the projects that will be will go into construction starting from 2027 later. Over there, we have additional 13.7 FGW. So when we look at our financial reports -- and this is something that I'm really, really proud of. When we've reached ILS 1.4 billion, there are so many tiers below and in English, we are calling it increase and convert. It's not a mountain. We are constantly increasing it going into new projects, new countries, and it's growing constantly. But here in Enlight, we really believe in execution. And I think that we've reached already the highest execution in our market if we took the world benchmark. And our goal is basically to continue to develop our portfolio until it reaches the top of the iceberg, and this is when you can see it. Let's talk about differentiation for a moment. There is a reason why we've been so successful. And when we measure it, there is one clear measurement for companies such as ours. One, how fast do we grow, and we grow faster than the market. But also, we would like to grow in higher yields than the market. And because it's the growth without yield, it's not the parameter that we want to see. We need to check, are we outperforming the market. How do we do this? How do we check that? I think you can see it in the report. So first of all, we have a very unique business model. We've invented it. We we've promoted it in Israel. More and more players are joining us now. It basically says when we've realized soon enough that the value is in development because if you look at the yield of yielding projects, a lot of it, the hardest part is to develop it. If you purchase a yielding project, you receive the project that is safe, but the yield is lower. A lot of players are doing it, and it's great. However, a lot of the yield went already. The higher part is in development. But to be only a developing company, it's not enough because then you are not able to grow your projects and to sell the electricity. So the CEOs, of course, of these small companies can get very rich, but the companies stay smaller. There are lots of private developers out there in the world or large IPP companies that purchase the developments through the smaller players. And then we talk about the value project but the yield is lower. So we've realized that combining the 2 is the best thing. And today, at the Israeli stock market, the companies that have -- that came after us are also using this model and also in the U.S. market. But the question is, how deep is your control of the value chain? This is the question. And here we are differentiated. Look at our geographical diversity. Most entrepreneurs choose their market, the U.S. market, the European market and others. And in the U.S. as well, perhaps because the market is really large, people usually focus in certain areas, only PGM, only certain parts of the market. We are a really unique player because we have a very balanced activity, growing activity between the 3 different geographies, one of the largest in the world, one of them, of course, Israel, our home, but we also expand to MENA, Middle East, North Africa. These are 3 growing markets, and we have a great depth that other players lack. Europe, of course, Europe is a title. We have -- we are present in 10 countries in Europe, and in the U.S., 22 different states. Technological differentiation as well really complements these metrics. When we went into the market, it was different. It was -- most of it was wind and solar. And we were the first to [indiscernible] in Israel very fastly, we've realized that because the [indiscernible] is getting stronger. Coverage is basically also becoming more and more [indiscernible] that we were the first to go into storage. And today, we are one of the leading players in storage and this is one of our growth angles. So there is a metric, 90% for our balance between [indiscernible] and storage and this metric is on 3 large markets. And these are our relative advantages. But beyond that, I think [ we realize that ] IPP can also impact the [ drill-down ] power, the depths of our growth. So we took about [indiscernible] and in the beginning, the people didn't know us, but we came up with the capability and a lot of players of the Israeli market understood without [indiscernible] renewable energy. And then we've expanded to the U.S. market. So today, we have a great financial flexibility which is based on a float on leading players. Israeli market. We've added the [ S ] market, we have diversity, we have the sweet spot of all the markets' advantages. Industrial, other advantages in the U.S. We are really flexible. Also, the company doesn't have a core control, and we are completely aligned with our investors. There is no one shareholder that has control of the company. We are growing. The company was a very flexible structure, which is best for our investors as well. When we pick our leverage rating, we make sure that it produces most value but also -- for you, but also most resilience for the company. And look at the 15 years of our history. We are innovative. We know how to identify the spots on the markets, but we -- we're also good in execution quarter after quarter, year after year, more than 50 quarters consecutively already. So when you look at all this, you can understand that this is what brings us to the differentiation. But eventually, of course, we talk about people, and I really believe that this team and the leadership are the most talented people and the most important part. Some people of senior management are from Israel, others are not. And these are the players that help us to take this machine through the -- also, we are adjusting our infrastructure constantly while dealing with challenges. And one of the best things that we did this year was the restructuring that brought 4 CEOs below me and 2 C levels, Founder, Amit, and Nir, who is almost another founder and senior. And the tier of senior management who support this growth. So these are the people that we have CEO in the U.S., CEO in Europe, CEO of MENA. We have CEO of Execution division because we need to deal with engineering, construction, acquisitions, managing yielding assets. So the CEO and the VPs who are in charge of that are currently here with us, and they are making sure that everything continues. And people with so much experience, more senior [ repeat ], with a lot of experience in Israel and also other people. And also we have a very professional Board [ with ] Yair, the Chairman who also audit us, monitor us and to provide us with the optimal growing conditions without fighting for power and ego. We are really talking about a highly professional company. Now this is only the first tier below me. Below the CEOs and C-levels, we also have the deputies, and these are the people who are the best experts in Israel, Europe and in the U.S. And they're really [ making it happen ]. And I would like to provide you today with the information about these markets. So in order for us to start, I would like to invite one of the most talented managers in company, Gilad Peled. He joined us about 2 years ago, and he has taken us forward in Israel, I don't know if you know, but -- here in Israel, we have been growing almost exponentially. So it makes Europe and U.S. a bit anxious. There is a revolution on the Israeli market. Gilad talk to you about what's going to happen. It's really exciting, I must say, and we are a large part of it.

[Interpreted] Good morning. First of all, I must say that I joined your company almost 2 years ago, and I'm so proud to become a part of such a contributing and growing company that takes care of the environment. And for me, it's something that provides us with meaning and it's a part of our great success because people really believe in what they do. People are committed to it, and it brings results. I will start with a snapshot of Israel activity, and then we will talk about Enlight and the market of energy in Israel and the future of Enlight in it. This is our snapshot. We have almost 900 FWMV, FMW of operational capacity for 2024. On the right bottom part, you can also see the jump that we did in this past year. And it's, of course, the result of hard work. If we go back, this is the result of the hard work below the sea level, below the iceberg. And on the left part, bottom part, you can also see the technological diversity. There are no other companies in Israel that have this kind of diversity and brings a strong stability to the revenue flow. Now let's talk about the Israeli renewable energy market. And let's talk about perspective for future years because we've been working for a few years already, and it seems that we are there. But I can tell you that the Israeli market of renewable energy, currently, it's only in the beginning. It's going to grow greatly in the years to come, and the numbers are very high. The numbers, although may seem to be humble, but we are talking about growth of renewable energy, and it's the more stable growth -- no, the market of other types of -- fossil types of energy is getting stabilized. And in the future, it will decline. Now it's important to see the numbers to understand that we are only in the beginning today. On the Israeli market, we have capacity of 6 gigawatts of renewable energy. In 2030, we will reach almost 17 gigawatts, so in the next 5 to 6 years, we will grow more than twice compared to today. This is our market. But when we look at 2050, it looks really far away, but it really isn't, people. The system is going there already. We will grow almost 16x. These are forecasts of the Energy Ministry and the Electricity Authority. So this market is supposed to grow. So what happens now, you really need to build the tracks to let this train go into the future. And even more interestingly, the storage market is also perhaps the highest driver for renewable energy. By the end of 2023, for storage, we had 0.3, but it's going to grow 10x. In 5, 6 years from today, we will see 30 gigawatt and later, it will continue to grow. This is our market. Now it's important to explain how come storage market in Israel is so large. We can see the comparison with other countries, you can see here the U.K., Italy, Greece, Spain and France. And you can see that Israel is in Europe for targets on the second place, but targets for 2030, although in storage, our KPIs are very high approximately 4x higher comparing the population. Why does it happen? Because in other countries, there is more diversity for renewable energy, more wind, there's hydro, there is solar and profile of production for other countries is more balanced. But what happens in Israel, despite for wind, which of course, is where we are leading, more than 90% of renewable energy today and in the future is solar, it depends on wind -- on the sun, sorry. Hence, it depends on the time of day and it brings us with a lot of energy that is being produced at the same time. But the consumption, as you can see, is distributed differently over the hours of the day. And what the contract needs to do for renewable energy, we need to take this large capacity. And the way to do it is, of course, is storage. We need to dissipate it. Hence, unlike other countries, the storage part is going to be very, very substantial, and we are leading this process. I would like to talk to you about our competitive environment. During these first years, which was basically the beginning of renewable energies, we needed to protect renewable energy market, to subsidize it. So the electricity authority had tenders in this area in order to enable it to grow. But what happened eventually is that these companies are competing with themselves. And it led basically prices of ILS 0.20 per kilowatt per hour. And during the past year, the authority of electricity has opened this to competition on the market, and we've seen an increase of 50% in prices. And this is, of course, these are very good news for us and for the industry. What you see here are ILS 0.30 per kilowatt per hour, this is the average on the market. You know that we sell our [ electricity ] with discounts to our clients, but we managed to beat this price. We received price even higher by 3% or 7% than ILS 0.30 because we find clients with different use patterns where the price is higher. So we are really excellent in terms of electricity trading, and we know how to work with the clients that match our production patterns completely. So we are successful in getting even a higher tariff comparing to the average of kilowatt per hour. If we look at the future, we can see that here as well, forecast goes along with the forecast for the growth. Here, we are looking at the forecast for the future, the consumers, growth of population. And we can see that phenomenal and real parameters, the prices of electricity are going to rise. Now we are used for subsidies. But I can tell you today, it's profitable already, but it will become even more profitable in the years to come. And this is, of course, great news for us. Now during the last year, something happened in Israel, lots of things happened, but for renewable energy, up until today, it was about deployment story. And we know that in Israel, people don't really prioritize climate at the top. But what happened is renewable energy, it now goes together with defense and security because the power industry is very concentrated. 10 power stations come up with 50%. I'm talking about [ fuel ] cell power stations. And we've seen during these past months, including the Iranian attack that although they were not targeting the power stations, but when they were, they damaged them precisely. And if they do that, this is a very high risk for the national security. You can't do -- you can do nothing. The more you protect it, the more aerial protection you have. If you are with such a high concentration, there is a risk. So all the decision-makers already understand that the only way to deal with this is the dissipation of the production. And the only way to do it, those are renewable energy. So -- because if you have farms -- a lot of farms with solar and storage capacity, this is what will be the most effective. Second thing deals with food security and agro-solar energy. The ability of the state of Israel to develop the renewable energy together with agriculture, it is one of the successes because territory is limited in Israel. So our ability to combine solar farms with agriculture farms is, of course, very, very profitable. So hundreds of thousands of dunams basically were assigned and now the obstacles for development of solar energy in Israel was removed -- were removed. So eventually, most of the production for renewable energy happens in the agricultural areas. And a quarter of these are close to the line of confrontation, and we understand it will take years to do things differently. But renewable energy, it's the most accessible, stable and fast solution to take money, to use it in the areas of -- close to the line of conformation with Israeli and foreign investors. This is the [ winning ] formula for investment into renewable energy and is going to be the driver to rehabilitation of these territories. Now let's go back to Enlight in this context. We really believe that in the places where we operate, and we really try to choose the places with the most potential for growth, and there, we are leading. We've been operating for many years in the utility-scale market share, and we've reached 27% in renewable energy, of course, in this market share leading the market. We understood that the storage is going to become basically the engine of the next growth. And we were the first to go there, and we took risks because what Gilad spoke about. You need to see where it's going and to -- but you need the courage to take the risk to go into the unknown market, the unknown industry. So we did that, and there is not another player that has the same capacity in Israel in terms of yielding projects. And we were also the first to go into market regulation. But here as well, there is risk because you need to have the information system, you need to match production and consumption and there are risks as well. And again, we agreed to be the first. And again, we are leading this part of the market as well. So in market regulation in the bilateral sales, we have about 50% market share for Enlight. Additional market that we've identified is home electricity. We've identified potential partnership with Electra Power and together, we have 30% of market share. We have dozens of thousands of customers who became our consumers together with Electra Power. Additional market is called nonutility. These are smaller players, panels on the roofs, on backyards, small farms, et cetera. And the best team, the best team in Israel is also working for us. We've purchased a small company that was an expert in this, and now we are present there as well. So if we look at Enlight MENA, for the years to come, we went into agro solar area, we came up with a unique solution. It's located in the directories adjacent to Gaza Strip. It's in operation. And already today, we are producing very large transactions that will enable us to have enough land in the future. We will continue to lead the storage market, and we plan to have a substantial market there. We will continue to lead the home consumption and to be the leading player. One of the biggest advantages that we bring, comparing to others, we know how to work with -- we were working with a company that knows to work with customers, but we also bring production capabilities that are lacking on the market, and it really grants us a very serious competitive advantage. We've purchased also a great team in nonutility. And I'm telling you, we will be leading here as well. And during these 2 years, we've been expanding our own limits. And today, we are looking at other markets in MENA area, very interesting projects there as well. We can see future growth. When we look at our portfolio, we can see the capacity. Today, we're talking about 900 FGW, but in the next year, we will go into construction of additional 200 factors megawatts. So we do see another growth. But if we look at the future, if we go back to the iceberg that Gilad spoke about, we can see that in the next 2 years, we will go into construction of additional 800 megawatts which is basically what we have up until now. And in the further future, we have additional 1.8 in order to take this even further. So we really -- we can see a substantial growth for the next years to come. additional milestones, additional [ growth ] for Enlight in Israel and in the MENA area. So this is about MENA. And I would like to invite here to join us, Ilan Goren on Zoom. He is the CEO of Enlight U.S. Ilan has been working for the company for 14 years now, and he has a substantial contribution to Enlight's success and growth in Europe, and now he's taking his experience to the U.S. Ilan, please go ahead.

[Interpreted] Thank you, Gilad. Good morning to all the participants. The next presentation is dedicated to Enlight U.S. activity. The activity here is in large scope, and the growth rate is very fast. We've started the year with 470 factored megawatt and then we've launched additional 3 projects in New Mexico, California and another one, total for factored megawatt above 1,700. In addition, we're talking about 33 projects on the Eastern Coast. And if we talk about [ project breakup ]. If we talk about under construction project, these are about 3,457, and then we have preconstructions, 3,157. Advanced development and development, you can see, we will continue to grow in the next years as well. And this is what Gilad said as well. Our portfolio has been growing consistently, and our projects are facing -- are progressing towards construction substantially. You can see that our deployment has more than 20 states and we are located all over the U.S. territory. Before we dive into our portfolio and its characteristics, let's say a few words about the U.S. market. It's a huge market, of course, but it will also continue to grow in the next years. We've established data centers and in many places, a lot of new data centers are being established and we're talking about consumption of 4% to 5% as of today, but by 2030, it's going to go up to 12%. Now regarding the electric cars as well, a lot of -- more -- the U.S. market has more and more -- no, sorry. Now because the market of renewable energy is growing, the full-sale energy market is on decline. Even now in the first half of the year, we've seen that 90% of projects -- new projects on the market are in renewable energy and 95% of the projects for the next years are in renewable energy. If we talk about VNF, it will also be on the rise until 2030, including utility scale, and we are going to be a part of this growth for storage as well. It will go up from 30 gigawatt for storage until 120 until the year 2030. Now these sectors are very important to the U.S. economy. And most of the projects are concentrated in solar energy. The government supports panels, large plants for solar as well as storage fields. By the way, these plants contribute, of course, themselves to the rise of demand. Additional parameter for the U.S. is called WECC. The U.S., includes -- the WECC area includes 14 states and about 70% of our portfolio is located in that area and its target of the U.S. government to reach presence of renewable energy in this area by 2045. We're talking about 300 gigawatt, about 20% of a total of production in the U.S., 90 million population, and the population is growing fastly. In WECC area as well, a lot of projects are in construction or prior to construction. So the WECC area, the same working on infrastructure and making other preparations for the future. Additional characteristic, which is basically unique to WECC area is that the optimal -- these are the optimal conditions for solar energy. You can see here in this specific area, it has certain characteristics. There are a lot of large, open areas, deserts, radiation, conditions, et cetera, the environment that enables us to establish large projects. To talk about the background and the offtake structure. All the PPA that we've signed so far, it's a so-called busbar PPA. This is very important component that supports stability in revenues. And basically, it fixes it along the years. When we talk about busbar, we're talking about a physical point where the electricity goes into storage and sales, unlike the other model, hub-settled PPA. And sometimes, there is large geographical distance. So there are more expenses and there is more volatility for the second mode of us. But in busbar PPA, the price can be fixed in advance. If we talk about 20 years and sometimes even more, so these are long-term contracts, can be 10, 12, 15 years in other areas. But here, we are talking about long term. So the price is attractive for us and for our tax equity partners. And as a result, the prices are attractive comparing to the average of the market. Following previous slides, the characteristics of our projects can be seen here. They are important and unique. So we're talking about very large projects, similar to gas and coal power stations. Now the locations are also very attractive. We have large production and storage capacities for utility market, and we are able to match our production profiles to consumption profiles. For instance, in Atrisco project that we've been currently working on, it's a combined project, solar and storage and NPV is derived from it. So additional parameter for our U.S. portfolio, our follow-up project, it's also correct for Europe. One of the projects that now went into construction, which is a follow-up project for Atrisco, we now went to construction, and it enables us to save costs, developments. It makes the whole workflow more effective. Now the result of these 2 factors can bring us to very large projects with very good yields for long term. If we will talk about our yielding projects, so these, the first is Atrisco in New Mexico and another project in Montana, 2 projects for -- with yearly EBITDA of $50 million. In addition to these projects, the first 2, we can see the next waves to come. The second wave is supposed to reach operation in 2025 and others in 2026. The projects that will come up with EBITDA of approximately $110 million and revenues of approximately $140 million. Another project in Arizona and Snowflake, Snowflake A, 3 projects in the East. If we go backwards for a moment, the total revenues will be approximately $500 million and yearly EBITDA of about $400 million. Our mature portfolio includes also other projects, some yielding, some under construction. Snowflake is a very vast project already. We will talk about it. We evaluate it as of 85% of our portfolio. So we're talking about land rights, connection to the grid and other parameters that explain regarding how close we are to operation. So the readiness is about 85% already and other projects, about 75% maturity. Storage and solar, some of it under construction, others prior to construction. About the 3 projects that will go into construction soon. On the left, you can see California project, Country Acres, the construction has started. It's a large project and interesting one, Gilad mentioned Acres already. We've been working together with California and University, and we've been checking a few parameters for [ gross ] and also the results from Israel assist us in our work in the U.S. We will launch another project follow-up for Atrisco. You can see the data on the presentation and Roadrunner, the first project in Arizona, after 2 other large projects will follow during the next year. Let's talk more about Snowflake A. It's a large project with capacity of distributing into 2 Snowflake A 600 solar megawatts and 1900 storage megawatt. Snowflake A has a territory of 12 southern dunam and the next stage of the project, Snowflake B, will double its territory. We are talking about high territory desert with heights of 1,600 meters, radiation, storage and solar, and the agreement of connection to the grid was already signed. Just like I said in the beginning -- just like Gilad said in the beginning, there is the top of the iceberg, but below it, we have a lot of things going on as well. If we talk about advanced development, we have a total of 11 projects with the parameters that you can see. Progress rate, consolidated 67% as well as portfolio in development, 36 future projects. To sum up, you can see a very large portfolio of almost 20 factored gigawatt, including 14 gigawatt solar. The first part is yielding already. Another port will go into construction, into operation in 2025, and also other projects that are in different stages of development and will contribute to our growth in the future. This is it. And now I would like to invite Marko. Nir and myself have been working here for almost 14 years, and Marko has been working with us for many years as well. He is working -- he has been working in Eastern Europe and then move to Central Europe. And today, he is the CEO of Enlight Europe. Marko, the stage is yours.

Thank you, Ilan. So [Foreign Language]. Good morning. My name is Marko Liposcak. I'm a General Manager for Enlight in Europe. I've been in Enlight since 2017, actually beginning of 2017, I've known the company for more than 10 years. I was one of the -- actually, I was the first non-Israeli employee of the company when I joined. Started as a business development manager, as Ilan said, back in Eastern Europe. And then my responsibilities have grown over the time. After 2021, I was appointed as Head of Business Development in Europe for Enlight. And today, my team is basically making sure that we grow and we convert our portfolio even further in Europe. And today, I'm very honored and pleasured to be able to show you what have we done in Europe and what we are doing in Europe and what we are going to do, more importantly, in Europe over the next years. So here's a short snapshot. This is a snapshot of where we are today. So today, in Europe, we have the strongest portfolio in the company. It's more than 1.2 gigawatts of operating capacity. As we speak, we are putting into operation additional capacity. So by end of the year, Enlight will have more than 1.3 gigawatts of operational capacity in Europe, consisting of majority wind farms, a big chunk of solar PV projects and also a portfolio which is growing into battery storage space as well. Today or over the next 12 months, Enlight is generating almost $200 million of revenue in Europe. And our mature portfolio has grown for a couple of hundred megawatts in only this year. What I'm going to show to you today is that we're going to continue this kind of achievements. We're going to continue this growth. Enlight has been present in Europe almost 10 years. It is present in 10 countries, and it will grow and it will go for 4 key reasons. First reason, there is an opportunity in Europe. So in Europe, there is a growth of capacity in both generation and battery storage side -- on the battery storage side. The renewable generation segment in Europe is predicted to grow for more than 1,000 gigawatts over the next decade. This means that Europe has been very committed to renewables, and Europe will continue to be very committed to renewables in the future. Today, more than 50% of all Europe's electricity is being generated by renewable capacity, mostly being solar PV and wind generation. And in the next decade, this capacity will steadily grow at the pace of almost 10%. So one can maybe think of Europe as being like a ship, which is navigating very consistently towards the direction of energy transition, and it's a ship which is very committed to continue navigating in the same direction. So this presents a huge opportunity for us as a company who is already established in order to grow even faster. Now this renewable generation segment is driving another segment to grow exponentially, and that's the storage segment. So basically, the more renewable generation is being built, and we see this across all the European markets, there's more volatility on the pricing side. There's more demand for balancing the consumption and production, which really amplifies the need to build more storage. So that means that total utility-scale battery energy storage capacity in Europe will grow even faster than the renewable generation capacity. So today or until end of '23, there was a little bit more than 7 gigawatts of installed capacity of battery storage in Europe. And we predict that within 5 years, until 2030, this capacity will grow 7x. And what we have identified is that there are some core or largest markets which will take most of that capacity. And they are presented here on this slide. And among those, we have focused on some of the markets where we, as a company, see the most profitable and most high growth and combined with our unique position and expertise in terms of infrastructure in Europe. And that's the third key reason why we think grow and we're going to execute in Europe in terms of enlarging our portfolio and bringing even more growth than we brought so far and even more revenues than we are bringing so far. First reason is that we have a strong team developing projects in Europe in terms of origination of new capacities of new projects, in terms of development of the new portfolio and in terms of managing those portfolio and executing on this. So today, in Europe, we have employees in more than 10 countries, so more countries than we operate in. And we have a very healthy blend of employees, which are Israel-based and Europe-based, myself being Europe-based as well. And then, not less important, we have an infrastructure or an ecosystem of project development partners, project origination partners, of advisers, engineering companies that we have built over the time, which enables us to really execute on our plans. Now how are we going to this -- to do this? What are we going to do over the next years in order to address this market opportunity? First, we will continue and even accelerate growth of our portfolio on core markets. And what are our core markets? You have seen in the map in one of the previous slides. It's the Southwest Europe, so places like Italy, like Spain, with very strong infrastructure for Enlight but as well as strong infrastructure for the growth of renewable markets and a lot of renewable resource, a lot of wind and a lot of solar. Then it's the Nordics, where we have built a quite substantial and large operations of wind energy over time, which we expect and plan to grow substantially in the future. And then there is Central and Eastern Europe, which is the market which initially we addressed as a company, which -- where we have -- where we had, had a great success in really cherrypicking of the right projects, the profitable ones and managing all the risks, which enabled us to really harvest revenues and profitable growth over the last 5 to 6 years. Now besides growing in the core markets, what we see and what I showed in previous slide is that we see a big opportunity in storage. Europe compared to Israel and U.S. is a little bit less advanced in terms of deployment of storage. On the other hand, our track record as a company in the markets of Israel and U.S. which are -- which have been a little bit faster in developing the storage market gives us a unique position or true competitive advantage. Our ability to source, plan and execute on battery storage projects, I think diversify us from our competition today in Europe. We have more track record, we have more experience, and we know how to execute on these projects better than most of our competitors in Europe. And this is where we see the opportunity to grow the portfolio and utilize that track record and experience and know-how that we already have. Besides pushing a lot of resources in growth of our storage portfolio, we see also some low-hanging fruit in terms of utilizing our existing operating portfolio. As you've seen today, our existing operating portfolio is the largest right now compared to other regions that Enlight like to operate in. And what we believe is that we can utilize that operating portfolio and the infrastructure that we've built around this operating portfolio in a very efficient way. If you look at the average wind or solar project, their capacity factors, they range between 20% to 40%. That means that the infrastructure around them is utilized 20% to 40%. So why don't we then add additional PV to existing wind or additional battery storage to existing PV or wind or we do all, like we are doing it in Gecama, where we are hybridizing the biggest project that currently operates in Spain in terms of wind energy, where we are adding more than 200 megawatts of PV capacity and 200-megawatt hours of battery storage capacity, which will really make this project unique. Unique on the Spanish market, but I would say unique also on the European level market with more than 500 megawatts of capacity on a single connection point combining all 3 technologies, which will really enable us to provide our customers with a very nice profile of supply of energy, which will be, at the same time, very competitive compared to our peers. We can do the same with most of our other projects in Europe. So we can do the fast-track hybridization of operating assets in Sweden, in PV assets in Hungary and also in Central and Eastern Europe, and that's what we are doing. And at the same time, we want to grow the new portfolio. When I'm saying the new portfolio, just in Italy, we have more than 2 gigawatts of portfolio coming up, and I will show the numbers just in a second in terms of both early, advanced and mature portfolio. What we want to do is to leverage our existing infrastructure to increase our presence and what we want to do is to increase our activities both in Nordics and West Europe while maintaining profitable Central and Eastern Europe operations. So these are the 4 pillars in which we are going to focus on in order to really make our business in Europe even more successful. Now going a little bit deeper. So going a little bit around this iceberg that both Gilad -- both Gilads and Ilan has talked about. The iceberg exists in Europe as well. So the tip of the iceberg is the EUR 200 million that -- of the revenues that we're going to generate over the 2024 in Europe. And then what is below that tip of the iceberg are pretty much some of the projects that we have already talked about and that we have already announced like Pupin wind project in Serbia, which is now just nearing COD or commercial operations. It's battery storage projects in Italy, which we are looking to start constructing 2025, and that consists of our mature portfolio. But then there's even more beyond that mature portfolio. And that's the advanced and the development portfolio, which we have been growing over the years in order to fuel this growth in the next coming years. So if we go to the next slide, I'm showing the operational capacity of 1.2 and the operational and under construction capacity. So basically, all the capacity that will be online by end of this year, which will be beyond 1.3 gigawatts. And then there's a hybridization incentive, which -- initiative, which we already discussed about. And then there's a storage initiative that I already mentioned as our key drivers for '25. That means that by the end of '25, our mature portfolio will grow from 1.3 to 1.75 gigawatts by end of the year. And then when we go into our advanced and development phase, we see that there is more than 2.8 gigawatts of advanced and developer projects in the pipeline. We are growing that pipeline as we speak. Every year, we add between 500 and more than 1 giga of new greenfield or mid-stage projects into the pipeline. And you know what is our mantra in Europe is to grow and convert, so basically to grow the overall portfolio and then convert the early and advanced pipeline into our mature portfolio. And this is what you're going to see over the next years or over the next quarter, I expect that the advanced portfolio, there will be a few conversions coming from early-stage portfolio so that it is going to be, I would say, significantly larger than what I'm showing today. And the early stage portfolio is being built on a quarter-by-quarter basis, and this is where we can show a consistent growth in terms of numbers and numbers of megawatts. And then to wrap it up, I would just like to show you or put the spotlight on a showcase that we wanted to present on how we are implementing our strategy in Europe. And what are we doing in terms of making it all happen. It's a showcase of stand-alone battery storage portfolio in Italy that we have built over the last couple of years. Last couple of -- a couple of years ago, when we sat down altogether and looked at, okay, what is the opportunity, what is the big opportunity in Italy, what we saw is that there are a couple of key success drivers in place in order to execute on storage in Italy. First of all, there is a market demand. So Italy has been identified as a really immediate market after U.K., the second immediate high-growth market after U.K. for storage in Europe. There is a clear need for battery storage, which has been articulated by the transmission system operator. And then based on all these analysis and needs by the transmission system operator, the Italian government has put in place a very supportive regulation scheme, which is, I would dare to say, probably the most advanced in Europe. So the market is there. Secondly, the supportive regulation that has been put in place in Italy enables for a very high growth, which means 71 gigawatt hours to be auctioned by 2030. When I say auctioned, that means that the transmission system operator will put on the market a fixed capacity contract for 15 years, which will enable bankability for almost 10 gigawatts of projects. On top of this, there is an upside, an upside comes from the merchant revenue exposure. So besides having a very strong and bankable long-term contracts, each investor based on its risk profile can decide whether they can also take some merchant exposure, which is a little bit more risky, but provides a great upside in terms of returns and yields. And then, it's all combined with the dynamics. And the dynamics is that the first auction in Italy will come into place in the first half of next year, and it will continue in coming years gradually. So there is a market, there is a regulation, and that regulation is supporting the market over the mid- to long term. And then maybe the most important ingredient or key success driver and that's Enlight's core capabilities. So with time, we have built infrastructure and the team in Italy, which is able to address those challenges. We have cherrypicked the right sites. We have cherrypicked the right projects and the right development partners and in-house team, which resulted in building a portfolio which can really address those market needs. And then more -- maybe more importantly or most importantly, our track record from U.S. and Israel enable us really to be competitive here. So we know what does it mean to pick the right side. We know what does it mean to have the right grid connection, and we know how to engineer and design project to be the competitive and to have a low cost, which will yield in high returns. So all these success drivers combined resulted in a portfolio of more than 2.5 gigawatt hours and still growing, consisting of various projects very strategically situated across South Europe or South Italy. While South Italy has been recognized as the region with the most need for battery storage with short connections on high-voltage grid with connection substations either existing or approved. And this will enable us to build this portfolio in a way that it gradually increases our revenues from battery storage in Europe all the way from 2026, '27 and going towards to '29 and in 2030. So for us, this is a model that we would like to apply on other markets. I've already shown that we have in focus Italy, Poland and Spain. And it's a model that we intend to implement and a success story that we will be showing in the years to come. So that's a little bit about Europe. Thank you very much. I give to work back to Gilad to wrap up the session.

Thank you, Marko. [Interpreted] We will proceed now with the presentation from over here. We would like to go with you to the session of FAQ, but I will also provide you with a short summary. Okay. What have you seen? You've seen that market for renewable energy is growing. And I think that very few people have the opportunity just like we did to go into an industry that's going to replace the existing electricity production in the world. We did have a great opportunity, and we've made the best of it in order to grow to become a large company. And today, we are working to become even greater. And we -- we've tried showing you why it happens. So you've seen a very distinct and unique business model that enables us to grow and to continue bringing yield. But to make sure that we are stable and we have funding abilities, we are working on diversity, geographical, technological, and we are also becoming more competitive on the U.S. For instance, our costs, although we're comparing to other competitors. And in addition, we have the most professional people working for us, who are working with passion and they know exactly where to go and where the next thing is emerging. Now you've seen the numbers. The numbers are extraordinary comparing to the Israeli market. We are, today, in total of 10% of this machine, but there is another mature portfolio of 8.2, which is another 20% of this machine and there is also the bottom of iceberg, which will continue leading us to the future, and we invite you also to join us in this marathon and become sprint runners. If there are any questions, please go ahead. I cannot hear any question.

[indiscernible]

[Interpreted] Regarding the U.S. market, I think that most importantly, we need to look at the full demand and to understand where we are going. In the past 20 years, there was a decrease for stabilization of consumption, demand and consumption. And during the first years, there was a sharp increase. So we look at -- and we don't measure it at megabyte, but in megawatt. And the data centers, when they started, they used to have 15 kilowatts within the huge data centers, then today I think it's 150 kilowatts. And the largest companies are already developing huge centers and projects are in need to deliver this power. There are also -- there are projects that took very long time to finance. These are working projects, and they try -- and the competitive projects come from the renewable energy. Now the climate, basically also the government is saying, I care about the economy, not about the climate. So maybe they will exit the Paris Accord. The global warming isn't so important for them, but the economical growth, it's important to them, and our ability is to deliver projects. And this is what makes it happen. I think that if you look at the first time -- the first candidacy of Trump between 2016 into 2020, and the Texas and California were the first to go into this industry. And if we look at our states, which are mostly Republicans, we think that the changes in the policy will also take place. The gas will continue. The coal will continue, but the renewable energy will step in without necessarily the linkage to environment. Regarding storage, we should say every new market is usually profitable. We can see today in storage that where it's needed for different types of users and needs. In Europe, it's mostly due to support, to stabilize the network, the grid because these are 27 countries connected together. And in Israel, it's more due to big shifting as well as U.S. So Poland, Sweden, it's stabilizing the grid. And you asked big shifting, to move the mountain, what Gilad said. And we know how to achieve the best results everywhere we go. So in terms of storage and production. We know to be #1, and our objective is, of course, bringing the highest yields, and I think we're good at it. Let's talk about the basic costs. I think it's the best environment as we've ever been since the establishment of the company. Today, the cost of panels is $0.11. I've never seen the prices so low because the silicon price is very low. But more than that the batteries, when we look back in terms of storage, it's what happens in the panels in the first years because the batteries, the battery cost $300 2 years ago, but today, it's about $130, and I think it will reach $60 also in the future. But eventually, the cost, the cost of equipment and the price of electricity, this is what gives us the main formula. So the costs are going down but the price for electricity is going up. Now in the U.S., very consistently, perhaps both Democrats and the Republicans, the one thing that they do agree upon, it's the trade war with economy -- sorry, the trade war with China. So I think -- I don't know what will change now under Trump administration, but the prices are going up and the renewable energy in the U.S. is making that happen, unlike in Europe. So they have tax incentives. They encourage renewable energy industry. And within this, the U.S. production, we believe that this will continue to improve. Now if there is increase or decrease in certain factors, there is also factor #3, the price of electricity. We've seen this that under a Democratic administration, when the price -- with everything that was going on with China, they have agreed to open our PPA contracts for 25% and still the PPA 25%, it increased. It was lower than the market price due to demand, high demand. So I don't know what's going to happen, but I know that the market balances it out. I don't know, maybe more [ affects ] tax equity, less tax equity, but it balances out eventually because of the prices of electricity.

[indiscernible]

[Interpreted] Okay. First of all, we need a lot of equity. Today in the U.S., the cost of establishment of every gigawatt is about $1 million. So we need to invest about $150 million. And we have high financial resilience. In the quarter, we have flow of $66 million. In 3 months, it's $170 million. So it's a very good financial capacity. Now primarily, they're IPP. Our scope will come from IPP. Most of our portfolio, we will hold the agenda, it will balance us and enable us to develop that to purchase other assets. But to fuel our growth, we could also talk from time to time. We could also execute and sell a few assets. We've started last year, and we will continue this year. And you will see that we are selling our assets with a very high percentage, first of all, because they are high quality and second of all, because many players want to be our partners. So hence, we are multiplying our capital. You can see these components, but we won't do this for the whole portfolio. We'll do this to get their fueling for the flow. And also, we've expanded. I think it was great with 1.6 government bond, the State of Israel and also in Europe and in the U.S., we know how to purchase these bonds, government bonds. And it can also be capital, private equity or tradable -- traded. So we have a very high flexibility as to sources of finances and also project management and you've seen that the company knows how to do it in large numbers.

[indiscernible]

[Interpreted] Now Northern Africa is a very unique resource. If we look at Morocco, where we've been active already, we have business development in Morocco, together with NewMed, with Yossi Abu. And why we are doing it because in Morocco, there is sun, but also wind. Not everybody knows on the sea on the Atlantic Ocean, the Western coast of Morocco, strongest wins and this combination is extraordinary. Now Morocco uses coal still, but Morocco is also one of the closest states to Europe. So to bridge Europe, we can do it with cables underwater, underground marine cables, but also you can use green hydrogen or ammonia. Ammonia Is also fuel for agriculture, but also for marine transportation, it's going to go there. There will be ways. It will take a decade. But in another decade, this energy will cost just a few cents and it will find its way to Europe. Just what we do now in the Nordic countries. Why did we go to Sweden with large projects and Finland too? Because the there is a very competitive price for wind and hydro, about 70% comparable. And today, it doesn't have the way to be sold in the continent of Europe. It's close to Nordic countries. But when interconnection will be present, just like we see LNG after Russia conduit was closed. Now they are looking for ways from the U.S. to Europe. So in 5 or 10 years from today, we will be able to export the electricity from Nordic countries to Europe.

[indiscernible]

[Interpreted] Okay. So of course, each company has its challenges. What we're showing you is that we are a company of growth and not value. What does it mean? If you give me ILS 1, I know how to triple it and come up with ILS 3. And most investors that tell us you can do -- you can make ILS 3 out of ILS 1. So the company is based on dividends because we're IPP. So these large firms were dividends. And of course, we are doing it best by producing ILS 3 per average ILS 1.

[indiscernible]

[Interpreted] First of all, we are getting ready with our business model. Think about it. We are the company that is the best company within the uncertainty due to dissipation. Because in the U.S., they usually work with the U.S. companies only, and we have the dissipation for Europe and Israel, and this has been very helpful. The results are going up constantly. When we look at their reports, and it's really extraordinary. Sometimes the prices in Spain go down, but Israel go up. Something happens in Sweden, we've got the U.S. So it's hedging, but it's also exponential because everything is rising. Now within the U.S., we build ourselves just like as others do. We need to do safe harbor and you need to start investing in the projects to have the tax equity for 4 years. So we do safe harboring just like everybody else. And there are also other ways to protect yourselves to make sure the equipment is arriving. So we're going to do it. And eventually, U.S. economy, it's very important for the current administration. And the renewable energy, especially in WECC areas. I'm not talking about base. I'm talking about 2,300 hours of solar radiation, it enables us to sell the electricity for much lower prices comparing to the GM because Eastern U.S. is pretty much like Europe. So about 1,400 hours. But we have 2,300 hours in WECC. So it gives us more production. And I think that the company is good. We are a bit concerned, but also, I mean, nobody knows what to expect from the new administration. But let's look 4 years in advance, we can be sure that U.S. economy will be taken care of, and we are ready to competition, problem fossil energy projects can be advanced. We really are not concerned.

[indiscernible]

[Interpreted] Due to one reason, eventually, we pick our areas. We are looking for a ratio of growth and yield. You've seen offshore wind growing in Europe and there is demand in Europe. On the other hand, when offshore wind was growing in Europe, the cost of money was 0, the utilities did the right thing. They understood that if they don't switch to renewable energy, they will go bankrupt. So eventually, they needed to pick the scope and utilities went to offshore wind with very low yields. They bought franchise in Europe. And then they went to the U.S. and bought franchises that are based on forecasts of money cost -- money value 0. So these projects do not bring the yield that we are looking for. And eventually, we need offshore wind. However, there is also a technology for floating turbines that is in development and it will open an additional market. So I think that after time, we know to go into places that have yield, and we also know where not to go. But this is waiting for next stage. Thank you very much for coming over and joining us, and I would like to thank the [ BOT ] and everyone present here at -- Gilad and everyone. We will continue on working and taking Enlight to the future. Thank you so much for listening to the interpretation. Have a good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]