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

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the ERG Third Quarter 2020 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Luca Bettonte, CEO of ERG. Please go ahead, sir.

Good morning, everybody, and thanks for coming to this conference call on our third quarter results. As usual, here with me is Paolo Merli, Corporate General Manager and CFO. Let's start from the Chart 4, showing you the highlights for the quarter, with an EBITDA that came in at EUR 99 million. That's EUR 107 million in the third quarter '19. In order to develop a further understanding of this slightly lower result and before going through the industry drivers [ affecting ] the quarter, I suggest you take into account 2 specific items that have had a negative impact on the foregoing comparison. The first, as through the -- with the full consolidation of Barkow wind farms 9 months 2019 EBITDA in 1 shot in Q3 in the third quarter of 2019 at the time of acquisition. So in the third quarter, last year, included EUR 3.9 million of EBITDA pertaining to the first half of this year. The second is the lack of production of white certificate set by 1 of the 2 modules of the CCGT, usually inspired [ of a second generative ] period, this accounts for some EUR 2.6 million. Hence, on a like-for-like basis EBITDA in this quarter would be in line with the 1 of last year. Focusing our attention on to the industry specifics in the third quarter, the overall scenario has kept worsening year-on-year both in Italy and abroad, although improving substantially Q-on-Q following the end of the lockdown. On a year-on-year basis, the energy prices were lower, thus affecting wind, solar, hydro and CCGT performance. As for the last -- the significant lowering of the natural gas price was not sufficient to offset the reduction of [ CCGT on our ] price, bringing about lower clean spark spreads. Needless to say, I'll remind that this trend stems mainly from the impact of the pandemic. That also implied a lower energy demand in all the countries that we were exposed to. However, on a like-for-like basis, we posted results pretty in line with the last year, thanks to a high production and higher unit green certificate value to green value in Italy associated with the positive impact from our 3-year rolling hedging cost. As for the net profit, it was on the contrary even better than in 2019. I'm now referring to both the third quarter and 9 months. Lower EBITDA was more than offset by the strong reduction of the cost of money and by the lower taxation. The former as a result of the ongoing liability management program; the latter thanks to the positive tax effect of ACE, as well as the fiscal reduction of carryforward losses linked to the unwinding of [ IFS ] against the prepaid ERG wind projects financing. Net profit for 9 months at EUR 79 million; that was EUR 75 million in 2019. And as for the net debt, we went down some EUR 55 million from its value at the end of 2019. Main items to highlight are the strong operating cash flow of some EUR 341 million, CapEx of about EUR 110 million and dividend distribution of some EUR 114 million. Now on Chart #5. In this chart, we give you an overall picture of some very important achievements that we reached in this quarter. The successful issuance of our second EUR 500 million green bond again, with a sixfold over subscription along with a quite low coupon on a 7-year tenor. And an important worldwide award from Vigeo as for the way we analyze and disclose the climate change impact on our business performance, earnings profile. Furthermore, it's worth mentioning also the improvement of our development plan as we have increased our pipeline in ready to bid assets of some 80 megawatts in the U.K. and in Poland. We secured [ exceeding ] long-term [ use ] revenue for some 27 megawatts in France through successfully taking part to auctions. And the relevant medium-term supply framework agreement through which we secured some 790 megawatts of, let's say, WTG, both for greenfield and repowering project at competitive pricing. Good. Keep commenting on our growth, I'm now on Slide #6. Here you see where we stand and what we are going to do next. Easy to say that we are ahead of our plan. When adding to what we've done the capacity that we are building, we have already achieved and secured some 622 megawatts out of 850 megawatts to be delivered by 2022. And on top of that, if 1 included there the newly secured capacity, coupled with the repowering in Italy at most advanced stage, we would outdo the original projected growth by some 100 megawatts. It has 12% more. We keep growing at a faster pace. And now I will hand you over to Paolo for his financial analysis.

Thanks, Luca, and good morning, everybody. I'll start, as usual, by commenting on the price scenario over the period, then I'll take you through results business by business. And finally, we'll take a look at the profit and loss and cash flow. So let's get started. I'm on Page #8, commenting on the business environment starting from the power demand in Italy which was down 3% year-on-year in the quarter. Here you see the trends for the different sources covering that demand. Basically, only wind and solar posted a rising contribution, whilst thermal and hydro generation have [ sold ] all the drop. Looking at our assets, Hydro, unfortunately, was still down importantly, 18% year-on-year well below the national average as well as our budget based on its average historical production. So our budget reflects basically the history of the plants. Unfortunately, the dry season continued in Central Italy again in 2020. As regards to wind, our production instead were up 12%, broadly in line with the trend seen in the country. Solar flat year-on-year, slightly worse than the national level. As far as our CCGT plant is concerned, volumes were down 4% year-on-year, slightly worse than the national level due to higher volatility in prices, so with a greater use of modulation. Let's now comment on electricity prices in Italy. The chart, I think, is quite self-explanatory, a fairly weak price scenario in Italy, I mean merchant scenario, mainly as a consequence of the downturn in electricity demand coupled with the decline in gas prices. The all-in price from EUR 143 to EUR 141 per megawatt went down much, much less given the higher value of incentives, which is calculated on the basis of last year's average national electricity price, as you know. Given the current trend, let me just open a window from -- to 2021, the value of incentives is expected to be even higher next year. Coming back to 9 months, it's important to underline here that not all but a big part of the merchant effect was neutralized by the hedging actions taken over the period according to our risk policies. Our CCGT clean spark spread declined year-on-year to EUR 18 per megawatt hour from EUR 22 with lower price in Sicily partly offset by lower gas prices. These numbers also reflect a decline in the premium versus PUN in Sicily from 15 to 13. We are talking about a decrease of these thermal margins, but still solid numbers in absolute terms. Abroad, in the graph at the bottom right of the chart, you can see here the average reference selling prices for our productions, country by country. Here, it's worth noting the significant downward trend in prices in Romania due to the weaker merchant price on top of the green certificate. Similar trends you can see in Bulgaria, where there's been a change in the tariff from a FIT to a FIP, and that's the result of it. Let's move now Page 9, commenting the group EBITDA evolution in a nutshell. So quarterly EBITDA was EUR 99 million, down 7% year-on-year. So notwithstanding the challenging environment, the impact from price scenario on our results during the quarter for sure, was very limited if none and -- because mostly absorbed by the hedging taking over prices, and by the higher value of incentives. So if I would comment, I would comment this way, this set of results. The year-on-year drop is almost fully determined by 2 effects. The first one is a change in the consolidation scope as we started accounting for Barkow wind farm as of Q3 2019, but retroactively since January 1 of that year. So this positive effect on the third quarter last year was worth about EUR 4 million. The second effect, which accounts for roughly EUR 3 million, so the sum EUR 4 million plus EUR 3 million to EUR 7 million, explaining mostly all the difference is due to the fewer white certificates as the result of the first module of the CCGT phasing out from the incentive scheme at the end of 2019. As you are aware, we are investing to refurbish this module 1 in order to make it say eligible for another wave of white certificates starting from 2022. The other effects offset 1 other more or less, so better results in wind and solar in Italy, thanks to stronger weather conditions, while weaker hydro as the dry season continues, as I've already commented on. I go now segment by cement, starting with wind, and I'm on Page #10. EBITDA during the quarter was EUR 42 million, slightly, very slightly down year-on-year. But I think it's useful to break down this contribution. In Italy, EBITDA was up 22% and down abroad 32%. And I will explain in a moment that most of the drop abroad is related to the perimeter effect I mentioned before. But very quickly on production. Volumes in Italy, you see on the right part of the chart, were up 12%, is thanks to better wind conditions. And abroad the productions were down 15%, mainly mostly concentrated in Germany because of the effect I've already said. So the fact that the Barkow wind farm was consolidated all during the third quarter of 2019 with a retroactive effect since January 1, '19. So basically, the quarter last year got EUR 4 million pertaining to the first half of the year. Prices. I've already commented, the merchant scenario down but compensated by the hedging policy and incentives. As a matter of fact, the selling price on average was in Italy EUR 122 per megawatt hour, basically in line on a year-on-year basis. Abroad was 84, on average, slightly -- just slightly down compared to the 86 in Q3 '19. No more to say here. Let's move on solar results, Page 11. Here, EBITDA was up 2%, thanks to the combination of both slightly higher production and gain. Unitary revenue slightly up at EUR 321 per megawatt hour, against the EUR 319 over the same period last year. And the reasons are basically the same. So I can keep repeating the same story. So moving on hydro. Hydro on Page 12. Here, EBITDA was EUR 18 million, down 12% year-on-year, driven by weaker volumes with production down 18%. Unfortunately, very -- a very dry season continued in Central South Italy, while in the North of the country, the picture was a little bit different. But unfortunately, in this case, our plant is located in the center of Italy. The result in production is below -- was below our budget and our historical -- and historical average of the plants. As far as prices, again, the story remains pretty much the same I've already commented for all the other segments. So lower merchant prices, higher incentive value and the value of the hedging. And in this case, let me add another factor, which is the highly modulation of the plant, which make possible to pick the best pricing day by day. So in the end, bottom line, the underperformance versus previous year, and our budget has entirely to do with the lack of water. Last piece of information as far as our water reservoirs in the quarter, the level of energy stopped and our lakes decreased compared to the third -- compared to June 30, 2020. Due on one hand to the lack of rains, and on the other, with the usage -- the net usage in the period. As of the end of October, say, our reservoirs were filled with an equivalent amount of energy in excess of 50 gigawatt hour. Let's now comment on Page #13, the CCGT. CCGT results. EBITDA in Q3 2020 was EUR 21 million, so down 17% year-on-year. It may seem a big drop, but it's not. I think in absolute terms, the performance of the plant is still very, very good. Consider that EUR 3 million are the consequence of the phaseout from white certificates of 1 of the 2 module of the plant, while the remaining 2 million explaining -- the remaining 1 million, or a little bit more than 1 million, explaining the gap is related to a slightly lower spark spread scenario in season. But I repeat in general term, we are talking about a very, very solid performance. And now investments. I'm on Page 14. Let me here, as usual, focus on the first 9 months of the year because I think they are more representative of what we are actually doing. We invested EUR 110 million versus the EUR 401 million invested over the same period last year when you should remind, we had EUR 364 million of M&A CapEx, mainly refer to the acquisition of Andromeda in the solar business, but also Polaris and Barkow wind farms in France and Germany, respectively. The acquisition of ready-to-build Craiggore projects in U.K. And the pipeline of Windwarts in Germany. So a lot of, say, acquisition in 2019. During the 9 months of this year, CapEx is composed as follows, let me say, EUR 44 million in M&A. You should remind that we bought the Trinity wind farm portfolio in France, EUR 42 million at the beginning of the year. And on top of that, the acquisition of ready-to-build projects in Poland now under construction. Then we invested on top of the M&A, a further EUR 42 million organically in wind developments, mainly in U.K., where our capacity under construction, as recently communicated was increased from slightly less than 200 megawatts to 250 megawatts following the full authorization of paying for the extension of [indiscernible] and Craiggore wind farm, which we believe is a great achievement for the company. Construction work is also going on in Poland on track with our targets and plans. Then we invested EUR 9 million, I touched this point earlier, related to the first work in progress in investments of what we call the CAR 2 projects. So the projects for making the CCGT plant still eligible for another shot of white certificates starting from 2022 and lasting further 10 years. About EUR 14 million, which is the remaining portion of CapEx, were related to maintenance over the first 9 months, which brings slightly less than EUR 20 million on a yearly basis, which is commonly our guidance for maintenance CapEx. So the takeaway here is the usual one. So 86% of our CapEx was spent for new developments. Let's now go and comment on key financials, starting from the adjusted profit and loss, Page #16. Adjusted for non, say, recurring items, which are very few or none during this quarter. Let me again remind you that these figures are shown on adjusted basis without including the effects of IFRS 16 and IFRS 9, as we believe this gives you a representation that is more consistent with our cash flow profile. But nevertheless, all the related effects, the explanation, are reported in our profit and loss statements. That said, let us continue. I've already commented on EBITDA. So going down the profit and loss and looking at the quarter specifically, we have slightly lower depreciation, reflects the same perimeter effect or the retroactive consolidation in 2019 of the Barkow wind farms portfolio in Germany while this consolidation took effect in the third quarter. Net financial expenses at EUR 13 million, 13% lower year-on-year. This is thanks to the lower cost of gross debt, mainly following the issuance of the 2019 green bond -- not the most recent one, but the 1 we issued last year and the associated liability management carried out just after that last year. But evidently with the full economic effects that are evident in 2020. Here, let me remind you, but you already know that as of Q4 2020, we'll be seeing the effects of the second green bond issued last September at very exceptional yields. Finally, taxes, finally before commenting on net profit, tax rate in the quarter, you see was 22% against 43% last year, mainly reflecting, say, the introduction of the tax breaks known as ACE and let me say, also the seasonality of the quarter. So this number shouldn't be taken as a guidance for the full year. And please also consider for your comparison analysis that the positive effect related to ACE will reverse in Q4 2020 because last year, this benefit was introduced, was first canceled at the beginning of the year and then reintroduced in Q4 2020 when we accounted for all the full year benefits in one shot again during the fourth quarter. So on a like-for-like basis, in the fourth quarter, these effects should readjust. Let me also point out that during this quarter, the third quarter 2020, we also write off -- and so the taxation in the quarter is penalized by this write-off, about EUR 2 million which was a tax benefit accounted in the first half and related to the Decreto Rilancio whose, say, interpretation has changed after the issuance of an article in the [indiscernible], which was unknown by operators. So for -- to be as cautious as possible, we write off this item. We'll be waiting so for further details. Minority, the 22% stake in Andromeda and solar business, but let me comment, which is more important, that the adjusted net profit because I think here, the main takeaway is that despite the lower EBITDA -- EBITDA, leveraging on lower financial charges, lower taxation compared to last year, in the end, the bottom line was significantly up both in the quarter and in the 9 months. Let me move on to Page #17, commenting the cash flow statement. See the net financial debt closed at the end of September at EUR 1.421 billion, down by EUR 55 million from the end of 2019 with leverage flat at 45%. I think it's a further proof that this company went lower or slowed down the CapEx, at least compared to the previous year -- the leverage is very important and very, very quick. Touching on all the items from left to right, we have our EBITDA, EUR 362 million. I've already commented investments made over the period, EUR 110 million, a negative working capital trend, which is mainly related to the timing of cash in of incentive which also reflect certain seasonality. Financial charges, EUR 38 million; and dividends paid in May for a total amount of EUR 114 million. And some other negative items, which are mainly referring to cash flow hedge, the movement of IRS, the interest rate swap following the step down of the interest rate curve and taxes. So all these effects led to a net debt of EUR 1.421 billion, which is bang in line, say, with our objective and our guidance. So I think I touched all the relevant items. Thank you for the attention and now hand you over to Luca for his final remarks.

Thanks, Paolo. And our guidance. We go over to the key elements of the scenario and of our operating performance. As usual, including the projections of October's actual results that went better than expected, thanks to the high production in wind in Italy and abroad and [ on the whole ] to energy price uptick. By and large, for the months to come, we see slightly better energy prices than in the third quarter than -- in the previous quarter, sorry, in the second quarter of this year, but still below 2019 levels. As for the production, we keep our advanced projections consistent with the historical trends in wind and solar while we forecast another dry year in wind power. [ This analysis has ] taken into account that we have already -- we had already sold most of 2020 renewable energy production in previous years. We see no reason to change our view going forward. And then we confirm the guidance for year-end. In this effect also for EBITDA, the final outcome could be in the lower half of range. And for that, let's say, again, EBITDA will come between the EUR 480 million and EUR 500 million. And as for the different technologies, say in wind power in Italy, we should [ post ] worse results as to last year due mainly to the loss of production. While the outcome from abroad, on the contrary, it's expected to be better, thanks to a larger production and a like-for-like asset base, plus also a wider asset perimeter. As for solar power, chances are that we have a slightly better result stemming from mainly a larger production. In hydro power, on the contrary, we should post results slightly lower than last year, combining the persisting lower availability of water, along with the lower energy prices. Thermal power will report a lower result too, due to quite depressed clean spark spreads despite of hedging and the lower contribution from white certificate and the planned phasing out from the initial 10 years of cogenerative generation. As for CapEx, CapEx foreseen in the range of EUR 150 million to EUR 180 million. We keep confirming the delay of about 6 months on average in deploying our CapEx plan, already factored in the existing forecast. This represents [ financial ] delay that we expect to recover in the month afterwards. The delay mainly refers to the U.K. assets under construction due to TSO's lower pace to finish the works. And as it is referred to assets that it will be up and running by 2021, 2022, it does not imply any reduction in 2020 EBITDA. In the end, net financial position in between EUR 1.35 billion and EUR 1.43 billion. No significant changes to the underlying versus the existing forecast. Lower operating cash flow versus 2019, as last year, there was a change in the regulation that accelerated a collection of the value of the green certificate. It is offset by lower CapEx due to lower M&A investments in 2020 and by lower financial charges. So we confirm the numbers for the year end. Good. Thanks for attending, and now we are ready to take your questions.

[Operator Instructions] The first question is from Sara Piccinini with Mediobanca.

I have 4. The first is starting from the participation of repowering 2 auctions. So when do you expect to have more clarity on the rules for the auctions to allow repowering to participate? Second is, obviously, the participation of repowering makes a lot of sense given the very low participation in auctions and the goal of the government to increase the competition to reduce the prices. So are you afraid that the participation of repowering could lead to low prices awarded? And can you indicate the LCOE for repowering projects to have an idea on what pricing -- prices you will be willing to accept to get interesting IRR. So this was on repowering. The second is on greenfield projects. Given the projects awarded in Poland, France and U.K., could you remind us which are the markets where will you focus on greenfield development? And what about Germany? And the third question is on the development of the PPA market. There are some markets like Scotland where [ you are only ] developing merchant projects. Do you see the possibility to sign PPA? And in general, how do you see the evolution of the PPA market in Europe? And finally, or just very quick information, hopefully, that I may have lost. So the first is on the hedging policy. If you can say how much is your hedging policy for 2021 and '22? And also the level of hydro reservoirs and the taxation that you expect for this year and next year.

I think that's -- I'll have to [Foreign Language] -- to share with Paolo some of these questions. I go for the first 4, Paolo, and then I think that you can answer the last 3 questions. [ Easy to say ] that myself and Paolo are in 2 different locations. The repowering auction, clarity of the rules, I say that there's no doubt that we can take part in the auctions. In just a matter of authorization, committing process. And we work very hard, but I -- about that we should take part to the auction in May with a good portion of our assets [ being ] powered in Italy, in particular, the Sicilian assets, which we already got the authorization method central level. So the VIA -- V-I-A, decree. And now we are working hard to get -- in order to get the authorization at regional level, the so-called Autorizzazione Unica, we are well positioned also in that path. [indiscernible], so there's a couple of items that should be improved, let's say. I'm referring to the minus 5% to be applied to the auction price when will I guess the final price for the repower assets, so we don't understand why there's such a reduction discount that had to apply. And the second 1 has to do with the attribution to the repower assets, the right to be repowered just in case if some megawatts wasn't attributed to the greenfield project. It means that at the end of the day, that has created 2 different auctions inside the single 1 because first of all, there's the competition that among the greenfield say, developers, and then the competition among the repowerable assets. It could lead to have a not efficient way to allocate from a system standpoint in terms of pricing, the new capacity to be sold in the country. Which means at the end of the day that we could facilitate the -- both the greenfield operators, because they compete on their own and very specific as a group, and the same for the repowerable asset or operator like ERG. A better situation, more clarity on the [ goods, ] so we are working with a -- with all the [ factories, ] working with the GSE in order to see if we can improve the situation. Patent offers from a, say, a competitive standpoint, [ if not better much, ] but it could be an opportunity because we being the first starting process to get the authorization for repower our assets. And then we may have a commercial advantage in the auction in May due to the lack of authorization, in particular for repowering assets. We will see. What I can tell you is that is a quite positive evolution of the regulation, and we are working, let me repeat, to take part of the auction in May next year, which is that it will be, say, in line with our expectations for our business plan. As for the LCOE IRR, let's say that if we -- let me put it this way. If we go towards an infrastructural way to be remunerated, so through auctions, fixed price and say, [ credit year, ] I guess that the remuneration should be and the return should be in line with this risk profile. So I'm talking about unlevered something which is in between 6% to 7%. So that's what I could tell. Greenfield, market -- okay, yes, we are working very hard in all the European currencies that are the basis of our business plan. You asked for specific information about Germany. Germany, we have a partner that is larger than 200 megawatts. We are working. It's going to be part of our business plan. So we still believe that Germany is a country that's worth being. And so no relevant information there to be add to what you already know. And based on what we have described in our presentation on Germany, [indiscernible] it is important to underline that we are in more, let's say, than on track on budget, we are exceeding the expectation and maybe that could be something that is usual for ERG. But cross fingers because now, we have 2 very important years ahead of us to comply with what we are calling, but I'm confident that we -- to get the target from a couple of years ago. Also because now we have already secured more than -- some 116 megawatts already secured, and the other part of the repowering projects that are going ahead very well. So I'm very, very confident that we achieved the target shared with you in 2018 or even more. As for PPA, yes, we are working very hard in order to finalize our -- the construction of our partner in Scotland. You know that in Scotland, there's no incentives or any [indiscernible] in place today. But -- and so we are working on to get a PPA agreement for sure. [ This when say, ] customers in the end in both, say, corporate and utility PPA. So there's a market there. And we are working to gather the best price. But at the same time, we are still engaged in the [ constitution ] process as for the reintroduction in the U.K. specifically in Scotland of the CfD agreement through the competitive auctions. And if it's the case, we'll be ready to take part with the new game also in that country. As I already -- as I'm used to saying is that we have a different way to turn the power like many others in this industry. First of all, we like to have a fixed price for the longer period that -- the longer period possible. And so auctions are our best way to that. At the same time, our PPA is a very good alternative and the market European wise, is on the rise -- is increasing developing. And my guess is that going forward we'd be one of the more important way, most important way to sell power across Europe. As for the last 3 questions, I ask Paolo to help me because you asked some specific numbers. I don't have here with me any specific information about that. So I defer to Paolo to give you the right numbers.

Absolutely. I'll start with the tax rate for the full year. It shouldn't be different from the one already reported over the first 9 months of the year which is in the region of 20% -- 20%, 21%. Consider that our theoretical tax rate should be in the region of 30%, but we have some upside coming from ACE, as you know, probably. And also some carryforward losses that we have accumulated throughout the liability management performed last year. So we have some upside from this in the tax rate. And also, we're still awaiting, as I said in my remarks before, we are still waiting to gain a full understanding of the Decreto Rilancio because at the first sight, it seemed that it offered opportunity to have huge or an important discount, say on IRAP, while according to, say, an article issued on the [indiscernible], which refers to a document issued by the government in June, but unknown by operators, it seems that this potential savings, say is kept at just EUR 800,000. So we still have to gain more details on that. So for the time being, we have [ write off ] everything waiting for more details on that. But this is an upside eventually on the guidance I gave you, 20%, 21%. The second question was about the hedging policy. Yes, I confirm that in 2020 -- the question was about 2021, but let me say that in 2020, we had a coverage of 75% since the beginning of the year because the actions taken to cover the prices over 2020 were executed, say, in the years before, according to our policy. And coming to 2021, we have right now 60 -- more or less 65% of the [ rest ] production in 2021 already covered. And let me add, at a price, which is not very different from the 1 we covered in 2020. So just few euros per megawatt hour less but not very different. And also consider that in 2021, we should expect a much higher value for the incentive because, as you know, the value of incentives for 2021 is based on a mathematical formula which is inversely correlated to the price of energy registered in this current year. So we should expect based on the forward in the market that the value of incentives will go up from 99 to roughly EUR 110 per megawatt hour. So we are quite optimistic about the scenario given the hedging and given the evolution of the incentive. Part of the production is already covered also for 2022. This is according to our 3 years rolling hedging policy. And say, 30%, more or less, is covered also for 2022 at a price again, which is very, very similar to the one we covered 2021 productions. I think the last question was about the amount of the water or the energy stopped in our hydroelectric plants. I repeat this number in excess of 50 gigawatt hour. So consider that during the quarter, we used a little bit of the previous amount, which was in the region of 80, 85. So right now, today, we have still 50 gigawatt hour of production stopped in our lakes.

The next question is from Roberto Letizia with Equita SIM.

Actually, you showed us a picture in which you're exceeding already by 100-megawatts the planned targets for 2022, which was originally 3.6 gigawatt. Considering actually, that there's 2 years remaining on the table to reach the target, is that possible that this target will be beaten by a significantly higher amount versus the current 100 megawatts? So wondering if there are possibility or chances in the short term, meaning the next 2 years to add more megawatts to be realized in a short period of time or if you believe this is all done right now. A clarification on the hedging, so meaning you are just a couple of euros below the power prices you hedge throughout 2019, actually. Are we talking something in the region of EUR 50, EUR 52 per megawatt hour? Is that a fair range for the hedging for next year? I have a question on the OpEx per megawatt. So wondering if we should expect or we may expect a significant or any type of reduction in the OpEx per megawatt considering your large [ rent of the ] asset base, the new contracting, I guess, the ongoing -- always ongoing saving processes. So what kind of benefits should we expect in a 3, 4 years of time for what we guess the OpEx per megawatt management? I have a quick question. I'm not sure if you're going to answer it today, but there is a lot of elements below the line, especially what you mentioned also for the liability management and your new bond program, which we have set in the fourth quarter. If it would be possible for you to give a range of net income for the full year considering there are a lot of moving parts that would help a lot in understanding the net income generation for the full year. Maybe some follow-up later. Okay.

Let me answer the first 1 and the remaining 3, again, I have Paolo to help me understanding. Right, on Chart #6, we have put our projections for 20 -- out for 2022. Let me say, underline 2 items, as a component of my answer -- that, first of all, this is what we expect to get by that date, by the end of 2022. That is the original final date for our business plan. As you know, we said a couple of months ago, no -- say, more than a couple -- 6 months ago, that we made an in-depth analysis on the impact of COVID-19 as for the deployment of our investment. And we said and we keep saying that we must have -- go through some 6-month delay. That could be anyhow, let's say, recoverable today is -- let me repeat the same sentence. And -- but at the same time, to keep confirming that we should comply with this -- the target set forth by this chart. So finalizing [ happens ] by 2022. So -- and on top of that, we have the 100 megawatts, which is very important because this is a few greenfield generation. Because they are part -- in particular of the larger authorizations that we got in Scotland. And you know how much is the value of the greenfield project today. And these projects are for sure, [ could be big ] by us because they are a, say, [ that we're ] paying [ already ] to authorize projects, and we are just improving the number, [ announcing ] the number, increasing the number of the megawatts stored in the same place with the same connection and the like. So well done, let's say, to my colleagues, they did a very good job. To go, say, beyond that -- So based on what we are doing now, so I'm talking about construction, so get authorization, finalizing construction, get the connection. I think that's what we -- what I can tell you we will do next. To go ahead [indiscernible] to go through M&A transactions in order to accelerate. Say that what we are -- we aim at achieving now is to improve and to strengthen our pipeline, first of all. Because in the medium, long term, ERG is becoming and want to become a, say, rolling generator of, say, new assets to be installed that the core business of this industry we are operating into. And so that's what we are mainly focused on. If you look at also, again, the [ channel 6, ] you see that in the past, from the past, we have been growing through M&A -- say, till this year when starting, particularly from 2020 based on the CapEx that you see we are projecting to year-end. We guided the end sort of tipping point when [ EFG ] has been transformed in a pure operator that generate revenues through the development of new capacity. So going beyond -- exceeding these targets, it means that to accelerate through M&A transaction. For sure. Why not? We are starting, for instance, in [indiscernible] ready-to-build assets. But the price of the market are very, very high in this moment. So if we do that, we will do through a quite careful cherry picking investments in the M&A. I don't see in the next year some large M&A, say, transaction for us at all. We have a look at every opportunity that could come on the market. But we prefer to stay focused on the inflow. Of course, let me conclude and giving the floor to Paolo by saying that never say never. Because as you know, first, we are do things and then we come here to tell you what we have achieved. Please, Paolo.