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

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the ERG First Quarter 2025 Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Paolo Merli, Chief Executive Officer of ERG. Please go ahead, sir.

Good afternoon, everyone, and welcome to our first quarter results presentation. As usual, is our CFO, Michele. So let's get started with the usual overview of results for the period. I'm on Page #4. As mentioned during our webcast in March, the existing wind drought impacted the business environment throughout the period, penalizing our financial results. The first quarter was still characterized by extraordinarily weak wind conditions across the EU, well below the historical average and last year. EBITDA closed at EUR 145 million, down 12% year-on-year. Again, there were 2 major effects, say, behind this performance. On one hand, the much weaker production recorded during the period on a like-for-like basis. And this effect was only partially offset by the production -- the contribution, I mean, from new installed capacity in Europe. with the first repowering projects now up and running and the new capacity in the U.S.A., where the asset portfolio is being, as you know, consolidated as of Q2 '24. Despite the higher prices on screens, all in all, the price scenario on a year-on-year basis was just marginally positive as the lower production resulted in scarce availability of merchant volumes. I mean all the volumes that were produced were already hedged with either CfD or PPA. Investments amounted to EUR 115 million, 2/3 related to an acquisition of the Broken Cross wind farm in U.K. at EUR 72 million and the remaining 1/3 allocated to organic developments, mainly greenfield and repowering in France, Germany, Italy and U.K. Adjusted net profit was EUR 49 million, down 37% year-on-year due to the already mentioned decline in EBITDA, coupled with higher depreciation and higher financial charges associated to new assets. The net debt -- the net financial position at the end of the quarter was about EUR 1.850 billion, slightly higher versus the end of '24. But Michele will elaborate a little bit more on the cash flow over the period. Let me now focus on the extraordinary wind drought that has been persisting all over Europe since October last year, affecting our results. The map in the chart shows the deviation against the long-term average of wind speed in Europe in the first quarter. In dark blue are the regions where the negative deviation is larger. It's quite unusual to see a situation like this, basically involving all the areas where we have wind farms. In Italy, according to Terna, and these are public data, wind production on a like-for-like basis was down 24% year-on-year, and production were more or less in line with that trend. You can also easily read the statements in different countries, highlighting the exceptional wind drought that affected the first quarter. In the chart below, we show the trends over time of our own portfolio in Italy, France and Germany in the past, say, 12 years. Even though wind availability is quite volatile, we know that with up and downs, Q1 '25 was unfortunately an exception so far. You see from the chart, it was basically the weakest ever experienced so far. It's worth mentioning that the guidance we published in March already factored in this generalized and exceptionally negative trend in the EU, at least for the first quarter. And I'll comment when talking about the guidance. Moving to Page #6. Here, I'd like to underline that despite this challenging environment, we continued to deliver on our strategy over the period. And in line with our value over volume approach, we pursued growth of our portfolio through selected M&A and organic developments, a mixture of repowering and greenfield in several countries like Germany, France and Italy. We also made important steps towards stabilizing our revenues particularly crucial in this volatile price environment. We signed 3 long-term contracts, PPA with primary counterparts in Italy and U.K. On top of that, 3 projects in Germany for a total of 40 megawatts were awarded with a 20-year one-way CfD tariff in the last auction. As far as financing, Fitch has confirmed our long-term rating at BBB- with a stable outlook, reflecting, and I quote, "The solidity of the group business model and the visibility of its green portfolio." As far as shareholder remuneration, the AGM approved the distribution of EUR 1 per share dividend, which will be paid next week and now the authorization for a potential share buyback plan up to 10% of share capital, thus providing the company with a flexible instrument to be activated during '25, if necessary. So now over to Michele for his comments on results of the first quarter.

Thank you, Paolo. In Q1, power market prices have been higher than Q1 2024 in nearly all countries where ERG operates. However, as you know, this trend had only a partial impact on our all-in unitary revenues due to the positive regulated nature of our business. In Italy, the wind unitary revenue is EUR 120 a megawatt hour, in line with Q1 2024 despite the increase of the year-end incentive, which is EUR 55 a megawatt hour against EUR 42 a megawatt hour last year. In the higher power market price, the all-in unitary revenues remained stable, offset by short-term hedging at lower prices versus previous year. In France, the increase of the unitary revenues refers to the higher market scenario captured by merchant assets, such assets which do not benefit anymore of the two-way tariff mechanism or long-term PPAs. In Germany, captured price in Q1 are higher than last year, thanks to the one-way CfD mechanism, which allow us to capture the higher power market price. In Poland, unitary revenues increased in Q1, primarily driven by short-term hedging. Romania got a lower power price than previous year because the government set the clawback cap price at RON 400 a megawatt hour, while during Q1 2024, the cap was RON 450 a megawatt hour. U.K. captured price is around EUR 67 a megawatt hour compared to Q1 '24, which benefited of higher short-term hedging. Note that this figure does not include revenues from balancing services. As regard the solar all-in unitary revenues, there is a decrease of value in Q1 in Italy due to lower hedging price year-on-year. In Spain, the captured price suffers the current market scenario with significant profile effect during daily hours. In France, the all-in unitary revenues is influenced by assets acquired in 2024, which have a lower fee than the plants already in portfolio. ERG plants in the United States have a unitary revenue that reflect the PPA price solvency. Now a focus on production on Page 9. Regarding the first quarter of 2025, the group's overall production has been slightly higher than the previous year, primarily due to the addition of new capacity, which offset the persistently very low wind conditions in Europe, as already stressed by Paolo. In details, Italy, 785 gigawatt hour, minus 10%, mainly due to persistent low wind conditions compared to Q1 2024, and this was only partially compensated by the contribution of new greenfield and repowering assets, 151 gigawatt hour in addition; in France, 330 gigawatt hour, minus 15%, due to significantly lower wind condition, partially offset by new assets; in Germany, 125 gigawatt hour, minus 38% due to lower wind condition; Eastern Europe, minus 17%, again due to lower wind condition; in U.K. and Nordics, 182 gigawatt hour, plus 10% compared to last year, mainly thanks to the new assets acquired in January in Scotland; in Spain, currently 75 gigawatt hour, minus 6%, due to lower irradiation; the newly acquired plants in the U.S. contributed 285 gigawatt hour in Q1, of which 252 gigawatt hour from wind. Overall, increase of production out of Italy, thanks to investment in new capacity, over 500 megawatts, that mitigates the effect of an exceptionally low wind quarter in all European countries. In the first quarter of the year, we have an overall EBITDA of EUR 145 million, EUR 19 million lower than first quarter 2024, mainly due to poor winds in Europe, partially offset by revenues coming from new assets. In Italy, EBITDA is EUR 86 million, lower than last year by EUR 14 million, again, due to lower wind condition, partially offset by contribution from new repowering assets in particular, coupled with a better price scenario by the green incentive, as already commented; in France, Germany and East Europe, a similar trend, EBITDA lower than previous year due to poor wind resource in the quarter, partly offset by higher captured price, with the only exception in Romania, where clawback cap has been low; U.K. and Nordics, EBITDA is EUR 11 million lower than the previous year, mainly driven by lower maintenance in U.K. and lower captured price, partially offset by the EBITDA from new assets acquired at the beginning of 2025; in Spain, EBITDA is EUR 1 million, lower than last year, driven by lower production and lower captured price due to profile effects in daily hours and also short-term hedging at lower prices in comparison to last year; the contribution coming from U.S. is EUR 14 million and also includes the production tax credit calculated on actual production in the quarter. Let's comment now on the investments. In Q1, we invested EUR 115 million, mainly due to acquisition of wind plant in U.K. In addition, we spent about EUR 43 million of organic CapEx, out of which EUR 16 million in U.K. for the construction of a 47-megawatt wind project; EUR 11 million in Italy, mainly for our first storage project; EUR 8 million in France; EUR 7 million in Germany for the completion of a repowering project and the beginning of the construction of greenfield wind plant. Let's now move on to the financials, commenting on other items of the profit and loss. In Q1, amortization and depreciation, EUR 69 million, higher than Q1 2024, mainly due to perimeter effect. Net financial charges are EUR 10 million versus EUR 2 million in Q1 '24. In detail, financial charges versus banks and bondholders, net of liquidity remuneration, stand at EUR 5.5 million, plus EUR 3.6 million versus last year due to perimeter effect and lower remuneration on cash. To complement EUR 10 million, EUR 4.5 million are noncash accounting items such as effects coming from tax equity partnership in the U.S. portfolio and the lease interest expenses according to IFRS 16. Tax rate in the quarter is 23%, lower than 25% of last year due to a different contribution of various countries to taxable results. The adjusted net profit of the quarter amounts to EUR 49 million, lower than last year, mainly driven by the already commented extremely low wind in Europe. Finally, let's take a look at the cash flow statement and the net financial position. The net financial debt closed at EUR 1.9 billion, EUR 0.1 billion higher than the end of 2024, mainly driven by the cash generation from EBITDA netted by the already commented investments of the period; the cash financial charges for EUR 6 million, tax cash out for EUR 9 million and net working capital for EUR 65 million, mainly due to ordinary net working capital dynamics. Thank you for your attention. And now I leave the floor to Paolo for his final remarks.

Thank you, Michele. Now let's see our guidance for '25. As you know, the EBITDA guidance given during the last week webcast already took into account the low winds in the first quarter. Unfortunately, this trend continued in April throughout most of Europe, although to a lesser extent than in the first 2 months -- in the first 3 months of the year. Nevertheless, assuming windiness in line with the historical average from now on, we are still confident that we can approach the midpoint of the guidance range. But let me be clear, to reach the upper part of the range, however, we would need windiness above the historical average, basically assuming at least a partial recovery in the second half of the year of what was lost in the first. With this caveat, we confirm our EBITDA guidance within a range of EUR 540 million to EUR 600 million. CapEx is also confirmed within the range of EUR 190 million to EUR 240 million as well as net financial position at year-end that is expected within the range of EUR 1.85 billion to EUR 1.95 billion. So thank you for listening, and we are now ready to take your questions.

[Operator Instructions] The first question comes from Enrico Bartoli of Mediobanca.

Actually, I have 3. First of all, I'd like to start with your comment on the guidance. You mentioned that in April, and we are seeing also beginning of May, that wind resources continue to be weak. I was wondering what kind of level of load factor you are assuming for the second quarter in your guidance and particularly what you said that the mid of the range would imply average wind resources going forward to the end of the year. Also I was wondering if you can elaborate a bit on, let's say, what are the main drivers of the top and the bottom of the range, if you mentioned wind resources, but if there are also different assumptions in terms of prices. Second question is regarding the upcoming auctions for the FER X Decree, which, if I'm right, should be maybe in June. I was wondering what is going to be your policy for the participation to the auction as you have 300 megawatts, more or less, of wind repowering project already authorized, if you expect them to participate all to the auction. And what kind of level of competition that you are anticipating? And the third one is related to the U.S. If you can provide some -- let's say, your approach to the 1 gigawatt pipeline that you have in the U.S., considering the recent evolution with the tariffs, the proposal that was made in the Congress recently for the modification of the IRA, if you are actually freezing those projects or what you are planning for that portfolio.

Okay. Enrico, I'll try to answer your questions in the order you pose them. The first, I confirm that in our guidance, we took already into account in the first quarter the lower production in the first quarter. To come clean on this, April and the first days of May were maybe at a lesser extent than the first quarter, but anyway, well below the historical average. And I think you can find -- you all can find a lot of news headlines showing this trend. And in particular, this morning, on a German newspaper, there is an analysis conducted by the German weather service showing that over the last 6 months, the wind speed was very low in the area of 5.5 meter per second against an average over the last 8 years in the region of 6 and 7 meters per second. If you consider that the production of a wind farm is moving proportionately to 2x the speed of wind, you can simply understand that speed, which is 15% less than the historical average, translates into 30% reduction in terms of volumes or load factor. The positive outcome of this analysis, this is -- I'm quoting, say, the Head of Department of this German Weather Service, "There is nothing related to climate change because similar cases were experienced very back in the past, in '63 and in 1972, 1973," so when climate change was not yet on the agenda, say, of everyone, let's say. It's a very unusual wind route, stronger than the one we have experienced so far. But still, this analysis, and it's an independent analysis conducted by an institution, a third-party institution, is giving confidence that, that could happen, has already happened in the past, but it is not -- shouldn't be correlated to climate change. For simple -- 3 simple reasons that are mentioned in this article -- you can ask Emanuela, our Investor Relation, to share this article, which is public. But the 3 simple reasons are, first, as I already said, there has been other 2 cases in the past, in the '70s and in the '60s, when climate change wasn't there. Secondly, because no more than 18 months ago, I mean the third quarter from September '23 to April '24, we had 7 months of very good and strong winds, okay? You can remember the results in those quarters. So we are not talking about an age ago, we are just talking about 1 year, 1.5 ago. And third, which is a more scientific reason, analyzing the data of these 8 years because the analysis -- as I remember well, the article started to cover, say, the period from 1950 to 2024. There have been many swings in this month. For instance, April, there was a long series of data showing very good April and very bad April. So this is normal. Then your question is more concrete on the guidance, what could be the case for the floor, what could be the case for the cap, say, of the range. As I said very honestly, now we are slightly below the midpoint because of April, but we had some buffer, say, in our guidance. So we are still confident that if from now on, wind is going to be, let's say, in line with the historical average, I mean the P50, it's very difficult to give you a load factor because it's a sum -- a mixture of hundreds of plants. But let's say, if it's in line with historical average, and you can measure this with all these institutions that provide this kind of information publicly, then we are confident to approach the midpoint of the guidance, even including maybe some efficiency we can reach from a cost point of view and blah, blah. To go in the upper part of the guidance, we would need a wind speed that is not at the cap, I said before, of the range, but slightly above the historical average, which basically means assuming a partial recovery of what we have lost during these 4 months of the year. So very difficult to predict because wind is unpredictable. But still, I repeat, it's normal. So this kind -- and there is a chart in the presentation showing, and it was the same chart for the fourth quarter, showing the fluctuation of our portfolio and production. And this graph is on a like-for-like basis. So there is no weird comparison. I mean, we are just comparing the same assets. And you can see that there are up and down all over the wind of time analyzed. FER X, yes, FER X, we expect the first and unique, the only, I mean, auction for '25, to take place before summer. Probably, the last bid should be submitted within June or July, something like that. We expect to take part of the auction with 3 projects for around 150 megawatts. It's not said that they are a little bit less. But it's not said, I mean, that we are going to win and awarded the tariff because we expect a competitive auction because remember that we have been waiting for 3 years. I mean, the sector, all the operators have been waiting for 3 years for this auction. So there is a long queue of already authorized projects. And second, you probably have seen the decreto ministeriale, the ministerial decree, that followed the FER X through which the ministry set the amount of the curve, I mean, the offer curve, and they expect to assign currently a limited amount of megawatts for wind. The target is 300 megawatts, even though the national plan would ask the country to install 4 gigawatts of wind in '25. But let's see. I don't know if it's a strategic approach to stimulate operators to keep the bidding prices as low as possible. Let's see. But we don't care, I mean, about the approach. We have our value over volume approach. So we will submit those projects at a level, I mean, a CfD level, which is consistent with our target return, of course, within the range of the FER X that, I remind everyone, that is from EUR 70 to EUR 95. This is the range in which operators can offer their capacity. So let's see what's going on. For the time being, we are quite happy with the construction undergoing. We have 130 megawatts that should enter into operation in 2025. We have some megawatts, 30 megawatts, that are already in construction that will enter in '26. And on top of that, we recently approved the investments about 3 projects in Germany, 40 megawatts that were awarded a CfD between EUR 80 and EUR 100 per megawatt hour. So those are the real CfD in Germany. You probably read on the screens EUR 69, EUR 68, but then there is the correction factor that is always positive. And then raising, say, the tariff in Germany. In France, the same, we have a couple of projects that were awarded a tariff and the tariff again, 20 years CfD, are in the region of EUR 90, something like that. So we want to move step by step. I mean, value is coming first then volumes. This is the approach, which is exactly the same for U.S. You asked for U.S., our approach hasn't changed. So we want to buy assets that are fully secured, in particular in this uncertain environment. I mean, the administration moves up and downs or back and forth, and we still are trying to understand the direction in the U.S., even though we believe the U.S. is a great market to be because it's a very -- it's a market not based on CfD, but based on private negotiation, all -- made of all PPAs. It's a nodal market. So whenever you have a longer supply in no time, I mean, industries and consumption will rise around that node because it's convenient to buy energy from that node. So we believe it's a true geographical diversification in the U.S. So we still are looking for growth there, but at our conditions. We are not on a hurry. So we will wait for the right conditions. Pipeline, Enrico, it's still there. I mean we have this partnership with Apex. We share that there is still room to work together. We have to find the meeting point between supply and demand, but we are working on it.

[Operator Instructions] The next question is from Francesco Sala of Banca Akros.

I just have a question, a clarification on Slide #14, especially I wonder how we should model the net working capital for the rest of the year, if we should assume, let's say, a similar trend for the remaining 3 quarters of the year or if we're going to see some kind of stabilization on possibly a lower level.

No, this is something that is very specific of this quarter. We had some movement at the end of the year related to CapEx, some project in construction. So we cannot expect to have this kind of movement for the remaining part of the year.

The next question comes from Davide Candela of Intesa Sanpaolo.

I have 2. The first one is related to Italian regulation and the fact that the regional ministry court expressed a negative view with regards to the aree idonee. So I was wondering what's your view on that? So basically, I believe that the region should have less autonomy in deciding which -- where are these areas. And I was wondering if this could change the things about authorization and so on. So just a view on that. And the second question was related to the load factors in wind, and I was interested in the Slide #5 you showed. Of course, the CEO already talked about that. But I was wondering if also there are the possibilities for the wind production to keep up there, also in May from the data you are seeing. And I don't know if there are some effects on the prices with regards to this low wind production in the sense that the low wind, the low supply could drive the prices up and so compensate a little bit this negative effect you're having.

Okay. Let's start with the Italian regulation. Yes, there has been some consultation about the aree idonee in favor of the operators because the operators were complaining exactly what you said about the fact that the ministerial decree gave too much power to the regions to set the go/no-go areas for renewable installations. Take, for instance, the example of Sardinia that basically issued a regional law that basically prevents operator from installing any megawatts whatsoever and wherever. Then there has been a lot of claims, appeals against this decision and this regional law. We are not -- we are happy of the decision because they ruled in favor of the operators, supporting what we were saying. But still, we are not happy because we are losing time. This creates a big mess in the court from a jurisdictional point of view -- juridical, sorry, point of view, expenses for lawyers, a lot of time spent in reading all the documents and blah, blah. But still, it's a process for us. Permitting, in this moment, is not the main priority. The main priority is to find the right business case to yield the right return on our project. Of course, we have one project and probably, it has been mentioned over time many times, a very nice project in Sardinia, which is a quite big one, 100 megawatts of wind, onshore wind. It's a repowering. I mean, there is already another plant there with towers lower for sure than the new ones. And there is a big fight, let me say, from ourselves supporting the quality of the project and the region that still hasn't issued the Autorizzazione Unica. But again, here, the administrative court ruled in our favor, imposing the region to issue the Autorizzazione Unica. So we are waiting. For instance, in this case, we are not taking part with this project to the next auction of FER X because even though the administrative court ruled in our favor, the Italy case, we still need to gain clarity on this. But as I always said, repowering is like a good wine. So the more you wait, the better the return is because right now, we are running on the existing asset that is performing well. So the aree idonee is still an issue to be settled. That's our opinion. It's very important. And in particular, one of the points in the ruling, which is very positive, is about the areas so-called, I don't know how to say it, but we call them [ esercizio ]. I mean, areas where there are already plants up and running. In these areas, new installation should be allowed by definition. But for instance, according to the regional law in Sardinia, this is not the case. So they changed retroactively the destination of those lands. This is an important point to be clarified because if it's so, I mean, all the repowering projects would be possible. But let's wait. And we think and hope that this matter should be cleared, I mean, in the next months because if not, the is a stupid slowdown of the deployment of renewable. Which is the other one, the load factor?

And possible impact on prices.

Prices are strictly correlated in particular in countries like Germany, where 60% of production comes from renewable, strictly correlated to the -- but say, when there is no resources, prices tend to go up. But actually, we couldn't benefit from higher prices since we have 80% of our volumes basically covered either through PPAs or CfDs. So if the volumes contraction is higher, the first production that you are going to lose, given the lower presence of resource, is the merchant volumes, so the ones that are exposed to the merchant price. So whenever the volumes aren't there, it's difficult to benefit from higher price. In fact, in the first quarter '25, prices were high, but we didn't have volume -- merchant volumes in order to reap the benefit of those higher prices. Say, yes, in May, wind can come back, if I remember well, a point you touched because 1 year ago, it happened exactly the same. And they repeat from October '23 to April '24, incredible wind continuously all over this window of time, and then abruptly disappeared. And we are still there. So long period of strong wind, long period of weak wind, so it can change without any others, let's say. So I hope we have touched on all the points, all your points.

Yes. And maybe if I can have a follow-up that is a high-level question, very difficult maybe, but I was wondering which are the conditions for you for the renewable market to change in the sense that likely you will need more stability and returns and so on, but which are the conditions to move for that stability in returns? And related to that, if a competitor in market like a pure renewable company, in your view, of course, from ERG point, but is it less remunerative than rather being integrated? Or it's just a perception and just about how you compete in the market and how you close the volumes and so on?

Thank you for your question. So based on the current environment, for sure, being integrated can provide an edge against this volatility, having retails or -- we decided to go this way because we believe in the energy transition in the medium, long term. And the main element, if you ask me, which is the most important element to get all the energy transition story, a good one, is the electrification of consumption. So I mean demand. If Europe also from a regulatory point of view, will be able to push in that direction and other areas of the world are going in that direction because the electrification -- the electricity demand all over the world is growing at a pace which is double compared to the GDP, except Europe. So if Europe, as continuously stated, will manage to electrify through electric vehicles, heat pumps, hydrogen, data rooms, crypto coins, all data centers and so on, as it's happening in other part of the world, for instance, China, Asia and also the U.S., absolutely, the energy transition is there. At some point, I think some adjustments from a regulatory point of view in terms of price mechanisms should be found because the renewable got the investments, the capital intensity, but then they got -- they haven't got, say, variable cost because wind and solar is for free, fortunately. And then we have to -- I think the regulators should adjust this price mechanism either through CfD and PPA, but extend it not just to the new asset, but also to the existing assets in order to obtain what everyone is asking for, decoupling. Decoupling is possible just if made at European level because Europe should be a single market, but with the right mechanisms. So this is not yet there, but I think we need to go there. That for us is the game changer of the energy transition. And sooner or later, it should come.

The next question is from Emanuele Oggioni of Kepler Cheuvreux.

The first one is on acquisitions. The general high-level question on the current situation, if you consider the current situation more interesting for you as a net buyer of assets in renewables in brownfield existing assets compared with 1 year ago, a few months ago. So what is the situation and update? Some players, for example, said that it is a buyer market, so for the buyers more than the sellers, it could be a positive environment or not. What is your opinion on that? Second point is a clarification on the auction in Italy. What is your expectation about the number of auction? Probably only one will be -- only one auction will be called before summer probably. Or do you expect also a second auction? And in any case, your approach, value over volume, means that you could not attend the first one in which the competitive level pressure could be probably far higher, but the second one or next year, et cetera. And then I have another question on the U.S. market, an update on this market. Basically, you stopped the CapEx development in the U.S. So if there is an update compared with a few months ago, what is your outlook on this? When could you start the greenfield projects, at least, or acquisitions in this case? And finally, a question on the supply chain. So due to the trade -- the current trade war or what could be the implication on your cost -- CapEx per megawatt for both photovoltaic solar panels and wind turbines, if there is some implication you expect in the next -- in the coming quarters.

Okay. If I count it well, there are 5 questions. So I'll try to follow in the order you touched them. M&A, I'd say, I think you noticed that we became a little bit more selective, not because before we weren't, but because we have completed, I mean, the transformation. We reallocated the proceeds coming from the disposals of the gas plant and the hydro plant. And now we still have firepower from our balance sheet, but we are not on a hurry to replace the EBITDA we lost from the disposals because we did it. To be honest, now we have a higher EBITDA that we had before or we were supposed to have before. So we are quite happy, and we are just looking for the right opportunities. You said -- if I remember well, you mentioned the bid-ask. The bid-ask is getting larger, for sure, market because, as you said, we are moving from a seller's market to a buyer's market or anyway, something in the middle, because the buyers would like to be a buyer's market and the sellers, the other way. So there is always a midpoint in between demand and supply. So we are trying to find the right one, the right one. And this is valid in Europe, but as well in U.S. In U.S., we are not -- now I'm moving to the last, to your last point, we are not developing greenfield. We have a co-development agreement with a developer in U.S. and the developer is in charge, say, of developing greenfield and closing the business case with PPA and tax equity partner, tax equity scheme and blah, blah. And our model is simple as that. We are buying at the commercial operation date. So we are not bearing any construction risk, regulatory risk and blah, blah, because our strategy, and we were very clear since the beginning, in the U.S. is grow and learn or, if you want to change, learn and grow, growing safely and, in the next few years, be focused on knowing the market, all the knowledge and competencies to become then an independent, say, owner, asset owner, in the U.S. Auction, as already -- I've already said, we expect just one single auction in '25. It's a matter of technical times. So probably the bid-ask will be closed by -- within the summer. The awarded projects will be announced probably in September or late September. So there is no technical time to manage another auction within the end of December '25 when the current FER X Decree is going to expire because this is a provisional temporary decree, but we are quite confident that based on the same rule, a couple of auctions will be taken in '26. And honestly, as I already said, it's fair enough to expect the first auction to be oversubscribed because there are a queue of projects that have been waiting a lot of time for this auction. So maybe the right tactic is wait for the second auction. I'll remind you, all of you, that the previous scheme, so-called the Decreto Duemiladiciannove, the RES decree 2019, the first auction was super oversubscribed and then undersubscribed all the following. So this is a trend that we could expect similar. I mean, we do not expect all the auctions oversubscribed as the first, for the reason I said before. Supply chain, I don't know, Michele, if you want to say, but still, we are not experiencing a reversal in the capital intensity in wind; solar, a little bit; storage, a little bit, but not something that can change the picture for the time being.

No. In Europe, we don't see any material disruption of the supply chain for the trade environment. Consider that more and more, a relevant percentage of our CapEx is made by local content. So the BOP part of our investment is becoming more and more relevant and so it is less influenced by this kind of dynamics. Having said that, we see an environment in terms of CapEx per megawatt quite stable in solar and wind, still decreasing in storage. But in storage, we don't have any additional project in construction right now, just the first battery project that is in construction in Sicily, but that was contracted 1 year ago.

Gentlemen, at this time, there are no more questions registered.

So thank you very much for attending. And next time will be before summer for the 6 months results. Thank you very much.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.