Grenergy Renovables, S.A. (GRE) Earnings Call Transcript & Summary

Okay. So good morning, and welcome to Grenergy's first half results presentation. I'm Ruben Gomez, Head of Investor Relations. First conference call with Grenergy, as I joined very recently. And honestly, I'm very happy to be here. The presentation is going to be led by our Executive Chairman, David Ruiz; and Daniel Lozano, our Chief of Strategy and Capital Markets Officer. They are going to take you through our business and financial review. And at the end of the presentation, there will be a Q&A session for sell-side analysts. I hand over to you, David. Please go ahead.

Okay. Thank you very much, Ruben, and good morning, everyone. Well, I'm glad to -- we're very glad to have Ruben on board. So welcome, Ruben, and I really hope it's the first one of many. Going to the results presentation. I think it's been a pretty good set -- we've had a very good set of results during the first half of '24. It's -- jump to Slide #3. We -- I think the results have been mainly driven by the asset rotation in Peru in the first quarter 2024. We are expecting more asset rotation at the end of the year. But in this first half, these deals in Peru were very relevant, right, in the first quarter. Our revenues amounted to EUR 192 million. This is 15% lower than last year. But in reality, if you consider -- we consider the inventories that -- we're talking about inventories to -- of pre-agreed sale of solar plants, which are coming under construction. The total figure will be very close to EUR 300 million. So this is what we are roughly delivering in construction of plants now for the year, around EUR 300 million per semester. EBITDA grew 43%, thanks to asset rotation, right? Our EBITDA remains growing but still in the ramp-up phase. I think Daniel will give you more details. In Peru, we got USD 150 million of proceeds with EV/IC ratio of 1.3 right now, rotations I mentioned in Q2, but expected before the end of the year. Net income was EUR 0.5 million in the first half versus EUR 4 million in first half 2023, lower figure, right? I don't think it's meaningful, but anyway, mainly explained by FX differences between the periods. Daniel will give you more information on this in the financial review. CapEx, EUR 186 million, in line with last year and good news, the fact that we are experiencing a very steep CapEx deflation in modules and batteries. Net debt reached EUR 736 million, implying a ratio of 6.6x and 2.9x in corporate rate. This will improve, especially in Q4, with ongoing mega negotiations regarding asset rotation, right? Some highlights on M&A. I think one of the main topics of this result is the acquisition of Repsol and Ibereolica of 1 gigawatt solar, with the aim of hybridization in the north of Chile for a total number of USD 128 million. We will elaborate more on the rationale of this important build for us. Basically, with this acquisition, together with the redesign from 5 to 6 hours in most of the phases of Oasis of Atacama, we are updating the figures from what we announced in our Capital Markets Day in November from 1 gigawatt solar and 4.1 gigawatt hours to -- we are doubling the size of PV to 2 gigawatts, and we are nearly increasing 3x the potential of BESS to 11 gigawatt hours, right. We will look at this more in detail. Regarding M&A for the rest of the year, we can confirm there is strong appetite from investors about many of our assets currently in operation and under construction. Going to business highlights. Well, I will review our solar platform, which is now reaching nearly 16 gigawatts. This is an increase of 0.3 gigawatts quarter-on-quarter and very strong increase in the hybrid BESS platform, mainly but not only coming from the acquisition we made in Oasis of Atacama. On the update of Oasis, I think everything is well on track. We will give you more information for its Phase 1. The factory acceptance test for the first phase have been concluded, and the batteries have been shipped. And we're expecting them to reach the site early October, a few weeks from now. We will elaborate more on a slide on this, right? Concerning finance, very important milestones. We closed the project finance for Phases 1, 2 of Oasis of Atacama for a total number of USD 345 million -- a total figure of USD 345 million. This is a record for us. We have also pre-hedged the Phase 3. We are expecting to close this definitely before the end of October with the same syndicate of banks. And also regarding other fronts, we also closed an important financing for Valkyria for EUR 175 million for the plans that we will rotate in mid-2025 to Allianz. So for a total figure of EUR 175 million. And we have also renewed EUR 150 million of green commercial paper. Going to the next slide to our pipeline. Let's look at the pipeline. Again, total platform of 15.6 -- 15.9, sorry, gigawatt of solar close to 22 gigawatt hours of BESS, that's a massive upgrade on storage stabilization, mostly in Chile and -- but also in Europe, right? [ BESS ] really happening now everywhere. We are very lucky to be in Chile, where things are happening first. But we are planning to replicate this everywhere else. Having said that, a very well-balanced portfolio in solar with 3 main geographies. And well, again, if we look at the next slide, we will see that -- well we have a very balanced picture on the left-hand side of the slide between the U.S., Europe and Latin America. We nearly have very similar figures. But if we look at how projects keep advancing, you look at the figure of advanced development projects, we are very close to reach 3 gigawatt. That's a very important change from the figure in the last update. And if you look at the early stage, we have 5 gigawatts added to our opportunities, another 5 gigawatts. So the pipeline is maturing. Chile is very important for us and Latin America in general. But look at what is coming up, especially in markets from the -- like the U.S. and other new markets in Europe. And this will give us visibility on our revenues in 2026 and 2027. In hybridization, we have a very high percentage now of hybrid plants with BESS in Chile, but also we are advancing in some other markets, and we will see some sharp increases in the next few quarters coming from the U.S. and Europe, where I'm talking about hybridization, right? The following slide, we are going to show you the update in detail of the business case of Oasis of Atacama. We start first with a look at how Oasis of Atacama was until now, until the announcement we made today. And we can see that there's been a redesign. Due to the sharp reduction in CapEx, we have reduced -- we have increased from 5 hours to 6 hours as BESS [ CapEx ] is significantly below the guidance. And we believe this will increase projects profitability as we are moving more solar hours from day to night. So you can see that Phase 1, 2 and 3, we have increased the megawatt hours associated to those phases, to those projects. And we will remain with 5 hours in Phase 4. This is -- this project has a different PPA, and we believe it's fair not to change. And Phase 5 is closer to ready to build, and we believe we will also shift to 6 hours. So all in all, the first phases of the Oasis will be now -- will now account to close to 5 gigawatt hours of BESS, right? And moving to the next slide. Well, obviously, the headline is the acquisition of Repsol and Ibereolica of 1 gigawatt solar portfolio with -- but it's very important to explain you what we are really buying and what is our rationale behind. We've known this project for a very long time. It's, we believe, the largest PV development in the north of Chile. It's fully developed for the first phase. It has an interconnection line, high-voltage line of 1 gigawatt, and that's something -- this is really something. It took the previous developer many years to develop this. And the line is fully energized, and it's in the -- has the best radiation in Atacama. It's next door to our project of [ Quillagua ]. So we know that very well. It's very close to 3,000 hours of radiation. So that's something very unique. It's connected to the most strategic line in the country, [indiscernible]. This is where the new high-voltage, the HVDC line will depart -- will start less than 5 -- 5 years from now. So we are connecting these project straight to the substation, where the main line connecting Atacama to the south of Central Chile starts, right? There are no concerns with communities or environment, its area, and it's a perfect flat land. So it's an area we know very well, and this was the first BESS development in the area. The project has 77-megawatt peak of solar PV in operation, right, and a 923-megawatt peak in different phases of development. But apart from the size, what we're really buying is also time and reduce -- we are reducing the [ uncertainties ]. This is a massive acceleration plan. Again, a high-voltage line of 1 gigawatt already energized in the best possible location in Chile with the potential to allocate, to incorporate 6 hours of BESS. So we are talking about 6 gigawatt hours. This is potentially more than 2 terawatt hours of energy a night and close to 3 terawatt hours, all in all, including the solar hours, and with the first new phase fully commissioned before 2 years from now. This project, together with the continued downward trend in BESS CapEx, giving us the opportunity to connect 6 gigawatt hours additional. So I think Daniel will also explain how we are considering to finance these and how we are not planning to change our CapEx plans for the next 3 years. Moving to next slide, we show how the new -- how Oasis of Atacama looks like with the new phases. We -- again, we are moving to the initial 1 gigawatt of solar and 4.1 gigawatt hours, which we explained, outlined in the Capital Markets Day. We are now moving to 2 gigawatts of solar and very close to 11 gigawatt hours of BESS. At the bottom of the slide, we show the -- well, how the 2 new phases, Elena and Antofagasta, and you will see that phase, the Phase 6, right? It's -- we are able to connect even before Phase 5 of the existing -- of the previous Oasis of Atacama. So I think this is good news. Again, it's a massive increase, but it's also we are buying time to market with this deal. Moving to next slide. And while we are updating this slide, I think it's very interesting every quarter to explain to you in detail how we are executing with Oasis of Atacama since we outlined this deal in the Capital Markets Day back in November last year. Since then, in -- during 2024, we have announced in January, a strategic agreement with BYD for the supply of Phases 1 and 2. We have been in large disagreement, and we just recently announced a new agreement with BYD to support the supply of batteries for Phase 3. In January, we announced the hybrid PPA for Phase 4 with an investment-grade utility. We are now in the process in advanced acquisitions for Phase 5. And we -- as you know, we -- the deal we announced today, we have been several months negotiating this deal with the sellers. But at the same time, we have launched negotiations to close the PPA for Phase 6 at least, and we're also working on several options for Phases 7. And we will give you some information when we have visibility. If you look at -- this summer, we -- very important milestone, we closed PPA -- sorry, we closed the project finance for Phases 1 and 2 with syndicate of 5 banks. We are replicating now with the same banks for Phase 3 and Phase 4. We will -- I think before the end of October, we will announce the credit finance for Phase 3 and before the end of the year for Phase 4. So everything on track there. And regarding the shipment of batteries, already it's on the sea, the first -- the batteries we need for Phase 1, which will be on-site before the -- I think in early October. I'm glad to give you more details in the Q&A. Okay. And a final slide just from my side, where we show all the numbers of Oasis of Atacama, which I think are very, very impressive. I went through most of them already. And it's worth highlighting the diversified sources of revenues. We have generation output, both solar and BESS, mostly contracted, but I think we also have some upside of the energy, which is not contracted, but it's merchant. And a very interesting price spread between day and night, we have capacity payments. So -- and we are very glad to elaborate more during Q&A. So thank you very much, and I give the floor to Daniel.

Thank you, David. So moving on to the financial review, which starts on Slide 11. Total capacity increased to 950 megawatts with gross additions during the year of 463 megawatts. That include Matarani solar PV asset built by us and sold in Peru, Gran Teno and Tamango in Chile and Elena. Thanks to the M&A transaction. Regarding production, we experienced a 4% decrease in total output. This decline was primarily due to the disposal of our Peruvian wind asset Duna Huambos. However, at constant perimeter, we grew by 1%. Load factor also was affected by the disposal of Peruvian assets. Contracted volumes increased by 10% and represented 73% of our total electricity production. Realized prices show a 2% increase, thanks to the positive trend of PPAs, mainly pushed up by contracted asset in Chile. On the other hand, merchant prices declined mainly to the pool price situation in H1 in Spain and no contribution from Duna Huambos. Additionally, on the right side, you'll find a summary of the main financial KPIs that we will look into later. So moving to Slide 12. You'll notice that in the first half of 2024, total revenue reached EUR 192 million. Revenues declined by 15% year-on-year. But we will have -- sorry, but it will have increased by 30% if we had considered inventories as income from capitalized works, okay? So when we are registering the capitalization of assets that we are building for third parties, we are not including asset revenue, but as inventories. So that's the reason of the differentiation. EBITDA rose to EUR 31 million, 43% increase mainly by development and construction division, the asset rotation of Duna Huambos and Matarani solar PV project generated nearly EUR 70 million in revenue. And in energy division, despite the disposal of the mentioned asset, the revenue of the energy division remained relatively stable, minus 3% in as higher realized price helped to offset the impact of lower output. However, the impact from this disposal on EBITDA was higher, minus 10% in the first semester 2024 compared with previous year. Finally, retail supply business in Chile achieved positive EBITDA EUR 0.5 million in H1 2024 compared with minus EUR 1.7 million in first semester 2023, and we anticipate that this trend will continue. Turning our attention to Slide 13. We observed that total CapEx reached EUR 186 million, similar figures to the previous year, EUR 187 million. It is important also to mention that this figure includes EUR 102 million of inventories as explained before, of those related to the pre-agreed sale of solar plants that are under construction, such as Matarani, Tabernas and Jose Cabrera in Spain. A significant portion of the CapEx was allocated to solar PV asset. 60% of this investment occurred in Spain and remaining 40% in LatAm. An additional EUR 24.7 million was dedicated to development initiatives. On the right-hand side, we show a reduction in CapEx per megawatt in solar PV, and per megawatt hour in BESS attributed to the expansion of global industrial capacity, both in solar and storage, increased production level of necessary materials like polysilicon for solar and lithium and other materials for storage. In case of BESS, lower demand coming from electric vehicle that is being allocated to our industry. Panels are now priced at just $0.09 per dollar, and the current CapEx, excluding the interconnection line stand at 0.39 million per megawatt. BESS CapEx per megawatt hour is estimated in $0.12 million versus the amount of $0.2 million that we forecasted in Capital Markets Day or our previous estimation for this year of $0.18 million for 2024. Moving on to Slide 14, which provides insight into the cash flow for the period. Cash position in H1 2024 amounted to very similar figures from full year 2023 of EUR 125 million. CapEx has primarily been self-funded through asset rotation and project financing, not only net proceed from asset rotation in Peru positively impacted our treasury balance contributing with EUR 116 million. And you know we executed a share buyback program totaling EUR 36 million equivalent to 4.3% of the company's shares. It has been executed several weeks ago. And from those EUR 36 million, EUR 20 million was in the first half 2024. Now on Slide 14. Our net debt increased to EUR 736 million, primarily due to CapEx investment, and our total leverage ratio increased to 6.6x in June 2024 compared with 5.6x in December. Regarding our covenant leverage, it stood at 2.8x in June 2024 very similar level to December, thanks to the disposal of Peruvian assets as both projects were free from nonrecourse debt and the closing of the financing for Tabernas and Jose Cabrera, which implied achieving corporate debt into nonrecourse debt for the CapEx already incurred. As announced during our Capital Markets Day in November, our investment plan for 2023 to 2026 will be self-funded. We are achieving this through asset rotation strategy, which is already 55% completed. If we move to next slide. It's important to mention that the current acquisition is not affecting the total investment plan. We are keeping it at EUR 2.6 billion. As David explained before, we are adding 1 gigawatt of solar PV and 6 gigawatt hour of BESS with the acquisition. As well, we are increasing organically the number of hours allocated to the first phases, shifting more energy from cheap solar hours to more expensive hours at night. The main moving parts that explain the same CapEx for 2023, 2026 are following. EUR 0.4 billion of CapEx reduction due to lower BESS and solar CapEx. Previously, remember, we were considering USD 600,000 for solar, including the length of the substation, and USD 200,000 per megawatt hour for storage that we have just updated to much lower figures. We are pushing forward some stand-alone solar PV plants, mainly in LatAm and some in Europe and U.S. as we are locating those resources to, by far, more profitable hybrid solar plus BESS project. There has been an increase of 0.5 -- sorry, EUR 0.1 billion related to the redesign of Oasis of Atacama, extending the hours from 5 to 6 hours. And finally, there is a new EUR 1.2 billion related to the new phases of Oasis of Atacama as we expect to Antofagasta, the final phase COD in 2027, there is EUR 0.35 billion that we have deployed in 2027. With all this, we are maintaining the same CapEx, but we are increasing significantly the capacity, IRRs, the EBITDA and generate the value of the project of Oasis of Atacama. And finally, on the next slide, #17, sorry. We are showing the same self-funded investment business plan mainly, thanks to the project financing that we are showing banks are now closing hybrid project financing. We have proved it with Phase 1 and 2, and there will be more phases commission and asset rotation that already 55% of it completed, and we are still in 2024 2 years still to complete it, but hopefully achieving that before. The figure that changed versus the announced one in the Capital Markets Day are PV CapEx, reducing a little bit from EUR 1.5 billion to EUR 1.45 billion. CapEx in storage, we are increasing it to EUR 0.95 in billion from EUR 0.8 billion. And we're increasing a little bit dividend received as the project we are connecting will produce more dividends. To sum up and to finish my presentation, we could say that we are allocating resources to more profitable projects. We are investing the same, but we are getting much more back. Thank you. And now let's move on to the Q&A session.

Okay. Thank you, Daniel. [Operator Instructions] Let's wait 1 minute until we receive all the questions. Okay. I think we're going to start. We have 5 questions. So okay, first one, please, from Flora Trindade from CaixaBank. Please go ahead, Flora.

Can you hear me now?

Yes.

First of all, congratulations for the deal, clearly expanding your coverage there. I was just wondering if you can share with us the returns that you expect with this expansion. So for the new Oasis Atacama large project, what is the IRR that you are seeing that I imagine it is higher than you have in previous in the previous perimeter. And also, if we can share what is the expectation of prices more in the longer term because in the beginning, you will have the PPAs and also the advantage of this arbitrage between night and day. But I was wondering that if in the midterm, if competition starts to expand capacity as well, if you could see some pressure on prices. If you can elaborate on that, it would be useful.

Thank you, Flora, for very interesting questions. Okay. I will start with the last one, right, on the -- on our expectations for prices in the long term. Well, I agree with you, and we will see that in markets like Chile and California, the Australia with a very high penetration of BESS in 2, 3 years from now, our prices at night will have tendency to stabilize. We're also looking at an increase in estimation prices during the day. So prices, they will not get -- you will not get like a flat base load. But it will definitely -- that curve, as we know it today, will be very different. We are already looking at that in places like California. Anyway, just keep in mind that with our PPAs, we are living an initial period full merchant, which could be like a year on average, then the PPA will hedge most of our energy sales. We're talking about 75% on average during the first 15 years. So let's say we have visibility on the first 17 years, and we're estimating their IRR for 20, 25 years. So we have a lot of visibility and stability, and I think is the right way to do it. We also have the capacity payments fixed for the first 10 years that might mentally change from year 11. But I think it's giving a lot of visibility on the projects. I agree we are going to see a cannibalization in the long term. So I think the longer we hedge in our opinion, the better why we are basically following the same policy we followed with PV. Going to the returns, well, we -- in Phases 1 to 4, we have outlined a project IRR between 11 and 14. I think we are very close to the later, right, to 14 or even slightly higher in some cases. About the new projects, we are expecting similar returns, right? We are in very advanced negotiations for PPAs. The prices will tend to deflate since the CapEx is going down. But we are now seeing that there is still deflation. So we believe we can maintain, if not increase the IRRs, and this is why we believe this is a fantastic opportunity for the company because we can deliver energy as early as 2026.

Okay. Next question from Bank of America, Alexandre Roncier.

Just actually one follow-up on your comments, David, just now. When you say on Oasis 5% to 7% that you should see in your IRR equal to better. Is that equal to better to the 11%, 14% IRR initially targeted for Oasis de Atacama or the 14-ish-plus that you're seeing today with lower CapEx? So that's the first one. Still on Atacama, I've noticed on the slide a little graphic update where the Phase 1 COD was actually at the very end of December compared to mid-December, I think, in some previous slides. So is there some kind of a risk perhaps where you would see the Phase 1 COD perhaps slipping into 2025? Or is that not an issue at all? And then maybe perhaps you mentioned the pipeline growing up in the U.S. moving some PV into -- forward to focus on the hybrid. About the U.S. themselves, any COD in mind for the 300 megawatts of solar you got in advanced development, incrementally from the Q1? I think you've got also 200 megawatts of storage. I mean, I assume this is a build and own strategy for the U.S. and a very exciting market as well. So any kind of update on progress there would be super helpful.

Okay. Thank you very much, Alexandre. And replying to your questions, well, about the IRR thing, well, we are considering the returns for the new phases at least in the high range of the first 5 phases there -- 4 phases, sorry. There are obviously some inputs we still cannot control. So when we -- for the first phases, the CapEx is somehow hedged. The PPA, the energy prices also hedged, even we have an interest rate swap. So we can give a more accurate return information, right? For the next few phases, I believe there is a very high demand of energy at night. We have the right plan at the right time, in the right place. So we believe the PPAs will not be very different from what we have achieved, even considering that the delivery of the energy will start 1 year or 1.5 years later. So this is the plan. Going to Oasis of Atacama's first phase. Well, this is -- the first phase was an operational plan. I mean, we -- I think, we have just [ unplug ]. This is not right now connected because we are now installing at full speed the BESS associated to these first 100 megawatts. The most of the civil works are concluded now. I think we published in LinkedIn some pictures the other today. And we are now waiting for the batteries. The batteries have been shipped already, having tested, and they will arise in early October. It's really up to us in this plan. What I mean is whenever we feel that we are fully concluded, we can plug this because there is no interconnection associated. Everything is done. We're just unplug. We do the work, we plug in it again. So we expect that this will be operational. We will be able to sell energy from the end of December. Maybe the COD, I mean, the official COD will be planned a few weeks few weeks later, right? And at the same time, we will try to accelerate the COD for Phase 2. I think the Q3 estimate we are giving there this is slightly conservative. We will try to move that forward to Q2. For us, it's very important, right? Because in the BESS project of this size, every month, really makes a difference, right? It could be -- we could be talking about USD 5 million, USD 6 million in revenues. In summertimes, even more. So it's really something. So we will try to accelerate the more we can the interconnection of all phases, right, because there's a lot of at stake. And talking about the U.S., I think -- okay, we're talking a lot about the Oasis of Atacama now. I think next year at this time, we will be talking a lot about the U.S. It's the next big thing for us. I would say the next big things for the company are, apart from Chile and Oasis of Atacama, on one side, there's huge boom of BESS everywhere. And we will start taking and giving visibility on stand-alone projects as well, but also the U.S., right? And if you look at the advanced projects in the U.S., this is in Slide 20, I'm showing. We have 3 projects, Beaver Creek, Shubuta and Creed, where I think we will be announcing PPAs very, very soon, and we will give visibility. If you look at the CODs, in some cases, we're talking about late 2028, mid-2029. Creed is definitely faster, right? And I think, we'll give visibility on these pure PPAs. But it's a very exciting market at the moment, right? Obviously, we are also waiting for the results on the elections, and whether there is any minor change to the IRA. We are not affecting -- we are not expecting major changes even it's from wins. This is the idea. But anyway, we're going to be very, very busy with Oasis of Atacama and also with M&A activity. But definitely from first quarter next year, we will have a very strong focus in the U.S. And it's a very exciting market, mainly due to the driver of data centers and the acceleration and this unprecedented source of demand.

Okay. Please, next question from...

Sorry, if I may, just to mention an obvious thing that -- regarding returns. Well, as David said, it has improved since November last year. If you -- I think you have main KPIs to build that model. You can always contact our IR team. We can help you to calculate how has been that improvement.

Okay. Next question from RBC, please, Fernando.

So a little bit related to the returns. So maybe if you can update us, what is the evolution of spreads, daily spreads that you are seeing in Chile between day and night hours? And related to that, I mean, you were putting a guidance of an EBITDA of running rate, if I don't remember it wrong, of around EUR 300 million for EBITDA in 2026, taking into account that you are doing now much more for the same. I don't know, if you will like to update that guidance? And then the second question is on asset sales. I think that there are, I guess, 2 main options that will be [indiscernible] from Valkyria or maybe one of the phases of Atacama. So there what can we expect in the next months of 2024 and 2025 in terms of asset sales to finance all this plan?

Fernando, thank you very much for your questions, and I hope you are fine. Okay. I was looking at the last report we get -- the daily report we get of prices, right? That's the internal report we get every week in every market where we are. If we look at the case of Chile during this year so far in Atacama, on average, the solar prices have been EUR 11.76, so nearly EUR 12. So that's very, very low prices, and that's not included considering the containment we face. And the net prices are EUR 98, okay? And in Central Chile, we are talking about EUR 19.33, nearly EUR 20 during the day on average and EUR 93.72 at night. So that gives you maybe of the current spread that we have in Chile. We will explain why this is happening in Chile now. Well, because these very high prices, they are here at night, until we don't see a lot of BESS getting into the system, thermal plants are setting the price, and they need to be turned on, and that's systemic now. And that's if you put together to the high radiation, so it's perfect conditions for recycling the batteries, plus this spread, plus capacity payments, it's the perfect market now. And again, I say maybe together with California or Australia for the massive deployment of BESS, this is getting accelerated with the reduction of CapEx, right? So this is really the situation. So this is what helps us to offer hybrid premium PPAs and secure the offtakers hedge price or prices at night, right? That, as I mentioned before to Flora, eventually will change, but it will take a while. And we are in very good position to secure PPAs for 15 years, which is basically what we are doing. Regarding the EBITDA guidance. Obviously, we cannot -- I cannot give a new guidance right now. I think we will update that maybe in November, right, where we will give the strategic visibility on 2027, and we will update our guidance for 2026, and we will give a guidance for 2027. But well, as Daniel mentioned, we are -- basically the whole idea about buying these projects in Chile is that we can remain with the some CapEx. Some of the targets for 2026 coming from the U.S. and European markets will be moved to maybe first semester or 2027. Instead, we will have this new project with very higher returns. So obviously, we -- I think we are doing this for the good, and we will also have possibilities to accelerate the EBITDA coming from bid and sell. So I think it's good news as a whole for the company, and this will have a reflection on our targets for 2026 and 2027. I think that's it, Fernando. I didn't write more questions or maybe -- I'm not sure. I think there was a last question, but I maybe didn't write it down. Yes. Okay. Daniel?

We have some more analysts to ask just with just 7 minutes. So...

Okay. Okay. But anyway, you know Fernando, where we are. So very glad to elaborate it a little more.

Okay. Thank you. Next question from Barclays. Please Nash Cui, go ahead.

Congratulations for the great results. Perhaps 3 questions from me, if that's okay. So the first 1 is with this new PV portfolio in Chile, especially for the Phase 6, Phase 7 of Oasis Atacama. Can you give us an update on your EBITDA run rate in the medium term? I guess you would have a higher EBITDA run rate, right? Can you give us an update on that? And then number 2 is a very near-term asset sales. Are you guys expecting any sales to be announced for the rest of the year? Any guidance will be good. And then number 3, net debt target, and I just wonder with all the updates yesterday, and do you have any view what sort of level of leverage do you want to achieve?

Thank you for your very interesting questions, right. Well, as I mentioned before, to Fernando, I cannot give you a new guidance on EBITDA, cannot update that. But if you remember and you have most of the information from Oasis of Atacama, we had a run rate EBITDA expected of, I think, around EUR 200 million. And this plan -- we are buying is 1,000 compared to 800. So it has more volume. Maybe the prices of PPAs will be slightly lower. But all in all, I think, I can give you an idea of the size of the new animal. And more importantly, we'll have the opportunity to rotate assets. I think in our strategic plan, we were considering a rotation in 2026. With this new project in hand, we have the opportunity to rotate faster some of the initial projects in Chile. As I mentioned, we are aware that we have a big [ concentration ] in Chile right now. And we will work very hard in the next 2 years to diversify our footprint in other markets, mainly in the U.S., but also there are fantastic opportunities for BESS in Europe, right? So this will be the main driver. And I think this new project is an opportunity for an acceleration also of M&A coming mainly from Chile. We have also received some approaches for our portfolio in Colombia. And we're working on it. I think definitely, something will happen before the end of this year. Yes. I think for the net debt, I leave you -- yes, third question, Daniel, maybe you will reply...

Okay. Perfect. Nash, we have -- we are not providing guidance for net debt. We have a target for corporate covenant of 3.5x. Right now, we are in 2.9x. Bear in mind that every time we are doing an M&A transaction, leverage moved down rapidly, okay? So remember that in the time being, we have already achieved a minimum of 1.3x EV invested capital for our asset, depending on the one that you are considering and when exactly that is happening, that will move leverage down quickly. It is not recurrent. Unfortunately, we cannot predict exactly when we are going to close the deal. But as more M&A is coming in 2024 and 2025 as well onwards, you will see that moving down as soon as we can keep this M&A and EBITDA as well coming from our portfolio.

Okay. Okay. So please limit your to 1 question per analyst, okay, because we are running out of time. Maybe we are going to spend 10 or 15 minutes more. So next question comes from Jorge Guimaraes from JB Capital.

Please, one question. I think we are going to have 10 more minutes of the presentation. But one question, please.

So my question is related with the Chilean regulatory risk. Can you elaborate on what is at risk with the current regulation -- or revision of regulation? Is it PMGDs, capacity payments or all of them or neither of them? And what could be the timetables for the new regulation to be out?

Okay. Thank you. Thank you for the question. The announcement made at the end of July by the Chilean government, right, the new project of law affects only the -- is trying to create a new tax on PMGDs just on PMGDs, that's absolutely nothing to do with capacity payments. Chile is based on capacity payments in the whatever. I mean it's nothing to do with this. If they announced this project, we believe it's a negative project even if it affects only the PMGDs since it has never happened before in Chile. We believe that like many other reforms that this government has tried to do in the last few years, they have 1 year more in office. I don't think it will get through since they don't have a majority, both in the Senate and in the Congress, right? And so far, this is the information we are getting. So we don't think it will eventually happen. If it happens, for any reason, the impact on Grenergy will be fairly limited, right? We currently have 140 megawatts of PV only, right, no BESS. This only affects 140 PMGDs that we now have. This has been financed by Natixis for refinance and the impact in our EBITDA of this transition tax that they're willing to implant will be between EUR 2 million and EUR 6 million in revenues per year, right? But again, we don't believe this will finally happen. And if it happens, we'll have a very limited impact, and it will be reduced quite a lot.

Okay. Next question from Berenberg, Henry Tarr.

It's mainly on the CapEx side. So we're seeing lower costs, obviously coming through for storage and for solar. What are you able to -- does that apply across the whole of Atacama? Or have you already committed, I would guess, for the first phases of it to a particular CapEx? So I guess that's the first question. And then on the battery storage CapEx numbers, I guess, this is just purely lower costs coming through from BYD. Is that right? And then I know I'm supposed to limit myself to one question, but just if you -- if there is time, if you could comment on the appetite for asset sales that you see today, that would be great.

Okay. Thank you, Henry. I try to be very concise in the reply of the questions. Okay. About the hedge, how we hedge our new CapEx, that's something -- well, the golden rule for us is that we don't hedge or we don't buy materials, until we have secured a project or secured a PPA, right? Otherwise, I think we will be speculating, right? There is now a big temptation to say, okay, let's hedge the cost of the materials or the next phases of Oasis of Atacama. But eventually, we rather prefer to do that when the PPA is fully secured, and we have no doubt that this project will get under construction, right? Right now, we have hedged -- fully hedged Phases 1 to 3 year of Oasis of Atacama. We are very close of hedging Phase 4, and I think we will reveal the name of the -- well, we are working, as you know, with BYD for the first 3 phases. We might be working with the BYD, or we are working with -- we're also having conversations with other majors like CATL, C-A-T-L, which is a very good candidate and other big names in the storage manufacturing, right? The industry is really active right now, as Daniel mentioned, since the electric vehicle is lagging behind and is not growing as quick as expected. A lot of activity and production capacity is moving to stationary, right, to the type of projects we -- or BESS we buy. And also this is a fantastic news because it's consolidating the industry and is creating new players, right?. We have the 2 big names, like BYD and CATL, but there are other emerging names in the industry as well, right? About the appetite for our sales remains intact. I think it remains very, very strong, and we are receiving even unsolicited approaches for the projects we have, I would say, mainly in Colombia. In Spain, we have [indiscernible] now. It's a good candidate for build and sell deal. It was initially designed to be rotated in 2020 at the end of 2024. Maybe we will go for a deal at the end of '25, COD deal similar to the one we closed with Allianz. Remember, it's the same PPA with Amazon. We are now building the projects with a lower CapEx. So the price remains similar. We may get a higher return, right? Also another thing that we are seeing is that in general, the lower the interest rates, lower the expectation of returns from -- for buyers in our rotations, right? So I think lower interest rates is definitely good news for us.

Okay. Thank you. Next question from ODDO, Anis.

I have only one. So it's regarding storage. Congrats for the expansion in Chile. And my question is about Europe. You mentioned that there should be some opportunity in Europe. Could you please specify in which country in particular?

Thank you. Thanks for your question. BESS is coming everywhere. I mean, everywhere. It's really -- we are looking at opportunities in all the, I think, the 11 countries in 3 regions where we are. I think it's very important that we focus and we concentrate the efforts in the areas of the market where we really believe the returns will be higher and will be easier to replicate, and we -- but believe me, we are looking where the next Oasis of Atacamas are going to be, right? It could be a stand-alone massive projects in Germany, or it could be some large similar hybrid premium PPAs in Texas. That -- we're talking a lot with the hyperscalers that we believe there will be the largest buyers of energy coming from BESS, whether it's stand-alone through mainly tolling agreement or whether [indiscernible] hybrid plans through similar PPAs and once we are closing in Chile. So it's a very exciting model, right, and data centers and AI is really hitting things up, right? But replying your question, we are working very hard in every market that we are in Europe, right? I think, we will eventually -- it's happening now in the U.K. It's the most mature market for BESS in Europe, right? But it's moving from ancillary services, frequent regulation and more to energy trading and tolling agreements for energy trend that's happening. Another thing that we are witnessing in every market is that before we -- in many markets, we're talking about 1 hour, 2 hour markets because we were approaching those markets and now approaching energy trading. We are now talking about 4, 5, 6, even 8 hours, right? So longer duration storage, right? We are very active in Germany, Poland, even in Spain. Even if some inputs are missing, we believe it's going to happen, right? And you are now looking at some M&A activity. Italy, things are getting tough for PV, but it remains, I think, very, very bright for storage. So this -- the main markets where we are, the main markets that we know well, and we will try to give more visibility on every market in every quarter.

Okay. Thank you. Please, next question from Kempen, Paul Chevron.

A bit of a conceptual question. Back in 2021, we limited [indiscernible] targets, which found out to be unachievable and which caused low confidence in space. What would you say to someone saying that, right now you are getting maybe a little bit too bullish on storage with [indiscernible] doubling the capacity of the project...

Sorry, if you get me, I cannot really hear very well. Paul, sorry about that. Ruben...

No, no. Me neither. Me neither. Okay.

I think, I can -- Paul, can you repeat the...

[indiscernible] presenting big CapEx target, which turned out to be unachievable and which caused lower confidence in space. So what will you say to someone saying that basically you are maybe here making the same mistake to some extent, and you are maybe a little bit too bullish with this large capacity target increase, which was considering that for most of the projects, you still have no financing PPA or CapEx secured.

Sorry, Paul, we -- sorry about that. We missed the first minute of your -- I catch up when you were saying something about unachievable targets or something, but I'm not sure, which market you're talking about.

I think David, he's asking if we are going to be able to reach the time line we are explaining regarding Oasis of Atacama.

Well, I'm not sure. We're obviously confident we can meet the -- and I think we have proven we have been very transparent. We're giving a lot of visibility. I think, first, obviously, we need to go step by step. Now we have [ Quillagua ], the first 2 phases, right? The first phase will be again operational at the end of this year. I think there is a slide here, right? The first Phase 3, we have already started construction, right? We have secured all the materials. In a matter of months, we'll be ongoing in Phase 4 as well. And well, Phase 5 is like 1 year behind. About the new projects. Obviously, the key things are closing the PPAs. And I think -- I don't know if it was -- I mean, the sooner we secure the PPAs in the long term, I think the better so we can secure these pipeline as it is, right? Again, we believe it's -- we know it's a high concentration in one particular place. But we have already done that in Spain before. We have been able to rotate some of the projects, and I think we will follow the same strategy in Chile, eventually.

Okay. Thank you very much. And last question from Mediobanca, Alessandro [indiscernible].

I wanted to know if you can provide the split of the EUR 128 million that you paid for the assets in Chile for the portion under operation, the portion ready to build and the portion under development? So the split between the 3 areas.

Thank you, Daniel. I think there is no -- question simple. There is no split. We have considered everything as a whole, right? It's -- again, what we are buying is an operational plan of 77 megawatts, but I don't think this is a lion's share of the deal -- the lion's share of the deal. And the most important thing is that we have an operational project of -- with an interconnection line of 1 gigawatt, right? And this is already built, energized and operational. So it's something similar, more similar to what we have in [ Quillagua ], right. It's an existing plan that we can easily expand, and the first 500 are ready to build, and we can commit with very little uncertainties, right? So it has nothing to do with the new project where you need to build a new interconnection line, new substations. And I think it's the key thing about this project. It's in the perfect location, the best location in Chile, but it's very easily adjustable to the new animal we want to create PV BESS,right? Daniel, maybe you wanted to add something?

No, no. I was going to just mention that.

Okay. So we have finished. So thank you very much for attending this conference call. If you have further questions, please contact the Investor Relations team, okay? So thank you very much.

Thank you. Thank you very much.

Have a good day.