Iberdrola, S.A. (IBE) Earnings Call Transcript & Summary

[Foreign Language] Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2020 Capital Markets Day in which we have the pleasure of sharing with you our plans for the period to the end of 2025 and even some of our plans beyond that. Secondly, we hope that you, your families, friends and colleagues are all safe and keeping good health during this global pandemic. Today's agenda has already been shared with all of you. But to recap, firstly, we will begin with an overview of the energy context and a detailed description of our operational and financial targets; afterwards, the business positioning; and finally, the financial details and the closing remarks given by the senior executive team that we usually have with us: our Chairman and CEO, Mr. Ignacio Galan; Mr. Francisco Martinez Corcoles, Business CEO; and finally, our CFO, Pepe Sáinz. Following these 3 presentations and after a 5 minutes break, we will move from the -- to the Q&A session. I would also like to highlight that we are only going to take questions submitted via the web. So please ask your questions only through our web page, www.iberdrola.com. Additionally, it is a pleasure for me to introduce you to a small selection of our younger, multinational, committed and experienced management team that we have with us today from various location across the group. Some of them physically near to us and others virtually as a consequence of the travel restrictions and compulsory social distancing that we must adhere to in these difficult times. Anyway, that is enough from me. I hope that you find the presentation to be useful and informative. Now without further ado, I would like to give the floor to our Chairman and CEO, Mr. Ignacio Galan. Thank you very much again. Please, Mr. Galan.

Good morning, and thank you very much for attending this Capital Market Day. We'll have liked to meet you in London as usually to maximize personal interaction, but this is not possible in the current circumstances. We have organized this event virtually trying to maintain the same level of transparency and to give you the opportunity to ask as many questions as you like. Today, we present Iberdrola's current position and prospects in the short, medium and long term, updating our target for 2022, giving you detailed information about our outlook over 2025 and sharing our vision for the next decade up to 2030. As Ignacio Cuenca said, we have structured this Capital Market Day in 3 different presentation. Firstly, I'll give you an overview of the energy context and describe our operation and financial target, in other words, what we are going to do. Then Paco Martinez Corcoles will explain our operational capabilities to reach those targets. That is how we will do it. And finally, Pepe Sáinz will provide all the financial details of the plan to maintain our strong balance sheet, in other words, how we will finance it. After my closing remarks, we will move to the usual Q&A session. We have also with us connected already, as Ignacio mentioned, to answer any question the 3 global business directors, the Head of Control, the CEOs of our main subsidiaries and other members of our management teams, as is usual in our Capital Market Day. The industry is reaching a real turning point. The contention of the urgency to fight climate change is already almost unanimous. And all the analysts show that transforming the energy industry to electrify energy usage is most efficient way to decarbonize the economies. This will lead to a dramatic increase in investment in clean electrification to change the way we produce and consume energy, and it will also constitute a unique opportunity to accelerate economic recovery and job creation after the pandemic. In this context, we need energy group with the commitment, the skill, the technology and the financial strength to lead this process. Iberdrola's track record over the last 2 decades proves that we are one of those companies. Back in 2001, we identified the building blocks for our model, a strong belief in social market economy and a proactive contribution to sustainable development following the same principle that 10 years later defined United Nations Sustainable Development Goals. Today, these goals are fully integrated in Iberdrola's strategy in our corporate governance system. Following this principle for the last 20 years, Iberdrola has been anticipating and shaping the energy transition; investing strongly in cleaner and more reliable power systems based on renewable networks and storage; closing polluting generation plants and concentrating our asset portfolio in our core businesses to produce, distribute and sell electricity and related services; also maintaining a constant commitment to efficiency in our operation and increasing our agility in decision-making and execution; and taking an innovative approach to technology, customer relation and energy policy to capture the acceleration of change in the industry. Over time, following this business model, we have had the courage to implement different energy solutions, often against general trends but always looking for the effectiveness and efficiency. In renewables, for example, we firstly bet on hydro, onshore wind and hydro pump storage and then invested as well in other technologies like solar, offshore wind and batteries as they become competitive energy solutions. In terms of geographies, starting as a company fully concentrated in Spain, we implemented a deep internalization strategy in areas with attractive rating and ambitious climate policies like U.K. and United States and then expanding to new geographies in Europe and other continents, always with quick and successful integration process, thanks to our friendly approach to mergers. In terms of financing, Iberdrola growth history has been based on conservative policies preserving financial strength through cash flow generation and efficient product liability management, ensuring open access to different market and structures and leading development of financial products such as green bonds. The outcome for these 20 years is the largest and a stronger group that has created sustainable value for stakeholders. As shown by our environmental, social and governance metrics like investment in renewable energy, reduction of emission, measure to promote diversity and equality, the increase in training hours for our employees or job creation either in the company or in our supply chains, always with fluent relation with trade unions. And we have demonstrated a transforming Iberdrola into a greener and more sustainable company was also the best way to create shareholders' value, multiplying our size by 6x and our result almost by 5x, delivering a total shareholder return of 350% since 2001 and becoming 1 of the 3 largest utilities worldwide, a global diverse group based on regulated and renewable business with 80% are in A-rating countries. But as I said, Iberdrola 20-year journey has also placed us in a unique position to accelerate growth in the current energy scenario. Today, the need for decarbonization is more pressing than ever. Only in the last month, we have suffered extreme weather event, fires like in California, massive floods in Southeast of Spain or heavy storm in Scotland. Policymakers all over the world are taking several actions to face this challenge also in response to the increase in social pressure. At present, countries that consume more than 50% of world energy have already set net 0 emission goals for 2050. This increase in ambition is in line with the improvement in efficiency and competitiveness of clean technologies like wind, solar or batteries that have reduced costs by 80% in the last 10 years and with the demands of customers who are clearly pressing the preference for clean, sustainable, affordable and smart energy solution. These factors will drive a very relevant transformation of the energy landscape in the coming decades. According to all reset bodies like the International Energy Agency, the only way to supply all the world's energy requirement and reach emission reduction targets is a very significant increase in the share of electricity as a percentage of total energy. In fact, electricity demand is expected to double by 2050, contributing to close 40% on energy demand by this year. Higher energy efficiency resulting from the substitution of fossil fuels with renewables will make this huge increase in electricity use compatible with a 10% decrease in fuel energy consumption and with a 70% fall of CO2 emission by 2050. In this new context, we require an unprecedented acceleration of investment reaching $2.7 trillion per annum in 2030. This means that in just 10 years, we will need to multiply by 3x the current annual investment in electricity generation and storage to emission and distribution if we want to supply the new demand for energy sectors. In transport, electric vehicles will continue increasing market share as battery costs keep declining and new charging fluctuates bill, multiplying power consumption in this sector by 15x in 2050. In building, the electrification of cooling and heating will boost electricity demand, partly offset by new energy efficiency measures. All in all, demand in building is expected to increase by more than 50% by 2050. Finally, industrial consumption will also go through a deep transformation, mainly to electrified processes that currently use fossil fuels. In addition, other processes will be decarbonized through new technical solutions like green hydrogen. Powering all this demand will require to multiply renewable capacity by 2.5x in just 10 years to reach 7,000 gigawatts. Out of the 4,000 new gigawatts needed, 2,000 gigawatts will be through thermal and nuclear plants that will close over the decade. This amount, to give you a number, is equivalent to the current total capacity in the United States and the European Union combined. On top of this, 2,200 gigawatts will be needed to cover the electrification of new users. This trend will continue in following decades with renewable capacity increasing by around 4,000 gigawatts, even 10 years, reaching 15,000 gigawatts by 2050. By technologies, solar and wind will contribute 90% of the new capacity addition by 2030. Offshore wind will show the strongest growth rates with installed capacity multiplied by 7x. Solar PV will multiply by 4x and onshore wind by 3. This acceleration of renewable investment will be common across all geographies and very especially in all this in which Iberdrola is present. For instance, offshore wind capacity is expected to rise by 50 gigawatts in the next 10 years in U.K., continental Europe and United States. All in all, the potential growth opportunity for Iberdrola is enormous, just if we aim to maintain our current share in each of these market, which is today from 5% to 15% approximately. Bringing all these renewable energy consumption centers will increase very heavily the current investment levels in distribution and transmission networks as well. Average global investment will be need to increase by 60% to $430 billion per annum in the next decade. It will multiply by 3x to more than $800 billion per year from 2030 to 2040. This will be experienced across all geographies due to a combination of new demand, the need to integrate renewable capacity, new interconnection, network refinement, smart grids and storage. Finally, electrification together with new products and services linked to this process will increase the value of access to industrial and residential customers, creating also opportunities in energy usage for which direct electrification is not technically feasible such as certain industrial processes and heavy-duty transport, which together represents 16% of final European energy demand. Over the last month, we have seen several administration taking specific action to support the transition from grid to green hydrogen like in European Union, which published a new hydrogen strategy targeting 40 gigawatts of electrolyzers by 2030; or in Spain, where the government approved hydrogen road map targeting 4 gigawatts by 2030. The production of green hydrogen will also be a very large source of new demand for renewable energy. Producing all the hydrogen currently required for industrial processes through electrolysis will mean an additional renewable energy demand of 3,000 terawatt hours per annum, equivalent to today's total electricity consumption in Europe. Finally, decarbonization through renewables will multiply the requirement efficient storage capacity, both hydro pump and storage and batteries, in order to increase system flexibility and security of supply. Only in Europe, more than 40,000 megawatts will be added in the next 10 to 15 years. Then in context, I'll just describe what makes Iberdrola business model even more suitable for the years to come. After having invested EUR 120 million in 2 decades, today Iberdrola is in the best position to face this new stage of investment acceleration across the whole electricity value chain, and we have seen we are taking about -- we are talking about multiplying renewable capacity towards electrification and decarbonization, investing more in transmission and distribution networks to increase resiliency, connect new renewables and integrate more complex system, building more storage capacity to accommodate supply and demand and optimize energy resources and providing more energy solutions to customers who will push this revolution looking for competitiveness, efficiency and sustainability. Becoming good in this scenario will only be possible for companies focused on countries that combine a clear commitment to decarbonization with the credibility and the strong credit rating needed to attract investment in very competitive environment, companies that have already made energy transition a key element of their purpose and values beyond opportunistic approaches and have the capacity to make incremental investment and maintain efficiency in operation. And we are also talking about companies with experience and well-prepared teams with a track record of execution and delivery on time and budget and sufficient management flexibility to construct, review and optimize their portfolios preserving a strategic focus and final sustainability and that innovative every day with the new solutions to anticipate customers' need and improve competitiveness. Iberdrola has been getting ready for this opportunity over the last 2 decades. We are fully prepared to take part of this energy paradigm with a not new -- that is not new for us as selecting investment and maintaining our financial strength to deliver growth and sustainable dividends to our shareholders and to act as an engine for recovery promoting industrialization, creating economic activity, boosting productivity, generating new jobs and delivering sustainable value for all our stakeholders. We have the team, the know-how and proven expertise of execution. All the geographies in which we are present are showing day after day a clear commitment to this energy transition to give you just a few examples. European Union has increased ambitions of the Green Deal through the mobilization of 37% of the total EUR 750 billion from the Next Generation EU funds to put in place the most powerful decarbonization agenda, even seen targeting a 55% reduction in emission by 2030 and carbon neutral by 2050. The U.K. has reaffirmed its net zero goal by 2050, taking steps to become the world leader in offshore wind. And more and more, United States continue to upgrade their renewable energy target for the coming years. Energy policy is already there. Now it's time for execution. And only those who have been able -- have been already working for years ahead of this moment will be ready to take this opportunity. In our case, in just 2 years, we have increased by 75% our renewable pipeline to reach 70,000 megawatts worldwide. In particular, our offshore wind pipeline has multiplied by almost 2 up to 20 gigawatts in United States, U.K., Germany, France, Japan or Sweden. As well, the best portfolio of projects that will be maturing over the next 10 years, starting with our American, French and German project and then adding other geographies. This will allow us to maximize investment opportunities and accommodate a rational use of technological, human and financial resources. We also have more than 15,000 megawatts of onshore wind pipeline and over 30,000 megawatts of solar photovoltaic located in most stable geographies in terms of energy resources and policy support mechanism. We are talking about a specific project, not just dreams or pieces of paper. 7,000 megawatts of this capacity are already under construction, and we expect to continue maturing new projects in a similar pace in the future. And over the last year, our track record shows our ability to commission 5,000 megawatts per annum. Our plans considered that less than 50% of our current pipeline will start operation in 2025, a pipeline that for sure will also continue growing in the coming years. In networks, our footprint combines markets with strong growth in demand like Brazil with others with significant investment requirement to enhance transmission capacity and reliability like United States or to reinforce and digitalize the grid like United States -- U.K. or Spain. All of them also present big opportunities linked to new electricity usage in cooling and heating or electric mobility. In terms of customer base, several years ago, we anticipated the value of access to customers to sell new products and services, hedge energy position and find new routes to market. On top of this, electrification is adding a new value source to Iberdrola's customer base of more than 40 million contract at present. In our consolidated market of Spain and U.K. as well as the fast-growing areas of Portugal, Italy or France, where we have built a significant footprint in the recent years, and new markets like Germany, Brazil or United States, for each of them, we are building different channels, including powerful digital platforms and a wide competitive product portfolio aimed at meeting of our customer needs from pure energy to value-added services like mobility or smart solar or the residential customers, other energy solution for industrial and commercial customers like on-site solar energy efficiency or more recently, green hydrogen in sectors for which solution based on electricity are not technically feasible like steel, glass, ammonia-based fertilizers or heavy transport. Given the ambition, energy policy targets and the increased environmental awareness of industrial customers, we are working in different initiatives on top of the addition of new renewable capacity for electrolysis. We had contracts in advanced state to support the creation and development of new manufacturers of electrolysis to avoid bottlenecks in their supply chains with the same rationale as with Gamesa 2 decades ago. We expect to give you more details shortly. And we are signing industrial alliance to accelerate the use of hydrogen in different manufacturing process like we recently announced with Fertiberia. Based on this energy landscape and building on the strength of our business model, today we are presenting you an ambitious but realistic outlook for the coming years. We have updated our financial projection with macro and energy assumption, then taking into account the economic impact of the COVID-19, especially in the short and medium term. In particular, our energy assumption reflects lower demand and commodity prices with the exception of the carbon emissions. This impact power prices mainly between '20 and '22 with a more stable evolution from '23 to '25. In terms of currencies, we are now projecting lower exchange rates of dollar, pound and real against euro. And we are also forecasting lower interest rate, which will remain at current levels to 2022 and then increase slightly. Again in this scenario, we are implementing several management measures to avoid negative impact in our results. As you already know, we have accelerated our investment, increasing them by around 10% in organic terms to 2022 or by 35% including corporate transaction, PNM Resources in the United States for EUR 7 billion and the smaller deal announced in Australia, France, Japan and Sweden. All in all, investment will reach EUR 50 billion from 2018 to 2022. In terms of operating efficiency, as we have reported over the last quarters, the company is making an extra effort in all activities. This is allowing us to increase our saving target by 33%, reaching EUR 1.6 billion in the last 5 years. Looking at the impact of this scenario on group net profit for 2022. We are forecasting that exchange rate, new market condition and lower return to regulated networks driven by lower interest rate will have a combined negative impact of EUR 100 million, which will be more than offset by the positive effect of interest rate on our financial expenses as well as the management measure implemented, high investment in cost control for a total net positive impact of EUR 150 million. Once we add the net profit from PNM Resources transaction, we are increasing our 2022 net profit guidance to between EUR 4 billion and EUR 4.2 billion from EUR 3.7 billion to EUR 3.9 billion that was the previous one, which allow us to maintain our shareholder remuneration policy with our dividend payout ratio between 65%, 75% and floor of EUR 0.40 per share until 2022. Focusing now on the outlook for the period 2020 to 2025. We will continue accelerating our investment to reach EUR 75 billion over the next 6 years. Within that upward trend, they will lead us to almost double the average EUR 7 billion invested between 2017 and 2019 to reach EUR 13 billion per annum in the last 3 years of the plan. 75% of this investment will be allocated to growth activities, maximizing the opportunity from the investment cycle we are entering. And these figures are based on projects already identified. Out of the EUR 68 billion that will be dedicated to organic investment, 70% is secure. With this presentation [ reaching ] 90% in the case of networks, thanks to regulatory frameworks already in place, which reflect higher investment need to support electrification of the economy. And in renewables, 60% of the investment are already secured, too. These are specific projects. Of this -- of the 30 gigawatts of the plan put in service, 7 are already under construction, as I mentioned before. And the remaining 23 represent 1/3 of our total pipeline. As I mentioned, we expect to commission 5 gigawatt per annum, in line with the last year. By business, renewable will contribute 51% of the total organic investment, more than Europe and United States, consolidating the position of this business as a group first investment destination. Network investment will also increase in the geographies, mainly in United States and Brazil, reaching 40% of the total. By geography, let me highlight the very significant increase in the contribution of the United States and Continental Europe led by Iberdrola Energia Internacional. By 2025, we expect to allocate to this new platform as much investment as in U.K. As a result, the total share of investment in A-rating countries will continue to increase, reaching 83% over the period. The plan will lead us to double our renewable capacity [ in CCR ] up to 60 gigawatts by 2025. And to show you that our sustainable growth will continue beyond this period, we have already identified projects for 11,000 megawatts that will be under construction by 2025. On top of renewable, as you know, we have 20 gigawatts of other generation technologies for a total installed capacity of more than 80,000 megawatts. In the coming 5 years, we will split our renewable investment almost evenly among onshore wind, offshore wind and solar PV. As you know, offshore wind required higher investment per megawatt installed, but this technology also delivers 5x the EBITDA per megawatt of solar and 3x the EBITDA per megawatt of onshore wind. Over the period, we will add new offshore wind facilities in France, Saint-Brieuc, which is in construction; United States, Vineyard Wind and Park City Wind; Germany, Baltic Eagle. And on top of East Anglia ONE in U.K., we become operational already in 2020 for a total of 3 gigawatt of capacity. By geographies, the largest contributor to this growth will be Spain and the United States. And Iberdrola Energia Internacional, we will multiply its capacity by 8x, contributing to 7,000 new megawatt for 25% of the total group capacity's additions and become the third largest area by installed power in the group. Again, the group projection for this new growth platform are based on a specific project. In solar, more in Portugal, Australia and Italy; in onshore wind, mainly Australia and France; in the case of offshore wind, France and Germany, which is now in construction. Regarding networks, our regulated asset will increase by 50%, reaching EUR 47 billion by 2025 within 3 main growth drivers: organic investment in all our markets, the regulated asset base of PNM Resources in United States and additional transmission investment outside our franchise areas, which are growing quickly in countries like Brazil, United States, which will reach EUR 4 billion by 2025. Thanks to the integration of PNM Resources, the new interconnection line with Canada and other investment into transmission and distribution, United States will become the group largest geography with around 40% of total assets -- or regulated asset by 2025, followed by Spain with 23%. And 83% of the total regulated assets will be in A-rated countries by 2025. Our portfolio of contracts will also increase by 40% to 60 million, driven mainly by growth in European countries. And the addition of new product and energy solutions will double to 24 million. This will place Iberdrola in the best position in the context of increasing electrification and more customer productivity. By geographies, Iberdrola Energia Internacional will reach a similar number of contracts to the U.K. where we also expect to increase our energy services. The rest of geographies will grow more moderately, due in a relative way to the growth -- due to the growth of Iberdrola Energia Internacional. As mentioned a few days ago, we announced an alliance with one of the largest producer of fertilizers in Europe, Fertiberia, which will be our first investment in green hydrogen, resulting in 600 megawatt of electrolysis in production, with a production of 15,000 tons of green hydrogen by 2025. This plan will require financial reported scheme that, in our view, are more than justified at this project because this project will accelerate the competitiveness of green hydrogen, develop new industrial activities across the hydrogen value chains and create thousands of qualified jobs in Europe. Following our 20-year model, these ambitious growth plans are combined with an extra effort in efficiency and cost saving, as Paco Martinez Corcoles will explain in detail later on. We expect accumulating savings of EUR 1.5 billion from 2020 to 2025. As a result of the ongoing improvements, our net operating expenses/grower margin ratio will fall below 25% by 2025. Out of this total, we expect EUR 1 billion to materialize between '23 and '25. Combining all these factors, EBITDA will increase by EUR 5 billion to reach around EUR 15 billion in 2025, which is 6% to 7% annual growth rate from 2019. 80% of the operating result will continue to come from networks and renewable by '25. Investment in green energy will increase the contribution of renewables by more than 5 points over the period to exceed 30%. Generation supply is expected to maintain a contribution of above 20%, mainly thanks to the new retail activities in Europe. By currency, the contribution of euro and dollar to total EBITDA will increase with more than 80% of EBITDA coming from A-rating countries. Net profit will reach around EUR 5 billion in 2025, increasing by EUR 1.5 billion for a 6% to 7% annual increase as well, maintaining our commitment with financial solidity and strong rating levels, as Pepe Sáinz will detail later on. In terms of dividend, we reaffirm our target to increase shareholder remuneration in line with results, which allow us to maintain our shareholder remuneration policy with a dividend payout ratio between 65% and 75%. According to our result estimate, this will lead to a dividend per share of approximately EUR 0.53, EUR 0.56 by 2025. In addition, we'll have an increasing floor of EUR 0.40 per share up to 2022 and then EUR 0.44 per share afterwards. We will also preserve the optionality for our shareholders through the Iberdrola Retribución Flexible program, including share buyback. I started this presentation defining social market economy and the United Nations 2030 agenda as the building block of our model. The expected impact of our outlook for 2025 in all our stakeholders show our commitment to social dividend is not just limited to a nice work. So far, today, I have been describing what this plan will mean for our shareholders. But we always take our decision thinking in our famous triangle, looking for a balanced outcome that benefits employees and society as well. For this reason, we have developed an environmental, social and governance plan with a specific ratified target in a wide range of indicators. Today, we reaffirm our determination to become an active player in the transformation of the current social economic model and leave a better world to future generation. In environmental terms, apart from our emission reduction goal we will explain later by 2025, we will contribute for reforestation by planting 1 million trees with ambition to reach 20 million by 2030. We'll also maintain or increase our current training hours per employee, which today is 4x above the European average; increase the number of jobs we support globally from 400,000 to 500,000 in just this year, think our investment and purchases; contribute further to gender quality, increasing the share of women in leadership position and having no gender pay gap, an achievement we already reached in 2019; expand the number of beneficiaries of electricity for all program from 14 million people to 25 million. We also determined we have at least 75% of suppliers with sustainable policies. This plan also reinforced our leadership in terms of decarbonization. Our carbon emission per kilowatt hour, which are already 2/3 below European average, will continue decreasing to reach 0 emission in Europe already by 2030, becoming a key actor for the success of Europe's climate ambition from 2030 to 2050. Let me repeat it. This plan will lead us to zero emission in Europe by 2030. Globally, we expect to reach less than 50 grams per kilowatt hour from our current 110 grams. This is significantly below the targets of our main competitor for 2030. Finally, after the measures taken in the last year, Iberdrola is positioned at the forefront of corporate governance and compliance, as recognized by various bodies. But this does not lead us to complacency. Instead, I increased our commitment to remain [ as smart as is ] in this field as well. Now I will pass the floor to Paco Martinez Corcoles, the business CEO, to explain more in detail how we are going to make it. Thank you.

Thank you, Chairman. Good morning. During my presentation, I'm going to detail our view about the technological evolution impacting the electricity system, the competitive advantages of the company and our key actions to benefit from the growth opportunities we have ahead. In terms of technology, the evolution will be driven by the decarbonization as the main challenge we have in the system. All renewable technologies will significantly increase their presence in the electricity sector, requiring a large amount of investments on networks to integrate their energy and on storage to absorb their output variations. Thanks to this expansion of renewables, the electricity becomes the most cost-effective energy carrier to remove the emission from the majority of the demand, postponing the decarbonization of the most difficult sectors to the availability of other solutions different from electricity. Renewables technologies are already competitive, but a further reduction of cost is expected during the decade, driven by the huge growth they will register. This massive growth will impact the electricity system in which renewal will be the main source of energy with an increasing need for demand side response and storage for flexibility purposes. Regarding photovoltaic, the technology evolution will be driven by the improvement of efficiency in the modules, a further reduction of material needs and a performance increase in the production lines. As a result, we expect an efficiency improvement of 25% and an increase of installed capacity of 4x. In terms of onshore wind, we expect improvements derived from the larger size and the weight reduction of the turbines as well as the progression of modular components and digitization. This evolution will allow an efficiency improvement of 14% and an increase of installed capacity of 3x. In offshore wind, the technology evolution will be driven by the economies of scale together with an increase of standard and modular components as well as innovation in construction and operation. As a result, we expect an efficiency improvement of 9% and an increase of installed capacity of 7x. The increase in renewables technologies and the electrification of the economy will imply a strong increase in networks as well given the unique role as integrators of the generation and supply sides. We also expect a more active role of the demand in the system as its flexibility needs will increase a long time. More storage will also be needed to integrate the increasing amount of renewable energy. In this regard, we expect a large technology evolution of the batteries driven by the strong increase of electric vehicles that will imply a cost reduction above 50% by 2050. Given their size and modularity, batteries will increase their role in the electricity system. However, the efficiency and capacity to store large amount of energy makes the pumped hydro the most cost-efficient solution for providing flexibility, and we expect this will be the preferred alternative where possible. The expected cost reduction of green hydrogen would enable its storage role in the electricity system, but our view is that this will be a negligible solution in most of the markets as its small efficiency will hinder to be a competitive alternative. Given its ability to integrate renewables, the electricity is and will be the most cost-effective way of decarbonizing the economy. As European Commission has stated in its strategy, the principle of energy efficiency first should guide the decarbonization. In this regard, the electric appliances, the electric vehicle and electric heat pump have a clear competitive advantage against other alternatives given their much larger performance. Therefore, we expect an increasing role of electricity for decarbonizing light transport and residential heat, which could also be spread to heavy-duty transport and some processes of the industry in the medium term. There are some niche areas in which electricity is not decarbonizing alternative or competitive. For this consumption, which only accounts for 16% of the demand, the green hydrogen is expected to be the main solution for reducing emissions. Based on 3 drivers, reduction of electricity costs, lower CapEx and larger electrolyzer performance, we expect the cost of green hydrogen will be reduced by 2030. As a way of improving technology and reducing costs, decarbonization of the hydrogen used as feedstock in the industry should be the priority. Now moving on to Iberdrola's competitive advantages. I'm going to detail them around 3 main topics: diversification, experience and size and customers. Regarding diversification, Iberdrola counts on a diversified model in all scopes, business, geography, technology and route to market. In terms of business, the company has always tried to adapt its progress to the new needs and trends of the industry, which have resulted in potential growth opportunities in several aspects of the 3 businesses, giving us a broader flexibility to select the most profitable ways of growth and a more diversified source of results. As of geography, Iberdrola counts on a diversified position across the 3 businesses at country level to increase stability and to maximize flexibility and synergies. Regarding technology, the company has always bet for exploring the new needs of the industry, which has resulted in a healthy position in terms of renewables with a balanced mix of the different technologies and customer services, being able to offer a broad range of products. As a consequence, Iberdrola is able to propose an integrated and sustainable model. For instance, we benefit from the complementarity of wind and solar production, offering renewables PPAs to customers with base load needs. Lastly, the route-to-market approach, which is essential to sustain the growth. As shown in the graph, Iberdrola has multiple ways of developing projects and making them feasible. This allows us to find the most profitable way for growing in power plants but also a flexible model to keep investing when a certain solution is no longer valid. For instance, it is typical to see huge competition in renewable auctions even from nonincumbent players and a more reduced and selected playing field for PPAs contracts. In terms of experience, Iberdrola has developed a strong management and execution capacity, which is essential to control the delivery in periods of sustained growth. There are 3 levers we have developed in this regard: the identification of core activities in each business to preserve know-how and outsource low-value services; an effective combination of global model with local capabilities; a permanent focus on customer and ESG. Regarding renewables, we have identified the core activities we want to preserve in order to secure the delivery of the growth, especially in terms of development control, technical know-how and construction supervision. As of networks, the technology know-how is a key element of the value chain as well as the consistency and control of the operations. We have implemented global processes, systems and tools that are adapted to local characteristics and updated with any best practice the different teams find and share. In retail, Iberdrola takes care of the complete customer experience focusing on the product design and sales. Let me highlight our commitment to this area with particular measures to vulnerable -- cash for vulnerable customers and special effort on social collaborations. Another aspect in which the experience has a great impact on is the efficiency. Iberdrola is best in class in this regard. It has been developed along the years based on the early implementation of digital solution and the best practices exchange, which have a large effect on the central control dispatch, operation and maintenance of the assets. The third competitive advantage is our customer base. We believe that our customers are an essential element of the business, and we keep them at the center of our decisions. They provide a natural hedge for our generation, mitigating the risk from price variations. This is one of the reasons why Iberdrola continued growing in renewables, to balance our short position. This fact is also beneficial for the customers as many of them do not want to be exposed to electricity price changes and are willing to have fixed price contracts. For residential customers, Iberdrola's approach is to be the unique provider of their energy needs, offering customized products for heating and cooling, mobility, self-consumption or efficiency. This gives us the opportunity of fostering our customers' loyalty and getting more value from them. For industrial customers, Iberdrola offers an integrated model, which is composed of all the services needed. We can be the interface of the customer with the market, provide a renewable baseload PPA, thanks to our mix of renewable technologies, or help customers to decarbonize their energy consumption and processes by electrifying heat or producing green hydrogen. This is the case of the Puertollano project, our pioneer bid for decarbonizing the use of hydrogen as feedstock in the industrial process to obtain ammonia. Now moving on to our key actions for this strategic plan. We have identified 4: growth, as the world requires a massive increase in the electricity sector that will benefit our stakeholders, creating employment, local providers, training; acceleration to increase momentum and grow in line with the decarbonization progress; investment efficiency; and operating efficiency, both devoted to gain competitiveness to secure growth and results. Starting on growth in renewables. Iberdrola plans to invest EUR 34 billion in the period in all technologies and countries to increase our diversification and take advantage of the best opportunities. 90% of the investment is devoted to growth and 60% of the total is already secured. Let me highlight the strong bet of the company for offshore wind and for Iberdrola Energia Internacional, where our position in Australia, France, Germany, Italy, Portugal, Ireland and Greece has significantly increased with the integration of Aalto Power and Infigen, giving us 2 additional platforms of growth. These investments will enable the installation of almost 28 gigawatt of renewable capacity, half of it solar photovoltaic. In terms of geographies, Spain and international will be the main destinies of the new assets, followed by the United Kingdom. As a result, Iberdrola will almost account for 60 gigawatts of renewables by 2025, almost doubling our capacity in only 6 years, with a healthy mix in terms of technology and origin. Onshore will be the leading source with a weight over 40%, followed by hydro and solar. Spain will have more than 24 gigawatts installed, thanks to our strong presence in hydro, followed by U.S.A. and international. In order to secure this growth, Iberdrola accounts with one of the largest pipeline in the industry over 70 gigawatts of projects in different stages. Let me remark its high quality given the solid diversification in terms of technology and countries as well as maturity. The company has 7 gigawatts already under construction, as the Chairman mentioned, 25% of the total new capacity and over 15 gigawatts of projects in different phases of permitting process, adding around 10 gigawatt to the pipeline every year. You can see the complete detail by technology and country where solar and offshore have the main contribution as well as U.S.A. and international. Now regarding Iberdrola Energia Internacional, our plan considers an increase of capacity of almost 7 gigawatts, focused on Australia and Europe. Regarding our growth in solar photovoltaic, Iberdrola will install almost 14 gigawatt up to 2025. Close to 6 gigawatts will be put into service in the first 3 years, having already 2.7 gigawatts under construction. Spain will be the main destiny of the growth followed by international. The company will install almost 7 gigawatts of onshore wind, having close to 5 gigawatts already secured and more than 2 gigawatts under construction. The means by geography is well balanced, being international the region with the largest growth. In terms of offshore wind, Iberdrola will add 2.3 gigawatt of new capacity up to 2025, reaching almost 4 gigawatts installed at the end of the plan. Two projects are already under construction, Saint-Brieuc and Baltic Eagle. And the other 2 are awarded and with secure PPA, Vineyard and Park City. Moving on to networks. Iberdrola will invest EUR 27 billion during the period. 60% of the investment will be devoted to grow our asset base, whereas 90% of the total investment is secured under current regulatory frameworks. USA will be the main destiny of the investment, having the other 3 countries the similar way. Most of it therefore will be devoted to regulated transmission and distribution, but we also plan to invest on competitive transmission to enlarge our opportunities of growth. This strong investment will allow 55% increase of our asset base, which will exceed EUR 47 billion by 2025. The niche of the asset base is in line with the investment, being the U.S. 40%. As shown in the graph, the evolution of the asset base will be mainly driven by the investments in regulated distribution and transmission, in competitive transmission and in PNM, partially offset by the regulatory amortization of assets during the period. Let me highlight the stable regulatory frameworks that Iberdrola concerned with almost 80% of them secured up to 2022, especially in Spain, Brazil and U.K. In competitive transmission, we expect growth opportunities in different countries. We are already developing effect in the U.S. and several projects from Brazilian auctions. We will analyze further options to see -- to this -- in these 2 countries and in new geographies where the company is present. Moving on to the Generation and Retail business, Iberdrola will invest EUR 6 billion during the plan, especially in the retail activities to increase our customer base. Spain will be the main destiny of the investments, followed by U.K., including the smart meter deployment, and International, 60% of the investment will be devoted to growth. During the period, the company will significantly increase the service to customers, reaching 40 million by 2025, 60% more than today. As I have already mentioned, Iberdrola is devoted to the growth of smart solution as they increase the loyalty of the customer, fulfill their needs and allow us to benefit from the rise of electricity consumption. We expect an increase of smart solutions of 11 million up to 2025, with a balanced mix between Spain, U.K. and the rest of the countries. Iberdrola is building strategic alliances with manufacturers and customers to reinforce our positioning and ensure our growth. Mobility has had a more active role in this regard given the more advanced stage of the industry, but we have also developed relevant projects in areas like solar or green hydrogen. Let me move now into the second key action, acceleration. We have enlarged the speed of our growth to benefit from the early movement and to gain momentum for the decarbonization progress. That is why Iberdrola's investments are increasing during the years, going from an average amount of EUR 7 billion per year in 2017 to 2019 to around EUR 13 billion per year in 2023, 2025. In terms of Renewables, therefore, has increased our installed capacity per year growing over 3x during the plan. Instead of an average installation of 1.6 gigawatt per year up to 2019, Iberdrola will put into service over 5 gigawatt per year from 2023 onwards. In terms of our regulated asset base and considering different effects, we expect a larger growth return in line with the investment required for the decarbonization. Regarding services to customers, we also expect a steady increase of our sales in smart solutions, especially on the ones concerning mobility and heating and cooling. I will comment now our key actions designed to increase our competitiveness. In investment efficiency, Iberdrola will continue improving the business process, especially the ones concerning development and construction. The largest use of standard designs, equipment and procedures will enable the capture of synergies along the life cycle, whereas economies of scale and technology evolution will also play a significant role to optimize investments. In terms of operating efficiency, we will maintain our effort on the early implementation of digital solutions to increase our remote activities and improve process. We also expect gains derived from economies of scale and asset optimization, thanks to the improvements on logistics, availability and standards. Let me conclude. Iberdrola is perfectly positioned to keep growing. Our pioneer [ bid ] for Renewables, smart network and solutions for our customers allows us to be in the right place at the right time. In Renewables, we have a high-quality pipeline of 70 gigawatts and investments of EUR 34 billion to increase our installed capacity by almost 30 gigawatts by 2025. Of that, close to half is secured and 7 gigawatts are already under construction. In Networks, we have stable regulatory framework and investments of EUR 27 billion up to 2025, which will enable an increase of our regulatory asset base of EUR 17 billion. In Retail, we will get 15 million services more in the period together with 600 megawatts of green hydrogen. This growth will result in a strong benefit for the society, creating wealth, high-quality employment and development of local industry and providers. Iberdrola counts on strong competitive advantages that will allow us to optimize the growth opportunities. We are well diversified in all scopes, business, geography, technology and route to market. These give us more stable results and a broader pipeline of opportunities to grow in all the businesses. Our experience and extended assets have developed a compelling management, execution and efficiency capacities that allow the company to be a reference in competitiveness and know-how as our track record of delivery shows. Iberdrola's customer base is key to growing the electricity system as it is a natural price hedge for our increasing renewable production, which will balance our share position in Generation, a source of results given the rise of consumption and the perfect platform to sell more added value products. Thank you very much for your attention.

Thank you, Paco, for providing us details how we will do this plan. And now Pepe will provide the financial detail plan. In other words, how we will finance it. Pepe?

Good morning to everybody. I hope everybody is doing fine and keeping healthy in this difficult situation. Following the Chairman and the CEO presentations about the future prospects of Iberdrola in this era of energy transition and great opportunities for the group, I will now explain how we are going to finance this plan, maintaining a strong financial profile and creating value for our shareholders, adding the "F" of financial performance to the concept of sustainability. So for the 2025 period, we will continue our sustainable financial strategy as we have proven in the last years with a sustainable growth path combined with a maintenance of a strong financial position along the plan with credit ratios in the BBB+, Baa1 levels, and with a green and sustainable financing, where we are leaders and will be at the core of our financing strategy. And at the same time, enabling a sustainable growing dividend policy, growing in line with the earnings per share with a 65%, 75% payout ratio with EUR 0.40 per share floor up to 22 and $0.44 per share up to 25. And as the Chairman has explained, given our earnings estimate, hopefully reaching an EPS range of EUR 0.53 to EUR 0.56 by 2025. Green financing is the way that suits best in our sustainable strategy. Our green financing framework is considered a best practice. Aligned with International Capital Markets Association, green bond principles and only including assets and activities eligible under the European Union taxonomy. Use of proceeds strict reporting, external verification and strict standards for the eligibility of activities together with a full alignment of the company's strategy are highly valued by ESG investors. Investors find in the use of proceeds approach the best way to measure the sustainable impact of their investments, comprehensive reporting, second-party opinion and external reporting guarantee, assurance and transparency. Our current asset base and investment plan focused in the energy transition allow the group to continue taking advantage of the green bond market. This allow us to increase the investor base and as a consequence, to reduce the cost of our debt. We estimate that green sustainable financing can save up to 15 basis points according to Citi reports, et cetera, and other investment banking reports. We estimate that 75% of our total investment plan will be considered sustainable, green under the EU taxonomy criteria. This percentage could potentially increase up to 81%, considering 2 more U.S. states, which will be in the trajectory to decarbonization by 2025. As of today, sustainable and green financing already in Iberdrola is up to EUR 22 billion, EUR 40 billion of green financing, mainly through bonds, and another EUR 8 billion of sustainable credit lines. Our proven financial track record supports the credibility of our commitment to sustainable financial strength. Our FFO over net debt ratio has been maintained above the credit rating agencies' 18% threshold, granting a BBB+ rating since the end of the financial crisis. Our asset rotation plan of EUR 3.5 billion for the period '18 to '22 has been exceeded, reaching EUR 4.6 billion. Regarding green financing, as I have explained, we are the world-leading private group in green bonds issued. In 2014, Iberdrola issued its first green bond, where funds proceeds were used to finance green projects. We were the first Spanish issuer of a green bond as well Spanish -- the first Spanish issuer of a green hybrid bond. Since then, Iberdrola has consolidated green financing following the group investment strategy. Our commitment with green financing goes beyond the holding level. And thus, our subsidiaries in the U.S. and Brazil have already been tapping this market. This has led the Iberdola group to become the world's biggest corporate issuer of green bonds. Our FX risk management strategy, both structurally and on a yearly coverage, has been proven effective protecting our solvency ratios and the group's yearly net income. A highly diversified source of funds allow us to continue reducing spreads and increase our average debt maturity. In 2020, we have signed new financing for more than EUR 5 billion through the lockdown. And recently, we have added another EUR 3 billion through an additional hybrid issue. And finally, we have maintained, through the past years, excellent liquidity levels, more than fulfilling rating agencies' requirements of 18 months' coverage of financial needs in stress scenarios. During the 2025 period, we will have EUR 94 billion as sources of funds to apply to CapEx and dividends. 67% of the plan needs will be covered by funds from operations, 19% will be additional debt, 8% hybrids and 1% tax equity structures, and the remaining 5% will be covered through asset rotation. 80% of our sources will be dedicated to investments, including 6% capitalized costs and 10% of assets under construction at the end of the plan that will deliver further growth and cash flows post '25. The remaining 20% will be dedicated to dividends. Working capital will have a slight positive impact. This growing investment cycle will be funded while maintaining financial discipline with a strong solvency ratios throughout the plan. Our net debt-to-EBITDA will be around 3.6, 3.7x. Our FFO over net debt will be between 21.5% and 22.4%. And our retained cash flow over net debt will move around 20%. Although our ratio calculations differ from those of the rating agencies, these ratios, in our opinion, are consistent with the 18% threshold that rating agencies require to maintain a BBB+, Baa1 ratio. As you can see in the slide, during the 2019, 2025 period, net debt increases 47% to EUR 56 billion, an average of 6.6% per year, driven by the significant investment efforts that have been already explained. In the same period, FFO increases more than the debt, 51%, reaching an average increase of 7.1%, or 0.5 percentage points more than debt, guaranteeing an adequate debt coverage. You will see that in 2021, we have a big growth, a peak in our investments plan, and this is due to the consolidation of PNM. Our asset rotation plan has a flexible approach, depending on investment opportunities and financial ratios. We have already completed, as I mentioned, EUR 4.6 billion divestments, exceeding our EUR 3.5 billion target for the period '18 to '22. And for the '21, '25 period, we have introduced a new target of EUR 3.2 billion, equivalent to just 4% of the EUR 75 billion total investment of the plan. We have, in principle, set the new asset rotation program in EUR 3.2 billion, but it will also depend on our investment opportunities to increase or decrease it. Divestments will, as always, comply with the requirements that we are asking, either low strategic fit, low contribution or minority stakes. We will maintain moderate financial needs throughout the plan, thanks to a diversified debt maturity profile without concentration of maturities in a particular period and our strong cash flow generation that helps. In 2020, despite the COVID lockdown, as I mentioned, Iberdrola Group has raised close to EUR 9 billion of funding in different markets, more than the needs, as you can see, for '21, '22, '23 and '24. Life of the regulatory cycles is around 5 years. An average life of debt of over 6.5 years warranties the repricing of the company's debt, taking into account the regulatory changes and adapting our cost of debt to a new interest rate environment while taking advantage of the yield curve. Our financial needs will be financed mainly from the holding, although USA and Brazil will also rise financing in their local markets. Our strong diversification of financial sources allows Iberdola plenty of access to different lenders and markets. Currently, the bond market is 62% of our total sources, including 22% of green bonds that will continue to grow. Current weight of the bank market is 12%, including 1% of green loans, giving us the opportunity to increase this kind of financing if required with our strong and diversified group of relationship banks. We keep a stable commercial paper exposure of around 8%, supranational lenders have another 12% share, and structured finance represents 6%. Eurobond will still be our main source of financing, maintaining the target to have a complete secondary curve with 2 benchmark references each year. Local bond markets in the U.S. and Brazil will also be important. Supranational lenders will continue supporting our investment plans with Iberdrola being one of their most important partners, especially with the European Investment Bank and several development banks, including those of Spain and Brazil. The good news is that more and more development banks in different countries will be active in funding sustainable investments, and we will collaborate with them to get the funding. Also, the hybrid market will have an important role given that our low outstanding balance allow us to increase its share along the plan. Let me stress that in our recent 3 billion hybrid issuance, investor demand was more than EUR 7 billion, proving again the strong interest from fixed income investors in Iberdrola paper. We use green financing for investments in Renewables and Network, investments for clean energy. As you can see on the slide, currently, 26% of our sources of financing is green, and this percentage will increase to 45% in '25, as most of our expected financing during this period will be green or sustainable. Our average cost of net debt will continue to decrease during the plan, around 3% in '25, despite the increasing weight of debt in Brazilian reals and U.S. dollars. We're improving the financial cost close to 80 basis points versus our previous plan due to lower average forecasted interest rates. Analyzing the gross cost of debt by currencies, our euro cost will fall to 1.5% by 2025. Our U.S. dollar will maintain more or less its cost in the range of 3.5%, 3.6% compared to the 4.3% area in previous plan. In Sterling, our cost, which is currently around 2.9%, will fall to levels of around 2.3% in '22 and 1.8% in '25. And in Brazilian reals, our cost was 6.9% in 2019. Cost expected for this year is around 4.7%. It will increase to levels of around 6.8% in '25 due to higher interest rate and inflation rates in Brazil that we are expecting. We expect also to continue actively managing our liquidity requirements, keeping 15 -- more than EUR 50 billion of liquidity, maintaining 18 months coverage of financial needs under stress scenarios, complying with the demanding requirements from rating agencies. We will optimize our liquidity position, trying to reduce our cash balances, which are very expensive nowadays, as you know, and extending the maturity of our credit lines with a target of minimizing the overall liquidity cost. Our green liquidity and benefits from being part of the Iberdrola Group has a coverage of 15 months. And Neoenergia that has its own liquidity policy has -- covers 12 months of financing needs according to the rating agencies' requirements during the period. All new credit lines will be based on KPIs, achieving 100% of our sustainable lines at the end of the plan. Our financial model is based on financing the group needs from the holding company when this is possible. This model is designed to optimize the funding of our needs and monitor structural subordination guidance. Currently, debt is mainly at the holding level. Our external debt other than the holding will be mainly raised at the regulated operating companies in the U.S. as cost of debt is a pass-through and where we have minority shareholders like Neo. It has its own financing policy as the group does not provide support. The holding has direct access to cash flows from fully owned subsidiaries that account for 70% of group's EBITDA. The high visibility of centralized cash flows and the centralized treasury reduces the impact of structural subordination. Over the plan, the ratio will steadily decrease after the PNM transactions to levels close to 30% threshold, in line with our financing policy. Our expansion plan requires a conservative while active management of interest rate risk aligned with our earnings structure. As mentioned earlier, currently, we have a 65% fixed debt. I would like to say that we have a lower refinancing risk in fixed debt as we have more than EUR 2 billion in interest rate for workshops. We will progressively adapt our debt structure to the income structure in different currencies and using forward start swaps to anticipate changes in interest rates or monetary policy. Regarding our analysis of fixed and floating debt structure, we take a bottom-up approach by currencies, looking to match it with our own revenue structure and regulatory requirements. We have all mostly fixed debt in our U.S. business. That is a perfect pass-through on our regulated business, and most of our renewable business is based on long-term PPAs, less in dollars, less in euro, solely due to the weight of the liberalized business. In British pound, our income is fairly balanced at fixed, floating and inflation index. And the real is heavily inflation index, as most of our revenues are linked to Brazilian inflation. Expected debt interest rate structure by currencies is very close to our income structure along the plan. Our FX strategy hedges our most important solvency ratio to immunize the solvency and protect the rating of the group from FX fluctuations. On average, more than 60% of our operating cash flow will be generated in currencies different from the euro in the period. Structurally, we minimize the FFO over net debt ratio, volatility, adjusting the amount of debt in the different currencies to the funds generated in each currency. In addition, this policy protects partially the income statement from currency depreciation. As you can see in this slide, we have around 30% of our FFO in dollars, and we have a similar proportion of debt in dollars. The same happens with the pound and the real. On a yearly basis, the target of our policy is to reduce as much as possible the volatility of our net profit. We mitigate the FX P&L risk through derivatives. Our net income risk is managed on a yearly basis as long-term FX management is not possible as it would generate huge P&L volatility and will not protect the P&L in subsequent years. Our FX risk management protected the budget net income, creating value for the company over the last 10 years for around EUR 235 million or an average of EUR 24 million per annum. As you can see in the slide, this plan creates value for our shareholders. As you can see, our return on capital employed will improve to over 6% from 5.9% in 2019, thus allowing return on equity to grow from 9.2% to over 11% in '25. As you can see, our average return on capital investment on the investments that were going to be in the period, what we're going to be doing in the period will be clearly above the cost of capital of Iberdrola that we estimate in around 4.5%. Let me conclude remarking that Iberdrola is able to finance this ambitious plan, maintaining a financial strength through the period, improving shareholder return and with flexibility through asset rotation, as I was mentioning, only 4% of our total investment and much less than our asset base, which is over EUR 120 billion. That can grow if needed and with margin also to replace debt with hybrids at a very attractive cost. In the annex that we are providing you, you will see the financial hypothesis on which the plan is based. Thank you very much.

Okay. Thank you, Pepe, for the clarity you have already provided us how to finance this plan. So to conclude, let me highlight the key features of the ambitious plan we are presenting today. The first one is the increases ambitious climate agenda and the unstable electrification of the economy and leading the power sector toward an investment phase never seen before. Achieving a net-zero global carbon economy by 2050 is possible, but we need concrete action today. Iberdrola's commitment to this vision place us in a best position to accelerate our growth, reaching all-time high levels. Gross investment will exceed EUR 75 billion up to 2025, almost doubling the annual amounts of our previous plan for a 6% to 7% increase in result with EBITDA reaching around EUR 15 billion and net profit around EUR 5 billion. And we will achieve this growth, maintaining our commitment to a strong credit rating and to shareholder remuneration, which will continue increasing in line with earnings per share. The transformation of energy landscape that we are going through has led us to analyze the prospect of our company in the longer term looking beyond 2025. Up to 2030, the massive investment needs in Renewables and Networks confirm that our business model is the most appropriate way to continue delivering healthy growth. According to the energy plans announced all around the world and analysts forecast, global onshore wind and solar capacity will multiply by 2.5x in the next 10 years and offshore wind will multiply close to 5x. We are fully confident of our ability to capture reasonable share of this growth, the good rate from 5% to 10% for solar and onshore wind in the geographies where we are present. In the case of offshore wind, our current leading position in the larger market will allow us to estimate share between 15% and 25%. As I commented earlier, these figures are, in general, even lower than our current market shares. Based on this assumption, our ambition is to reach renewable capacity of 95 megawatts in 2030, almost flipping our current installed power; to double our current regulated asset base up to EUR 60 billion; to reach 70 million contracts by 2030, up 30 million, up from today's figures; and decrease our green hydrogen production up to 85,000 tons. The plans are presented today, connects 20 years of growth with a prospect of an unprecedented transformation of the energy industry. We have proven that we have the skills, the team, the track record of delivery, the technology and the access to financial resources to continue leading this industry in the next decade, with attractive growth in result to 2025 and with ambition to multiply our key operating metrics between 2x and 3x by 2030, maintaining our commitment to efficiency and financial strength. You all remember that in 2001, we forecasted to double the size of the company, and we have done much more than that, as you can see. It's up to each of you to fill now the empty boxes on the bottom of this slide and estimate the value generated by this plan. However, you can be sure that Iberdrola, starting from myself and all the senior managers, will continue to deliver in our commitment to reach those figures. And as the younger team behind us has even more knowledge and ambition, the ones we have taken the company where we is today. We have all the ingredients to succeed. A business model that made us pioneers in energy transition. It's a record 20 years delivering increasing resulting dividends. A genuine commitment to environmental, social and governance standards. And of course, the best team made up of 40,000 women and men that day after day demonstrate their full dedication and professionalism, and their readiness to continue advancing along the path of the last 20 years to achieve or even to improve the vision of 2030 we have just presented. Thank you very much. And now we'll answer your questions you may have. Thank you.

Okay. As I mentioned before, we are going to have now a break, 5 minutes only, in order to satisfy human needs. Thank you very much. [Break]

Thank you. We are going to start telling you that we have organized and structured the Q&A session by blocks, so -- thematic blocks. And we are going to answer all your questions you may have. Up to now, we have 36 questions, probably more to come. But it's just to let you know, more or less, which is the theme that we are going to have regarding this Q&A session. We are on time according with expected program. The first one is the block -- the first block is regarding Renewables. And first question comes from Harry Wyburd from Bank of America and James Brand from Deutsche Bank. What proportion of your plan Renewables addition in gigawatts? Do you plan to sell fixed subsidy or PPA versus floating? How is your market price or selling to a regular supply customer or floating price contract?

So as I already mentioned before, we have already around 60% of our Renewables investment already secured. With I think 7 -- more than 7 megawatts are already -- gigawatts are already under construction. So as I mentioned as well, we have a pipeline of 70 gigawatts, which, I think, is -- that means that the plan we have already in this moment is to transform half of this into new productive power plant. I think the first thing I would like to say is considering the renewable action we have taken part in 2019 and 2020, our hit rate was already 70%. So every 10 auctions, we got already 7 in all sectors. So I think not only in Renewables, in everything. In any case, we are not taking part in all auctions. We take only part in some and depending because we have already different route alternatives. I think we have already the route of PPAs. We have already signed with many of the largest corporations of the world, which is the case of United States, companies like Google, Amazon are the one. Another one is we sell directly to our customers. I think we have already customer base very, very large, and I think we are selling to them. So I think it's -- another point as well is part of those renewables is for replacing our conventional generation. So -- and for fulfilling the new demands with -- during the electrification process.

Okay. Second question comes from Harry Wyburd as well, Bank of America. For your market share targets on Page 142, what assumption have you made regarding competition? Do you think these are achievable even with complexion from big oil competition -- sorry, from big oil?

So our position is always welcoming the competition. So I think welcoming the new entrants. You have already seen the figures. I think we need a much higher electrification. So I think there is room for everybody. In any case, we are very sure about our scale and resources, I think, as Paco and Pepe has already mentioned and very well explained. I think we are ready in this sense to compete with the same way we've been already competing during our 120 years' history. In any case, I think maybe in the next year. So with the new entrants, we will learn in electricity as much we have already learned during the last 120 years. I imagine that they are really faster in lending. We took 120 years to learn what we have learned, and I think I wish them that maybe they will be able to learn as much as we have learned during this 120 years. But I think competition is welcome, and there is room for everybody.

Harry makes another question, Harry from Bank of America. Is there a risk that new renewables lead to a structurally lower power price in Europe in 5 to 10 years, which would impair profitability on your nuclear and hydro assets? Is this a scenario governments would probably respond to boosting subsidies to support new renewables projects, but nuclear, hydro and all renewables rolling off subsidies could be stranded or low power price? How do you manage this risk?

Well, I think nuclear, we have the plan of closing. I think the nuclear is -- we are in a loss. I think everybody knows that we are losing money with nuclear. So I think the only thing to happen is that I think we've been -- we agreed to close this one with the government from '28 to '33 or '34. So I thought if I've not already said anything correct, please correct me, but I'm trying to tee that one. In the case of hydro, I think hydro is already -- is mostly it's an historic energy, which has already been -- it's going to have even more value. So I think it's going to -- when the wind blows, it will be a lot of wind. When the sun is shining, there will be a lot of energy, but when there is no wind and there is no sun, I think it's needed to ready something, which is called storage. And the storage is massive, is pumping what we are using. And I think we have already reconverted many of -- almost half of all our installed hydroelectric in storage. And that one, which is not storage, is massive energy what we have already for weeks or for months. So I think just the opposite. I think our hydroelectric is we have much more value, and that's why the pumping is already needed. In the case of nuclear, anything can happen, is that we will force to more rapid closing of that one. I think the fact in nuclear in most countries is just precisely deposit. I think it's needed for maintaining the service, in the case of United States, and they are already paying -- we are paying, I think, our distribution companies. We are paying an extra for keeping -- for maintaining open the nuclear power plant of our energy vendor. So -- but I think it's -- nuclear, we are in a loss. The only thing would happen is then they can already -- if it's needed, they have to pay for maintaining those one open. That is what we have already negotiated. And in the case of hydroelectric, my vision is that storage of energy is going to be crucial and having already our electric with large dams and with large storage, so I think that is going to provide much more value than what we have today, which when it goes already for those. We have only running waters model.

Next question comes from Jorge Guimarães, JB Capital Markets. What are the average CapEx cost considered in plants of offshore wind, onshore wind and solar PV?

Pepe, can you reply to this one? You can reply the question.

With regarding the cost of construction that probably Paco...

Is it construction or the financial cost?

No, it's average costs, CapEx costs.

CapEx. Okay, Paco. Sorry, sorry.

Well, Jorge, you will understand that we are not -- that we do not feel comfortable telling the exact figures we invest in each technology or the cost we have in each production. So cost and CapEx is, let's say, a strategic value for the company. What I can say is that more than the CapEx invested, what is important is the levelized cost of energy in each of this technology, which is what really matters when you compare with the utility that the different customers have for their needs. So within this levelized cost of energy, we are pretty sure and we are sure and we -- and if we are not, we do not do the project that we are going to be competitive, that we are going to be very high in the merit order -- in the merit order -- in the classical merit order of cost. So that's for sure. Everybody knows that more or less onshore and photovoltaic are in a proportion of 1 to 0.5, and offshore is probably 3, 4x this. But the specific values, on one hand, I don't have here. And on the other hand, if I would have it, I will not be willing to tell in public because it's part of our strategic knowledge.

Nevertheless, I think I would like to add with this thing that Paco has mentioned, that we are already working in a manner to make already more competitive design. We are already working to have already more operational maintenance, lower cost. And we are already just with our critical mass of our purchase reducing heavily the cost of our vendors and suppliers. So altogether, make us in a very, very competitive position. So in some cases, I think we are already [indiscernible] our existing fleet of power plants, which I think that already minimized our operation costs. And in another cases, I think we are already making larger installation, which as well minimizing our CapEx, et cetera, et cetera, as Pepe -- Paco says, I think we are working very hard in order to minimize the CapEx and to minimize the OpEx in order to be ready to become much more competitive, but we are very much more competitive. We are not [ in any doubt ]. So after our 120 years experience in making those things, make us already a clear competitive advantage. That's why we are gaining 7 in every 10 auctions we are coming. So...

Okay. Next question comes from Andrew Moulder, CreditSights, and it's regarding the U.S. offshore business. He wrote Orsted has reported permitting an authorization delays in the U.S. offshore wind industry. Is there a risk you cannot meet your timetable on Vineyard Wind on Park City?

So I think it's -- we are already in a process. We were already the first mover in the country. I think we won the first auction from Vineyard, so which I think we are already just opening the road to the rest of the investors. So I think the information we got up to now is that the marine permits will be in December. There is not any reason why that is going not to be -- is going to be postponed and delayed, and I think the plant continues [indiscernible]. I think we are already in this moment we have already awarded in Vineyard the service station, which we make already last year, the wind turbine supplier, we already selected. The [ bureau ], as I mentioned, the marine is already expecting the process in December. So I think we have not really seen anything for Vineyard. In the Park City, we are still in the earlier stage, commence it. And the project -- I think we present the project to the plant to the BOEM, as well to the marine authorities. I think we present, correct me, Dennis, if I'm not correct on that one. I see yourself somewhere else. I think it was presented in June. We have already signed a PPA with Connecticut. And the federal permits are already progressing according to schedule. So I think we have not seen anything. In the case of Kitty Hawk, which we have already in North Carolina, I think the technical survey campaign is concluded. We -- I think as we are already [indiscernible] already working on it. I think we will start -- we could complete it as well in October. We will submit the grid connections, which I think we are expecting for identifying what is the best play for the service station. I think that worked. And in the case of New York, I think the new auction, we have already presented. I think we make already different offers for 1.2 to 1.3 gigawatts. And we already expect then the result will be already beginning of next year. So I think we are already all are in line. Dennis, if you have anything to add, please don't hesitate to say anything you would like to say to add on this point.

The only thing that I would say regarding Vineyard is that we did exhaust our schedule previously, and it reflects what's currently on the BOEM website. So we won't comment, obviously, on Orsted. But at this point in time, we have no reason to believe that the schedule that we put forward for Vineyard is the right one.

Next question comes from Alejandro Vigil, Cygnus Capital. Opinion on new auction in Spain?

So well, I think I used to say that we are not making the energy policy. The energy policy is already made by governments. I think that the government decides to make auctions, so I think it is their duty to the responsibility to make. Our point is if we will go or we will not go to this one. And I think that is something that we will decide depending on the terms of the auction. So I think it's -- we feel that there are enough people ready to make the investment. I don't know why the government is going to have to take already commitment, but I think it's their policy. So I think I have nothing to argue against the government policy. The government policy is they dictate the energy policy, they dictate the decision, and it's in our hands to decide to go or not to go.

Question #7 comes...

Probably, we will go, right? So I think I would like to say.

Comes -- #7 comes from Jorge Guimarães, JB Capital Markets. What is the EBITDA contribution of hydro in Spain in 2025 EBITDA objective?

Oh, god. I don't know. I don't know. Pepe?

It's very small. It's not even EUR 100 million. The contribution is very slow -- small.

Yes, yes, yes. I know.

Okay.

8. Of your 20 -- is coming from Alberto Gandolfi, Goldman Sachs. Of your 2025 EBITDA, how much would come from Renewables? And when do you believe the step-up of Renewables in the mix will begin to negatively impact power prices? So the question is regarding the -- when we [Foreign Language]

Renewables will account for the prices when [indiscernible] and will account for a big baseload of energy.

Well, it's not going to be a clear fetch effect. It's going to be progressive. So we are seeing now that the prices, and you have seen in our presentations that the prices we are forecasting or foreseen for the future are about, I don't know, EUR 5 to EUR 10 per megawatt hour less than they were in the previous [ emissions ] or additions of our information. So this is going to happen progressively and the level of around 45, 45 to 50, or if you want 40 to 50, is going to be the trend and is what we are assuming, and we are managing this. So it's -- the negative affection is already here, if you want, and is not going to be worse in the future going to -- well, I mean, in a stable way, in a [indiscernible] happening in March or April that we have half of this on prices. But in a stable -- in a steady state regime, we don't think it will be so different of around this 40, 40 something.

Alberto is asking as well. You now have 20 gigawatts offshore pipeline. There are likely to be 25 to 30 gigawatts auctions until the end of 2021. In how many will you be able to be?

So perhaps, Javier, you can reply. So I finish -- you have more in detail that one, please?

Yes. It's Herman. I think that we are going to -- as you know, we have just recently presented our bid in New York. Next year, I think also there is Massachusetts, third possibility; Rhode Island, second possibility. We are going to take part in both of them. And also, what is the important one that is the [ Route 4 ] in U.K., all right, where actually we're going to present. It means that -- it doesn't mean that we are not obviously, searching for other opportunities, maybe a little bit outside of what is our current, let's say, areas of interest.

We are now passing to the block corresponding to Generation and Supply, and it's José Javier Ruiz from Barclays, asks why do you expect growing power prices in Spain, while the Spanish [indiscernible] in backwardation up to 2025, #11.

So I think it's -- I think Paco was already explaining that one. It's okay. In the mid to long term, I think we expect already stable wholesale price in nominal terms, which we put in our plan of EUR 45 to EUR 50-megawatt hour. I think that we already -- the cost of certain technologies will be offset by the increasing demand and inflation. I think they are already as well, and Paco mentioned as well, the period of instability. I think it's -- I think these moments which are already deriving for the excess of gas or excess of wind or so on. But I think those are [indiscernible] I think we have to look at the trend. And I think the trend we are seeing is that those prices are already we see now, that can be already been maintained in the long term. So I think we are not -- that is our expectation. And because that is -- they are not any reason with that is going to change very much on that one. [indiscernible] it could happen, but the average will be already maintaining this level. That is our expectation.

Now we are going to start with the financial block. First one is coming from Javier Suarez, Mediobanca. Why the company has decided to remove the minimum and growing annual dividend commitment included in the previous plan?

We don't understand it.

Sorry? I don't...

Probably some misunderstanding of Javier because we have not removed anything. Why the company has decided to remove the minimum and growing annual dividend commitment?

Not at all. Not at all. I think we are maintaining our dividend policy. We are maintaining the same payout. And we are already -- the opposite. We are increasing the flow in the period '23 to '25 from EUR 0.4, that was the previous plan, to EUR 0.44. So I think we are not really reducing, but I think we are increasing the flow and maintaining the policy.

Next question comes as well from Javier Suarez. Why FFO is now at 22% by '22, while previous business plan was at 24%? Why the company feels comfortable with net debt-to-EBITDA at 3.7x versus 3.0x under the previous business plan?

Will you reply, Pepe?

Yes. We -- in the previous plan, we always said that we would never reach those levels, that basically, we got to these levels because we didn't -- I mean we were not -- we don't have specific investment plans, but that as investment plans would come, we would go to levels in which we are right now, which are consistent with a BBB+ rating. In a world where there are lots of opportunities of investment, we are trying to maintain the solid credit rating while taking the opportunity to increase the investment. So we are comfortable with these levels of net debt EBITDA and FFO over net debt.

Harry Wyburd, Bank of America, is asking for the EUR 68 billion gross organic CapEx, what is the net figure? And is it the split of the net figure for Renewables, Network levelized, the same as the split of gross on the Slide 44?

So you give reply, Pepe.

I could -- we will provide through Investor Relations.

No.

No, But I think he can reply. I think the organic...

Yes. I think it's a -- the organic CapEx, we have around 6% of capitalized costs. So this means that net CapEx would be EUR 64 billion, of which around 52% will go to renewables and around 35% will go to networks.

Next question comes from Jorge Guimarães, JB Capital Markets. What type of assets are you considering for the asset rotation, build and sale of renewable assets?

So we receive the same question every plan. And so far, we always have delivered even sometime in advance or even much more than what's already expected. Today, we have announced a new target of EUR 3 billion, which from the period '21 to '25. As Pepe mentioned, that represents less than 4% of our investment and less than 3% of our total assets. So I think we have plenty of things that can be sold on that one. As Pepe was mentioning, either in the non-strategic asset, either minority stakes, either things that we can already discover, then they are not contributing enough to the company result. And the same thing we have already been done -- doing during the past. I think the amount is so low. If we compare it with the size of our investment, with the size of our asset, then we feel they're more than achievable, those numbers, as always we have already done.

Next question are really 3 inside 1 from Lawson Steele, Berenberg. Do you intend to raise 5% of your EUR 94 billion funds from asset rotation, and at the same time, to increase your renewables capacity by 3 to 95 gigawatts by 2030? Is that 95 gigawatts a gross number or net holdings, excluding minority, please? Second, can you please talk about the current investor appetite for sell-downs? And how do you see that developing? And if you could also give us more color around how do you see gigawatts ownership per se versus sell-down opportunities? That could also be very helpful. Thank you, Lawson.

So I think the first number, the 95, I think, is our own. I think those ones we are making for our own; and those ones, what we are already consolidating. So to sell or not to sell asset, I think I used to say it all with the same thing. I think we are not already a company with our fundamentals is build to sell. Saying that, if somebody is ready to pay a huge amount of money, we are always open to sell a minority stake or to sell the whole business. So I think is we are not already in love with any particular piece of our balance sheet or our particular piece of our asset. But I think is -- our ambition is not to build for sale. It's to build for operating and building for already making business with it. So I think we have already sold last year a stake of East Anglia because somebody was ready to pay a lot of money. We are ready to sell minority stake. But I think our ambition is already to make the things for our own to operate and to make already for our own. But if somebody is ready to offer a huge amount of money, I think we are always ready to listen.

Next question comes from [ Miguel Verina, KC Capital ]. Can you comment on your views on Mexico?

So I think I said already in our the last presentation on results. So we are very, very clear on that one. So I think we are not in Mexico as of most countries. I repeat, we are not making the energy policy. So yes, we adapt in every country, our investment to the energy policy, which every country defines. So I think in the case of Mexico, I think if they promote a foreign investment, we are ready to analyze those investments. But if they don't promote for investment, we are going not to fight against the energy policy of the country. So saying that, I think with the Mexican government, we are already -- we're very open dialogue, and I think we will continue in that lane. So I think it's nothing new. I don't know, Enrique, you would like to add anything to this point?

That we don't make the energy policy, and we have to adapt our investment plan to the -- beside of the Mexican government.

Okay. Thank you.

Next question comes from Fernando Garcia, Royal Bank of Canada. What would be the '25 -- 2025 net income, assuming hybrid interest cost is included in P&L?

Well, actually, it will be more or less the same amount because as a matter of fact, in our projections, we have slightly higher than EUR 5 billion of net profit. So we were saying -- but for -- to give you a number, more or less, would be around -- for 2025, the impact of the hybrids will be around EUR 170 million. But as I was saying, the number will be the EUR 5 billion because in our projection, we have slightly higher than EUR 5 billion.

Next question comes as well from Fernando Garcia. What would be the sensitive if we assume 2025 forwards of EUR 42 per megawatt hour, instead of the EUR 50 that we have already included?

So -- well, I finish and you can already add, Pepe. I think in prices, I think some numbers I got here is for each euro per megawatt variation will represent already a 0.3% on average of the EBITDA.