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

[Presentation] Good morning, ladies and gentlemen. First of all, thank you very much for joining us this morning. It is with great pleasure that we welcome you to the presentation of our 2024 Capital Markets Day and ESG, in which we are pleased to update for you our expected numbers of the period 2024 to 2026. We would also like to thank you, [indiscernible] for allowing us to hold this event in this excellent London office, one year more. The agenda of the day has been already shared to all of you. First of all, we are going to start with the intervention of our top management, the Executive Chairman, Mr. Ignacio Galan; the CEO, Mr. Armando Martinez; and finally, Mr. Pepe Sainz, our CFO. Their speeches will be followed by the Q&A session. First, we will take the questions we received from the floor and then those ask via the web. We would also like to remind you that the whole event can be followed online as well through our web page, www.iberdrola.com. After this first series of presentations, in addition to the lunch break, we will be pleased to invite you to enjoy several presentations on different topics that we believe will be of interest for you, sustainability, innovation, human capital, corporate development and finally, electricity storage alternatives. Hoping that you will find the day with us informative and productive. Now without further ado, I will hand over to our Executive Chairman, Mr. Ignacio Galan. Thank you very much again for your interest in Iberdrola. Please, Mr. Galan.

Good morning, everyone, and thank you very much for attending this Capital Market Day. It's a real pleasure to see you face-to-face again here in London one year after the last our Investor Day. Today, I will share with you our long-term vision for the industry, our business model outlook for 2026 and the trends we foresee for an end of the decade. This plan is built on the pioneering vision developed by Iberdrola since 2001, so it's 23 years vision, has been reinforced in the context of last year, confirming the electrification is unstoppable. The trend of self-sufficiency and energy security, more energy efficient competitiveness and price stability after the case of volatility created by fossil fuels as well as the urgency to reinforce emissions of -- if we want to reach the carbonization targets is driving major changes in energy policies all over the world to promote electrification. But more importantly, is making electricity [indiscernible] option for our customers in fact. Today, day after day, we see more evidence that once an energy need is covered by -- with electricity, they are not turning back. No one will switches to energy car or change domestic gas heating to heat pumps is returning to a fossil fuels options. As a result, even assuming no changes in current policies, the International Energy Agency expected direct electrification will drive 60% increase in demand in the industrial sector by 2040 with additional consumption coming from green hydrogen and derivatives. Transport also expect to multiply the electricity demand by 4x to 2030 and by almost 20x by 2050, moving also towards green hydrogen derivatives from [ CNL ] transportation. In buildings, in just 15 years, electricity will cover 60% of total energy consumption in Europe and 70% in United States with huge additional demand from data centers doubling already by 2026 and increasing responsibly afterwards, driven by the energy needs of artificial intelligence and cloud-based applications. The increase in the use of power to substitute fossil energy option and [ carbon ] demand could result in a growing share of electricity as a percentage of total final energy consumption after decades of only around 20%, reaching up 28% by 2030 and more than 40% in 2040. This process will imply a huge deployment of electricity networks, the need to be ready in advance to preserve electricity supply as well as a strong expansion of renewable capacity driven by substitution of fossil technologies and additional demand. And finally, an increasing role of storage technologies to preserve the balance between supply and demand 24 hours a day. Starting with Networks, we have been insisting on this for many years. And today, more and more voices are recognizing the urgency of multiply grid investment. Globally, we need to double annual investment in networks in just 6 years and this does not depend on energy policy scenarios. In fact, the difference between estimate -- between the low and higher scenarios of International Energy Agency by the end of the decade is minimal, driven by the need to promote security supply and reliability into digitalization and accommodate an increasing penetration on offshore renewables, new large offshore wind projects and self-consumption facilities. After 2030, growth in annual investment will be more sensitive on the speed of electrification of other energy uses, but even in the lower rate scenario, we are talking about multiplying current levels by 2.7x. If we look at Iberdrola core geographies, opportunities are clear, driven by several reasons, such as replacement or reinforcement of core infrastructure and digitalization in United States and United Kingdom. Under investment due to regulatory constraints like in Spain and a quick expansion of consumption as we expect in Brazil. And as Bloomberg New Energy Finance data shows, the progress of electricity system around the world is clearly behind the requirement of net zero. The need to accelerate the deployment of renewable is also a clear trend. In advanced geographies, due to replacement of 500 gigawatts of fossil generation and the coverage of the new sources of demand and the developing -- and in developing countries where we need renewable will be crucial to cover substantial growth in demand to more than 3% until the end of the decade. All in all, we are talking about more than 6,000 new gigawatts [indiscernible] here. The impact of this transformation in wholesale market is already evident in those geographies that moved early toward renewables. Like Iberia, were non-manageable renewables, onshore, wind and solar are already displacing thermal production from baseload to peaks. As the production from these technologies increases, mainly solar supply start to be higher than demand during the [ central hours of the day ] created an excess of energy that will be lost unless the system has sufficient storage capacity, thanks to manageable renewables and storage technologies, able to allocate the excess of production to mornings and evenings when consumption increases. This phenomenon will become much more significant by 2030, increasing the needs of these renewables to balance supply and demand. And it will not only happen daily, over weekends period, lower consumption during the weekends with the same renewable resource would also create a huge opportunity to displace this energy and cover demand during Monday to Friday. And seasonal changes in consumption due to weather will also require technologies to balance the system. As a result, storage requirement will grow, driven higher opportunities for batteries and pump storage due to higher price volatility. Both technologies can provide short-term storage and ancillary services like frequency regulation. But pump storage is the only one able to store energy also for a period more than four hours of very high or very low consumption, which are becoming increasingly frequent. Those two anticipate -- those who anticipated this scenario and investing significantly in a storage capacity like Iberdrola will now be able to maximize the use of the asset and their service to the whole system. It will, for example, the Aldeadavila, La Muela pumping storage facility in the East of Spain was finalized in 2015, its production has doubled in the last four years and is expected to multiply by 3 to 4x by 2030. This process will also change price dynamics in wholesale market. If we look at the Spanish system back in 2019, the most relevant marginal technology was combined cycles, sit in a marginal price equal to gas plus CO2 run [indiscernible] cars and operation and maintenance. With manageable renewables playing this role during the rest of hours at a price, which is slightly below the cost of inefficient facilities by doing this, manageable renewable resources produce savings to the system are they about using more expense gas and reduce emissions at the same time, allocating energy that is already stored to the moment in which the systems required instead of wasting and when other resources are abundant. In 2023, the expansion of non-manageable renewables already displacing inefficient gas starting to become the marginal technology for a significant numbers of hours and driven an increasing role of manageable renewables. These market dynamics will as such [indiscernible] by 2026 with manageable renewable setting price during more than 40% of the hours, a non-manageable renewable during 20%, driving higher intraday price volatility as we saw earlier, at an average price of around EUR 60 per megawatt hour according with our estimates. Fully [ current this ] price with current forward prices of around EUR 30 per megawatt hour of gas and EUR 60 per ton of CO2. So all in all, we are gearing total power system with huge need for additional networks. In more known manageable renewable is driving more price volatility and increasing role of manageable renewables and storage, but still with an average price clearly below the high levels of 2022 and 2023 and more in line with the levels seen on average in the last 5 to 10 years. Based on this outlook, today, we are reaffirming our strategic pillar announced in November 2022 here in London. Growth in Networks, a selective approach to investment in renewables and focus on high rating countries and full commitment to financial strength as a key priority of the company and to shareholder remuneration, while creating sustainable value for all our shareholders. The implementation of this strategy will drive gross investment of EUR 41 billion in 2024 and 2026, including the acquisition of Avangrid minorities announced a few weeks ago. Out of this amount, EUR 5 billion will be contributed by partners in the renewable business, resulting in net investment of EUR 36 billion. The share of network will increase significantly in the coming years to 60% of the total EUR 21 billion. With 30% allocated to renewables and the remaining 10% storage and maintenance of the traditional fleet. The vast majority of this investment, 70% will be allocated to growth. United States will remain our first investment destination with 35% of the total net investment. Followed by United Kingdom with 24%, Iberia with 15%, Latin America, Mexico, Brazil with another 15%. The remaining 11% will be allocated to Australia and other European countries mainly offshore wind in Germany. Now our French offshore wind farm Saint-Brieuc is recently completed. All in all, 85% of our investment will be allocated to A rate countries. As mentioned of the key investment destination, this plan is net worth EUR 21.5 billion. In countries that combine the need of a strong network expansion, reinforcement or modernization. With a stable attractive remuneration frameworks like in United States, they will absorb 45% of the total network investment, followed by United Kingdom with 25%, Brazil and Spain in similar amount. Transmission investment will reach EUR 6.5 billion, 1/3 of the total networks. That's -- some message is new for you. Growing significantly, thanks to our large new project in the United States, in fact, U.K. Eastern Green Link and Brazil for an asset base of [ EUR 15 billion ] by 2026. If you compare that with certain of the transmission companies across Europe, you see that this amount is similar of those one or even superior. And our distribution asset base will reach a total of EUR 54 billion with 30% increase. As an optional diversification, the United States will represent 1/3, United Kingdom 26%, Brazil and Spain, 20% each. 80% of this investment will be driven by rate cases, which are already closed or under advanced negotiation with key conditions already known. In fact, 85% of our estimated RAB has its framework fully close to 2025 with a large part also secured for 2026, including distribution in U.K. and Brazil will represent 34% of the total asset. On top of this, negotiations are already ongoing on transmission in U.K., representing [indiscernible] And in terms of supply chains, we have 90% of our strategic network agreement already secured. That is very important in this time we are living and 50% of EBITDA for 2026 is fully hedged against inflation and interest rate with additional 30% with minimal pressure. All in all, we are expecting average return between 350 and 450 basis points above sovereign funds, driving regulatory remuneration about 7% before taxes in Europe and in United States and 16% in Brazil. Gross investment in renewable projects will reach EUR 15.5 billion between '24 and '26, including EUR 5 billion contributed by Tier 1 partners, as I mentioned before. 51% will be directed to offshore wind projects already under construction. Vineyard Wind, United States; East Anglia, United Kingdom; Windanker and Baltic Eagle in Germany and very last part, Saint Brieuc in France, which is almost completed. Out of remaining 45%, almost 2/3 will be invested in offshore wind and the rest in solar PV, also employing most of them under construction or ready to build in this moment. This investment will reinforce the competitive advantage, we have built over the -- more than 20 years leadership in renewables. In supply chains, 76% of all our critical renewable suppliers to 2026 are already close with prices secured. And in terms of access strategic partners and alliance with Norges Bank, Masdar, and MAPFRE, almost other and a geographical diversification with similar capacity addition across United Kingdom and United States, Iberia and other European countries, in Latin America and Australia. All this will drive further optimization of our risk-reward [indiscernible] with capacity addition increasing, the coverage of energy sales with our own production and rising the share of high value added energies like offshore wind by 2026 and beyond, thanks to our pipeline on mature project of this technology, including 2,000 megawatts ready to participate in the upcoming multistate auction in New England, United States and 1,600 megawatts of East Anglia Hub qualified to [ round 6 ] in United Kingdom this year. Our plan also include EUR 1.5 billion in storage, a technology in which we decided to invest heavily 20 years ago, anticipating the increasing role and it play in the system in the coming years. Following this vision, we start making many of our hydro turbines reversible. [ In Bill ] new pump started project in Iberia, La Muela fully operating from 2015 or Tamega hydroelectric complex in Portugal has been recently completed, reaching 11 gigawatts of manageable capacity with 4.5 gigawatt of storage, for a total capacity of 100 million-kilowatt hours already in operation. This allows us to concentrate the production of manageable renewables during the peak hours, driving an average price equivalent to 130% of the average price in Iberia. Thanks to the stability of the power hydro to provide intraday, weekly and seasonal storage, providing us margin stability independently of external conditions, while we play a clear role to modulate supply and demand and persistent reliability. On top of this, we have 20 million additional kilowatt hours under construction in three projects in Iberia, 150 million-kilowatt hours of future projects in the pipeline as Armando will comment later on. We also have several projects in the greater scale batteries, mainly in countries like Australia or U.K. Investment in customer and traditional generation will reach EUR 2.5 billion with EUR 500 million directly maintenance of production assets and the remaining EUR 2 billion to customers. To continue reinforcing our portfolio of route-to-market, which already in 2023 reached 115 terawatt hours of contracted revenues with margin secure. 60% to industrial customers, mainly through PPAs with an average duration of 11 years, 15% through regulated contracts like CFDs with an average duration of 16 years and 25% to retail customers with average churn rate of 18%. In terms of hedging policy, this means that we have 100% of our sales and margin close for 2024 covered with our own production, with 80% close for 2025, 75% for 2026 when our production will reach up to 150 terawatt hours. This play us in a very comfortable position as regard of energy balance, significantly limiting our exposure to wholesale market prices. In addition, we are assuming retail margins will be normalized into average levels of last year, as we will see later on. To finance all these expansion of business activities and preferable solidity, we expect to continue implementing our conservative model. Based on cash recovery as the key investment criteria, fixed-rate financing, long-term maturities, active liquidity management and high diversification, maximizing the use of green financing with partnerships, asset rotation, giving us optionality for further growth. So the Pepe Sainz will explain all this in more detail later on. Driven by all these factors, we expect to preserve financial strength and maintain our dividend policy without contemplating any capital increases. Moving now to 2026 financial outlook. EBITDA will reach EUR 16.5 billion to EUR 17 billion by 2026 from EUR 13.2 billion in 2022, resulting in a mid- to high single-digit annual growth in the period. This will be driven by a combination of investment and further efficiencies as operational expenses will grow well below gross margin. By geographies, EBITDA will be even more diversified, with 40% coming from United States and U.K., Iberia and other countries like France and Germany will represent 40% and the remaining 20% will come from Latin America and Australia. By business, networks and production and customer will contribute 50% gross margin each -- gross operating profit each, meaning the 70% of total group EBITDA will be linked to energy prices. By business, Networks EBITDA will be in the range between EUR 8 billion, EUR 8.5 billion by 2026, up to -- from EUR 6 billion in 2022, increasing in line with our regulated asset base and with transmission as a key growth driver. By 2026, we are expecting between EUR 1.3 billion, EUR 1.5 billion of EBITDA from this business, doubling 2022 figures. Wind energy, [ production and customers ] we also reached EUR 8 billion, EUR 8.5 billion, after the extraordinary situation of the last two years, very low in 2022 and high in 2023. Comparing this outlook to 2023, when we obtained EUR 8.6 billion in EBITDA, we will have also the negative impact of EUR 500 million of the divestment in Mexico and we expect supply margins to normalize driven by the reduction in prices of around EUR 30 per megawatt hour for a total energy around 40 terawatt hours corresponding to contract for residential and industrial customers that will be rolled over 2026. These two impacts will largely offset by offshore wind. They will increase its EBITDA by EUR 1 billion to reach EUR 1.8 billion, becoming the key growth driver in this business. The additional production of onshore 6,000 new megawatts and more retail demand with additional storage preserving the stability of our margin. All in all, as you see, we'll be able to continue increasing results in this business compared to the average over the last two years, offsetting this EUR 500 million lower EBITDA of Mexico due to divestment and the margin normalization already mentioned. In terms of net profit, the progress of our plan ahead of schedule is allowing us to improve today's our outlook for 2025 to between EUR 5.3 billion, EUR 5.4 billion in the upper limit of the range provided in November 2022 as the cancellation of the PNM transaction and the impact of the asset divestment in Mexico in the scenario of higher interest rate and lower market price will more than offset by high investment in networks, mainly in transmission and better rate cases. New renewable capacity with offshore wind as main growth driver and the additional optimization of route-to-market as well as lower debt expenses and the depreciation due to the impact of the cancellation of PNM in Mexico transaction. This growth will also allow us to deliver the shareholder remuneration of EUR 0.55 to EUR 0.58 per share by 2025. We expect this positive trend continue to 2026 with an average growth to mid- to high single digit in net profit versus 2022, reaching between EUR 5.6 billion and EUR 5.8 billion in 2026. Growth in acceleration will be fully compatible with an improvement of our financial strength, which continues to be the key priority of this plan. Today, we are announcing a stronger financial ratio for 2025 and 2026 with FFO over net debt growing from 23.2% in 2023 to 24.5% in 2025, 250 basis points above the target set in November 2022 and reminding about 24% in 2026 driven by higher cash flows and asset rotation. As mentioned earlier, we will continue increasing shareholder remuneration in line with results, with a payout between 65% and 75% for the earning per share. According to our result estimate, this will lead to a dividend per share in the range of EUR 0.61 to EUR 0.66 by 2026 as we are today setting new dividend flow of EUR 0.55 per share during the whole period, identical to the dividend we are paying in 2023. We will also maintain flexibility for shareholders through our Iberdrola Retribucion Flexible program, which include share buyback. All in all, dividend payments are expected to reach EUR 11 billion from 2024 to 2026 from EUR 9.5 billion paid in the previous three years. As you know, the key pillar of our long-term value creating strategy is the combination of financial and social dividend and this plan will drive additional positive impact to all our stakeholders. Focusing on environment issues, 90% of our CapEx for the next three years is aligned with EU taxonomy and we will continue maximizing the use of sustainable and green instruments, benefiting from the unique business profile as [ fit ] has just recognized rating Iberdrola as the green on its transition assessment outcome. And we will continue progressing in our ambition decarbonization strategy with a target to become carbon neutral by 2030 in Scope 1 and 2 and all in 3 Scope before 2040. Our investment will imply 10,000 new hires by 2026 and even more jobs in our supply chains on the top of the 0.5 million already support today. We will also progress even further in terms of equality, diversity and inclusion with woman already holding almost 30% of relevant position, our target for 2025. And we will continue focusing on learning and development in areas in which we already provide 3x more training hours in Europe than average. All these targets are also possible, thanks to a government system based on ethics, transparency that continues to implement the best market practices. Today, Iberdrola has 79% Independent Board members and gender diversity in our Board has already reached 43%. Just to conclude, the vision we are presenting today will create even more opportunities for the next decade, maintaining or increasing our growth trajectory. Mainly driven by an additional investment required in networks to support the acceleration of electrification, allowing us to reach a regulated asset base of EUR 65 billion to EUR 75 billion by 2030, 30% will be in transmission. We also expect faster growth in renewables due to the replacement of the fossil fuels and nuclear in Europe and United States, resulting in new opportunities for manageable renewables as well as new demand in emerging countries. By the end of this plan in 2026, we have completed 3,000 megawatt of new offshore wind capacity and 6,000 megawatt of onshore technologies, they will be fully contributing from 2027 as well as 20 million new -- 20 million-kilowatt hours additional storage. And we'll retain future optionality to capture additional consumption, thanks to our 100,000 renewables pipeline, a 150 million-kilowatt hours potential storage projects. While we preserve our financial strength, thanks to the access to our Tier 1 partners. So thank you very much. And now Armando will give you more details of this plan. Thank you.

Thank you, Chairman, and good morning, everyone. It's a pleasure to be here with you in London today. During my presentation, I'm going to detail the main projects that give us a high degree of certainty on the delivering the goals of the plan that the Chairman has just covered. Starting with Networks, more than 50% of the total investment of the plan will be devoted to the regulated business. During the three years of the plan, we will invest more than EUR 21 billion, which will principally be invested in the U.S., followed by U.K., Brazil and Spain. For our distribution activities, we are going to invest more than EUR 15 billion. In transmission, we will invest around EUR 6.5 billion in already known projects in the U.K., Brazil and the U.S. The growth of our regulated business is well defined, thanks to regulatory frameworks, which provide highly stable and predictable results. The vast majority of the regulatory frameworks to cover our investment are in place or in advanced stage of negotiation. As a result, 90% of the investment up to 2025 and 80% up to 2026 are driven by rate cases closed with key conditions. Regarding distribution, in the U.K., the company operates under two licenses. Scottish Power Distribution in Central and Southern Scotland and Scottish Power Manweb. Here, we will invest EUR 2 billion between now and the end of 2026. The distribution framework, RIIO-ED2, which has been agreed for the period '23 to '28 sets secure conditions and inflation protection for both of them. In transmission, the company operates under Scottish Power transmission license in Central and Southern Scotland. We will invest EUR 3 billion up to 2026 under the existing transmission regulation RIIO-T2 framework, which is in place until March 2026 when it will be replaced with RIIO-T3, which we are already having discussions with the regulator about as part of its formal process of definition. This framework will follow a government mandate to the regulator within the scope of growth duty, aiming to promote the network sector. In the U.S., Avangrid has secured rate cases for the distribution in states of New York, Maine and Connecticut. In particular, in New York last year, we -- it was agreed on a [indiscernible] year period with very attractive conditions. With respect to transmission, the FERC provides an attractive rates and visible revenue stream, which also has inflation protection. In Brazil, the framework parameter for our distribution license in the state of Bahia, Rio Grande do Norte, Sao Paulo, Pernambuco and Brasilia are already set and linked to inflation, securing EUR 3.1 billion of investment between '24 and '26. In all those -- these countries, this attractive frameworks bring further opportunities for investment and growth. They also recognize the needs of increasing the investment on the networks. In the distribution rate case in the U.K. and the U.S., the annual investment during 2024 to 2026 have significant increase compared to the levels of the previous regulatory periods. In Spain, the current framework provides a rate that is fixed at 5.6% up to 2025 and discussions are ongoing over conditions for the next period. The government has already shown its intention to amend the methodology. To achieve the National Integrated Energy and Climate Plan, the investment in Networks needs to double with investment requires up to EUR 53 billion in the decade. This clearly highlights the need to review the current limitation to investment linked to GDP as well as improving the regulatory rates of return. We can already see that countries like the U.S. or U.K. offer reasonable rates in distribution in the range of 7.5% to 9%, so our remuneration rates in line with these countries of around 7% is also expected in Spain. 20% of our investment in distribution will be devoted to digitalization in the deployment of the smart grid. With the aim of improving the operation of our high and medium voltage grid, we are strongly focused on digitalization, which will be increased from 78% in 2023 to 86% in 2026. With the ongoing investment on providing intelligence to the grid, Iberdrola has dramatically reduced the time response in unplanned outages and other events without human intervention. All this advantage in digitalization are driven for innovation developed in our 3 Smart Grids Innovation Hubs, one in Bilbao, another in Glasgow and the third in Doha where Iberdrola wards with more than 80 companies from all sectors. As a consequence of the digitalization, the quality of service and efficiency improved drastically. We deliver efficiency gains, which are partially shared with our customers to decrease tariff. In terms of quality of supply, we are committed to delivering an 11% global improvement in quality of service by 2026. I would like to highlight that one of the main drivers of this plan is the growth on transmission business. As of today, Iberdrola has proven a strong track record of delivering big transmission projects in the U.K., U.S. and Brazil. Our plan in 2026 allocates EUR 6.5 billion of investment to continue growing our transmission assets in these countries, all of them under defined and clear condition of remuneration. The investment plan is based on specific projects and most of them are already under construction. In the U.K., as of today, the group already operates more than 5,000 kilometers of transmission lines, including within -- this is the Western Link and 400 kilometers high-voltage subsea cable, which is a critical part of the U.K. grid. The holistic network design program included RIIO-T2, identifies the critical nature of investment from the electrical system and provides them with enhanced protection. [ Often ] recognized in the regulatory asset base, the cost of securing the supply chain and returns of these projects has earned from the moment that the investment decision is taken. Each pound invested will increase RAB and remuneration during construction. Under this program, we have now started the Eastern Link 1 project, a HVDC line that will connect Scotland and England down the East Coast. Project progresses well and major contracts were already awarded in December 2023. The company develops two major projects of HVDC lines, Eastern Link 4 and Western Link 2. In this context, Scottish Power has launched the largest networks tender for more than EUR 6 billion to secure supply for transmission projects over the next 5 years. In the U.S., the group has almost 5,000 kilometers of transmission lines. We are building new projects to our license like NECEC high-voltage lines of more than 200 kilometers between U.S. and Canada. We started this construction in August last year following the decision of the main department of environmental protection to leave the suspension. The project is currently ongoing and most of the contracts are already secured. In Brazil, where we operate 2,400 kilometers of transmission lines, the ongoing projects which came from public tenders are progressing as expected and will be completely operational in 2025. All of these projects included in the plant under construction -- under construction and the EUR 2.5 billion of investment will contribute to our results under the regulatory remuneration conditions. The investment across our network business will mean that by the end of 2026, we will have a regulated asset base of EUR 54 billion. In terms of activity, let me stress the growth in transmission whose asset base will represent almost 30% in 2026. Based on this investment, during this period, the company will deliver a more resilient and smarter grid, with 36 million of connections in more than 20 million of smart meters through the 1.3 million of kilometers of line and most importantly, improving 11% the quality of service. Let's move to the production and customers, which as you know, we manage jointly as integrated business. We have a unique combination of route-to-market options and storage capacity, providing long-term stability and maximizing margins. This includes our renewable generation fleet. We will have a total investment of EUR 15.5 billion to 2026. These projects have been selected following a robust process and having chosen following a strict capital allocation criteria, manageable generation and storage, which Iberdrola has been living for years and is key to energy transition, that plan for [indiscernible] EUR 1.5 billion of investment, and a wide portfolio of route-to-market that we manage to maximize our margins. The sale of this clean energy has a strong visibility on returns, thanks to our retail and industrial customer base. It enabled us to offer value-add solutions through our existing contracts, which currently total more than 16 million and with solutions linked to decarbonization of the industry. The company as leader in renewables production has multiple options to allocate investment. Again, Iberdrola has followed a strict criteria of selective and profitable growth. Our plan considered investment of EUR 15.5 billion that will be delivered additional renewable capacity in A rate countries and selected due to their strong value creation credentials. If we look at investment by technology, more than half of this total investment will be dedicated to offshore wind, with projects already on construction with full visibility on margins in Germany, the U.S. and U.K. During the next three years, we will add around 9 gigawatts of renewable capacity, 6 gigawatts of this new capacity corresponds to projects already under construction. The remaining three of the capacity related to already known projects that are ready to build. We are in a very comfortable position with respect to certainty of this investment, as I will show you in the following slides. During the period, our offshore business capacity will increase to -- thanks to four new projects that are in advanced stage of construction. They will join the existing four wind farms that are already in operation to reach 4.8 gigawatts. Among the new projects are Baltic Eagle and Windanker in Germany, both under construction, which will supply energy through corporate PPAs already closed with companies that include Amazon, Vodafone and Mercedes. Also, Vineyard Wind in the U.S. and East Anglia 3 in the U.K. are progressing as scheduled with full visibility of their incomes through corporate PPAs or regulated schemes like inflation-linked CFD that are available here in the U.K. All the projects have all the supply chain fully secured. These four projects will come into operation before the end of 2026, when they will contribute with an additional EBITDA of more than EUR 1 billion, resulting in an offshore business EBITDA of EUR 1.8 billion in 2026. Moving on to offshore wind. Our plan will allow us to reach 23 gigawatts by 2026. We have selected the projects with the most attractive returns among a large and balanced portfolio. Around 60% of the new onshore wind capacity is already under construction and the remainder is already earned to specific projects. By geography, in Iberia, we are building three projects totaling 400 megawatts. Similarly, in the U.S. and U.K., Iberdrola has 5 projects for 600 megawatts. And in Australia, Iberdrola is constructing Flyers Creek project with a capacity of 150 megawatts. With regards to [ Solex ] technology, we apply a rigorous project selection based on predictability of revenues, such as PPAs close conditions. During the period, we will finish the construction of 4 gigawatts in the U.S., Italy and Spain. The revenues of these projects are mainly based on PPA contracts. The new solar projects already known and ready-to-build will mainly be focused on the Mexican growth to deliver clean electricity to a fast-growing industrial demand. In Australia, new solar projects will be hybrid with batteries and wind for providing firming capacity to our industrial customers in the State of Queensland. As I have explained, there are 3 gigawatts in known projects that will start construction in the coming months. These projects has selected from a mature and diverse pipeline of around 18 gigawatts, which covers more than 6x this capacity. It provides us with significant flexibility and give us a high degree of confidence in delivering our plan. Given the high dynamism of the industry, we will continue focusing on developing a larger and better pipeline to increase the optionality for future investment decisions. Iberdrola manage today a total renewable portfolio of more than 100 gigawatts. Integrating this huge addition of renewable capacity will require significant new capacity in storage to provide the markets with flexibility and reliability. [ PAM Hydro ] is currently the best alternative, technically and economically for large-scale, long-term storage. Iberdrola has a total hydro pump storage capacity of 100 million-kilowatt hours, including the largest facility of its kind within Europe, Tamega and La Muela. There are three projects currently under construction in Iberia, Valparaiso, Santiago Jares and Torrejon Valdecanas that will be operational by 2026, adding 20 million of kilowatt hours of storage capacity. As the Chairman said, Iberdrola has as well a pipeline of pump storage projects in Iberia to increase storage capacity to 150 million-kilowatt hour. Three of them: Alcantara II [indiscernible] are already under development. Having access to multiple route-to-markets is one of our key main competitive advantages and it enabled us to maximize returns on assets and limit our exposure to price volatility. Iberdrola's approach is to sell our own production through mid- to long-term contracts, allowing us to secure margin, driven by all the investment, the company with significant growth, its available production for sales. In 2026, it will grow to around 145 terawatt hour. In addition to the energy that can be sold in advance, there is generation dedicated to system needs of ancillary services that is not exposed to forward market. In terms of revenue diversification, in 2025, our route-to-market approach allow us to sell this production through multiple alternatives, including 22% to retail customers, 60% under long-term PPAs and industrial customer and 15% revenue from regulated schemes such as CFD or similar. For the year 2025, 75% of the production available for sale has been already sold. Iberdrola is the leader in Europe in the PPA market and has agreements with first-class companies worldwide like Amazon, Meta, Heineken, Holcim, Vodafone, et cetera. Increasing demand for technological sector and particularly in data centers are pushing the demand for this type of contract. After 2030, Iberdrola has committed more than 370 terawatt hours with industrial customers in our main geographies, U.S.A., U.K., Brazil, Spain and Germany. The stability of revenues to our generation assets is also secured by our stable base of 14 million contracts of electricity. That provides the route-to-market to 45 terawatt hours of our sustainable generation in Iberia and in the U.K. Iberdrola is the Spanish retail market leader and is among the top 6 in the U.K. with an optimized cost to serve below around 30% the average cost of our peers. The excellence in customer service is one of our main drivers and has been recognized in Spain and U.K. rankings like Citizens Advice. In addition to 14 million electricity supply contracts, Iberdrola has 3 million contracts of gas. These retailers have a strategy allows Iberdrola to sell add-value solutions that create further revenues from the energy business. That is the case for our smart solutions. The company is already providing more than 12 million contracts to retail and customers with an average of three contracts per customer in Spain and two in the U.K. combining power, gas and smart products. Our smart portfolio covers the full spectrum of decarbonization. In regards to mobility, we deployed more than 14,000 public charging points and 36,000 resident ones. To maintain the growth of the electric mobility, the company reached agreements with the main car manufacturers and to deploy the public [indiscernible] of charges, we have entered in a joint venture with BP. Moving to PV cell consumption. Iberdrola has been promoting these sustainable products for a number of years now, which is why our company is the actual leader in the Spanish market, managing more than 40% of the total actual installation. Decarbonization of the residential heating is another relevant vector of growth with more than 150,000 customers. During the plan, we expect to continue increasing our portfolio of smart products and to expand this high-value activity up to 16 million contracts in 2026. Our Industrial Solutions business support leading companies in their path to net zero by providing them with sustainable products to electrify energy-intensive project -- processes. Our current partners in solutions for heat brings a portfolio of more than 4 terawatt hours of steam demand with projects to completely decarbonize their processes. Iberdrola is a pioneer in Spain in the development of the district heating with 2 projects currently under construction. In particular, the company is building the first grid of the Spanish city of Valencia to supply 9,000 customers with domestic heat and sanitary hot water. As regards to data centers the group already supplies 7 terawatt hours of green energy through long-term PPAs. Green hydrogen is a solution to decarbonize the hard to electrify processes. We have developed a wide portfolio of projects to supply hydrogen as long as the price guarantees their profitability. Incentives may be needed to get through. Iberdrola has already has 3 facilities in operation and construction, one in Puertollano, another in Barcelona and the third in Castejon to supply 150 tons of hydrogen per year. In the U.K., the Cromarty and Whitelee projects has been awarded funding by the U.K. government. The same is also the case for the green methanol mega project, which has been awarded funds from the EU. The Palos project is in a similar situation. This project will supply 22,000 tons of green hydrogen to decarbonize an industrial complex in the South of Spain. The project has been selected to receive funds from the EU and just spending on the allocation of the funds by the Spanish government. The group also has a diversified pipeline in different regions mainly in Australia, Iberia, U.K., Brazil, which allow us to supply more than 100,000 tons per year of green energy. Always, unlike any other project we undertake, provided the economics justify so. Our supply chain management is one of our key pillars, providing us certainty of prices and availability of key materials and services. In today's challenging context, Iberdrola has secured 85% of the critical supplies to fulfill our investment plan, hedging our exposure to the impact of raw material, exchange rates and inflation. The success of our procurement strategy relies on several elements. Iberdrola presence in different geographies allows a deep knowledge of global and local markets and related economic cycles. Besides, we maintain close relations with Tier 1 strategic suppliers and monitor markets continuously. And finally, centralized and global purchase result in aggregated volumes, thanks to which we achieved very competitive pricing based on bargaining powers with suppliers. Only in 2023, Iberdrola awarded contracts for more than EUR 18 billion. As part of our strategy of securing margins, Iberdrola secured the supply chain prior to FID. We cover the commodity risk through hedging and inflation through linking the CapEx and the revenue profiles. In particular, the company has secured 90% of the strategic supply for networks, 100% of our offshore wind contracts, 100% of our solar panels and close to 75% of our onshore wind turbines up to 2026. With this, I'm now going to conclude. This is a plan built on solid foundations that we deliver sustainable growth up to 2026. The plan targets are guaranteed. Thanks to the visibility of our business and our derisking strategy. 80% of the investment in networks has already known conditions under agreed regulatory frameworks. 100% of the new capacity is under construction are ready to build. 85% of the energy margin is secured, thanks to our route-to-market based on long-term contracts, and 85% of the critical supplies are secured with certainty on prices. To sum up, each of our growth drivers, distribution and transmission, offshore and onshore generation, storage and customer solutions provides our plan to 2026 with a very high visibility of revenues and cost. This strategy, together with our consistent and long-standing track record of delivery will ensure sustained growth in the coming years. And my final words are for the main driver of this plan, the big professionals of the group and their exceptional commitment and expertise. Thank you very much for your attention.

As you can see, it's happening something at Iberdrola that is to be ahead of schedule. So let's go to the coffee break and we will start with Pepe presentation afterwards. Thank you. [Break]

We are going to start with the last presentation about financials and the floor now is by Pepe.

[indiscernible] to everybody. I am going to begin this presentation showing how our business and financial model has created significant value for our shareholders with a proven track record of our delivery. And then afterwards, I will continue explaining our financial strategy. The first thing I want to mention is that as the Chairman and the CEO have explained, the solid fundamentals of Iberdrola are based on a unique business and financial model that combines growth, predictability, shareholders' return and financial strength, growth and predictability as our EBITDA coming from Networks is 10 percentage points higher than the peers, reaching about 50% of our total EBITDA in '26, a good geographical diversification with more than 85% of our operating profits coming from A-rated countries, a balanced generation and supply position based on an integrated model with more than 85% of our production secured by long-term contracts and customer base with a sustainable financial strategy based on a strong rating, reducing risks in interest rates, FX and with a strong liquidity and our partnership model that adds a stable and long-term value. So this unique business and financial model clearly has paid off in the last years. Our net income has grown constantly with low volatility. Our shareholder remuneration has grown in line with high predictability and we have been over-delivering versus our annual guidance. We think that this business and financial model deserves a premium, a strong premium over our peers. As you can see in the slide, our total shareholder return of Iberdrola in the last years -- in the last 10 years has exceeded 300%, beating our American peers that reached 180% and also the European integrated companies that achieved around 130%. But not only that, as you can see in this slide, our net profit compared to our European integrated peers from 2019 to 2024, an uncertain period of time where the world faced COVID and more recently, the conflict between Ukraine and Russia, we've been growing above our peers, and with a very low volatility, our net profit standard deviation this year is close to zero, providing an attractive risk return combination if you compare it to our peers. And as you can see, our shareholder remuneration growth is fully aligned with our net profit growth, giving a strong visibility to our shareholder remuneration policy. And to finish this introduction to value creation, as you can see, we have offered an average reported net income growth of high single digit since 2016, with an average over delivery of more than 3% on our annual guidance. 2023 was a year in which we beat our guidance and we are working to do so again in '24. And as the Chairman has pointed out, we are already moving the guidance for '25 to the top part of the range. So talking about the delivery, as I was mentioning, our net income in '23 has reached EUR 4.8 billion versus EUR 4.5 billion, taking into account that we, in the last quarter, made extraordinary provisions of around EUR 300 million. Our '23 financial ratios, our FFO adjusted net debt improved by 300 basis points, and our net debt-to-EBITDA ratio improved 0.4x to 3.7x. In asset rotation, our EUR 7.5 billion target has been more than achieved in 16 months. And on the ESG side, the most important metric to contribute to the energy transition or a specific emission reduction has also improved from 83 grams to 77 grams of CO2 per kilowatt hour. Let me now summarize the financial aspects of our '24-'26 plan. Before entering into the details of our financing strategy, let me explain or recap or try to expose which is the rationale behind Iberdrola's recently announced proposal to reach a 100% ownership of Avangrid, which is considered now in our base case. Avangrid clearly has growth opportunities in the U.S., mostly in networks, but also in renewables as we have commented to all of you. But this requires an important amount of CapEx. As the Chairman has explained, the largest country where we are going to be investing more, 35% of our total investments is the U.S. In recent years, Avangrid has been cash flow negative and will continue doing so in future years with financial ratios becoming weaker, while the needs to fund this growth and maintaining the investment-grade rating is important because taking into account that we have a lot of regulated companies. So Avangrid needs either to reinvest its profits, changing its dividend policy or to have large capital infusions. And I think it is important that we understand this because obviously, Iberdrola is willing to do it. But obviously, this, as I was saying, means a change in the dividend policy and we will probably also have to make capital increases. At the same time, Avangrid's market performance has reduced its value as a currency for potential transactions in the country. With this transaction, in addition, we are increasing our exposure to the U.S. and to networks as nearly 80% of Avangrid's net income comes from networks. And also, we simplify Avangrid's corporate governance structure. Finally, we are expecting this transaction to be closed between 9 and 12 months. But as for the plan, we are assuming that we close the transaction on the 1st of January of '25. Passing to the macro hypothesis of the plan. I mean, in the annex, you are going to find a detailed explanation of all the hypothesis, which are very much aligned with the market forecast and we expect a progressive stabilization of the macro scenario with inflation under control, gradually converging to central bank targets, but lower than it was expected previously. And interest rates are also going to normalize with short-term rates starting to fall this year. Long-term rates will finally be above short-term rates from '25 onwards. Regarding credit spreads we think that we will remain stable during the plan. GDP is expected to recover gradually in '24 and '25 in the U.S. faster than in Europe, with Mexico and Brazil growing more than the U.S. and Europe. And finally, regarding the FX, the U.S. versus our previous plan has depreciated from EUR 102 to EUR 109 per dollar. The British pound will be in line and the Brazil real will continue to be supported by good economic data and political stability. Now I'm starting the Ignacio [indiscernible] section, which he has insisted that I put the sensibilities to this at the beginning. We were a little bit [indiscernible] on that because once you see the sensibility, you are stop -- going to stop listening to me, but in any case, Ignacio has warned. So based on the mid- to single high digit -- mid- to high single-digit growth of the net profit, you're going to see what are the sensibilities that we have to energy prices in Spain, in the U.K., distribution returns also in Spain, interest rates and FX. We think that this hypothesis are quite conservative, especially compared to the hypothesis of some of our colleagues, if we would have put the same hypothesis as they have put, we would have been showing an increase in profits of around EUR 300 million more than what we are showing right now for '26. The important thing to show here is that the -- as you can see, the expected volatility of the net profit is low and lower than others due to our business profile and policies. As you can see in the slide, EUR 5 per megawatt hour change on electricity prices in Iberia from EUR 60-megawatt hour base has an impact of only EUR 95 million in the net profit for '26. This is on a net profit of EUR 5.6 billion, EUR 5.8 billion and coming from a low start, which is around EUR 60 per megawatt hour. As you can see also, the impact in the U.K. is minimal. And another important element to point out is that the 50 basis points of higher or lower remuneration of our networks in Spain for '26 will have an impact of only EUR 40 million in our net profit, okay? So I think it is also important to say that if in Spain raises the remuneration that could cost a lot to the consumers and you see that this is not the case. In terms of our sources and uses of funds, let me enter now in the details of the financing plan. During '24-'26 period, we'll have to fund around EUR 55 billion of CapEx -- sorry, EUR 55 billion of CapEx will be around 75% of our needs. 4% of our total needs will be to fund the transaction of Avangrid and around 25% of our total needs. So 1/3 of the investments are work in progress that will not contribute to the cash flow, but it will assure future growth in our results. Shareholder remuneration and minority interests will be around 23% and our remaining 2% will be used for a cash tax payment linked to the Mexican deal. As you can see in the slide, 67% of our needs will be covered by our increasing funds from operations growing at mid-single digit on average since '23. Those limiting additional debt to only 11% of sources, 10 percentage points below our previous plan. Contribution from asset rotation and partnerships will be around 22% of the sources. But the good news is that around 84% of that is already done or in advanced stages, which is important. As a consequence, our financial solvency will improve given the limited increase in financial debt and the growth of our FFO. In terms of what are we expecting in terms of returns on CapEx. Our network business, the return is aligned with the well-known regulatory schemes that Armando has explained and an average EBITDA over growth CapEx will be more than 10%. And in renewables, with different routes to market, given our selective approach to investments, we will be able to generate more than 200 basis points over the cost of capital with an IRR between 7% and 12%. For example, in the offshore business, we are only assuming that we are going to invest in one project where we can choose from several projects in different geographies as Armando and the Chairman has explained. So we expect that the group CapEx will have a higher than 8% IRR and our return on capital used will increase from -- to 7% along the plan. This is 100 basis points higher than what we had in our previous Capital Markets Day. And this is without taking into account work in progress and additional potential value creation from partnerships. As I was mentioning, we have a partnership model capable to attract Tier 1 investors, allowing us to raise equity with lower dilution and issuing in the capital markets. We continue taking advantage of high volume of capital to be deployed by 100% equity funds. As I mentioned at the beginning of the presentation, our EUR 7.5 billion target has been more than achieved as of today. Our current plan has a EUR 12.2 billion target for the '24/'26 period, EUR 5 billion in partnerships and EUR 7.2 billion in asset rotation. And as you can see in the slide and as I mentioned earlier, 84% is completed or in very advanced stages. Let finally -- let me remark that on our plan, as in our previous Capital Markets Day, we are not including any asset rotation in the EBITDA. So let me repeat that, that we are not including any asset rotation in our EBITDA or in our net profit. And just for an example, just to know, we are going to have a capital gain in Mexico this year of EUR 1.1 billion that we are going to use to apply to efficiency measures on others that will secure growth for future years. Looking to the net debt evolution in '25, we expect to have EUR 51 billion of debt in '25 and '26 with EUR 54 billion, below the EUR 57.5 billion of our Capital Market Day in '22 for '25. Considering that we have the policy of financing the group in the same currency as we have the FFO, the non-euro currencies weight is going to increase, and the debt in euros will be falling from 34% to 26%. Regarding our interest rate debt structure, will continue to be prudent with a 69% average debt at fixed rate and higher -- which is higher than the 61% of EBITDA that we consider not inflation linked or variable. As you can see in the slide, we have a percentage of fixed debt higher than the income structure in all currencies with a 94% fixed debt in our U.S. business, which is basically fixed, both in terms of regulated business, but also a lot in terms of our renewable business as most of that is contracted with PPAs. In the British pound, we have a very high percentage of covered debt, but basically because we were able to [indiscernible] at very attractive levels. And the only area in which we really maintain without fixed debt is the real, as we have said, the revenues are 100% inflation linked. Another important element of this plan is that our cost of debt will be decreasing along the plan despite higher cost of currencies increasing weight to end 2026, around 4.4%, down from around 5% in '23. And what I can say also is that one of the losses that we have in the EBITDA due to the, for example, not the PNM acquisition is the fact that we are going to have significant lower financial expenses in '24 and '25 compared to what we had expected. In terms of solvency ratios, as I was mentioning, we are with strong solvency ratios throughout the plan, comfortably above the rating agency thresholds and clearly improved from the Capital Markets Day of last year. So our net debt to EBITDA will improve to 3.2x in '25, 0.2x better than the target of last -- of '22. Our FFO over net debt will raise to 24.5% in '25 to 150 basis points over the previous target. And in '26, we'll still be at a very comfortable 24.2% levels. Although as you know, our ratio calculations differ from those of the rating agencies, these ratios are comfortably well above the threshold of FFO over net debt how the rating agencies calculated. According to rating agency calculations, we will be in a range of around 19% to 20%. So this is the top part of the BBB+, Baa1 rating that rating agencies have. So we have space to grow. So rating agencies, which is important sometimes people are saying that our leverage is higher than others. But taking to account that rating agencies normally require lower threshold for our BBB+, Baa rating because we consider -- they consider us as one of the energy transition leaders and have higher debt tolerance due to our business mix, good diversification and visibility and predictability of our cash flows. Regarding other elements like hybrid, I would like to comment that Iberdrola is committed with its current hybrid portfolio. Our hybrid strategy will remain supportive of our current ratings. For this plan, we will remain focused on the refinancing of the outstanding stock. In terms of our financial needs through the plan that will be around EUR 22 billion, EUR 17 billion refinancing debt maturities, along with EUR 5 billion of additional debt. We have already EUR 3 billion of our new needs already signed basically with supernational entities. And in terms of coverage, basically, our needs are going to be covered through the bond market, 55%. And as I was mentioning before multilateral export agencies and development bank loans, are going to increase significantly this portion from levels of 17% to levels of around 35%. And this is very important because this type of funding is fully aligned with the target, so our investments are fully aligned with our targets. And it is not subject to capital markets volatility and providing financing at a very competitive prices, partially linked to the market evolutions. Bank loans will be the remaining 10% and a low level that allow us to maintain nonuse capacity for other products like credit lines. In terms of liquidity, we will comply with rating agencies' requirements for what they call a strong a strong or adequate liquidity. At the end of '26 we'll have around 22 months coverage with EUR 21 billion, EUR 23 billion of liquidity. We will optimize our liquidity position and cost reducing our cash balances and using, as I was mentioning, credit lines that will be all based on sustainability KPIs. Our expected average life of debt is going to be 6 to 7 years as we prioritize regulatory cycles versus asset useful life. Also, the 6 to 7 years average life debt -- of debt optimizes our risk cost perspective. And regarding our risk management, you know very well what has been our strategy. Basically, we have a structural FX hedge. And what we do is to hedge our FFO over net debt ratio, which is the most important ratio to protect our financial solvency at the rating of the group from FX fluctuations. And in addition, we annually hedged the net profit exposure to protect the P&L of every year to FX volatility. To finalize my presentation, let me move to the -- let's move to the ESG sustainability side. We have classified our sustainability and ESG priorities in 5 strategic lines of action. The first one, which is boosting electricity as the best available energy source and it is the pillar of our business model as the Chairman has commented and the main growth driver for us. And we will do this while protecting nature, promoting a more sustainable value chain, strengthening human and social capital and finally, maintaining our good practices in governance. This strategic approach, embedding sustainability into industrial operations, assures the provision of a shared value to all of our stakeholders. And we are also, as in terms of the financial performance, we are also progressing well towards the '25, '30 targets. We have added two new relevant KPIs. The first one is related to the European Union taxonomy CapEx alignment, and the second one has to do with promoting sustainability with our suppliers. We have also widened the scope of our targets. About circular economy, we are not only including circular economy for blades but also for photovoltaic panels, which is very important. In diversity and inclusion, we are widening from gender diversity to other criteria like racial diversity and others. And finally, our training target has been widened to a green skilling to focus the effort into strategic capabilities. Additionally, we have increased the level of ambition of seven targets. I want to bring the attention to the improvement in our specific emission targets for '25 by 14% or by 23% from 2023. So now our forecast is to achieve 6 grams in '25 per kilowatt hour produced. This 60 grams is 4, 5 or 6x lower than what our peers are emitting. Also, we have increased the target for storage in 6 gigawatt hour. The only target that we are diminishing is hydrogen, not because we don't want to do hydrogen that we would love to do more projects, but we are still waiting for the funds to come to the projects that we have presented. And as the Chairman has mentioned, 90% of our total organic investments will be aligned with the EU taxonomy. And therefore, will provide a large pipeline to be financed under green principles. So we are basically use the green principles to finance our needs. Sustainability will be more linked to credit lines and commercial paper. During the plan, a minimum 50% of new financial instruments will be green or sustainably labeled. And as a consequence, we are forecasting that we will have more than 70% green sustainable level financial instruments at the end of the plan. I would also like to stress that we are very proud to have got the green rating obtained in the transition assessment by Sustainable Fitch. Let me conclude this presentation remarking that we will continue delivering substantial value creation with mid- to high single-digit growth and low risk, optimizing the risk-return profile while maintaining a strong balance sheet, a visible and predictable shareholder remuneration growing in line with results and at the same time, being leaders in sustainability with the best practices in environment, social and governance. Thank you very much.

Thank you, Pepe. So to conclude today, we are presenting plan that face the key challenges and opportunities of an industry under deep transformation after two decades in our case of implementing a clear strategy. So I think we are not giving surprise, some of you were commenting to me. So to attend to Iberdrola's meeting is no surprises, which I'm very proud that we are not giving surprises. Our [ substantial ] record of financial strength and growth and the confirmation of the trends we anticipated 20 years ago, accelerated by the recent macro geopolitical landscape lead to reaffirm our vision, electrification is unstoppable. Increasing the user electricity is the quickest and more efficient route to solve all the key issues affecting today's industry and accelerate economic and social development across the world. Self-efficiency and security, I call [ FIFO55 ] many years ago, I'm already calling fit for self-sufficiency in Europe, energy efficiency, affordability and competitiveness and, of course, decarbonization as a consequence of all those things and the benefit of a positive impact on jobs and industry of the massive investment required. In this context, building on the strategic pillar presented to you in November 2022, this plan will allow us to reinforce our competitive advantage by increasing even more our focus on networks that will now represent 60% of our next CapEx up to 2026, reaching EUR 54 billion of total asset base on this year, which EUR 15 billion will correspond to transmission, a new key growth driver that will more than double its EBITDA in four years to reach over EUR 1.5 billion. In addition, we will increase our presence in highest value renewable energies with more than half of renewable investment allocated to offshore wind during -- driving 2026 an increase of an extra EUR 1 billion in EBITDA compared with 2023, reaching EUR 1.8 billion in 2026. With more growth in 2027 and beyond due to the assets already under construction we put in operation during that year. We will also benefit from the upcoming changes in the wholesale market, driven by renewable penetration, thanks to our unique position in manageable renewables and storage built over decades with more than 100 million kilowatt hours already in operation and 20 more million kilowatt hours under construction, they will be operating by 2026 with another 150 million kilowatt hours additional pipeline. And we'll continue optimizing our customer portfolio with around 85% of our electricity output for 2024 and 2026 is already sold and a strong combination of leading industrial companies with huge growth prospect retail customers and regulated contracts. This model will drive EUR 36 billion of net investment in the next three years to reach net profit for 2026 between EUR 5.6 billion and EUR 5.8 billion, not including any capital gains, as Pepe has already mentioned. With shareholder remuneration growing in line with the results, driving a dividend per share of EUR 0.61 to EUR 0.66 in 2026 and improving even more our strong financial ratios. Let me highlight that this plan relies on conservative assumption, I would like to insist conservative on energy prices and macro assumptions compared to some of our peers. Just by adjusting the wholesale market price in line with their expectations, not profitable growth in the line with Pepe has mentioned, EUR 200 million, EUR 300 million, EUR 400 million extra profit more. And of course, we will continue creating value for all, thanks to the combination of financial and social dividend, which is the core of the unique business model. Let me end summarizing a few words, the value proposition we are presenting today, which combined our strategic pillar of focus on network geographical diversification and balanced energy/customer mix, a total commitment to financial strength and BBB+ rating, sustained growth in results in dividend and a strong and diverse team well known by all of you that combine experience and stability as proven by our track record of increasing and predictable returns and over-delivering our estimates. You have the full commitment that we will continue working in the coming years based in all this strength to continue delivering sustainable value for shareholders, employees, customer and associated with them. Thank you very much and now we'll be more than pleased to reply to all your questions. Thank you.

Okay. We are going to start with the Q&A. Manuel Palomo, a lot of hands, sorry. I will try to give the round to everybody. Manuel Palomo, please.

Well, thank you very much. Two questions, both at the high level. It's Rob Pulleyn from Morgan Stanley. First of all, congratulations on another very impressive plan and look forward to digesting that. So firstly, on a very topical subject and given you raised it early, I assumed you wanted the question. May we ask how big this data center power theme could be? As I look at Slide 55, you talked about 7 terawatt hours already, how big growth area could this be for Iberdrola? And should we consider it mainly through tech-backed PPAs for new renewables? And secondly, maybe a little bit or could, on the balance sheet, given you've just outlined this investment plan. But as I look at Pepe's comments and the headroom versus the credit rating agencies, 24% FFO to net debt by 2026, 3.2x net debt to EBITDA is down quite a bit from recent years. So why is this the right level of gearing now, especially when you have 85% of the plan locked in, A countries and a network bias? Or should we just assume there's actually quite a lot of headroom and dry firepower for incremental investments should they arise? Thank you very much. .

So I think on the first question related to the data centers, I think we are in this moment something like 7 terawatt hours already contracted with PPAs. Today, we just announced another PPA with Amazon here in Britain, precisely for their data centers. So -- and I think it's an area which we are very active. We are already in contact with very many developers in different countries because we consider that it's going to be an important demand in the future. So I think this afternoon in one of the sessions with Agustin Delgado, who can really provide you detail how we are seeing this market. I don't know the numbers by memory, but probably that can represent an increase in the electricity demand and on the range of 10% to 15% in the next few years. But I think this afternoon, this detail will be provided by Agustin Delgado. The second one is related to PPAs.

As I mentioned, it is true that now we have good headroom for -- in terms of the BBB+ rating. As I was mentioning, we are somewhere between 19% and 20%, which is the top range of the BBB+ rating. And obviously, that gives us the possibility to accelerate investments if needed, et cetera. So I think that, that gives us a good position to continue growing and to beat the targets of this plan, maintaining the financial strength.

Next, Manuel Palomo now, and then I will...

I've got three. One, it's to some extent a bit of follow-up of last Rob's question. I mean, previous CMD in November '22, you took the decision to prioritize investments in networks versus reducing REIT investments in renewables to around 4 gigawatts per year. This time, you go a step further, you move from 4 to 3 gigawatts per year while increased CapEx in networks. However, balance sheet, super strong at 3.2x net debt to EBITDA by full year '26, which arguably is much better than other even pure regulated peers. So my question is, what is the rationale for the lower yield installations in renewables, maybe more challenging returns, trying to make company free cash flow generation more predictable. Hence, improving the risk profile or maybe you're just trying to prepare the balance sheet for an additional acceleration in CapEx. Second question would be on storage. You highlighted the relevance of storage. And well, you see that it is key to facilitate the transition. On the one side, you mentioned that Iberdrola has done a lot of investments in pumping hydro in Spain also and in Portugal, also batteries in Australia and the U.K., but what prevents you from increasing investments in batteries in other EU countries or maybe asking it another way around, what would you need to accelerate investments in batteries, which apparently are super needed for the energy transition? And my third question is a bit on the Spanish networks. When I look at the plan for the coming three years, you've got EUR 21.5 billion investment in networks, out of which 10% in Spain, which gives us roughly EUR 0.7 billion per year in the country. Is this one of the potential hidden growth drivers? What would you need to boost investments in networks in Spain and if you could assess to what extent you could increase the CapEx in networks in Spain.

So the first thing is, you're right, we are not investing more in renewables in networks, we have such a balance sheet. So well, I think in networks, you're seeing that we have already public service obligations. So I think we are not investing what we like. We are investing what we have requested. So the fact yesterday was with the chancellor here in Britain and they were commenting about what is the needs of this country for new transmission. And I think we have just been already given already this East Anglia Eastern link connection, but now is planning as well another reinforcement of the Eastern Link. So I think we will -- we have to have room to make as much as it's required. [indiscernible] . In the state, we are -- this rate case compared with the previous one, we are more than doubling. But I think in any time, we can be called already for making more [indiscernible] because the service is required. So I think we have to have certain additional room for making whatever is needed that one. In terms of batteries, we are making in some countries. I think in the storage, we are in the countries we have already like spending, which we have already still possibilities of changing our actual power plant, hydropower plant in reversible we are doing -- Armando was mentioning 3 that we have in construction. But we are putting batteries as well. I think we are putting batteries in Spain, in some areas. We are putting batteries in Britain, here in -- close to Glasgow, Whitelee. We have a huge battery, which is beside our onshore wind farm. We have batteries in Ireland. We have -- but I think that we are talking about what is the -- those [indiscernible] we are more obvious. It's more obviously those places where we have already a huge number of retail customers and we can already stabilize and provide already predictability and stability of our margins. In Spain in terms of remuneration of this one, you now expect we are under go, which we have a maximum of investment [indiscernible], which is I think it's [ 0.7% ] correct? correct me, the GDP, that makes this EUR 1.7 billion, EUR 1.8 billion for all sectors together per annum and that is what we have today. I think we are already making the maximum, we are allowed to make. Now that is under review. But if it's changed, in that case, of course, for change reason of this service, we would be ready to put more money if it's already requested to put more money. So I think those are the main limitation at that one, okay?

Jenny and then Fernando Lafuente, Javier Garrido.

It's Jenny Ping from Citi. Three questions, please. Just firstly, on politics. In some of your key jurisdictions, whether it's the U.K. or U.S. Obviously, we've got elections coming. I just wondered whether you have any commentary in terms of the expectations there and some of the policy changes that you're seeing, expecting in Spain. Secondly, just a follow-up from earlier on M&A. I presume if -- given you talked about asset rotations in renewables, the network side is much more likely to be acquisitive and whether you've got any commentaries around some of the discussions you're having there on the M&A side? And then lastly, just looking at your CapEx plan, 50% roughly close to of your CapEx is going into the U.S. Networks business in the network division. Can you just talk a little bit about how you envisage the gap that you have seen in the past in terms of the allowed rate of return and the achieved rate of return in the U.S. and perhaps that's one of the reasons why Avangrid shares has been trading where it was trading. So how do you envisage that gap to be closed.

So first, I think you said in some countries, almost in all countries, we have elections. So we have election in U.K., we have election in the United States. We have election, several elections in Spain. We just had already election in Portugal. We have election in European Union. So I think where we have not election? So I think we are a company which is 122 years old. We've been living under different regimes, under different governments and we've been able to manage the situation, which -- whatever those ones that will come. I think in the case of the United States, so we've been already under Obama administration, under Trump administration, under Biden administration and now whatever it should come. And why? Because what we have clear is what we have already is to serve the citizen, it's not to serve the politician and we are providing the service. In a particular case in the United States, I think the stability, and I link with the last question you made, the stability is given because the regulation is not dependent on the networks. It's not dependent on federal authorities. It's dependent on the states. So it means our rate cases are in each of the state we have a negotiation and the terms of those one are those what we fix in the terms of investment return for the next few years. Particularly now, I think it's we just -- last year, we signed the largest utility we had already in New York state. We signed already a rate case for the next three years up to 2028, which is already just giving us a return, which is on the range of, correct me, 9.5%? So 9.5%, which I think is in line with what we are expecting. And more than that, they are already requesting more than doubling investment in the state. I think it's the numbers what we have foreseen is a range of EUR 6 billion in CapEx investment in the all New York state. Similar returns [indiscernible] state, similar returns are in May. And so I think -- but I think it's important that you fix already that our -- 80% of our business in the State are linking with networks and networks are depending of the -- not the federal authorities, is dependent of state authorities, state regulators. The second thing was related to 50%, yes. So I think that is the reason why we are investing in the State. I think United States' networks, stable, predictable in a country we need a lot of investment, a lot of CapEx in the State because the grid is already -- most of it is [ not negotiated. ] I think the grid that you can see, you go to New York or you go whatever state of the Eastern part of the United States, the grid is -- looks quite obsolete. We compare what we have in Europe. And if they need already expansion, reinforcement, digitalization, and that is what is already fully required. There's only one -- yes, yes. Well, I think it's -- well, in the past, well I think we changed the team is just because we are trying to improve. So I think last year, our results were improved a lot with the new team. And I think what I can tell you the result we are achieving this moment are in line with the volume for the year, which I think is on that one. I think what's very important to sign the rate cases, we signed last year. So I think with any of rate cases with realistic terms in terms of target of service in terms of, let's say, how the storm is going to be treated. It's one of the big problems we are facing. All this in a more clear and [indiscernible] much better on that one. So I think we are -- we can tell you that last year, the result as you can see, I think it is much better than the previous one. And that's why the network business is providing what we expected to provide because the team is already doing the necessary for that to happen.

Then we give two gentleman here in the first line and then I'm committed to go back to the room, sorry. .

It's Fernando Lafuente from Alantra. I have 3 questions, please. The first one is a follow-up on the capital gains on Mexico. If I understood correctly, Pepe, it's net of taxes, and does not include any kind of provision, and it's not in the financial targets, right? And the question is, you mentioned that you're going to use them for efficiencies. Where do you see the biggest efficiencies within the group? And if these efficiencies could imply in an upside on the targets that you have for '26. The second question is on the -- coming back again on the balance sheet. This buyout of Avangrid, it's kind of a bolt-on acquisition to improve the, let's say, the risk profile of the group. Are you considering additional acquisitions of similar size, EUR 2 billion, EUR 3 billion, EUR 4 billion, that could add to the growth of the company medium term? And the third one is on Spain. On the one hand, on the mix of generation and your views on first nuclear and secondly, the role of therm assets in this context in which in theory, nuclears are going to be closed at some point in the next few years. And what should be the use of your thermal capacity going forward? And the second related to Spain is on networks. If I understood correctly, the plan includes a flat return for '26 on your networks in Spain and these sensitivities of 50 bps up and down. What are your conversations with the regulator regarding a potential increase in these returns for networks?

Yes. Well, as I mentioned, we are going to print and we're going to have a capital gain net of taxes this quarter of EUR 1.1 billion, taking into account also that last year, we had a negative impact of EUR 160 million. And obviously, we are not planning to -- we are planning, and I think that is a better answer for the Chairman, I mean, to do efficiencies and other elements that will support growth for our results in the following year. So in our guidance, we have not included the capital gain -- any capital gain coming from Mexico despite the fact that it's a large capital gain.

So I think on the point related to Spain rate case, I think, as you know, the rate case is -- we have rate case up to end of 2025. So I think it's the terms of that one is clear. I think we have already just a cap for investment and we have already a remuneration, which is well below what we have in other countries. The talks we have with them is in this moment is how -- if this cap of investment can be already ends with it and to have already the possibility of investing more, which I think is fully needed. And in terms of remuneration, our expectation is that they will be aligned with this in other countries. So I think you see, you compare and we put in our presentation, the remuneration in different countries, either United States or Britain has already similar return with the central Brazil with inflation. So I think the only reason why Spain is going to be different than other ones. So I would expect. Nevertheless, we are talking about 1 year in the whole project. In the network business, we represent 20% of our regulated asset base compared with the whole group. So I think it's Spain and network is important, but this only represents 20% of our rep. 80% is another country, which will define all our returns up to more than end of the period. I think that is what [indiscernible] one. Well, I think in nuclear, I think I'm not going to repeat this thing. So I think they are already, a protocol already signed in which we agree with the government to make already a process of closing this power plant from '28 to 2035. I think we are already -- would like to respect that one. But I think in any case, technically, this nuclear power plant with some investment can already extend their life easily. But I think it's the question -- economical question. I think its on -- are requesting to extend life of those one. If they are already properly compensating the CapEx -- extra CapEx we need to make. I think we're ready to analyze that one. But today's the position is with respect what we have already signed.

Javier Garrido, [indiscernible] Javier [indiscernible] on the back of the room.

Javier Garrido, JPMorgan. First question would be on your investment targets. You have gradually shifted towards 2/3 networks, 1/3 renewables, what can drive you back to a more balanced 50-50 approach, is you need more power demand in Europe? What would be driving you back to investing more in renewables given that you have the balance sheet to do it? Second question would be on the transmission business. You have highlighted the strong growth in that business. And I was wondering whether you would have any plan to give more visibility to that business by separating it from other networks in order to make it clear as a driver of growth and profitability. And also, you would consider entering the transmission business in other countries given that there are fewer barriers on entry than in distribution, if that will be one of your plans for the future? And then the third question is a very specific one to Pepe. I noticed that you are looking for a significant reduction in the cost of financing in euros, and I think in British pounds was as much as 110 basis points reduction. Given your views on short-term rates going down, but long-term rates stay now being higher, you can elaborate on how can you see such a big drop in euro -- in the cost of financing in euros and pounds, given that you have a high proportion of fixed cost net debt?

So I think the first one, why to invest more in networks than in renewables. So I think I was -- is not new. I think I was saying that in the last -- in 2022, we said that we are going to prioritize our investment in networks. We are going to be selective in renewables. I think some where it was a shock for certain of our colleagues and nothing is -- and I think we are seeing that what we did was really the right position. We have the fortune that we have already network this positioning in countries, which require a huge investment on that one, and we are prioritizing because I insist on the one -- we have a public service obligation. And second, we have already predictable clear, predictable returns, and that's why I think that we are prioritizing. I think with transmission. Transmission is not something is not new. I think the fact we are in Britain, we have specializing for transmission. So it's a business we have a Scottish Power distribution, Scottish Power transmission, they are 2 different license. But traditionally, we put inside of networks. But I think now we are seeing that, that is -- traditional has been already an area, which is quite sleepy, let's say, it's not requiring much investment. It's very stable, predictable, but it's not already a growing area. Suddenly, because of the comments I was making in my speech, is transmission is becoming same distribution crucial for many things. And that's why it's already approved. Yes, growing very important growing area of our business. And we feel there is -- we need to have full transferring with you showing that, that is area we exceed before, but we have not already, let's say, provide special information because we put inside that the network is time to show the has already just a clear growth area of our network business. So -- but I think it's a growth area in Britain with transmissions as we've just completed in the Western Link connection, not with sterling and some more demand on those one. Same thing in the case of United States, with this, we have the transmission already in Maine, but I think this new transmission line to connect Canada with Massachusetts. Same thing in the case of Brazil, where we were not already present and now this option that we've been awarded in the last few years. Now we are starting already generating cash flow in the moment, those ones are putting in service. That's why we are just presenting and I think it is a very relevant business. I think it's not something we can be already putting in sight of the -- of our network business alone because in a total revenue by 2026 in the range of EUR 54 billion, EUR 55 billion, EUR 15 billion is going to come or this revenue is going to go from remission. That's why we are going to from now, we are going to present to seller as a business with us already providing a lot of cash flow, a lot of growth into the company. So 1 or 2 go and other countries. Well, I think we are in networks, we are focused in the countries where we are. I think we are not going -- we are not already planning to look for another alternatives in another country. So I think to make greenfield transmission in some countries. I don't know if that is nice as because I think it's very complicated, requires a lot of skill and a lot of knowledge in each country. So I think being already having the present, we have already in Britain, United States and Brazil, where we are allowed to make transmission, not in the case of Spain, as you know, we are not allowed. So we have more than enough for in our growing expectation. And got more interest rates. To Pepe.

No, for 2 reasons. First, because during the years that interest rates were very low, and we have commented this before. we have been doing interest rate forward. So we have been able to fix part of our debt that is starting now at levels below what you see today in the long-term interest rates, okay? This is the first reason. And the second reason is that in the case of East of Anglia 3, we also fixed our cost of debt ahead. So the 2 elements are allowing us to have lower financial expenses in euros and in pounds, given our -- this policy.

Also Javier [indiscernible] and then we are going to stay in the back of...

Just 2 questions. The strategic ones. I will rephrase Javier's question. When do you expect the next renewable cycle? So basically, everybody is cutting down on renewables. There is priority for networks. When do you expect? Is that before 2030, after 2030, if you can guide us? And the second question, you said electrification is unstoppable. I guess, low electricity prices are helping. What would you require, how long would you require electricity prices to remain low in order to have a sustainable investment in electrification of the economy.

So I think in the -- we also said what are the drivers of that one. I think in the western countries, I think the drivers is a part of the demand, is the decommissioning of the existing power plant. So I think there are many power plants, which are at their end of the lives. And I think those power plants have to be [indiscernible] statistic for something. And always comment the decision has been taken by the Australian government. Australia is a country with majority of their supplies coming from coal. And then in my recent meeting with Albanese, with the Prime Minister, they had already made a plan in which they took the decision what substitution have to be made to build new coal power plant or to build new renewable power plant using their own natural. Their natural resources of coal, but are not sustainable. The natural resources, which is wind and sun, which are sustainable. And they decide to move to the direction of investing and transforming their mix on that one. So how that is going to evolve, how the existing power plant is going to be closed. That will be a driver of that. The second driver is the demand. So I think you see every time sectors like transport, sector like data, sector like housing and buildings sector, industrial sectors, sector like hydrogen. So what is going to happen with hydrogen, it depends on the support with the countries are providing on this one. So all those one will be the drivers for they want. And that will be not unique, depends in this country. So in the case of Spain, we have seen that unless our industrial transformation will be faster or interconnection increases we are already giving the enough support for making more hydrogen which can already injected, this green hydrogen to the industry. I think the flow of the demand is the picture that I showed to you, which have been -- there are certain hours of the day, where we have accessed toward the demand we have. And things in our case, to our storage capacities. We can already keep and maintain our margins in a good position. So the second, I think it depends how about the demand. However, the closing of the existing premises and the demand is now recently Germany is providing EUR 4 billion for already introducing massive green hydrogen or hydrogen into the industry. So which I think that sector is going to accelerate the construction more renewable for that. So in Britain, now as well they have some plan. They have already allocated certain hundreds of million pounds in which we have been benefiting as someone for hydrogen. I think that is -- I think we have -- it's a plan of 3 years. So I think we are not talking at 10, 50 years. You are talking in 3 years, and we would like to show to you a plan realistic, not dreaming. Realistic means that Armando was showing his plans where they are today under construction, mostly. So what we are going to make in '29, let's see in '27, we will present to the new plan. We'll show you what we are making for that time. Now it's '26. In '26, we would like to show you things what you can touch. Nothing that you can dream with. So I think it's touching. So offshore. Offshore is going to -- is now in construction, by '26 will give EUR 1 billion extra EBITDA. So -- and that is realistic. In transmission, in distribution, we are not dreaming. It's rate cases which is already signed. We know the time, and we know what is the amount of investment we are awarded for investing in those ones. So that's why. I think that is [indiscernible] for your question, I think, Javier, thank you.

Second one is related to prices of the [indiscernible]?

Electrification of the economy.

Of course. Of course, I think the drivers of electrification, there are 2 things. I think we have already learned during the last 2 years, what is the risk of external dependency of fossil fuels. So volatility we have been introduced as a consequence of the problem with Russia, Ukraine, et cetera, et cetera, Russian gas, we see what happened, but that is not the first time. I think my -- in my years in this company, we have already had 3 energy crisis. So time to time happens something in some part of the world, which introduced volatility. Good can provide the renewables is stability, predictability. And I think that is why the large corporation are signing with us. So PPA is long term with a price, which is not based in the volatility in the fossil fuel market, is based in our cost. So that is a good line. I think last year, we were the company in Europe. We will sign more PPAs, if we continue Why? Because we are not depending what is going to happen somewhere else in the world for whatever reason, there are lack of supply of whatever fossil fuels, we can already generate this volatility. And the big corporation to make that one. And as much companies are understanding -- then the most important for their business is not already being dependent what and things where they cannot manage. So as much people are signing that one. I think Mercedes in Germany, we are already 80% or 85% of their energy supplies mean for ourselves with the PPA on the production we have in the Baltic. So the business is not to play with this one. Their business is to make good design of the car, good marketing the car, whatever thing and that is their business. Same thing is our, is not ready to see how the things at the world, is how we can make more efficient our power plant. So that is our business. Our business is to be depending what is happening somewhere else to try to doing that is how we can make this power plant more efficient. And that's why I think that has already been every time more and more accelerating. Every time, more and more large production is signing, every time more and more industry is signing. The fact -- so as Armando has mentioned. So 100% of our production for DA is sold, 80% of the year is sold, 70% of [ 2020 ] is sold. And what these people are looking, not only what is based in our cost for providing [indiscernible], we can keep our margin, they can already be already quite and relaxed that the prices can already be stable on that one.

Peter and then Gonzalo and we move to another part of the room. Peter, please.

It's Peter Bisztyga from Bank of America. Two questions, if I may. First one, coming back to the topic of data centers. I'd be interested to hear whether the PPAs that you've signed, for example, with Amazon, do they command a premium of any sort over the ones that you signed with Mercedes or other industrial customers? Do you think in future, you'll get bigger premiums for as consumed PPAs rather than as generated PPAs? So that's my first question. And then the second one maybe for Pepe. On your famous sensitivity slide, you're -- interested to understand a little bit how you calculate the sensitivity to the EUR 5 per megawatt hour move in Spanish power prices and particularly what assumption are you making about retail prices in Spain? Are they moving by the same amount? Or is there a different dynamic?

So I think on the first one on the PPAs. Certain, I think the PPA is based on the household business. What is our cost? What is the margin, who have already in this one? And whether this price is convenient for the buyer or not? They are an important thing on this one. I think the data centers need electricity 24 hours a day. It's not already as energy according to -- with one particular or another one. I think we are one of the few who can provide this 24-hour service. Because in some countries, because we have another alternative energy supply centers and storage is an important part. Another one is hydro, another one is -- another thing what we can already provide that one. I think the other question in green and they're requesting already 24-hour service. And I think that we are already, of course, we provide 24-hour service, we have the premium toward what is the simple PPA base in a one particular power plant. So another one, Pepe?

That's for -- sensitivity. Well, basically, what we have done is we have as Chairman and Armando have mentioned, we analyze how much electricity we have already sold to our clients. We have also -- and then we analyze obviously, what is the maturity profile and the churn rate. With this, we have an open position and in different years. And then we are assuming that there is a renew of this open position at levels of around EUR 60 per megawatt hour. And that is what gives the sensitivity impact. I don't know if you want to...

No, no, I think -- I think I was very clear on that one. So which I think we are expecting a lower retail prices, but I think it only affected a part of our global business. So I think total productivity sold at the price which is already agreed. But I think the retail -- a few another one is already a rotation, and I think the [indiscernible] was renewing the lower prices than other one. And that is affecting not to the whole production, only a part of the production with this management is renewing and we have already gas reduction of prices, which -- this is compensating with extra production, mainly, I think it's for the new renewal we are already putting in service. And I gave you already the details, only offshore represent EUR 1 billion extra. So which I think only with offshore, we are already more than offsetting or potentially offsetting all those ones. I think in Mexico is as well. It's not a question of price. It's a question that we divested, so it's not contributing. But for that one, I think we have 6,000 extra megawatts of renewables, which are generated as well at that price -- at this new price.

Gonzalo. And then...

Gonzalo Sánchez-Bordona from UBS. I have a few questions related with networks since you seem to be finding new investments pretty much recently. I was wondering on your plan, you're saying that 80% of your expected investments in networks up to -- by 2026 will have an agreed regulatory framework. So there's 2 questions there for me. One is, what are your assumptions in terms of -- I mean, on Spain, you more or less said there is flat return, but I'm trying to understand what is your assumption for everything else. Are you assuming same regulated returns in the 2026 renewals or whatever. So -- and effectively, would that mean that, that potentially was it fair to assume that potentially there is some upside on the numbers if rates remain at high levels as compared to the previous review. So that would be the first question. Second question is on your conversations that you're having or your expectations regarding regulatory reviews in the next few years. Are there any clear sources of potential upside on investments similar to what you've had in New York, you already kind of anticipating that a little bit earlier. Is there anything that we should be expecting looking forward in terms of big investment hikes in the next 2, 3 years? So that will be the 2 sources of potential upside, I guess. Also on the risk side, you had some issues on NECEC execution. So I'm wondering what is your perceived risk on executing this very ambitious network plan, particularly I think in the U.S., where permitting and other stuff has been a potential issue. And last one also on the downside risk of potential risk that I'm seeing on this plan. Is you are effectively increasing significantly the investments in networks. Is there any -- or are you seeing any issues with securing supplies for the kind of execution that you need?

Thank you, Gonzalo. So I think, as we mentioned, rate cases, 85% of the rate cases are pre annual. That's fine. I think we are not changing the rates every year. I think it's signed -- the New York [indiscernible] is from '23 to '27, or '28. So I think that we know the terms, in terms of remuneration. The investment, they allow us a certain level, maximum level of CapEx, which I agree with you. In many cases, they are already clamming the regulators saying, we need a [indiscernible] expansion of the one for whatever circumstances. -- new demand or whatever thing. And we are already ready for making that one. So there is a real upside. But if they request more, we have to make more. So that's clear one point. So intense permits, I think in the regulated, we have certain rules without facilitating the permit. So it's in the case of distribution. So I think that we are much -- we have rules in most countries with a low asset to make things in, let's say, more agile manner that another traditional permitting processes. In transmission, the main ones we have today in construction are already with all the permits in hand. So NECEC, United States, finally after 3 years of delays of discussion now is all the permits, and we are already since mid of last year in full construction that one. Same thing in Brazil. And in Britain, I think those that we are already the permits away for those ones. And in terms of execution, so it's good that you asked to that. I think is if we are well known, then we are the best-in-class in execution. So I think what we are committed to doing something always, always, always, we made in time, in price and according with the schedule we have already fixed. So I think I'm not any doubt of my engineers, electricians, economists and whatever, then they -- we will fulfill the teams in terms of execution according with this plan. So no doubt. I think we find out big, big problems in certain of our project in France, for instance, Saint-Brieuc. Saint-Brieuc [indiscernible] project for making that one. I think traditional offshore is made already in the [indiscernible] and I think suddenly we discovered, which is basalt and is already granite. And I think instead of melt , we need to drill. And I think we need to invent new system for drilling for this huge, but we did, now is in place, is working, and is producing. So I have no doubt about that one. The execution is a must. Clearly, you have not any out and we will fulfill that one in the step. Thank you for the question of the execution, Gonzalo.

Sorry, we missed a clarification about the Spanish distribution returns for 2026.

Well, in 2026, what I said. I think we have up to 2025, the returns in Spain are the lowest of all the countries we are present in this moment. What we are expecting is in -- even if we present only 1 year in the 20% of our global wrap of the whole regulated business. So it's very small in the comparison that one. But our expectation is they will be aligned with the rest of the remuneration of the rest of the countries. It's no sense then Spain had a different one because it will be no [indiscernible] with the National Plan of Energy Transition, which are already encouraging to make more investment. I think they are not providing already a proper return. I think they are not incentivizing that happen. So as I think I'm sure that is going to be aligned with another one. And I think my feeling is in the mind of the regulatories on this line.

Any question on the right part, here. Well, go ahead, and then.

James Brand from Deutsche Bank. Two questions for me, please. Firstly, on hedging, you've talked about doing more medium-term hedging in Spain in respect to the new kind of hydro, where you would have historically generally only hedged maybe a year or 2. Could you maybe describe a bit more detail what you've been doing there? And then for 2026, we can potentially back it out from your sensitivity, but just to maybe help us how much of the new -- the Spanish new hydro have you hedged already for 2026? That's the first question. And then secondly, on solar, you showed the production profile you anticipate for 2030 in Spain in one of the earlier slides with production peaks more than demand over the middle of the day. How does that make you feel about solar? It's obviously a relatively small part of your overall renewable investments. So you're not going big on solar. But does that make you reluctant to do more solar in Spain? Would you maybe direct your investments more for markets, maybe like the U.K., that doesn't have very much solar already even though it doesn't have much sun, but would perhaps not see that on the [ production ].

So I think in the case of solar it is very simple. I think it's the same question. the same answer that I gave you before. So I feel if the demand is not evolving in Spain or changing because of more demand as a consequence of all these in data centers. Transport, electric vehicles, hydrogen, et cetera, et cetera. If we are not already -- this demand is not increasing on that one. What we are foreseeing with today's solar in construction of planning on that one is going to be mid of the day, a huge excess of this one, which I think there are huge -- excess, the prices will be already done. That's why we are investing in the storage. That's why we are already using and you saw how the trend of our storage facilities are increasing the hours of they are already working. We are already buying electricity in the hours with excess at low prices and we are already providing supply and electricity in the hours with the demand is much higher and the prices gone much higher. Making this institution of the CCGTs of gas. So I think our manageable renewable, which is a storage, hydro are already just been the substitution at a better price than the inefficient cities which are already just is not the same thing, the price of CCGT, where they're working in baseload then we have stopped and go stop , go stop. So I think in this one, where they have to be in these places, the prices much higher on that one. If we can already offer to the citizen prices slightly below this inefficient CCGTs and at the same time, that we can already absorb you in the hours with their excess of electricity for providing this electricity times which is already needed. And we can already with that 1 with -- we can make a good business with this transaction. So I think that how much is hedged? So I think we are not hedging this particular hydro whatever. We are hedging all our production, average production -- and as we were mentioning, we have, in this moment, in the group, I don't know the detail in spend, as you know. But we have 100% of our electric expected production of electricity, sold already for 2024, 85% -- 80% for '25 and 75% for 2025 -- 2026. I think that is globally through this contract, which is PPAs, CFDs and retail, which is long-term retail, but I think there's center rotation of the retail customers, as I mentioned already in my presentation.

Meike here on the -- please.

Meike Becker, HSBC. I have 2. The first one is on your longer-term growth expectations. You show on Slide 64, how you have reached this high single-digit growth CAGR over years and years and also expected to '26. How are you feeling about your growth opportunities to 2030 and beyond? Is it in the same range? The second question is about offshore wind and the execution and supply side of it. How do you feel about the execution risks in offshore wind relative to '23, now in '24? And how are you managing these risks?

So well, I think I provide you as much mass data as available for 2030. So I think for 2030, what is clear is that we are going to increase our regulatory asset base. I think we will continue investing in networks in line what we invest in up to now. And I think you can make your numbers to extrapolate. So -- and in terms of renewables, we are already giving you how much megawatt or new megawatts we will have in service. In 2026, we will deliver 100% from 2027 and then -- which is the number of total megawatts we plan to have already by the end of the decade. So to give you some more things, in my mind, is more or less, we will continue building on the range of 3,000 megawatt per annum and we will continue investing on the range of putting already extra RAB. I think we are moving from EUR 54 billion to EUR 71 billion, which I think is EUR 5 billion, EUR 6 billion more extra per annum. So with this, you can make your moderator models on that one. But I think it's -- that is the more we can tell you for the time being for 2030. Offshore. So of course, in offshore, I think we are 100% of our supply chain security. So I think we are in construction, those one. It's not already -- we are not planning to [ Maine ]. Now is East of Anglia 3 is already. Now I think was yesterday with Shadow Cabinet here in London, and she was already a few days ago, visiting the premises of La Rioja here in [ East Anglia ]. So it's something which is real. It's not already just a project paper, is the turbines is contracted. The cable is contracted, the service stations is contracted, the foundation are contracted. All these are already signed. In another one if the state is already 50, 49, from 65 turbines are already installed, so which I think is not already expecting anything else. And in case of Germany, Baltic Eagle is almost completed. I think they will start production during the end of this year. And Windanker all this agree as well, which is as well as starting the construction. So I think 90% of all our needs of that one are already secured, signed because we made for many years, we are making framework contracts. We are not buying contract by contract. I think we are not buying solar panels for this project. We are buying solar panel for the year or for next 2 years. We are not buying cable for this project. We are buying so many kilometers for the whole group of cable for hundreds of kilometers what we need in different parts of the globe. We are not buying transformer for this particular service station. We are buying 100 transformer for all our service stations for the next 3 or 4 years. And what that makes, that makes good for the vendors for these suppliers because they can already plan their own production, they can buy the components needed for this one. And it's good for us because they give the certainty that we have in time, and we have to take good prices for that one. It is not very different in terms of our approach for passenger we they're making the car industry. I learn from them, how do you make that in. So we are trying to be what we are not. So we are trying to make already different work in such a way they've already guaranteed suppliers with a plan we have to gain with framework contracts in which we can already hedge or they can buy already the component need for the supply they have to make to ourselves.

Okay. Now our friends from JB, Caixa [indiscernible]

[indiscernible] from CaixaBank. So actually, 2 follow-ups from previous questions. The first one on the balance sheet. So 24% FFO net debt is clearly a comfortable level considering your risk profile. I was wondering if you can provide us some guidance on the firepower that you may have for growth CapEx being it inorganic, organic, considering the thresholds -- the minimum thresholds of rating agencies and what would be the priorities in terms of markets and geographies? And secondly, going back to the topic of nuclear, the phaseout that is agreed in Spain. I would be interested in your high-level comments on the potential price impact this will have on wholesale market in Spain. And given where we are in terms of flexible generation technologies. And perhaps also the impact this may have on your capital allocation guidelines, perhaps this will increase your short position in terms of generation in Spain, especially electrification of demand does take off. So this will perhaps bring you back to invest more in Spain either in storage or even renewables again.

Pepe, you mentioned about the balance sheet?

Well, I think it's quite easy because, I mean, for every EUR 1 billion more or less of additional debt, we lose around EUR 0.4 million FFO over net debt. So basically, this is something that you can make. Obviously, it depends on how much FFO if we buy something that brings compared to the debt, et cetera. But this is more or less hypothetical analysis because as we have been mentioned, this plan is based on organic growth.

So I think in terms of nuclear, as I think I've replied before. So I think it's we have a signed protocol, and I think the same protocol, there are the dates for closing this nuclear power plant unless political they decide that they would request ourselves to extend already the life of the, technically is possible. So I think we require some extra investment for making that happen. And I think if they request and they are ready to pay this extra CapEx or to the return for the extra CapEx would require, I think will be already expanding that one. What is going to happen if that is closed, which is already the plan. So certain, I think the volatility increases and I think this volatility increases is that makes our pumping storage role will increase as well. I think we have the opportunity of making more already -- the manageable renewable can have to play a more important role in the energy means than today. So I think it's -- that's it. So that's why we are already just preparing ourselves, making already some extra investment in more already pumping storage, so reinforcing or transforming certain of our facilities. We are, in this moment, making one, which is in the [indiscernible] from sales. Torrejón Valdecanas, which is already another one in the [indiscernible] area as well. We are already making this one because we feel and they are another project which is in line because that is going to be needed. It's not only a question of the business. It's a question of stability of the system. So I think we have the 2 caps is we are providing a public service. And I think we are not only looking for the business, looking for the business and looking for keeping the lives on in the country. And that is crucial for keeping their lives on so that's why.

Jorge?

Jorge Guimarães from JB Capital. I have 2 questions. The first one, is it possible to give us an idea about the assumptions on the Spanish taxation in the guidance, namely nuclear tax -- in the guidance. What is the scenario for revenue tax and nuclear attack in the guidance? And the second is a follow-up to the previous question. When do you expect storage through batteries to be economically viable in Spain in this scenario of nuclear closing?

So I think in the second one, battery storage, I think the batteries is already favorable favor batteries. -- the fact that I spent 70 years of my professional life was in the battery business. So I was designing, manufacturing batteries in the [indiscernible] times with were in Portugal as well and Castaneda will be my pleasure -- factory. So I've been on this one, and I strongly believe in batteries. The point is that today batteries can be already used for a small period of time in an economic manner, is subject to 2, 3, 4 years and most can already been economic buyable. But I think you cannot storage electricity and we can. So I think you cannot make batteries on the side of [indiscernible] for restoring the excess of electricity generating during Saturdays and Sundays. And you cannot really provide already even during the day, you need already you have to generate electricity in 8 hours, you need to store 8 hours. So -- but I think probably it's not in a same or it's not enough demand for this time. So that's why our analysis -- these batteries is fine, up to 2 to 4 hours per day in more or less in some cases will be more economical, another one less economical that's what we are making in some countries like Britain I think here in Whitelee. We have already a huge battery here in one of our onshore wind farm, which is providing 2, 3 extra hours of production. We have already, in our hydrogen power plant of Puertollano, we have a battery, beside our solar power plant. We can provide 2 or 3 extra hours of electricity to the hydrogen power plant. So we are using that one. So that's why I think the battery competitiveness, it will depend on technology, but as well for the massive investment. I think they are already -- today, I do not say tomorrow, today, the most efficient manner is pumping storage. I think tomorrow, if the batteries are improving more and they have to play even more role than today. But I think they have a role to play, no doubt, no doubt. In terms of tax, well, in Spain, we have already 38 different taxes. So when you are talking about taxes, we have 38 -- sorry, 40. The last 2, I think one is in [indiscernible] country, 40 different taxes. So of course, you are contemplating these 40 different taxes. With the taxes we pay in Spain in this moment, this tax is not the corporate tax, corporate tax a part on the top. So it's more than our cost of financial cost, operation and maintenance costs and personnel costs. So there were account of this year. We paid EUR 1.7 billion taxes at the top with a total operational maintenance cost in the range of 1.6%, correct me, including financial costs. So we included all this one. So the only thing would happen is to improve. So it can be worse. So 38 -- 40 taxes. So I think we have hundreds of people dedicated to make that one, is local, regional, environmental, whatever we pay for the nuclear. We pay nuclear waste because it's waste. But the nuclear -- because it's nuclear, nuclear because it's in the village, which is nuclear. EUR 25 per watt hour, we pay nuclear, EUR 25 per hour. So that is included. So the only thing can really improve -- it's impossible.

Jorge?

Jorge Alonso, from Societe Generale. Just 1 question on the return on the capital employed that you said that you are going to achieve 100 bps above what you expected 1 year ago. And I think it's very remarkable. It is not just putting more CapEx and then getting more EBITDA is that the EBITDA on the same or on the capital employed will be better. So profitability of the assets will improve. I would just like to know your view about where this comes from its network, efficiencies, it's a lower cost on the network and then profitability of the same CapEx is higher, is renewables where you have the PPAs and then CapEx maybe is a little bit lower than profitability is better. So because it's important if you see real profitability on the assets improving.

Basically, as you see, we are reducing the investments compared to the previous plan, taking into account that, for example, PNM was a very, very large investment. And that investment, obviously, as we have said, was providing not a lot of returns, okay. So basically, we are able to reduce the investment in an important manner. And obviously, we are able to get returns, which are in line or better than the last plan. So basically, that is the reason also, for example, on renewables, we are able to -- or we are investing less with higher returns. So in that sense, I think that the investment criteria and the fact that we have been investing less amount is allowing to have a higher return on the capital employed.

One point as well, Pepe that you make in your presentation is the way that our needs is for the working capital and -- sorry, in the work in process. So I think in the moment, we are completing certain of our power plants, which takes a long period of maturity. So in the amount of capital, which is already generating returns increases, and that is improved. So I think now it's 25% Pepe in the working process of units.

No -- well, in terms of the working capital is around 25%. But it's similar to the previous plan. So that has not increased, okay? So basically, about 1/3 of our total investments, 1/3 of our investments are work in progress. So 2/3 are giving money, about 1/3 is still not giving money.

So that means the expectation is that there are not so many large projects that is going to potentially improve in the future.

Okay. More questions -- sorry.

This is Ahmed Farman from Jefferies. I have a question on your -- the power price sensitivity slide. You mentioned earlier some hedging levels. Could you give us the overall sort of contracted, uncontracted sort of power price or energy price that goes along with it in Spain and U.K. and the associated EBITDA impact. I'm just trying to understand how the sort of the -- what we have seen in the wholesale power prices, what is the sort of the associated EBITDA impact between '24 and '26 for that? So that's one. And then could you talk a little bit about the profitability of the CapEx program. You've mentioned various elements to it, but I just wonder if there was an EBITDA to CapEx number you could sort of provide us and then just also give us a little bit of sense of what you're seeing in the PPA market in terms of the trend this year versus last year? How are the sort of the prices evolving?

Pepe, you reply the prices?

Yes. Well, I think that the -- more or less as the amount that we are losing in terms of EBITDA, EBITDA due to this sensitive prices is around EUR 1.2 billion, okay? And as the Chairman I would say that is compensated with the increase in the offshore production and in the -- at the other offshore -- and the other renewables. But the impact that we are seeing due to this prices is around EUR 1.2 billion.

You can find the sensibility analysis of EBITDA in the Annex part. More questions? Okay. We have several questions from Alberto Gandolfi, Goldman Sachs and Javier Suarez, Mediobanca, made by the web -- most of them has been about power prices, offshore, et cetera. But the only one that is not -- has not been answered is regarding hybrid. Do you include the incremental hybrid by 2026. How many hybrids will you have by 2026? And do you include a portion of it in your EUR 54 billion net debt guidance?

Pepe?

The same. We've said that we are going to maintain the current stock, which is EUR 8.2 billion, and that is what we are expecting, taking to account, we have very little redemptions of hybrid to roll over and the idea is to maintain the same stock.

Okay. If there is no more question, we can go to enjoy the lunch break and then as I mentioned before, we have several questions. I don't know, Mr. Galan would like to say something to closing remarks before we close.

Very much. I think it's always your questions are very welcome. I feel they open our mind and I think we are not doing everything perfect. But I think your question help to us to rethink about what everything we are doing and to reinforce those teams that we have already just decided to go ahead. So thank you very much. And I think, as always, our people will be ready to reply to you. And this afternoon, you know you have already the session, which many of the questions you have already passed, they have much more detail to comment with you what everything related to technology, human resources, M&As, et cetera, et cetera, et cetera. So thank you very much. Thank you.