Iren SpA (IRE) Earnings Call Transcript & Summary

Hello, everybody, and glad to have you attending in person such an important event for the Iren Group. We are disclosing our first business plan with a 10-year time frame, the first one, led by our CEO, Mr. Gianni Armani. The presentation will see also the participation of our new CFO, Ms. Anna Tanganelli, who has joined the company just 10 days ago, bringing in our group stronger competencies from past experiences in international context. And now the agenda. First, the top management will give you the presentation for all the audience, both financial community and journalists. The Q&A section will follow only for financial community, then Mr. Armani will be available for a section with journalists. Okay. We can start with the presentation. Mr. Armani, the floor is yours.

Thank you, Julien. Good morning, everybody, and welcome to Iren's Investor Day. Today, we are presenting our new plan. It's a 10 years plan, together with our third quarter results very briefly. We'll guide you through a 10 years long journey to lead Iren towards progressive decarbonization, a strong acceleration on investments on our investment capacity focus on sustainable activities and low-risk businesses with a continuous commitment on financial discipline. The next decade, just to clear and clarify the context is going to be a crucial turning point for our country, and in particular, for the utility sector. Urgent need to reduce polluting emissions to fight climate change is pushing an ambitious transition that will reshape most of the economic sectors. In particular, renewables will become the most relevant and efficient source of energy, representing over 70% of total electricity production by 2030. And with recycling will increasingly represent an important share of raw materials into our economic cycles as landfill disposal should be significantly reduced. The need to rebound post COVID emergency will represent a new wave of public investments, an increase of plus 50% fueled by next-generation EU funds. Only administration capable of executing investments will take advantage of this opportunity. And in general, protection of natural resources, such as water reduction in consumption and the effort to mitigate climate change will be crucial in the next 10 years. In this context, all represents an unprecedented opportunity for most utilities like here. The carbonization targets, will boost investments on renewables, both electric and thermal and will enhance value of sustainable infrastructure such as district heating. And on waste management excellence in sorted waste collection and other development of waste treatment capacity, will be needed to close the gap, particularly on recycling and waste solutions. More efficient use of energy resources will require excellent networks, renovated and more efficient buildings, in general, our cities will need to be more sustainable to best capture this opportunity in our plan. We therefore structured our activities in 3 main pillars that I will illustrate. First of all, green. Leadership in green transition will be paramount, leveraging our sustainable footprint in all our businesses. Local. Reinforce our presence on local grounds will maximize business opportunities and also responding to infrastructure needs of local communities beyond our traditional scope of activities. And lastly, but not least, quality. Excellence in service quality across all businesses will build around -- building around this team trade will create and allow to transform Iren as the best choice for major stakeholders in our territory. In practice, what does it mean? Green means 80% of our organic investments concentrated on ESG compliant initiatives compared to taxonomy -- EU taxonomy. Thanks to the carbonization effort and in particular, the leadership in circular economy. Local means 85% of our investments will be focused on our home regions, and Iren will be the preferred partners to foster economic development in our territory and quality. 50% of our investments are driven on the goal of achieving the quality standards of excellence in all our businesses. So let's go deep in what means each of this pillar, in particularly green. Referring to decarbonization, the main goal of the group is to achieve by 2030, a reduction in carbon intensity from 330 grams of CO2 per kilowatt hour to 175, in line with science-based target ambition. And an important step towards full carbon neutrality by 2040. The target will be achievable, thanks to 2.2 gigawatt of renewable capacity, solar and wind mainly. And exploiting heat sources currently dispersed in the environment to saturate our district heating network and studying innovative solutions to store and produce heat for -- from renewable sources. 25% of our energy distributed on heat networks will be renewable in the sense. And we aim to get a long-term hydrogen adoption on our network, making 95% of our network by 2030 hydrogen ready. And further elaborating, we are green because we want to further strengthen our leadership in the waste business, excelling in particular in collection, improving our percentage of sorted waste to 76%, including and bringing to our newly acquired areas to practices that are best-in-class. And in terms of development of new plants, we focus on material recovery, increasing fivefold day capacity in this area. 2.3 million tons of increased capacity is mainly focused on regulated urban waste management. And also, we are investing in using water resources at the best, reducing our network leakages with a target of less than 20% and increasing the purified water by almost 4x in our network. Going to the second pillar, local. Local because we are going to invest around EUR 10 billion in our legacy territory. Focusing on our territories will mean to increase our market penetration, expanding the areas in which Iren is perceived and is a multi utility. And on the right side, you see that this will be reached increasing our penetration on all our main businesses with collection, water, gas and district heating distribution. This will allow to capture on our side, the efficiencies and synergies that are across businesses and reinforce our brand reputation on the area in which we are present, being effective in capturing and executing new business opportunities. And on this field, Iren is aiming to become the best partner for local communities in a wide range of new services, investing in this area more than EUR 1.6 billion during this plan. In particular, we have been already successful in expanding our public lighting and energy efficiency businesses, exploiting our -- the investment -- I'm sorry, the incentives that the public authorities have put on these businesses. And we have been able to take advantage of our operational skills and the ability to coordinate large networks of suppliers in the same areas. Acceleration of public spending connected to next generation, will widen the opportunities of collaboration with our municipalities. New infrastructure services in the form of project finances. The new potential areas that come from electric mobility, for instance, both on the public sector with the development and the infrastructure needed for e-buses and for public charging, 4,000 charging points will be foreseen in the areas in which we own the electric distribution. And in the private sector, with the installation of power thanks to our market effort on the energy sales. All in all, 65,000 charging points are targeting -- we are targeting by 2030. Moreover, urban renovation and public infrastructure will create several opportunities in the form of project finance, in particular, public schools renovation projects or hydrological instability projects have been long financed by the state and now refinanced with new funds, but never found active implementation across Italy. We are potentially able to put in place projects to solve these issues and more than 80 projects that will be devoted to public administration initiatives. The last pillar, quality. The goal is to be best-in-class in service quality on 2 different aspects. First of all, excellence in network efficiency and reliability. We are planning to invest more than EUR 4 billion to develop our grid. In particular, electricity grid will have to sustain higher consumptions plus 40% by 2030 and reduce interruption and failures, a reduction of minus 15%, being electricity, the most strategic energy vector by 2030. In the water sector, we are aiming to reduce losses, as I said, below the target of 20%, of course, including the additional territories that we are foreseeing in our expansion. And considering that the average in Italy is around 40% overall. Replacing pipes and -- will also push on the operation facilities, including our ability to expand our capacity to treat water by 15%. In the meantime, gas assets will be fundamental for energy transition and maintaining the highest standard of security is paramount in this context. We will drive leakages to an already excellent performance of 4.3 leakages per 100 kilometers per year versus an average in Italy of 24. And finally, across all grids, digitalization will be the leading star. The installation of smart meters and sensors and digital detectors will guarantee constant monitoring and preventive maintenance approach. On the other front, the other leg is arrive to maximize service quality and maximize customer satisfaction. In particular, this means reinternalizing most of the interactions with our clients. This, with 2 efforts. One is to in-source part of the customer service that we currently have totally outside the company. And the other part is by investing in digital platforms that will allow autonomously the client to use our platform and serve itself -- by itself. We are going to spread our presence, leveraging on our territorial footprint. The physical presence of our stores, increasing 80% the shops. And this will allow to support clients with a physical -- actually a physical approach and with solutions that could be delivered physically to the clients. Finally, we will invest more than EUR 300 million on our digital strategy on an omnichannel experience that will target 100% of seamless and personalized customer experience. Enabling also to foster Iren platform that is fundamental for increasing retention of our clients, arriving to 30% penetration of our customer base in additional services and products. As anticipated, our ESG targets have been the foundation of our strategy. About 80% -- 70% in EU taxonomy of total organic investments amounting to EUR 8.7 billion are related to sustainable activities, contributing to 10 that are evenly spread between water resources, circular economy, resilient cities and decarbonization. Breaking down the ESG dimensions, we already talked about the environmental, one in the previous pages. And talking about social, of course, the focus is on diversity and inclusion in the working environment, particularly the indicator of 30% in women in managerial position is an important target of which we have to invest. And support of local communities, as I said, is an important target in our strategy, both on the ESG platform -- on the ESG targets and on the business targets. Government, of course, such an ESG focus will be needed to be supported with engagement and accountability of top manager on ESG topics directly. What we are presenting today is therefore one of the most ambitious -- actually, the most ambitious plan that Iren has ever adopted. EUR 12.7 billion of cumulated gross investments, and then I will explain what I mean by gross. In 10 years, the average CapEx per year has been doubled compared to the last 5 years, reaching almost EUR 1.3 billion per year. And on the right side, you see how the investment has been divided in the different areas. But let me highlight 1 additional element that is in this chart. We have aligned our financial reporting to market best practices. Rearranging our activities in a way that is more consistent with our risk profile. In particular, we have moved district heating businesses into the network area, giving its semi-regulated activities. And since we align our view to our peers that already classify this activity in the network businesses. We also have put in evidence a fifth business area, smart solutions that include efficiency -- energy efficiency, e-mobility and other infrastructure services for local communities. This is for its market of reference, particularly mainly public administrations and for its business model that is connected mainly to PC investments with contributions -- with direct contributions and project finance. The intense CapEx plan is driving also a significant growth, 7% in EBITDA that will double our margins by 2030. In the planned horizon, we reinvest 80% of our reiterating cash flow into our business, keeping a healthy profitability all across the 10-year horizon. And while maintaining leverage consistent with our low risk profile, we confirm our commitment to BBB rating. in this plan is also other -- 2 additional elements. First of all, the inorganic investments are included in our CapEx plan. These for 2 reasons. First of all, to give an idea of what is our complete target for that evolution. And secondly, to put in evidence the areas in which we are going to grow inorganically, giving a clear strategic view on our future actions. Secondly, we included a strategy of bringing with us partners along the way. In particularly, this partnership model will be applied to the growth in renewables, of course, as the renewable market will increase. And secondly, in the gas network expansion, we have external growth that is concentrated on gas activities, which I will explain later on. Let's now dive into very briefly, of course, into our business areas. There are many, and so I'll try to On Networks, we have EUR 4.9 billion of investments during the plan, half of which are concentrated in the water sector that is our stronger element in this area, 60% concentrated on maintenance activity. Overall, RAB will double across the board. And EBITDA is expected to increase 6% per year. Thanks to higher allowed revenues closely connected to RAB and to synergies. Higher volumes of heat distributed is going to be offset by the expiring white certificates in the district heating businesses by 2021. Going deep into the evolution of our energy networks. Let me highlight that our ambitious plan of organic development in electricity distribution is bringing -- is doubling the RAB. And this is driven to upgrade our electricity distribution and to reduce the interruption time in the network. We will reach 9 -- I'm sorry, EUR 920 million of RAB by 2030, surpassing that of at even perimeter. On the other hand, on the right side of the slide, we show that the gas sector will see an investment short of EUR 400 million in expansion, supported by external parties. This is because the -- we want to unlock operating synergies in our territories and we want to enhance our local presence, as I said before. But consolidation of multi-utility can be accelerated by integration and participation to gas tenders that are networks are the only networks in Italy, and so they are the main drivers to multi-utility consolidations. In addition, on the Network, just a brief look at the district heating business that included, as I said before, in the network activities because it's monopoly business with a very long-term concession. The earliest one is expiring in 2031 for us and all the others in the subsequent years. And when expiring similar terminal value with a fair compensation is foreseen by all concession contracts. And the low risk of marginality is reinforced by the fact that the sale price is adjusted on volatility of commodity every quarter. Churn rate, lastly, is extremely limited to the list. Development of this project are sustained by almost EUR 800 million in CapEx and district heating network with significant increase in size from 97 million of cubic meters of pipes to about 130 million by the end of the plan. moving towards waste, our CapEx that is foreseen in this plan is EUR 2.5 million. 1/3 of our CapEx is concentrated on collection. And that is because, of course, we have a part of expansion, consolidation of our current participations in of Unieco particularly. But we also participate to tenders. But a great part of the investments are also driven by the full renewal of our fleet, 100% green vehicle will be by the end of the plan. And full automation of collection processes to be achieved with just Iren project. And in addition, digitalization is going to be key, arriving to a penetration of 60% of the model, of which we are a leader in Italy. On the waste treatment, we are going to invest EUR 1.6 billion to build a new plant and upgrade existing ones. 21 new plants are in the plan, half of which will come into operations in 2024. And expansion of energy capacity and construction of the first chemical plant will aim to recover the gap -- the Italian gap on unsorted waste management. EBITDA will grow the -- EBITDA growth will exceed EUR 260 million with a 10% average growth along the year. On the waste collection, just very, very briefly in the slides, it showed that we are going to push our collection, but to be faster in developing our treatment capacity. In order to guarantee that our collection is always an end of waste coverage, and Of course treatment capacity is currently the short offering in the market completed. Particularly, we will grow significantly in organic and in plastic. On plastic recycling, we are already a leader in this market, having the highest recycling rate. And therefore, this will lead our developing projects. On the energy, we are going to invest other EUR 2.5 billion of investments, 86% of which are on the renewable area. This will mainly be led by the 2.2 gigawatt of renewables that are driving EUR 1.7 billion of CapEx. EUR 200 million will be dedicated to a renewal of either related concession that will unlock revamping investments. Additionally, a similar amount will be invested into batteries in order to develop 300 megawatts of capacity. The group also foreseen investments in increasing flexibility of to optimize heating production and to capture MSD opportunities in the medium term. In this plan also for the first time, we clarified that we will divest on thermoelectric nonstrategic assets in the second part of the plan as these assets have reached the maximum development that we could implement. EBITDA growth will bring about EUR 170 million of additional margins, taking into account that we have expiring green certificates in 2026 and we are including disposal of assets in the thermal sector by the end of the plan. Specifically on renewables, that is the area in which growth is 400%. We need to clarify how this growth is going to be guaranteed. Of course, we are planning in terms of development to install of 500-megawatt of new capacity by 2026. But we are currently negotiating projects for the next 10 years above 1 gigawatt of capacity, 80% of which is solar. But we are confident to be able exploiting our authorization capacity and the good relation with local authorities to accelerate this activity. Remind that this company is able to authorize the toughest plants in Italy as waste-to-energy is very complicated to find authorization opportunities. Renewables will be an opportunity to measure ourselves on this new market. Minority stakes, as said before, from financial partners will be foreseen in this area. And in addition to a guarantee that renewable growth is secured in terms of margin, we will take advantage of our natural hedge on our customer base and adding 50% of PPAs in the market or tariff coverage on our development. The group can leverage from its growing retail and business consumer customer base to cover long-term investments on renewables and the integrated generation and sales value chain can exploit all the hedging opportunities in this environment. Moving on to our market business area. Just very briefly, we concentrate our action on 2 dimension, customers value growth, particularly IrenPlus is, as I said before, is going to increase the penetration. Thanks particularly to electrification process that will encourage consumers to switch to electric vehicles or to electric heating, and this will discourage switch out. On the other hand, we are projecting 2.6 million of clients, mainly from market liberalization tenders, where we expect by 2023, 500,000 clients -- additional clients from those tenders. And on EBITDA, we foresee a 2% increase up to EUR 180 million. And this can be attributed mostly by cross-selling of new services, where the increased margin in electricity consumers will be offset by reduced gas profitability. That is a combination of slightly reduced volumes and increased competition. Going to the next slide. In order to reduce churn, we modify our acquisition strategy by modifying progressively our acquisition mix, switching from teleselling and door-to-door to web sales and inbound sales that are -- have a lower churn and lower acquisition costs. In -- there is something that is going on -- sorry. On the right side, is explained what I was mentioning on the previous slide, we have progressively growing consumption of electricity by almost 30%. And it's not -- where we have a slight decrease in gas consumption expected on our network that is preparing for the energy transition full fledged. Last, but not least -- sorry for this long many business -- multi-business representation. Let's just have a look at the Smart Solutions that I already anticipated. It's relevant to highlight that EBITDA will target EUR 60 million by 2030 in this sector. And as anticipated, these investments, this EUR 1.6 billion are significantly different in terms of financial structure compared to the traditional ones. They rely significantly on public funds and direct contributions as EUR 900 million of these investments is in the form. So it's not build and hold model. And EUR 700 million will be on a project finance structure with up to 50% public contributions. On the, let's say, main actions that we are putting in place to grant the successful execution of the plan is innovation and digital investments. In particular, we are committed to develop a cutting-edge technology, particularly in businesses in which we are a leader. EUR 1.6 billion are invested on innovation, in particular, of course, digital and predictive maintenance on network, as I said before, and the blending of hydrogen on our gas networks. But we are also investing on new value chains on the waste sector, where each individual sector and value chain of waste is an individual product that has a typical evolution. On the other hand, our carbon footprint will drive leverage on carbon capture and utilization technology that will be developed and experienced and tested on our plants. And the expansion of thermal and electrical storage capacity will be an additional source of innovation. Partially overlapped to these activities, of course, are the investment on digital that amounted to EUR 600 million; EUR 300 million, as said on customer base management; and the rest on simplifying processes and increasing efficiencies on our businesses. And now after this very long representation. I hand over the presentation to Anna Tanganelli, our new CFO that has jumped on this running cart to join us on the business plan and implement it.

Thank you, Gianni. So please go easy on me today. First of all, good morning, everyone. It's really a pleasure to be here with all of you, especially with those of you who have been kind and brave enough to be here in person, but thank you also to those connected in streaming. I'm sure there will be plenty of opportunities then to properly introduce ourselves and get to know each other a little bit better over the next days, weeks or even hours for those of you who are here. But for now, thank you very much once again for being here to our Investor Day. And without further ado, let's go back to the presentation, and let's take a look at our overall key financials of the strategic plan. As already highlighted by our CEO, our investment plan, 2021, 2030 is, first of all, ambitious. First of all, because we are forecasting a little short of EUR 30 million of gross cumulated investments, raising the bar versus the past by doubling the amount of investments foreseen by the old plan presented to you last year and more than doubling our last 5-year average investment spend. It is also ambitious in terms of timing from you. As you can see from the chart on the slide, our investment curve is ramping up fast with almost 40% of our total investments, targeted to be carried out already in the first 4 years, by 2024, and more than half, 55% by 2026, which also means that our investments are relatively evenly distributed across the business plan period. In addition, as already mentioned by Gianni, we are targeting almost 15%, i.e., EUR 1.8 billion, which have been allocated to inorganic growth, mainly at gas and water networks and in waste, although some inorganic development has been foreseen across all businesses, I would say. Inorganic development to be achieved through 3 main access. One is selected M&A activity and consolidation. For example, by increasing our shareholding interest in subsidiaries where we already hold minority stakes with the objective to fully consolidate them. And this is mainly in water networks and in waste. Second, we've foreseen a handful of assets and companies as acquisitions, mainly in networks and market. And third, the acquisition of new tenders, again, mainly in gas and water networks and in waste. But our investment plan is not only ambitious. It is at the same time also resilient, flexible and above all, sustainable. Resilient because if we look at the breakdown of our investments, approximately 70% of our investments are skewed towards businesses at regulated/semi-regulated margins and, therefore, highly resilient and with a reduced volatility profile. Flexible because given the 10-year horizon of our strategic plan, we wanted to make sure that our investments were at all times, modular and flexible. Mandatory or maintenance investments, as you prefer to call them, have been targeted at 30%. In addition, we've also identified a pipeline of potential additional opportunities valued at around EUR 1.8 billion, which are currently not included in the plan, but which could be relatively easily and quickly activated in case needed. That said, above all, our investment plan is sustainable. Sustainable because 80% of our investments are towards sustainable activities aimed at achieving our sustainability development goals. In particular, 70% of our investments are compliant with the EU taxonomy. But also financially sustainable, as we will then better explained in the following slides. Because on top of the robust cash flow generation which is forecasted by the strategic plan, we are also estimating EUR 2.2 billion or 20% of external funding from third parties to support our investment plan, of which EUR 1.4 billion to come through direct or indirect public contributions or subsidies. When I say indirect, I mean basically EPC. And around EUR 800 million are expected to come from, let's say, as capital contribution from minority partners or investors, supporting our development in regulated -- gas networks, sorry, and in renewables assets. If we now look at our profitability, I think it's immediately visible from that both our EBITDA and our net income are expected to double over the strategic plan over the decade between 2020 and 2030, growing at 7% and 8% CAGRs respectively. But the growth is already forecasted medium -- or actually short and medium term because both EBITDA and the net income are expected to grow significantly by 2024. You see here EBITDA is expected to grow at an 8% CAGR and net income at a 9% CAGR. If we focus briefly on the EBITDA, you see from the chart that we are expecting to create almost EUR 900 million of value between 2020 and 2030. Let's now see how the EUR 900 million are broken down. EUR 600 million are expected to come through organic growth, basically as a result of our investments in renewables, in the new waste plants and in -- basically in water networks mainly. EUR 220 million are expected to come from inorganic growth. This number ties with the EUR 1.8 billion of inorganic investments we commented earlier. We have then foreseen a little bit of asset rotation. And then EUR 120 million are expected to come from efficiencies or performance improvement. This number is net of all related emerging costs and is a result of a pretty granular list of performance improvement projects, I would say, across all business units and mainly focused at processes optimization and digitalization. Finally, you see here in the last bullet that the contribution from the positive evolution of the commodity and energy market is expected to be fully offset by the expiration of our green and white certificates over the decade. One last important takeaway I would like to leave with you on this slide is that not only our investments are resilient and balanced, but also our profitability as the share coming from regulated/semi-regulated profit is expected to remain constant or even slightly above 70% across the strategic plan. Moving on to the next slide. Let's now take a look at our capital structure and balance sheet profile. Here, I would like to mention 2 key points. One is that the robust cash flow generation we already commented, combined with a little bit of asset rotation and the external funding we also saw before, will more than absorb and offset our organic and inorganic investments. Here on the chart, they are displayed as net. Therefore, the incremental debt required is going to be around EUR 1.6 billion both by 2026 and by 2030. Second important point is on the chart on the right is then our net debt evolution, which as you can see very sustainable, very viable, also compared to the EBITDA. So if we look at the net debt on EBITDA ratio, we really put a lot of focus and attention on calibrating and optimizing our investment strength to make sure our net debt on EBITDA ratio was always under 3.5x, which is a little bit our internal pain threshold, let's call it that way, across the whole strategic plan. We are, therefore, very confident in confirming our commitment to maintaining our BBB rating across the plan. Now moving briefly to take a peek at our debt and liquidity strategy. I will leave you, I would say, 1 key message for all the 4 quadrants. Looking at the top left, you see that the net debt we commented on the chart on the slide before, translates into an average financing need across the plan of around EUR 400 million per year. Again, it contains very variable, very manageable, especially if we consider in the first 2, 3 years of the plan, this number is even lower because it's approximately EUR 250 million. And also if you compare it with our average bond tickets very well, we've issued in the past, which have been in the range of EUR 500 million or even higher. If we move to the right, we have estimated a decrease in cost of debt over the decade. This is thanks to, first of all, the expectations of the evolution of the interest rate swap, but not just that because that's going to probably slightly increase in the future. It's also linked to our inherent debt structure, which you can see moving again to the left at the bottom because we have pretty long maturities. And you see that we have almost our entirety of our debt is at fixed or fixed rate, which gives us confidence about our decrease in cost of debt curve. Finally, one very important point. We will continue to maintain or even, if possible, slightly increase our share of sustainable finance, which is already best-in-class in the industry at 63% of our total debt structure. Before I pass the mic back on to Gianni, 1 quick last piece important and positive news, which gives us confidence and should give you substance about our achievability of the strategic plan and what we are on the right path towards its execution, which is our 9 months 2021 closing results. Very briefly because you see here a lot of numbers, I would say, positive performance of all the key financial KPIs you read it. And then obviously, we are ready answer any questions you might have. I really only want to comment that the EBITDA which is up 12% compared to 9 months last year. Main contributors here have been, I would say, So first, there is a change in scope, which weighs around EUR 28 million related to the acquisitions made last year in waste of Unieco and I.Blu. Second, there is an effective leverage of the energy and the commodity market, which weighs another EUR 16 million. Third, there is obviously the organic growth as a result of the investments made in networks and waste. Then there is a positive contribution and performance of volumes. And last but not least, also I have EUR 6 million of efficiency over the period. With that, I'll give it back to Gianni for our closing remarks. Thank you.

Thank you. Thank you, Anna. Thank you for being so patient. To summarize, we have presented you a very ambitious plan that boost investments with low-risk businesses. Actually, regulated activities are increasing in our plan horizon, strong environmental focus and sound financial discipline. And before handing to for a Q&A session, let me add a couple of final considerations on our 2021 guidance, the 2022 outlook and our dividend policy to be applied during the plan. In particular, for the 2021 guidance, we confirm the guidance presented in August. And let me highlight how the company is able to maintain its promises even in the turbulent times that we have been facing. So EUR 990 million of EBITDA by the end of the year and EUR 300 million of net income and EUR 800 million of investments, which is on the way to reach the path that we have presented in the plan. Overall, net EBITDA -- net debt on EBITDA is going to be around 3.3. For 2022, we project a further increase in EBITDA with a growth at least of 6% versus '21 with a target of investments above EUR 1 billion and net debt to EBITDA between 3.3 and 3.4 target. Finally, we confirm our dividend policy until 2025 with a growth of 10%, so a significant improvement in our distribution of dividends, keeping around 50%, 55% just for the purpose, the dividend payout ratio for the rest of the year. And now I'll leave the floor to Julie that will manage our Q&A session, and thank you all for having the patience to listen to our presentation.

Thanks, Gian, Anna. So before starting the Q&A section, just a couple of instructions. First, we take all the questions from the room, then from the streaming. For all the investors in digital connection, please follow the instructions on the screen. So we can now start the -- you are always so fast. Please, Javier, Roberto, it's up to you who wants to start?

Enrico Bartoli from Stifel. First of all, first question is on the waste business, which continues to be a main driver of growth even in the new plan. You highlighted 21 new treatment plants to be developed. First of all, if you can provide your general view on the opportunities in the Italian market that you expect. You detailed many kinds of, let's say, different technologies, plastic, paper goods. So just your general view on the opportunities that you see there. And considering that 14 plants are already authorized, if you can elaborate on the timing of the contribution of the CapEx acceleration if this is going to be mainly by 2026 or in the second part of the plan. The second question is regarding renewables. First of all, you highlighted that 80% of capacity will be PV. If you can -- I guess, maybe the remaining 20% is wind, if you can provide some details on...

I beg your pardon, could you repeat?

80% of the additional capacity is going to be solar PV. And I was wondering what is going to be the remaining 20%. The kind of returns that you expect from investment there. And around -- you indicated that around 50% is going to be PPA and tariffs, so how you see the evolution of the possibility to develop the PPA market in Italy and the outlook for the auctions. And lastly, in general, I would be interested in your comment on the, let's say, execution risk that you see in this plan because it's -- of course, it's a big jump in the compass compared to the old one.

Thank you very much. First of all, we have a significant development on the treatment capacity that it's, of course, a general opportunity for Italy. There are a number of regions, part of which are the ones that are in our territorial scope that have a gap in terms of construction of new plants, particularly Liguria and Toscana are significantly short of treatment capacity. And therefore, we follow the need for this response. We are -- as said in the presentation, we are foreseeing half of the 21 plants, which amounts to 10.5%. So I let you guess where the 0.5% missing is going to be invested by 2024. So by that time, we will have half of the EBITDA implemented. Of course, that is for all the authorized plans then probably, we will -- we are already planning to issue more authorizations on new initiatives. Going to the development needs we are pushing our investments, particularly on organic waste where we had very limited presence. We activated our first Iren plant. We have a plant in our participation in G.A.I.A. in Asti, but we have now a new plant in operations in Cairo Montenotte near Savona. And we have authorized plants in specifically one quite large near Reggio Emilia, and others are going to cover more or less our ability to feed those plants. The ability to have feedstock able to feed this plant is going to be, particularly in the north, crucial. And therefore, we are aiming to include our plants into the regional planning as is normal in Emilia-Romagna, but has been the leading interpretation that is written in the ARERA document for consultation that it is currently going to transform the business into a regulated one. The other area in which we're going to invest is plastic. Our participation in I.Blu, as said in the presentation, has the highest rate of regenerating plastic using also plasmix that is a significant fraction of the plastic that others cannot recycle. This allows us to be much more competitive in granting our -- the -- and winning tenders on feedstock acquisition. And also, we are very developed in the products that come out of the recycling cycle, you might have read that we are very strong in the steel businesses in which our plastic can be reused. Finally, waste to energy. It's a general gap across all Italy that we are aiming to fill in order to guarantee in the waste solution and the substitution of the closing landfill concessions that are going to be progressively offset in Italy. On renewables, 80% is solar. We expect that part of the solar will have access to the public tender for a tariff, but that we will see in the next Simplification Decree. The 20% remaining is going to be, in general, wind. We have minor projects on revamping our hydro plants, but I would not -- we are not including that additional capacity in the plant. 50% of PPA or tariff takes into consideration the shift in attention to long-term negotiation that has been linked to the recent turmoil in commodity cost. Now more and more even business clients are looking for a long-term negotiation. And especially if they link into a consortium, and so you are not exposed to individual credit rating and individual existence of the business client, then PPA -- it's probably the right moment to develop the PPA market in Italy. In terms of execution risk, as Anna said, the project is coherent and in general, flexible. And among the flexibility, we have developed another EUR 1.8 billion of opportunities that have the number 13 and ready to enter into the playing field as the opportunity comes.

Okay. Javier? Roberto?

So I would like to stick on the renewable and -- because this is one of the newest part of the business plan. So can you give us some visibility on your ability to build up the pipeline short term? You indicated, if I'm not wrong, 1 gigawatt in the next 3 years. So I was wondering how far are you in the negotiation already if this is predominantly on ground, I guess from your words, that it maybe should be solar on agricultural lands that you expect to be free to participate into tender probably. So is it everything is greenfield you are negotiating on the ground? Or are you expecting to buy out pipelines in the market? Can you give visibility on this? I was wondering if you included relevant investments in the hydro businesses, meaning not the water service, I mean the hydro generation. And this refers to the tenders that will probably happen. Recently, government appointed, you have to go on tender by the end of 2022. So I was wondering how much the capital commitment is actually not producing returns because this is an investment to increase the probability of renewable, but probably not generating EBITDA that will come later on if you are able to win the tenders. I would like to ask you what kind of assumptions have you included in terms of power prices, at least in the short term, say, in a shorter time horizon than we'll see what happened in 2030, but actually within the next 3, 5 years. And the last one, I was asking you to tell us how much return dilution have you included in the plan in terms of allowed return determination from the authority, just to understand what kind of losing EBITDA we'll have in the coming years, maybe recovered by efficiency actions, but that's an interesting point for us.

Okay. Thank you. First of all, on the pipeline, our approach, as said in the presentation, is mainly to focus on greenfield, and that has a couple of dimensions. First of all, we are developing actively on our grounds, so close to our plans. We have a significant footprint in our territories, the development of projects and the reach comprehensively around 100-megawatt of internal projects that we can develop on our land. Then we are negotiating with individual developers for existing authorizations that are well ahead in the process and that conservatively we put in the next 10 years in terms of implementation. This authorization are a mixture of agricultural land and industrial investments. I would say, 30-60 more or less, or 40-60, 40 industrial and 60 agricultural, mainly large grid-scale investments and mainly in solar. We have one negotiation for wind development. And we have currently in place an exclusive negotiation for an existing group of plants for 150 megawatts, which is partly tariff covered and partly in market parity. Of course, the way we are going to go ahead is to create bonds with developers and to build internal authorization capacity. This could -- will allow external contribution from developers to accelerate, thanks to the contribution of our team, but will multiply the efforts in the development scheme. Of course, early-stage focus will reduce the investment in terms of cost of acquisition of the plants, extracting most of the value from building up the plants.

And if I may, Gianni, that's why I forgot to mention earlier, all the investments related to renewables are not included in the EUR 1.8 billion inorganic investment. Given what Gianni just explained, they are -- they have been classified as organic, although obviously, we don't exclude opportunities to acquire assets in the future.

Yes. But in general, we would not be a participant to a tender of existing generation capacity. On hydro generation, as I said in the presentation, we are including in the plan the continuation of our concessions, of course, increasing the cost and the -- the cost that is linked to the prolongation of our concession. We are the only player that has not gone to court against the local authorities on the increase in the annuities that are to be given to local authorities, and we will continue to keep a strong, close relation with our regions. We foresee, however, an opportunity for the country to relaunch and to accelerate investments that have been long deferred in the hydro production. We have already built a number of opportunities to repower our existing concessions. And we foresee that a project finance scheme could be the best solution to accelerate investments and to guarantee a competitive setting for concession prolongation. On power price, I will ask details to my colleagues if they have them...

The PUN has been estimated at EUR 75 after -- I mean, decreasing prices, I would say, across 2022 to reach in the second half a PUN of EUR 75 per megawatt.

Yes. And we have closed 85% of our hydro production at EUR 95 for next year. And return dilutions from ARERA. Let me phrase this. We perfectly respect ARERA independence. And I think that ARERA independence is a value, an enormous value for this sector, and I think that is reflected in your evaluations. All the businesses that are linked to ARERA regulation have a better interpretation for -- from investors. So it's clear that an independent evaluation of -- and review of WACC targets is totally as expected, and I think is also fair. Of course, authority over the years have been proven to be very keen on supporting investments, particularly in this situation of energy transition and ecological transition, in general. So I will see that there will not be an intrusive regulation in order to discourage investments. But we will expect, of course, a sort of minor impact from the WACC reduction. I remind, however, to everybody that our regulation is also stabilized from the inflation evolution, which is directly linked with RAB growth. And so this is something that has to be added on any projection that is going to be played, along with the reduction in WACC.

Javier, it's your turn, please.

The first question is for the new CEO of the company. What is your imprinting on the new business plan? I think that Iren -- the company has been doing a very good job during the last few years moving on in its strategy. And I would like to know when you landed into the company, where do you see that the company has to change path and strategy. So looking at what you have just said, I would say that you are much more inclined to develop capital and resources to the development of renewable energies. There is a big opportunity on smart solutions, maybe there is less focus on thermal generation and less belief on its future role and also a call for gas networks utilized for the development of renewable gases. Is that a fair statement on what do you think the company -- on how the company should change its strategy for the next decade? So any view on how the new management team is changing path for the future would be very helpful? This is the first question. The second question maybe for the CFO is on the financing. So this is a company that generates an operating cash flow of EUR 900 million, and the CapEx is well above that EUR 900 million in terms of average CapEx per year. So if I'm dividing the total CapEx minus the organic CapEx, you have something like EUR 11 billion of CapEx. That is EUR 1.1 million -- excuse me, EUR 1.1 billion of CapEx per year. That means that structurally, the depth of the company is going to increase. And also, you need to put on top of that the dividend. Is that a fair statement that you see the company growing debt by EUR 300 million to EUR 400 million per year in the future? And also, that is leading into numbers for 2030 that -- where the net debt-to-EBITDA is at 2.5x and the dividend payout is just at 50% to 51%. So it's not that too conservative -- way too conservative because if you are mentioning 3.5x net debt to EBITDA, and you are landing into 2.5x by 2030, and the payout is just 50%, is not that a cushion that you have within your business plan? And the last question is on context, maybe, again, back to the CEO. The government has made an effort with the Simplification Decree. There are new European funds. The Competition Decree has been issued. The question for you is, do you see a positive impact from EU funds? I guess, the answer is yes, looking at your presentation. But overall, with the Simplification Decree, it is something that should be materially helping the company to deploy CapEx. And on the Competition Decree, do you -- don't you see the first version that we have seen as a missed opportunity to promote new waste-to-energy facilities in Italy?

If you want, Gianni, I can start so that you can give 1 short answer. So first of all, a couple of points. Yes, definitely, debt is increasing. We saw -- we commented earlier the incremental debt required will be EUR 1.6 billion. I think, though, we need to mention, I would say, 2 additional elements. One is that the cash flow generation you see over the decade is around EUR 11 billion. So able to offset, I would say, the majority or almost the majority of the organic/inorganic growth. You need to consider that the gross investments are obviously EUR 12.7 billion, but the net, EUR 11.3 billion, which on the chart of the sources and uses because we are expecting, as we commented earlier, contributions from the public subsidies in the range of EUR 1.4 billion. This includes the EPCs. And then on top -- the second point is on top of the cash flow generation, which is, in any case, in my opinion, significant considering also the industry where I come from. So it's definitely a big number. But on top, we've also considered some asset rotation. And then, as we said, the contribution of equity from minority partners in gas networks and in renewables. So all our renewable investments are not going to be 100% funded by Iren, obviously. So, yes, I think -- I hope I answered your question. So it's a combination of different things. But obviously, yes, also debt is increasing. The 3.5x net debt-on-EBITDA is our maximum threshold. We want to make sure we are always below that. So the maximum peak, I think, is maybe, I don't know, in the next few years because the ramp-up of the investments is high, but it's never going above 3.4x. So it's always below. And we will make sure that is kept.

Well, normally, in these cases, you should -- you should elaborate on what you are going to do, not what went wrong in the past. But actually, nothing is wrong with Iren. Iren is a perfectly healthy company, has been performing very well by inertia. And so it should go along in this path with very, very -- I mean, little effort. Actually, we could even return a great part of our cash flow to our shareholders and ask them to have a better investment -- or strategy. And that is, of course, a pathway that we evaluated. Then of course, I see in Iren a machine that is capable of implementing and put into ground significant investments, of which the country has great shortage. And we can make and create -- extract value from this ability. The ability to bring local institutions to understand a project finance structure, to understand the need for certain investments, this is something that Iren is already able to do. We are presenting, and we are tendering -- participating to a tender to a project that has the restructuring and the energy efficiency objective to restructure 800 public buildings in Turin, EUR 1 billion overall of project finance, which is pretty significant. Other projects are going to be presented in Reggio Emilia and so on. This, on energy efficiency, shows that we have been able to illustrate that kind of solution that is not very common in all the Italian authorities and to put it on the ground. Then, of course, we are able, not being a constructor, not being a real estate company, to organize all that is needed to implement what is required. Looking at 110% incentive, we currently have 400 initiatives, building initiatives around our regions. So this says that we have an industrial and engineering machine that is capable of investing much more than it was doing before. Secondly, we are -- we have faced a significant pressure on -- competitive pressure on the commodity market. And this is mainly due to the difficulties that a company like ours, that is a medium-sized company, has in entering the digital business. But we can exploit the fact that we are not so strong in digital, but we are ramping up, but we are very local, we are very concentrated. It means that we have a higher probability of having higher clients per kilometer, square kilometers in our territory. And this leads to the possibility to invest in a network service items, like shops, that can create and improve customer service. Customer service focus is then across our businesses. We have to be -- being monopolistic of many services, you have to be excellent in all of them. Because if you are -- if you fail to be excellent in the water business, then you cannot propose yourself as the best energy provider to your clients. So -- but demand of our clients is, in a way, a stimulus to excellence, in general, for Iren. Therefore, what the focus of the plant is to accelerate our -- and to put on the ground our capacity for investment. Incidentally, we are into businesses that have great opportunities for investments, energy and waste. It's easier to go on the flow than against the flow. So we are going on the flow. We are not inventing something new, and we are going to do it very fast and well. And that is exactly what is in the -- then an additional opportunity and is linked to what you were mentioning on the next generation EU, there is a general need for the Italian republic to relaunch public investments. The stratification of -- and I've been in the public administration, so I know very well. The public administration has stratified a number of laws that makes it impossible. So we will have a number -- a huge amount of money to spend, and we will not be able to spend them by 2026, if we don't organize ourselves with spending machines. Of course, in the past, we could say that we are not spending, so we are saving money -- and that is how we have a lot of debt -- a big debt. And so we are not restoring schools, but we are saving money, and that is a trade-off that has some sort of value. If the money is not yours, there is no trade-off to evaluate. You have the money. It's not yours, and you need to spend. If you're not able to spend them, then it's definitely a failure. In this element, we can add value. We can add value because we know exactly what our community needs. We are present in our territories, and this creates a value of local footprint, more than going abroad or expanding our presence, going national and so on and so forth. So being local, represents an opportunity, unprecedented opportunity to exploit to increase the possibility to create investment opportunities. Of course, investment opportunities must have the threshold IRR that we are looking in our plan. Thank you.

One last thing maybe we forgot to mention on the dividend payout. I'll leave it to Gianni 1 quick remark because I forgot to say it. Obviously, we are, to your point, that our net debt-on-EBITDA ratio is then decreasing to 2.5x, as you can understand, is a 10-year horizon. So we wanted to show a signal that our robust cash flow generation will, at some point, reduce our leverage. At the same time, but I'll leave it then to Gianni to comment, it's difficult to make forecast of dividend payout by 2030. So I think it was important for us today to confirm, but the dividend -- the DPS is confirmed from the last plan, but there are no changes at least up to 2025. We wanted to give you an indication of comfort, but obviously, the dividends, considering our net result is more than doubling, will be significant also thereafter. But then obviously, let's reconvene in a couple of years.

Yes, in 2025.

Exactly.

No, it's exactly that I'm -- the payout that we are foreseeing for the second half of the plan is totally only for Excel purposes. As I mentioned during the presentation, we are not committing -- I mean, it makes sense that we should have a payout policy beyond 2025. Currently, we want -- we have a priority on the short term to accelerate our company. And then, of course, we have time to adapt our dividend policy by 2025.

Please, Roberto? [ Daniele ], Banca Imi?

One general question is on the business plan and the CapEx plan, which is huge. And nevertheless, an ambitious -- and nevertheless, your CapEx plan is going towards a future with a potentially interest rate ratio -- interest rate increase. Some other headwinds like global supply chain issues. So my first general question is how you are going to put some countermeasures on this kind of an outlook and -- or which are the assumptions you are doing, especially on the interest rate? My second question is more specific and is on biomethane. Could you please tell us what the government is doing with the authorization process and the decree they are discussing. So basically, which -- do you have any news on that? Because as far as I see, there are some delays in permitting and authorization of biomethane projects? My third question is on tenders. If I got it well, you also talked about the gas tenders. So -- which is not -- which are not going on very, very -- not going on very fast. So do you expect this one to be a risk? And which is the value at risk of gas tenders not completed in line with your assumptions? My last question is -- if I may, is on the PPA contracts. You talked about a 50% PPA component. If you want to maintain or increase your infrastructural profile, do you think you can go above this level also for the new renewable projects?

Okay. I'll try to answer on interest rates.

Yes.

So you saw that our projections are to decrease our cost of debt. Yes, you're right, let's say, interest rate swap trend is slightly increasing year-over-year, still it remains pretty favorable. You also have to consider that, again, to comment. One, is our, let's say, embedded cost of debt or interest rate or actually, the interest -- the bond issues that we have issued over the past years have been at very favorable interest rates. So let's say, inherent in our debt structure, we have a pretty favorable interest rate. So we need to consider, obviously, the new rate for all the debt to be refinanced or to be issued. So I think in the short, medium term, this remains pretty favorable. So we see actually decreasing cost. Then you're right. Obviously, if we look longer term and beyond the second half and you can see it here on the chart as well, when we reach 2026, 2027 or even 2030, then probably our cost of debt will even, again, slightly go up. But when we say up, this should be around 1.6% by 2030, then obviously, I don't have a crystal ball, so we will have to see then in the next. But, let's say, we are very confident about the first few years also because the amount to be refinanced or new debt to be issued is pretty small. So as I said, our inherent interest rates are a very, very low, very favorable.

Yes. To add on that, we -- as mentioned, we have 70%. 60% of which is fully regulated investments and 70% regulated or semi-regulated. So significant edge on the variability of interest rates is embedded in our activities. What remains out is basically renewables and part of other investments in the market. But let me highlight basic intuition, the market in general is short of renewables. As long as it will be short of renewables, it will call for, in general, higher returns in order to incentivize. And therefore, investing, at least in the current scenario, that -- as said, that we can stop any time because our plan is very flexible. In our -- in the current scenario, there is a shortage of infrastructure if we are able to offer renewables infrastructures to the market. We -- and of course, the cost of the investment is in line with the market. The return should be there to grant the existence of the plan. On biomethane, we are happy that the horizon has been extended on the first Simplification Decree to 2026. And this has unlocked part of our plans that were not being forecasted to be implemented by that date. And therefore, we see and we have in our slides an expansion on this sector. On gas tenders, it's true that they have been stopped and now, a number of gas tenders have been unlocked. And actually, on our territories, Emilia and Liguria particularly, but also Piemonte, the acceleration, probably because local authorities are more efficient, the tenders are going to be present in the next few years. On PPA, as said, there is an opportunity in the market. The market is looking for a longer-term hedge, not to be exposed to the variation. And therefore, we are looking to that opportunity. But the shortage of renewables opens up also the possibility that more renewables are going to be admitted to public tenders. So tariff is also an opportunity that we are looking. Then of course, we have our customer base that can construct a long-term hedge, especially if we shift our customer base to longer-term contracts.

Please, Dario Michi?

I think the missing point is on the M&A. If I'm not mistaken, in your business plan, you have factored in bolt-on acquisitions. As this is a 10-year business plan, what do you expect at the end of this plan? I mean, sooner or later, we will have to face larger-scale M&A probably. What's your view on this?

My view is that we have a strong majority from our affectionate shareholders. I don't see, in the near term or at least in my horizon, a major acquisition of Iren buy or to another player. So definitely areas of collaborations can be there. We are excellent in our areas in several of our businesses. If I'm talking about A to A of ARERA, if that is what you were mentioning, definitely, I can see that we more or less have similar performances with, of course, different styles. But there is no clear industrial leader in each of the areas that we manage. Of course, a larger scale could be interesting in order to expand beyond the Italian territories. But as said, we are -- being local, we can generate a huge amount of opportunities. We don't need to go in other countries to develop them if we can go deeper in creating value to the communities that we serve. And that is exactly what we are going to do.

And please don't discount the M&A included in the plan because you're right, maybe there is not a mega deal. But definitely, the EUR 1.8 billion of inorganic growth is also through M&A. Small ones, definitely, but not given for granted. So there are acquisitions of assets, of companies, consolidation of subsidiaries or increase our stake. Even on the renewables, we will see, for now, they're not included, but obviously, we will scout opportunities. So please take it into consideration. And some M&A is already embedded in the plan. And it's not, as I said, for granted. So it's pretty relevant.

The second and last question on the district heating. Many thanks for the focus you raised on this business. I was wondering there was an article on the press yesterday mentioning new important projects in Turin, if you can detail these. And also on the potential introduction of incentives on this business effect, or if it makes sense in your view to introduce them?

Well, first of all, our expansion incorporates the acquisition of part of the areas in the Western part of the metropolitan area of Turin, and there is an additional large expansion in the East part -- Northeast part of Turin, taking advantage of the heat that is currently dispersed in the environment by Leini CCGT plant. Of course, this project is significant and brings Turin area to be the largest district heating network in Italy overall. This business is particularly relevant and efficient in the north of Italy. And we have -- if we look at the pollution emission of different pollutants than CO2 in the area, metropolitan area of Turin, the effect is evident because the rate at which different pollutants are present in this area is basically only driven by public transportation and individual transportation, whereas all the rest is set to 0, so the public heating and so on, thanks to the district heating network. This, of course, is very different to other areas in the north. And therefore, additional investments should be needed. Of course, this business has not been regulated, which is on one side a good thing. The return is higher. But on the other side, has not created a clear return on initial investment. Since the exposure that you have on rolling out network initially is very large because you have to make a great part of the investment without having clients connected is not very distributed in Italy in terms of initiative. We are fortunate enough to have the possibility to gradually improve our networks and increase. We have several initiatives. And we are looking at EUR 200 million of incentives that are included in the PNRR funds. We assume that by 2026, probably district heating initiative will be granted with the opportunity to get more contribution given the fact that other areas will be short of delivering by that date.

Okay. We have a question from Federico Pezzetti, Intermonte.

I have 3 quick questions, if I may. The first one is on hedging. Given the current scenario -- macro scenario of high volatility and given that we have a new CEO and a new CFO, I was just wondering if there's any new thought about your hedging strategy? And related to this, I'm wondering if you could give us -- maybe share with us some sensitivity to movement in commodity prices over the plan period. The second quick question is on CapEx. Just the maintenance CapEx, if you could give us an idea of the run rate of maintenance CapEx going into 2030, the exit of the plan. And related to this, if you -- if there's -- how can I say, in the EBITDA target of 2030, we are missing a significant part related to CapEx made in the last few years of the plan or if that's pretty much all the investments are in the EBITDA target. And very last one on ESG, which is a must theme. Now, it's on remuneration. Just if you could share with us maybe a little bit more of how much of the variable is linked to ESG targets and maybe a little bit of color on what are the drivers, the parameters that are key to the achievement of your remuneration -- your variable remuneration?

Okay. First of all on -- we highlighted that 30% of our investments are mandatory, meaning that those are the minimal investments that are -- or the maintenance investment. Let's assume that in a scenario in which maintenance is not discouraged, and investments are not discouraged, this is a large number. Of course, in a case of, let's say, a regulation that is negative on investments -- or remuneration or investments, that number could even be compressed if there is no initiative -- a specific initiative on compressing that figure. But let's say that out of the overall EUR 12 billion investments, 1/3 is maintenance.

You also saw that out of the EUR 1.8 billion, EUR 600 million comes from organic growth. So it's basically a result or a factor of the organic investments made. I don't want to say it's 100% secured, but it's definitely very -- let's say, very stable, or very reasonably to be achieved.

Okay. On the coverage, we have a 20% coverage approach to take into consideration the variability of the market and the variability in volumes, of course. And if -- I mean as has been seen in the first -- in the third quarter results and in the projection that we have for the end of the year, this, let's say, criteria has been very, very effective, having totally offset the impact that, of course, we had on the market -- on our market view has been offset by hydroelectric residual not covered production and the waste-to-energy production. So this enables us with -- if we compare the prices that we presented in August compared to that of now, we are projecting the same end results by the end of the year with completely different prices scenario. The 80% coverage strategy is totally replicated next year. As said, for instance, on hydro by memory, we have covered 80% of our production with EUR 95 per megawatt-hour.

Can you -- sorry, you had a question on ESG?

Remuneration.

Remuneration of -- okay, okay. I'm sorry, I don't have the detail, exact detail on how much is going to be part of our remuneration, but it will be included both on the short-term evaluation and on the long-term evaluation that will be, of course, approved by the Board after the approval of the plan. So I don't have the exact figure. There is the commitment of the company to have a significant target on ESG objectives. Well, thank you very much. I think that we have been running a little bit late. Thank you for your questions and for your presence. And I leave you to a little arrangement and coffee -- a little bit anticipation of dinner -- of launch, actually, or dinner, I don't know. And then I turn to the colleagues of the press.

Thank you.