Iren SpA (IRE) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Iren's First Quarter 2022 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Giulio Domma, Head of Investor Relations. Please go ahead, sir.

Thank you. Good afternoon, everybody, and thanks for joining Iren's earnings conference call on our first quarter 2020 results. We will start with the presentation, which will be given by the CEO, Mr. Armani; and the CFO, Ms. Anna Tanganelli. The question section will then follow. So now I will leave the floor to Mr. Armani. Gianni, go ahead, please.

Thank you, Giulio, and good afternoon, everybody. Let me start to quickly summarize some of the highlights of the quarter in Page 2. Despite the challenging energy and market scenario that we experienced in the first months 2022, Iren is at full speed ahead on the execution of the 10 years plan we presented in November last year. In the quarter, we posted a strong performance on all key financial metrics, with EBITDA up 16% year-on-year, reaching a record EUR 363 million of results and gross investments accelerating by 2.3x compared to previous year. At the same time, our sound and optimized working capital management, combined with the robust operating cash flow generation allowed us to maintain a very stable net financial position throughout the quarter, with the net debt up only EUR 40 million versus the end of 2021. Once again, our results have been supported also by our effectiveness in integrating the energy value chain with -- that have been strengthened in this quarter, thanks to the contribution of 122 megawatts of solar plants acquired in February, which helped us to further improve our natural hedging strategy, even in a scenario with lower precipitations. In addition, we gave a boost to set up our renewable organization and management framework, which is now ready to quickly integrate further opportunities during the year. Finally, we contributed -- we continue to demonstrate the capability to extract value from the integration of recently acquired companies, particularly in the waste business, leveraging also our development CapEx opportunities to grow our asset base. Moving on Page 3, our ESG results in the quarter. As you can see from the slide, we are on track and on some instances, even ahead of the plan on all major ESG KPIs. Solar contribution gave us a strong acceleration in the achievement of our green transition targets, particularly on the carbon intensity, now at 305 gram of CO2 per kilowatt hour, and doubling our green energy sold to our clients versus last year, well ahead of the 10 years plan targets. But we are on track also on our ambition related to local presence and particularly -- in particular, we have been growing our district heating capacity, reaching 900 million cubic meters in this quarter. And also, the sorted waste collection activities contributed to perform in line with the expectation. And while EPC value of rebuilding projects quadrupled compared to last year. Finally, we significantly improved also our service quality levels compared to the initial targets. We demonstrated a strong increase in the client digital transaction, now at 60%. And we also almost halved the average waiting time of our customer on the call center. Furthermore, we had a 4% decrease in the water withdrawal per inhabitant per day, which is a proxy of the reduction in water losses well ahead of the plan. Moving to Slide 4, which shows the key financial metrics of the quarter. As we mentioned, EBITDA was up 16.2% in the quarter, and EBIT was up even a better 22.9% at EUR 226 million on the back of the following main factors: the integrated energy value chain contributed positively for EUR 18 million as a net between different elements, particularly the growth in the generation business and a general reduction in the market activities that is exposed in a scenario with a high energy or growing energy costs. Taking into consideration our natural hedging policy and the financial commodity derivative, the positive result overall shows an exceptional performance. In the first quarter 2022, we saw also the kickoff of the capacity market, which contributed to additional EUR 17 million in the quarter. Organic growth weighted a contribution -- additional contribution for EUR 11 million, sustained by investments mainly in the network with positive effects on the tariff, which compensating WACC reduction implemented last year by the ARERA. The increase in rebuilding activities was a positive contribution, and the ramp-up of the 2 biomethane plants that were completed last year. Finally, we have a EUR 6 million contribution from the photovoltaic plants that we acquired at the beginning of the year. Please note that our first quarter results, net results have been affected by a full year impact of the contribute of the Contributo di solidarietà of EUR 24 million, which includes the best estimate also of the new measures announced by the Italian government in May 2, including, therefore, the announced increase in the charge from 10% to 25%. Without these impacts, the net profit would have been -- the industrial contribution to net profit overall would have set the net profit to EUR 142 million. The effect of the sustainability decree on the other hand has a limited -- was limited in this quarter. But we confirm overall during the year a EUR 20 million estimate for the full year impact. First quarter investments, as already mentioned, reached EUR 378 million, driven by the acceleration of renewable capacity; higher technical CapEx, which allows us to grow organically and to increase -- also the increased number in energy efficiency projects. Finally, we also considering such a significant growth in the investments. It is important to underline our net financial position that remained very stable throughout the quarter compared to last year. And this will be better explained by Anna in the following slide. I will hand over now to Anna in order to go deeper into the business unit results and overall financial results.

Thank you, Gianni, and good afternoon to all of you. Moving to the single business unit results, starting with the business unit, Networks, on Slide 5. As you can see from the chart, the business unit maintained a stable profitability performance year-over-year despite the regulatory revision of the WACC, which accounted for an overall EUR 3 million. This result was achieved thanks to the investments made in prior years made in water and electricity network, and which are reflected in the 7% total RAB increase of the quarter. Quick comment on RAB. Here, the immediate growth in RAB is very much consistent with our long-term strategy of maintaining a stable gas brand over time. Overall investments of the period increased by 14% year-over-year, as shown in the chart at the top right, and were mainly related again to water and electricity network. And in particular, to the re-ramping of wastewater treatment plants and to projects aimed at increasing the resilience of our electricity networks. Finally, districtization activities, functional to wastewater loss reduction continued also throughout this quarter, reaching more than 60% of the grid. Turning to Slide 6. The waste business unit posted a 26% EBITDA increase year-over-year to EUR 65 million, mainly driven by treatment and disposal activities, which benefited from a favorable energy scenario combined with an optimal saturation of WTE. In particular, the EUR 17 million EBITDA growth in treatment and disposal was the result of a plus 39% rise of heat volumes sold compared to prior year, as highlighted in the chart on the bottom right of the slide and a favorable driven in the quarter. Strong market contribution also some recoverable waste and from the ramp-up of the 2 new unit biomethane plants phased in during 2021, with biomethane production reaching 1.3 million cubic meters in the quarter. Quick comment on the amount that we've managed in Q1. As you can see from the chart on the top right, the reduction here is entirely linked to the decrease in other wasted managed due to a lower implementation of third-party waste. Moving to collection activities. The slight margin reduction versus prior year is mainly due to higher operational costs incurred to improve service quality. Finally, the business unit posted overall investment of EUR 23 million in the quarter, adding some 5.6% compared to Q1 2021 linked to new treatment plants, particularly in organic fraction and biomethane reduction, plastics and paper. We should be operational by year-end and to improvement of the segregation of our collection early. As for the Energy business unit on Slide 7. EBITDA increased by 78% in Q1 to EUR 165 million, thanks to a strong performance of our asset base, the contribution of our renewable capacity and the positive scenario effect. Heat margin performance in the quarter incorporated also normalization of the underlying profitability following the contraction experienced over the last couple of years. The normalization effect accounted for approximately EUR 25 million out of the total EUR 49 million. Please note that these results do not include the impact of our recently announced 2022 district heating bonus, foreseen by year-end for families in financial distress and which will be corresponded to clients between Q2 and Q3 2022. As for thermo Q1 performance, it was driven by higher clean spark spreads, flat MSD of around EUR 15 million and the rise in volumes produced. As already mentioned by January, Q1 saw over the kickoff of the capacity market, which contributed for EUR 17 million. Hydro on the other hand, was affected by exceptionally lower volumes, down 60% versus Q1 2021, reducing also the amount of green certificates recognized. Last but not least, the newly acquired photovoltaic assets contributed for EUR 6 million, while the strong performance of Iren Smart Solutions or Iren energy efficiency activities, resulted in a EUR 7 million year-over-year EBITDA increase. Moving to Slide 8. Here is the performance of our Market business unit in the quarter. In particular for what concerns electricity margin needs to be read in light of our integrated value chain management and natural hedging strategy. The minus EUR 28 million year-over-year contraction in electricity margin in MBU was, in fact, almost fully recovered by our generation asset performance, as we commented in the previous slide. As for gas margins, the decrease here was linked to a spike in volume associated with quarter temperatures, and particularly during March, bringing us to purchase missing quantities on the spot market at exceptionally high prices. Finally, strong increase in retail client acquisition in the quarter, now at 2.05 million, adding plus 50,000 versus end of last year, with new clients mainly acquired through [indiscernible] market. The growth of the customer base was directly related with the increase in electricity volumes sold to retail clients and small and medium enterprises, plus 30% versus prior year, which offset the reduction in B2B. Also, gas reported higher volumes sold to retail and small and medium enterprises, plus 9% versus last year. Let's move now to Slide 9 to give you comments about the key elements below EBITDA. I would say, no major remarks here, neither on D&A, which was up EUR 9 million versus prior line year on the back of the robust investment curve; nor on provision, which remained overall stable across the period. As for financial charges, average cost of debt remained in line with the target reached at year-end at 1.7%, down 10 basis points versus 1.8% of Q1 2021. As mentioned by Gianni, as for taxes and the result net profit here, both were affected by the impact of the Contributo di solidarietà decree for EUR 24 million, which Gianni said, includes our best estimate also of the new measures announced by the Italian government on May 2, including as said, the announced increase of the charge from 10% to 25%. Without this impact, net profit of the quarter would have been EUR 142 million, up 27% versus prior year, which in turn included a EUR 12 million positive one-off impact associated with the Unieco that is restructuring. On Page 10, we show the net financial position evolution from December 31 to March 2022. As you can immediately see from the chart, net debt remained very stable throughout the quarter, thanks to a strong operational cash flow generation, a disciplined working capital management and the positive impact of derivatives in the commodities. Working capital, in particular, increased only marginally in the quarter by EUR 82 million, thanks to an optimized management of the supply chain and despite an increase in trade receivables linked to the increase in turnover, the rise of commodity prices and the impact of bills installment payments. The disciplined financial position evolution enabled to largely offset the EUR 378 million gross investment of the period, which included technical investment for about EUR 140 million. The acquisitions mainly are in the solar assets in Puglia for EUR 166 million and EUR 52 million of energy efficiency projects growth of CapEx contribution and incentives. Thank you. And I will now turn the call back to Gianni for our closing remarks.

Thank you, Anna. To wrap up before we go to the Q&A, I would like to highlight just a few key messages for 2022. The coming months, we will concentrate our forces on delivering our plan, of course, with maintaining a rigorous working capital management and exploiting our natural hedging policies and assets. And we also will continue to execute our investment plan on the -- especially accelerating the development of our renewable capacity with an objective to reach by the end of the year photovoltaic or in the wind capacity of 250 megawatts, that is half of the target that we had for 2026. And we are very confident to be able to reach this important milestone given that the [indiscernible] pipeline that we have under management at the moment, more than 300 megawatts, and we will develop and continue to monitor the evolution during 2022. Given all the above and this imported -- and supported by the sound results of this quarter, we confirm our 2022 full year guidance. And we, therefore, thank you for the attention, and we can now move on to Q&A questions -- to Q&A session.

[Operator Instructions] The first question comes from the line of Roberto Letizia from Equita.

I have several, so we'll start with few and then maybe do some follow-up. I would like to first ask you what's the trend in the hydro reserve during the last month. We had some recovery. I was wondering if you envisage an improvement in the potential hydro production for the next month. You just touched the guidance for the renewables and the pipeline, which is 300 megawatt. I was wondering if you can comment about the opportunity to expand it in the next month and through which channels? Can you please elaborate on the macro scenario, hence, the coverages, hedgings you are currently putting in place and the risk of missing gas supplies. How do you intend to manage? And then how do you think the repricing campaign to final customer is actually going? And what do you expect to recover in terms of unitary margin profitability for the next month?

Of course, if I add the capacity to foreseeing precipitation, would be very big. But I mean we can estimate the value of our reserves in terms of snow accumulated in the month. And then unfortunately, we have to confirm the lower precipitation that have been affecting all the Alps, and particularly the Northwest Alps that is affect our hydro production. This is, of course, going to be expended during the year, and we are foreseeing overall 800 gigawatt hour of production for the full year overall. And this is included in our forecast in the guidance. In terms of pipeline on renewables, I said, we have several streams under which we are developing the pipeline. We have, of course, in an earlier-stage internal developments, particularly on land, owned properties that we own around our facilities that will have higher delivery days, longer delivery date. But we are also cooperating with several developers, and we have recently acquired significant ready-to-build opportunities that will be starting construction in the summer. And therefore, we have a clear view that we can reach the target that I said in the conference call, 250 megawatts by the end of the year. And on the macro scenario on gas coverage, correct?

Yes.

Yes. On the hedging, we have currently hedged our hydro and photovoltaic production at 90% at the price of -- an average price of EUR 95 per megawatt hour. That is overall 900 gigahertz hour of production covered. 100% of WTE production at EUR 130 per megawatt hour, and our 63% -- 62% of clean spark spread on thermo at EUR 5.5 per megawatt hour. That's it, more or less. And 95% of fixed -- clients that have fixed price are covered, which resulted more or less, amounted to 2.3 terawatt hour. I'm sorry. I was missing the last question you had on the coverage...

The trend on the repricing for the contracts to retail.

Yes. We are not experiencing at the moment, scarcity in the commodity availability. We see more difficulties in getting the commitment on prices on winter. We, therefore, are going to extend our normal policies on the acquiring storage capacity during the summer. This will be, let's say, in order to have a stronger, let's say, position during the winter. The regulation is protecting the economic exposure on these practices, even though this will increase temporarily the working capital on this element. And we have included in the guidance on average EUR 100 million of working capital increase for this reason. And you asked also about the repricing campaign, am I wrong?

Yes.

Yes. We -- of course, we have been delivering last year more or less to our clients, given our hedging policy, on average, 30% lower prices than the market, 25% on electricity and 35% of gas. We are currently still providing to our clients more, let's say, lower prices than the market on -- coherently with our hedging policy. We will, in any case, need to start by the summer with different ways, few repricing campaigns that will target the expiring contracts that we have in our books. And particularly those that have the lowest prices and that are not aligned to current market prices.

The next question comes from the line of [ Enrico Bartoli ] from [ Mediobanca ].

I have 3. The first one is on the Energy businesses. You highlighted this some performance in terms of margins from the heat production and sourceability. If you can provide some details of the drivers of this solid margins, if you have some positive impact from your procurement policy on the cash side that maybe is going to be replicated also for the next quarters. Second question is more general, is on the guidance. Actually, you confirm the target for the full year despite the very strong results in the quarter. I was wondering, let's say, if you think there would be some potential considering the strong results this quarter, to eventually increase that? Or do you see some, let's say, some risk going forward in the next quarters? And in this case, if you can elaborate what it can be reverting the very strong results that you had in the first quarter. The third one is related to the waste business. Actually, you highlighted some reduction in the volumes, not from the residential clients. And I was wondering if you expect some impact from the slowdown in the industrial reduction that we have been seeing in the past months. So what is your outlook, the possible impact that it could have over the next quarters should we try and continue?

Okay. First of all, on heat, we had -- our performance that is significantly improved versus last year, as you have seen in the numbers that Anna showed. This is, let's say, different elements that contribute to this. EUR 25 million are basically the realignment of 2 negative years that accumulated, the 2020 and 2021, amounting overall to EUR 25 million. Overall, the margin that we normally expect from these businesses, EUR 50 per megawatt hour per month. And we, in the last year, had around EUR 40 vis-à-vis the EUR 70 that we had this quarter. There is a second element that was -- gave a good contribution. We changed the and optimized our hedging strategy last year, which resulted in a positive effect with the change in the prices on this quarter. Particularly, we forced our hedging policy to look at the previous quarter prices that are the ones that are mentioned in the tariff so that we offset totally the commodity risk the in business, and this had a positive contribution. Plus, we have to keep in mind that we had to intervene in order to protect our, let's say, smaller clients in order to replicate what has been implemented for the gas business by the government with the law. Unfortunately, district heating was excluded by the contribution that the government has implemented in the law. So we implemented a similar policy on our district heating clients, and this will result in a negative effect of EUR 16 million in the future quarters. And this has been included in the guidance already, so it will be offset by other positive elements. Then you said we had actually on the volumes on industrial production, we had implemented this year a significant reduction in our exposure to business clients, limiting our -- particularly our exposure to the clients that are more close to us. And we had a reduction from 3 terawatt hour last year of contracts to 2.4 terawatt hour this year. So I mean our active policy is not giving us a specific clue on the risk for further reduction, I mean, on industrial production on the other businesses that we see. But I expect that most of the industrial players, especially these larger consumers of energy, will have reduced production given the impact of energy costs. On the guidance, we have included all the risks that we see, and we managed to compensate those. As I said, we have had to implement to deliver bonds on the WTE. We have included the full impact of the changing law that was implemented by the government for the current energy, yes, the increase in energy costs. And we also included the reduction in water precipitation in hydro production. All this said, of course, we are looking for, I mean, potential increase the targets, especially the results. Then we'll see if we can promise a better guidance in the future. That's it.

[Operator Instructions] We have another question come from the line of Roberto Letizia from Equita.

Please, I'm not sure if you said it already. I missed it anyway. What's the expected total amount on the full year from the additional taxation as per the decree that you already included in the first quarter? Then a few other topics. Can you please comment what you think about the optionality of having the Golden Power rules applied to the hydro concessions going forward? Can you just give us your view, if you believe that maybe a sort of protection for the tenant players in the next rounds of potential tenders, that would be helpful to have qualified you on that? The GSEs have recently talked about the chance of entering the market through direct PPA or long-term contracts offered in the market. I was wondering if -- how do you that? If that's any type of risk embedded into the participation of a new player in that market or not? And very recently, just a few days ago, non-intervention on the renewables, the government is talking about the possibility to expand the pure gas productions, around 20% without requesting authorization in case, technically, those plans have the opportunity to expand production more. I was wondering if that's the case for Iren plant. Or you may potentially not be able to achieve that target?

Okay. On the taxation effects, we have included the full impact of -- full year impact in this quarter of...

Contributo di solidarietà.

Contributo di solidarietà, so the last decree that -- I mean, the last discussion that was in place with the government.

At least our best interpretation.

Yes, our best interpretation. Of course, keep in mind that there is no law that we can read. So we just apply the different percentages that was stated in the...

So the EUR 24 million, that's including the 25%.

Correct.

Yes, correct, correct. Then we have, of course, applied also the restoring effect. So the impact on the sustainable provision included the impact of the renewable production. This doesn't have an impact -- significant impact on the first quarter. And given the fact that the production was totally hedged, the price is lower than then the one that is stated in the government today -- I mean the production that is affected by that degree. On the full year, we confirm that we have included in our guidance EUR 20 million impact overall.

Would you be confident in giving a net income guidance for the full year?

On the net income, you have to apply the taxation. Okay. That's it. I mean, 30% is taxation, I would say.

Yes.

No, no, for the net income, not the taxation.

Beg your pardon?

For the whole net income, not the taxation, full year, if you feel confident with that...

You want to know what is the average taxation that we expected by the end of the year.

No, no. I think he wants to know the guidance for...

No, no. I'm sorry. I'm sorry. If you feel confident in providing a net income guidance for the full year, including those taxation effect that you mentioned.

No, I think it's -- that's not true. That's why we didn't give it the last time, given all the uncertainties related to the Contributo di solidarietà degree. I think we said this is the best estimate for the EUR 24 million. I think we want to see the final -- how the final decree looks like. I think we would stick for now to the EBITDA guidance, which we confirmed. And obviously, the net income would be the result of it as a consequence side of this EUR 24 million. I think maybe one...

One thing that we can confirm is the guidance on the dividend.

I was going there but you stopped me.

I know, I know. But because, of course, we expect this year to be an extraordinary one. And therefore, it doesn't even make much sense to estimate exactly the number, the exact number that will result from all the different applications of the taxation will be. We have included the maximum estimate that we can see now in our estimate, and we're able to confirm the guidance. We are also able to confirm the dividend policy. Because in any case, any exceptional taxation does not impact overall our plan and, therefore, our ability to distribute the dividend over time. Our net financial position is confirming the ability of the company to generate value and to have a sound returns on the investments that we made.

That's perfect. I've interrupted you on the other questions. Sorry for that.

The next question comes from the line of [ Enrico Bartoli ] from [ Mediobanca ].

Sorry, a couple of follow-ups also on my side. The first one, on the renewable business, I was wondering if on top of the capacity that is shown in the last slide, if you are working on additional transactions. If we can expect some M&A going on over the next quarters? And I was interested in some comments on your side on the measures that the government has recently approved, trying to speed up the authorization processes for the renewable process. If you expect that this would provide some additional opportunities compared to what you took into account in the target of your business plan? Second one is related to some comments of the CEO that I read regarding the WTE project in Rome. So if you are, I guess, you are interested. If you can give us some details of the role that you could have in that project. And finally, on the working capital evolution, if I understand well, in the guidance, you have only EUR 100 million of absorption by the end of the year. So I guess that you are not seeing any, let's say, significant impact on your working capital from the current energy scenario and from the measures taken by the government in order to delay some payments from final customers. If you can provide also some comment on this?

On the pipeline, we have a strong development. As you recall from our acquisition from European Energy, we also had also an [ offer ] their pipeline that amounted to 450 megawatts. This is, of course, a source of significant opportunities. We are closing a deal to start construction on 2 projects currently, one in Lazio and the other in Sicily. Then we have finalized a signing of 2 authorizations in Basilicata of solar plants. And we have several other discussions on plants that are at different stages of authorizations, but they have a significant probability to obtain authorization by the end of the year. So we also have acquired an authorization for 8 megawatts for the first Iren wind plant. So we will start also that development of the technology. Of course, we have several opportunities and the project -- projection of the investment target include the kind of development in the guidance. In terms of authorization process, of course, the bureaucracy is one of the unsolvable problems of our country. But we have seen in the recent decrease that at least the government has, for the first time, tried to understand what are the problems that affect the -- I mean, the slow rate at which authorization have been given. The fact that already 2,000 megawatts have been authorized compared to the previous years in which overall in Italy, less than 1,000 megawatts were authorized a year is a significant improvement. We will try to see what will happen. But we are confident also that authorization had been a sector in which major players -- major utilities have not invested enough, and this is quite weird. Most of the players in the market are developers with very little capital and, therefore, the extended period of time under which authorization are developed is partially due to the fact that very little money is invested in this area. We believe that speed and capacity to invest can be a significant edge in having a success in this area. And we have managed to build an organization, as I said in the speaking notes that is going to deliver significant results in the future. On WTE, we have, of course, as you know, in our plan, several projects that we are developing. We are definitely able to contribute to Rome and personally, I would be very happy to improve the performance on the waste collection and management in Rome, given the fact that I live there. But of course, I mean, we will see if the participation to a tender is -- makes sense for us given the conditions under which the participation is requested. And of course, if we see that there is no opportunity for us, so we will not participate. Of course, we will not leave this tender and if -- unattended if nobody is going to go there. And on working capital guidance, Anna, can you help me?

Of course. Very briefly, obviously, we will continue to have a disciplined working capital management, working both on the supply side and on the customer side. That obviously leaves the seasonality. We see, in any case, a normal or ordinary worsening of the working capital, obviously, in the next month. But this is in fact, pretty normal lending to our quarter evolution. The EUR 100 million you mentioned are on top, let's say, of this ordinary working capital evolution across the quarter because we factored in the potential government measures. So the bill's installment payments, just to mention one, which might impact and so erode a little bit of the good start we had into 2022. As you might remember, we closed 2021 much better than our estimates, thanks to working capital. And we're seeing these government measures might erode a little bit of that buffer. But having said that, as I said, we fully confirm our overall guidance also in terms of net debt and on EBITDA.

Yes. And we also are performing very well on days of payment. We have a positive contribution overall on the energy value chain, and this is very important with the increased energy prices. We have not experienced any significant increase in the debt in this area. And also the request for deferral of payments is not significantly increased compared to the last years. So these are all positive indications. Of course, they are not definitive, but we see that we can continue to manage effectively the overall working capital for the business.

Excuse me, [ Enrico ], have you finished with your questions? The next question comes from the line of Roberto Letizia from Equita.

Yes. Sorry, but the operator cut me out before. I had the previous question on pending that were on: the GSE entering the market of the really long-term contract and PPA; the Golden Power on hydro, what do you think; and the possibility to expand biogas productions with no authorization up to 20%, as recently indicated.

Yes. There was no intention to cut you off.

I know, I know. Don't worry, don't worry.

On PPA, actually, we are -- of course, it would be very interesting for the market that we institute a GSE market for PPA, meaning that a GSE could play as the counterpart of last resort for any PPA. And this would significantly decrease the risk that should be held on the contract part -- risk that should be hedged on this contract. We are also considering, however, not with -- I mean, in the absence of this opportunity right now, the possibility to close PPA with our customer base, or considering our customer base, basically extending the hedging evaluation on the multiyear horizon. And we are looking for -- to close contracts with an existing renewable capacity in order to respond to this need. Then on hydro, I mean, Golden Power is hard to be applicable unless I mean, it would make sense to apply this power to players that are outside Europe for any energy infrastructure, I would say. And the current crisis shows that the control of the energy value chain is of relevant importance as for the overall geopolitic stability of the region. But in our -- I mean, in terms of impact on our side, we see very little impact. Actually, I mean, all the discussion about the expansion on the concession, I see very little opportunities for the player to obtain extensions, ruled extensions, the factory extensions that we are already obtaining in the last 10 years or so. We're not going to see it as a guarantee for extension. But in this case, we believe that probably a private partnership model would be more applicable to either on concessions. This kind of contract would extend maybe concessions in, let's say, in a regulated form with the possibility to unlock investments to repower these plants. And we believe that is the way to go. In general, we are trying to work on this with our institutions. Biogas, I'm sorry. I'm very distracted for some reason. Don't know why. No, we are, of course -- we will have by the end of the year, the full production from 2 plants that were put in operations last year, Santhià and Cairo Montenotte. And by memory, we should arrive to more or less 9 million cubic meters -- short of 9 million cubic centers by the end of the year. We are also implementing the doubling of Santhià and the construction of Gavassa, a larger plant in Reggio nell'Emilia region. Plus, we have an additional plant that we are awarding in terms of construction to Tuscany. So we have a program that is going to invest significantly on biogas in general in our plan. We are concentrating mainly on our -- for the collection that is in organic fashion as a collector from urban waste. We are not present in the, let's say, the agricultural waste, let's say, production. We -- of course, that is a different business model, and we are not yet active. Our target on the plan is to reach 40 million cubic meters per year in biomass in [ trauma ] urban waste.

There are all further questions, and I would like to hand the call over back to Mr. Armani for closing remarks.

Thank you.

Thank you very much for attending the conference, and have a good evening.

Bye-bye.

That does conclude our conference for today. Thank you for participating. You may all disconnect. Have a nice day.