REN - Redes Energéticas Nacionais, SGPS, S.A. (RENE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for attending REN's 2024 Results Conference Call. We have today with us our Executive Committee, Rodrigo Costa, our CEO; Gonçalo Morais Soares, our CFO; and João Conceição, our COO. Rodrigo will start with his opening remarks, and then Gonçalo and João will guide you through the main operational financial highlights of the year. We will then open up for Q&A, where we will be taking your questions.

Thank you, Madalena. Good morning, all. We had -- as you know, we had a good set of results. Yesterday, I was reading my notes from the same period last year, and I thought about delivering the same comments. It was a good template. A year ago, we mentioned the word elections a few times, the words and the need to make progress on the licensing front. Today, we have the same concerns and challenges. And if we go back another year to 2023, we have almost the same concern plus a very serious drought. One year before, we had all that plus COVID. And I think the future will keep being very challenging. On the positive side, we can share a bit of good news regarding sales. We will go through that during the presentation and the Q&A plus the fact that 2024 was a good year. As always, some setbacks, but plenty of successful infrastructure developments and usual service, high quality and efficiency. We are very resilient and focused on the operational front and on financial management also. And we remain cautiously optimistic also as always. We'll be keep -- we'll be able to keep moving and delivering our multiple fronts. We don't have many doubts on that. Both in Portugal and Chile, we achieved good operational and financial results, and we keep moving on our energy transition journey, where we see plenty of our projects that will keep us very busy in the coming years. The energy transition is a catalyst for our internal transformation, creating opportunities for our teams as well is attracting new talent to the company and also that is very positive. Also, we made very good progress on the ESG front, and we will also share the results, and you will be easily be able to see that. Before we take your questions, we'll go through the presentation, sharing with you all the main events and results. Gonçalo?

Thank you, Rodrigo. Good morning to you all, and welcome to our results presentation. We think that we have a very good set of results that we are delivering and even outperforming versus the business plan that we presented last year. You see our EBITDA at EUR 506 million coming down around 1.5%. It was clearly expected and even slightly better than expected, given some pressure both on the domestic front and also which due to core Opex also on the international front, given some nonrecurring that we had last year. On net income, you saw strong performance to EUR 152.5 million, the growth of slightly above 2%. And this is an evolution despite higher financial costs, so lower financial results, which were expected but was mainly driven by positive tax impact. And there are 2 stories here. One is related to sales to the specialty and other to some other tax impacts. I will go through this with a little bit more of detail as these are material in the accounts. Okay. As you see, the net debt is also coming down around 1.4%. This is mostly driven by the tariff deviations, but this number, the 1.4% is excluding those. So even without this, net debt is coming down and this is in the context as we see a very strong increase in CapEx. So CapEx almost EUR 370 million last year, an increase to above 20%. So clearly, delivering what we said mostly and as we also have focused on the business plan, mostly coming from the electricity sector. And flowing through RAB, as we saw also transfers to RAB outpacing in terms of growth, the growth of CapEx and growing around 33%. Let me now give the floor to João that will go through the operational messages that we have. João?

Thanks, Gonçalo. Good morning to you all. On slide -- the following slide, you have an overview of the key message from the operational side. One of the most important obviously is the fact that we keep increasing the renewable share in the total consumption of Portugal. We finished 2024 with a level of 70% which is almost 10% above what we did the previous year. In terms of consumption, there was a slight increase in the electricity consumption and the fleet point on the natural gas consumption, but I will go through that. In terms of quality of service, we kept the high levels of quality of service within our grid. At the same time, we keep reinforcing our sustainability commitments. And the most evident ones are the improvements on Scope 1 and Scope 2, together with Scope 3 emissions targets. Regulation highlights. Besides of the fact that what we have had in the slide, I'd like the fact that we got the decision from the European Union regarding our self-application for grants related to the studies of the new hydrogen infrastructure. The decision was taken in the beginning of this year. So we got about EUR 6 million for studies for this new interconnection with Spain as well as the retrofitting of our internal grid -- natural gas grid to be hydrogen, 100% hydrogen-ready. This represents a commitment from the EU versus our project by giving us 50% of the total budget of these studies. This is also applicable to the whole corridor from Portugal, Spain, France to Germany. Also in this regulation highlights, I would reinforce the fact that we just finished the public consultation that the regulators need for our investment plan on electricity, our investment plan from 2025 to 2034. As you may know, this is an important plan that envisage something like EUR 1.7 billion in investments on electricity grids for the next 10 years. Moving to Slide 7. So you have a little bit more detail on the operational indicators. Again, the 7.2% of renewables integration. This is mainly driven by an important increase in the hydro production. We went from 23% in 2023 to 28% last year, a slight increase also in wind and solar. And altogether, we managed to increase the 10% of renewable sources versus 2023. In terms of consumption, we saw the national consumption slightly increase 1.3%. And if you could do the production for these working days and the temperature this is even a little bit above is 2% increase, which is trends that we are expecting to be kept through 2025 and not considering the expected increase -- sharp increase on consumption related to new industrial sites and data centers that we are envisaging to be connected to our grid. The fleet point of that is the natural gas consumption, which decreased mainly driven by a big drop on the electricity generator. The more renewables means less need for gas for electricity generation, and this is something that is reflected by this almost 20% decrease on natural gas consumption. In terms of quality of service on the electricity side, we improved the average interruption time and we kept the high level of combined availability rates. These are the important indicators that the regulator follows in our IMDT incentive. Whereas in the natural gas, no big news, we kept the 100% availability rate in the transmission grid and high levels of response on the distribution grid. And with that, Gonçalo back to you.

Thank you, João. So I'll turn to Slide 8 with just the main financial highlights, and let's go to Slide #9 we do EBITDA. So here, what you see is pressure on the assets in OpEx, which is expected. We have some nonrecurrent in 2023. We had a new gas regulation that not only you saw rates coming down because of markets, but also you had new gas regulation with less costs being accepted. And you had less of that impact of electricity that we had last year in the terminal. So we knew that last year we have I'd say some also unusually high contribution to EBITDA here. And that's what is being corrected on a year-on-year. There is nothing, I would say, out of the expected. In the other revenues, there is an increase because we also have a lot of extra costs last year that were some of them nonrecurrent -- that we specialize as nonrecurrent, but we also have this year some higher own works because as we increase CapEx, we are increasing our own work, okay? In terms of core OpEx, this is mainly driven by high personnel costs and I'll go through it because the rest is actually coming down around 2% versus last year. Internationally, it's mostly because of that big nonrecurring impact positive that we had last year. We also had some small exchange rate impact. Sometimes they are EUR 1 million positive, sometimes they are EUR 1 million negative. This year, they were slightly negative. So that's why it kind of also contributed to this negative trend, but I'll go through it. So in Slide 10, in terms of our evolution, if you what you already know. So in terms of electricity, a slight decrease given rate evolution in the market in gas not only that, but also the review of regulation pushed rates a little bit down and that had impacts on our remuneration. Going to CapEx on Slide 11. I think that here, there is good news. So you are clearly seeing that we are delivering on the plan that we presented to you last year. You are already seeing the part of the solar agreements that we have told you. So in terms of EBITDA, we have close to EUR 7 million in EBITDA that's related already to solar agreements fully in line with what we expected. Yes, we still have challenges with licensings and things like this. But the operating teams are delivering, and that is good news. And this is mostly focused on electricity, most of the CapEx was focused in electricity. We have a very large project [indiscernible] that was concluded this year, and that was a very important project to be concluded this year. So I think that this is mostly electricity in green. We are also doing other things in gas. We are, as João said, doing small investments relating to hydrogen and launching in the hydro and adapting the infrastructure, but this is mostly driven by electricity. Looking forward to just making a small mention, we still -- we also expect strong CapEx this year, so we expect that there is some growth in CapEx this year in line with our business plan. And even if there are in any given year in '25, '26 or '27, some delays, which may be possible because some constructions are a little bit more challenging than others. What we are seeing is that there is also signs of higher for longer CapEx. So as João said, there are these new high consumption areas or zones, namely the 1 in [ Phoenix ] where we also already got the approval for CapEx last year of EUR 500 million. All of this was not in our initial business plan CapEx. So although there is, as I said, potential for a single year, a little bit of the life, which you cannot control. What we see is actually a positive development in terms of investment as we go along. So we will keep monitoring and give you feedback on this. In terms of RAB returns on Slide 12, I'd say that we went through this. So mostly strong negative ROR Evolutions on the gas assets, what you see -- there also is a positive evolution of electricity given the asset-based evolution. We think the sales CapEx keeps going up and as we reinforce transfer to RAB, you'll continue to see a positive impact here on the RAB returns of electricity. In terms of OpEx on Slide #13. As I said, these were mostly driven by personnel costs. We are increasing people to support the CapEx deployment. We still have to increase a little bit salaries given and high inflation that we had in previous years. So this was kind of trending in terms of increases of salaries. So that kind of still reflected in 2024. Bear in mind that at the same time, the own works are increasing. So part of these costs are capitalized because they are dedicated to investment activity. So there is an increase here, but there is also an increase. The net increase is actually not as large in terms of OpEx, okay? We should start to see it in '25 or '26 a kind of slowdown in the evolution of this cost, but it is still -- we are still seeing a strong evolution in terms of investments and so we have to reinforce our people. The other costs are coming down. Namely maintenance costs and consultation costs came down. So I think here is where we tried also to compensate and accommodate costs given the increase that we have in personnel. In Chile, Chile I think is continuing its growth trajectory, but 2024 was a little bit affected by some non-recurring, when we compare it to 2023. As I said, we had a EUR 4 million positive impact in '23. We have this EUR 1.3 million impact on the exchange rate impact from 1 year to the other. So it's kind of impact, but under that and after you look at that, I think things are going okay. In terms of [indiscernible] the electricity side, we just won some months ago, 4 new auctions in Chile. So 4 new constructions in terms of greenfield. I think this is exactly what we are aiming to do. So we are concluding also, and we concluded in early '25, one of the construction that has been delayed and the other one should be concluded in the next month or so. So we are also kind of catching up on some of the things that were delayed. So we expect to kind of regain the growth momentum, and we are continuing to be happy to promote growth on the electricity side in Chile. As you know, while maintaining this smaller business units within our group as we dedicate most of our capital to Portugal. In Electrogas, there is some decrease, but this is because we are coming from record years in '22 and '23. But again, it's also performing well and, I'd say, even above plan. Let's now go below EBITDA to Slide #15. In terms of financial results, and I'll come back to that a little bit later, but it's coming down. In terms of cost, they are clearly stabilizing at a lower value than we have in the business plan, and this is given the fact that rates also inverted versus what we have expected. As we have said before, we have guided you that we should go up to around 3%. We have now stabilized this year. We had 2.75%. We think this is where we are going to stay moving onwards. So if nothing changes in the rates now, we should be between 2.7% to 2.75% around there, which is clearly below what we have in the business plan, okay. Bear in mind that this was achieved while increasing maturity to about 5 years. So we have maturity around 4 years. We reinforced the review this year. We increased maturity to around 5 years. And at the same time, we were able to maintain costs a little bit below what we had expected. Now let's talk about taxes because we have 2 good news here. And so I want to spend some time even to, I'd say, preempt some of the questions that you could naturally have. So first on the special levy, Rodrigo already mentioned. So last year, we won 3 court cases, all of them related in gas to import gas and 1 of the other concessions. And this has allowed us to recuperate EUR 5.6 million. The court decisions were final came in, I'd say, later in the year. So there is no more deals nothing else could be done here. So we are certain that we are going to get this money. There is now a normal process of communication between the court and the tax authorities. This is normal. There is no delay that we can see. So it's the normal procedure that is ongoing. And we are now expecting to receive the money. But I'd say that we want it, and we should have accounted. That's why we put it in the account. So I think this is good news to see this materializing for the first time. Bear in mind that we have not still accounted for the interest as we will receive interest on this as we want to be certain of the amount that should be in the account, but this is not, I'd say, materials is, let's say, a positive impact, but it's not going to be material, okay? So it's the first time that we are seeing this. It's positive. It's clearly more positive on the gas side. We are kind of holding on the electricity. Let's see what happens in 2025 and 2026, since the court case is moved and continue to move up in the constitutional court. But I think clearly, this shows a positive trend. Let's now talk on the other tax impact. So this is a tax measure relating to the capitalization of companies. This was created in the budget for 2023 was repeated in the budget for 2024 and is now in the budget for 2025. So this is a measure that was in the budget of 2 different governments for 3 different years and is now on its very different year. Last year, the impact was around EUR 20 million. given the changes in the budget of 2024, the impact this year was close to EUR 36 million, okay? So it was an increase versus what we had in 2023, okay? This year and last year, we were still not very sure of how repeating this was. And so 2023 was mostly positioned as a nonrecurring, but what we are seeing, and I think you did not have in any of your models and this 2024 impact. And furthermore, I think that reconcile that for 2025, there is basic certainty that this will release. And given outside opinion that we also collected, we feel that there is a very high probability that in '26 and '27, we will still have some impact that will be coming from this. So we are looking at 3 more years of impact, let's say, of around EUR 30 million per year. We don't know the exact number. But so this is material. I think that these 4 years, if you look at them, account for almost an impact of EUR 120 million. So this is material, and I think it's good news. We never have absolute certainty, but we are, I'd say, confident given these outside opinions also that this is what is going to happen. After that period, we don't know when we like to be conservative in the way that we approach this. So we don't know, if anything happens after 2027. So moving to Slide #16 in terms of net profit. So this is kind of the summary. You see some pressure on the EBIT side. You see the increase in financial costs that were expected already, but this was compensated by both the recuperation and also the levy and by this impact in terms of income tax. On Slide 17, net debt, you can see that here, we are also delivering. And this was something that we had in the business plan and perhaps it was not clear or some people thought it was difficult to deliver, but we are increasing financial resilience, while increasing investment as well in CapEx. So you are seeing net debt coming down. This was mostly driven by the reduction in tariff litigation, which is good news. So it is coming to this stabilizing to a level in 2025. It will also that is the normal level without those larger deviations from rent trading -- but even if you exclude that, it came down 1% in a year, where we increased CapEx more than 20%. Of course, that looking further as this impact of tariff deviation has stabilized, as we maintain high CapEx, it's normal that net debt, as we have said, may go up a little bit. But bear in mind that a lot of CapEx is driven by -- also by the solar agreements, which we have a different cash flow profile. But -- and overall, we think that metrics are not going to be impacted even we perhaps think that they will be impacted positively. Again, repeating maturity going at around 5.2%, liquidity going at EUR 1.6 billion, clearly above the full year commitment of liquidity that we have. Our refinancing sales, again, delivering on increasing financial stability in Brazil on the cost. In terms of looking at the strategic plan, just as a reminder on Slide 19. The things that we propose to you in terms of strategic plan, both in terms of payment ability, emailing the energy transition and investment on delivering profitable growth in terms of metrics and business indicators. I think we are delivering. And you can see that on Slide 20, you look at EBITDA, and we are delivering on what we told you and you look at the net profit even recurrent net profit, we are delivering and on regular net profit that we are clearly over delivering on net debt, we are again delivering on the low end of that interval that -- we told you on CapEx, we are also delivering on what we told you in terms of -- so I think that we are delivering on all of the metrics that were required. Just taking a minute to talk about most of the ESG commitments that we have on Slide 22, which now already went over a bit deep. But just to tell you that the commitments that we have, namely on the environment and on emissions. We are clearly doing very good progress here. We have a commitment to reduce Scope 1 and 2 emissions by 60%. By 2030 by this year, given a lot of measures and the evolution of renewables, we are already at minus 57%. So we are clearly doing good progress. In the year itself, it came down almost 22%. Scope 3 also coming down 9% in 2024 and reducing already 28% versus '21 when our objective is to reduce it to 20%. So there's strong commitment. You can see the detail of that on Slide 23. We have a lot of metrics there that you can see that we are delivering on them. And if you have any other questions, please reach out. What you can also see, and that is the result on Slide 24, is that this is having impact on the ratings that we have in terms of ESG. Mainly the last 1 that we received and was the very good news was the CDP1. We have -- and this was early this year, so in February. So this is clearly an increase in S&P, we also improved in December the rating that we have in Sustainalytics. We also improved during last year. In MSCI, we are already at the top. So we did not improve, but we are there. In the ISS, we are doing a way and the journey to improve, but we are clearly delivering again on the business plan and executing also on the ESG sides. So as closing remarks on Slide 26. So good results in 2024. And I think that there is some news that have a positive impact on the stock. And we are delivering clearly on the business plan and fulfilling what we told you. And not only that, and we are on offset also yesterday in terms of these I think and there is a bit of good news here. As we -- last year, we had told you what we have promised was to have an increasing 2% dividend policy starting in the 2025 dividend, so the 2024 would still be the same as the 2023. But yesterday on the board and the board decided to present to the general assembly in anticipation of that and already increase the 2024 dividend by 2%. So that kind of shows the commitment of the Board to the shareholders and it kind of shows also the confidence that we have on the business plan and on delivering the business plan. So thank you very much for listening, and we now open the floor to any questions that you may have.

[Operator Instructions] The question come from the line of Flora Trindade from [ Caixa ] Bank.

I have 3, if I may. The first 1 is on these extraordinary tax incentive. Can you provide a bit more granularity on exactly how these incentive works. If I understood correctly, you're talking about a total of EUR 120 million potential cash impact from this incentive. So just wondering, if you can just guide us a bit on exactly how this works. And then secondly, on the sales decision, do you believe that this increases the probability of reversing at least what you have paid for gas. What's your expectation for 2025? Should you pay the same amount? Or should this be reduced at some point? And then finally, on the electricity regulation, are you holding negotiations with the regulator? Do you have any central scenario is just an update of the parameters? Or can we also see some change in the methodology.

So on the tax incentives. So as I said, this is related to capitalization of companies in Portugal. So this was created further budget of 2023, 2022, okay? The value I gave you. So what I'm telling you is that we have an impact of EUR 36 million this year, okay? And we are expecting to be able to maintain an impact of around EUR 30 million for '25, '26 and '27. So if you add this 4 up, that's the EUR 120 million that I was giving you, okay? But what you should expect is the impact that we have this year was EUR 36 million, and you can put in your model as we have, let's say, a higher level of confidence, a value of around EUR 30 million for the next 3 years. After that, there is still a possibility of something, but we are uncertain and we'd rather be conservative and tell you that there is still something else coming. So I would say that this is where we are confident. On the sales, there is no expectation that we have, but I think that Rodrigo will make comment on that.

On the sales, we cannot anticipate other decisions. We have these 3 decisions that Gonçalo mentioned. We decided that the impact of those decisions should be booked in our P&L. That's what we did. We discussed this, of course, with our editor -- auditors. But we don't do any predictions for the future because we need more resolutions for sure, it's a very positive decision that we got. It shows that our work with our lawyers is working. We had we -- on the first year, we did not get any positive decisions. But after 2019, of course, we have a good expectation. But this is for the future. In terms of also, you didn't ask but in terms of electricity, we are still waiting for decisions from the court, and we will see how it goes. On the last one, we don't comment on the process of the regulation revision. It's a process. Our regulator -- they just did a very interesting event, where they basically invited for the positive a few weeks ago. They invited several stakeholders. We were there. We were talking there. The idea was to provide feedback before their decisions. And I think it was the first time they did this type of event. It was quite positive. They got a lot of feedback, and now they are working. As you can expect, we will not make any comment on our work. This is a long process, and they are the ones, who can comment not as to remind you on the timings of the regulation this year, because those are the typical timing. So the first version will come out in mid-October, okay? So that's the first time that any information will be made public. And the final one will come out in mid-December. So most of the engagements will be before summer, but you will not have any news before those, but I expect that too.

We are now going to proceed with our next question. And the questions come from the line of Fernando Garcia from RBC.

Let me see on the constitutional court ruling and as well at the remuneration of -- from 2026 in electricity. So starting with the extraordinary tax, my understanding is that you are doing an appeal for each business and year. So can you clarify these rulings, what they refer to? And then I am correct to think that the rationale of these rulings can apply for the remaining years, I am thinking that, for example, this ruling applies to 2019? What will be the potential amount the amounts that you have paid until 2024 in gas. Related as well to the extraordinary tax. Do you think -- I understand your position of not commenting about the constitutional court decision. But can you share your views about if the rationale of the ruling can you use that as well in electricity particularly, since from 2019. About the last question on the tax. Can we link this gas for our ruling with increasing dividend that you are having already in 2024 of 2% and asking here as well, if there are more favorable rulings going forward, if that could have an implication in your dividend guidance. Final 1 is in -- about your remuneration in electricity from 2026. There are, your expectations about returns for next year. And at least you can share with us, do you think that this remuneration should be aligned with any improvement happening in Spain. And if the remuneration is fair, what you have, if that could mean an increase in the level of investments that you have in the future.

Thank you, Fernando, for your question. So on relating on the sales on specialty. So the rulings that we have were relating to 2019 and 2021. So '19 and '21 and 1 in the company in one of the concessions for [indiscernible] normal margin in '19, okay? So those are the ones that you got, okay? As we said last year, in terms of [ Rede ] across. The only thing that we find is that there was a shift in the quarter opinion parting in '19 relating to gas. That's the only thing that we can see. And so that is why we are, I would say, from '19 onwards a little bit more positive on what we can expect from the ruling. On the electricity side, we didn't have any ruling yet. So we are following. We don't know exactly what they will say, okay? The gas that is paid in the special tax effect -- the tax that is paid in special levy. For gas assets is around EUR 10 million per year, okay? So you have still 2020, part of '21, '22, '23. So there is a lot of money there. I can give you the precise amount later. But so it's more or less EUR 10 million a year, and we only recuperated part of what they had in '19 and '21, okay? So on the Feds, I think that was what you wanted to hear.

Just to comment, I think, just to comment on the dividend. What we announced is what we announced. We are not going -- we never do any type of forecast or prediction in terms of dividend other than the 1 we did last year, as Gonçalo mentioned, which is a steady increase per year. And this is all you will -- we can share at the moment. This is always to do. And somehow, this answers also to your second question about what we will be doing, if this situation we says will keep going. As we said, we have positive expectations on the sales side, to be honest, on the gas side and on electricity side. But the key decision also comes from the government. When they develop the next budget, we will see how they will decide. Our intention is to keep the process on the courts on both sides in electricity and gas. But to be honest, we need more decisions, and then we will act according to those decisions. In terms of the regulation? What can we expect? Again, I already answered, we do not make any comments on the process. We made public our comments to the regulation to the future. The importance of having a fair remuneration that allow us to invest. We need to make sure that future regulation takes in account the needs for innovation, the need to make sure we have the proper investments then every year in the network. We have multiple challenges that also the regulators need to address, and this is not just about Portugal and Spain. This is about every country. This is the feedback we gave them. I'm sure they will work they will listen to a few of the things. Some others, they will decide by their own. But at the moment, this is the process, and we have to respect that regulators will -- are the ones who will let us know their decisions.

The questions come from the line of Ignacio Doménech from JB Capital.

First question is coming back to the tax incentives, okay. I would like to understand because you sound quite optimistic now with the possibility of recovering or having this impact -- EUR 30 million impact on the 2027. So I just want to understand, given the political uncertainty in Portugal, how feasible it is that this impact could be repeated in 2026 and 2027, I understand that the budget was approved last year. So there's no risk through 2025. But just to see to understand there was I think in the government, if this is something that there is consensus between political parties or we could see some risk okay, to be started a little bit. And my second question is related with the regulatory review. I think as João mentioned, 1.7 investment plan until 2034, which is quite challenging now and substantial. So I would like to get your view on what do you think is an adequate or a fair remuneration in order to ensure that the company will actually be reinforced and invest on the Portuguese network until this year.

Thank you, Ignacio. So relating to the tax incentive in your question. So first comment one. This was created by the previous government and was repeated by the current government. So you can see that this is a measure that has gone through different political and government. So there is some stability in it. And it has been present in 3 different budgets. That's the first comment I would make. The second 1 relates to the fact that even despite those changes, this relates to certain rights that's when given the tax law in Portugal, guarantees the people that pay taxes for certain stability in how these laws are applied. And so that gives you some right in terms of tax in Portugal. So these are the 2 things that give us some expectation in terms of getting that money, we were aided by outside counselors on this. We reviewed those opinions. So this is not something that we only decided and analyzed on our own, okay? On the regulatory review, João, you want to add something or...

Just to mention that we are following what's happening in other regulatory models, namely the Spanish one. We are aware that these investment plan that we have in electricity is an ambitious one. Bear in mind that a significant part of it is related to projects that drive directly from options that are made by the national energy policy. So we are considering all this into the equation. And of course, the fair remuneration is a critical variable to account when we take the decisions to go ahead with these projects.

Just to add on that, and this is then repeating a little bit what we told you on the business plan. I mean there was a clear increase in cost of capital in the past years, since we left as the new electricity remuneration. And I think that it is on the back of that, that both in Spain and here, companies are doing that. Look, we need a fair remuneration given this increase in cost of capital. That's all, that's all we are asking, we are not asking anything more than that, okay.

[Operator Instructions] We are now going to proceed with our next question, the questions come from Alessandro Di Vito from Mediobanca.

I have question on CapEx because you mentioned before during the presentation that you believe that this level of CapEx is sustainable for the next years. So I want to have a confirmation on this. And I also wanted to ask, if you could provide a level of investments for the transmission and distribution in '25 and '26. And maybe, if you believe that there could be some potential upside maybe from hydrogen or some other factors.

So we don't -- I mean, we don't give specific guidance for any given year and any given CapEx you have that range of CapEx that you have on the business plan of EUR 350 million to EUR 450 million. As we only signaled to you that we are expecting in 2025, an increase in CapEx versus 2024, which is in line with the trend that we are seeing as we start to implement the solar agreements, namely, which will come this year, next year in '27. You will see that increase of CapEx going up. In any given year, as I said, some construction may be delayed, but that's not really the point for you. So what you see is trending upwards CapEx moving up that interval that we told you, okay? We also see signals of strong sales that there's other CapEx that we may be sustaining this as those high consumption around. So I'm not going to give you specific guidance on anything specific. But this is what you will see increase in CapEx this year again versus '25 and then '26 maintaining and '27 high levels of CapEx moving forward.

We have no further questions at this time. I will now hand back to you for any closing remarks.

Thank you very much, all on the line. As for usual, we remain available to answer any additional questions you may have. And thank you, and have a good day.