RWE Aktiengesellschaft (RWE) Earnings Call Transcript & Summary

Welcome to the RWE conference call. Markus Krebber, CFO of RWE AG, will inform you about the developments in the first 3 quarters of fiscal 2020. I will now hand over to Thomas Denny.

Thank you, Jess, and good morning, everyone, from us here in Essen. Thank you for joining us to discuss RWE's results for the first 9 months of the year. COVID-19 is still very much part of our life. So we hope you are all doing well. I'm joined here by our CFO, Markus Krebber, who will shortly start with the presentation before we continue with a Q&A session. Also, I've got a surprise guest here. A warm welcome to our designated CFO, Michael Müller.

Thank you, Thomas, and hello to everybody on the phone. I'm very pleased to be with you here today. And I'm really looking forward to my new role. After the full year results, I will take over the role from Markus and will be in the driver's seat for these calls. Between now and then, I will already attend several investors' meetings, and I'm very much looking forward to getting to know you all.

Thanks, Michael. And now before we get started, please remember our presentation focuses on the pro forma figures for 2019 in order to compare like-for-like. So assets taken over from E.ON in the third quarter last year are included in adjusted EBITDA and EBIT for the full year 2019. And with this, I now hand over to Markus for the update on the first 9 months of 2020.

Yes. Thank you, Thomas, and a warm welcome to everyone. It's good to speak to you, and I really hope you are all safe and sound. The operational and financial performance in the first 9 months has been good overall, and we have only seen a minor impact on the business from the COVID-19 pandemic. On a pro forma basis, year-on-year, adjusted EBITDA of our core business increased 4% to EUR 1.8 billion. The group's adjusted EBITDA stands at EUR 2.2 billion. With this, we are all well on track to confirm our full year guidance and our expectations for adjusted EBITDA to be at the upper end of the guidance. We reaffirm our dividend target of EUR 0.85 per share for this year. We successfully concluded a EUR 2 billion capital increase via an accelerated book-building in August. The additional financial flexibility enables us to accelerate the mid- to long-term Renewable growth. Thus, our net debt at the end of Q3 improved and now stands at EUR 5.9 billion. At the beginning of September, we announced that we would exercise the right to redeem the EUR 539 million hybrid bond at its first call date on October 21. After the redemption, we have 2 more hybrid bonds with a combined value of approximately EUR 600 million and first call date in the middle of the '20 is outstanding. On the M&A side, we have closed the acquisition of Nordex 2.7-gigawatt development pipeline in Onshore Wind and Solar. The development team of more than 70 employees, which is mainly based in France, has joined RWE Renewables. This gives us great options for further growth and a broad entry into the French market. The Board's succession is progressing as planned. As of November 1, Michael Müller, our designated CFO; and Nanna Seeger, our new Chief Human Resource Officer, joined the executive Board of RWE AG, and I'm very much looking forward to work with them for a successful future of our great company. Ladies and gentlemen, as you know, ESG is a key part of RWE's strategy, and I'm pleased that I have some progress to report on this front. CapEx for property, plant and equipment eligible for green investments under the proposed EU taxonomy amount to 85% in the first 9 months of this year. Also, the Transition Pathway Initiative has acknowledged our ambitious climate protection plan and confirmed that we are in line with the targets of the 2015 Paris Climate Agreement. Speaking of which, we have submitted our detailed emission reduction targets to the Science Based Targets Initiative for assessment. Together with the SBTi, our ambition is to get this done quickly. We will keep you posted. Last but not least, we further increased our engagement with the UN Global Compact. We are a founding member of the UN Global Compact CFO Taskforce committed to the Sustainable Development Goals. As such, together with more than 30 companies from around the world, we have developed first principles for sustainable finance backed by the UN principles for integrated SDG Finance and Investment. And now on to the financials on Page 5. As I said earlier, in our core business, adjusted EBITDA increased year-on-year by 4% to EUR 1.8 billion, based on a good performance in all segments. Broadly speaking, the good 9 months result for Offshore Wind and Onshore Wind/solar was due to the very good weather conditions in the first quarter and capacity additions from Onshore and Solar. The Hydro/Biomass/Gas division benefited from the resumption of the GB capacity payments. And the Supply & Trading division delivered a strong performance in the first 9 months. Ladies and gentlemen, our Wind and Solar business is scaling up as planned. After capacity additions of good 300 megawatts from the U.S. Cranell onshore wind farm and some solar farms in Canada and Spain, installed capacity increased to 9.2 gigawatts. And further, approximately 800 megawatts of capacity is due to come online by year-end today's point of view. We are managing the challenging as well as quickly changing environment due to COVID-19 daily. Further progress on our growth targets for 2022 has been made by taking investment decision relating to approximately 500 megawatts from our development pipeline, mainly for projects in the U.S. With regard to the period after 2022, actually for CODs towards the end of the decade, we secured lease agreements for our offshore U.K. extension options of about 900 megawatts pro rata. In addition, we will now continue with the development of the 400-megawatt remaining seabed option at our operational Rampion site. So overall, this is 1.3 gigawatts in the Offshore division that will now move forward through the steps of the development cycle. Let's move on to an update of our construction program on Page 7. We have made good progress in Q3 apart from some delays that are mostly COVID related and mainly at U.S. construction sites. As I explained on the H1 call, consequently, due to adjusted commissioning plans, as a result of this, we expect the overall financial impact for this year to be small to medium double-digit million euro amount at Onshore Wind and Solar. Now let's take a closer look on an individual project level, starting with Offshore. In our Triton Knoll project, all 90 foundation and 250-kilometer long export cables have been installed on schedule. At the Kaskasi side, preparations are continuing and going according to plan. The construction work will start in Q3 '21. Moving on to the Onshore business. Boiling Springs with a capacity of 148 megawatts, is our first project in the state of Oklahoma and will feed its energy into the Southwest Power Pool. The project is in the commissioning phase and is expected to be fully commissioned by year-end. Now our Big Raymond onshore wind project, the commissioning of Raymond East, with its 200 megawatts has started and is expected to be fully commissioned at the end of this year. The other part, Raymond West, is due to be commissioned at some point in the first quarter next year. Besides COVID-19, Hurricane Hanna caused some delays to the turbine deliveries for Raymond West. Our -- at our Scioto Ridge project in Ohio, almost all the turbines have now been erected, and the pre-commissioning teams are ready to ramp up their efforts. The site mobilization at Hickory Park project located in the southwest of the state of Georgia has recently started. The 196-megawatt solar project will be coupled with a 40-megawatt 2 hour battery. The Limondale Solar Farm, the grid commissioning testing has started, but delayed. We expect the full commissioning to happen in Q2 next year. So overall, we will bring another 800 megawatts online in the coming quarter. With that, we can now move on to the details of the individual divisions. Our Offshore Wind division realized an adjusted EBITDA of EUR 738 million in the first 9 months. Year-on-year, this is an increase of almost 12%, thanks to higher wind speeds in the first quarter, even though earnings from wind field in the third quarter were negative year-on-year. Gross cash investments in the first 9 months amounted to approximately EUR 500 million and are mainly driven by Triton Knoll construction work. The fourth quarter typically sees strong winds, and we are assuming normalized weather conditions. Overall, we confirm the outlook for the Offshore division and expect it to be at the upper half of the bandwidth totaling between EUR 900 million and EUR 1.1 billion. The Onshore Wind/Solar division increased 8% year-on-year and adjusted EBITDA amounts to EUR 336 million at the end of September. Value drivers are an increase in capacity of more than 600 megawatts year-on-year as well as higher earnings in Europe from above-average weather conditions in the first quarter this year. Overall, we have seen an unfavorable development of power prices in the U.S. and also various European markets during the course of the year. As a result, the earnings of our open generation positions were slightly lower than expected. For the full year, we expect this effect to be a small double-digit million euro amount. For the full year, we confirm the outlook of EUR 500 million to EUR 600 million but expect the division to end at the bottom of the guided range, given the aforementioned effects from delays, mostly related to COVID as well as lower power price levels. Earnings at the Hydro/Biomass/Gas division amounted to EUR 382 million and are higher year-on-year, thanks to the British capacity payments. As already reported in August, the fire at the Eemshaven power plant caused an interruption to the biomass co-firing in the middle of May, which we expect to last until the end of November 2020. The financial impact from this for the full year is small to medium double-digit million euro amount. Overall, we confirm the guidance of EUR 550 million to EUR 650 million for the division, but expected to end at the bottom of the range. Moving on to the Supply & Trading division, which contributed slightly above-average earnings in the third quarter. After 9 months, adjusted EBITDA amounted to EUR 399 million on the back of a strong trading performance and a good result from the gas and LNG business. This is in particular due to the very strong performance in the first half of the year. We confirm the division's outlook for the full year of EUR 150 million to EUR 350 million and expect the results to be at the upper end of the range. This is due to a weaker performance we have seen in the fourth quarter so far. Ladies and gentlemen, having now reported on the core business, let's move on to the Coal and Nuclear division. Adjusted EBITDA increased to EUR 381 million. Earnings improved due to higher realized wholesale prices and an updated production plan in the lignite system. Remain that implications from the implementation of the accelerated excellent plan needs to be considered. To sum this up, we confirm the outlook for the Coal and Nuclear division. Moving on to the earnings drivers down to adjusted net income, which amounts to EUR 762 million at the end of September, thanks to the high adjusted EBITDA of the group. The financial result at the end of September amounted to minus EUR 231 million, including the negative one-off of approximately EUR 150 million from Q1 and the E.ON dividend received in Q2. Adjustments in tax are applied with a general tax rate of 15%, in line with the expected mid-term tax level for the group. With that, on to the adjusted operating cash flow on Page 14. The adjusted operating cash flow shows the impact on net debt from operating activities. We've adjusted for special items and timing effects that balance out over time. Utilization of nuclear provisions is not included. As you'll remember, we consider this as a financial cash flow as when the nuclear provisions are utilized, they are refinanced by our financial debt. After 9 months, the adjusted operating cash flow went up to EUR 2.3 billion in view of the high adjusted EBITDA as well as the positive effects of the working capital. Change in operating working capital of EUR 342 million is mainly driven by the payment from the British capacity market for 2018 and '19, which we received in Q1 as well as a reduction of gas inventories. For the full year 2020, we expect this in -- this line item to remain positive for the same reasons. Turning to the details on the net debt development. Net debt decreased to EUR 5.9 billion. This is due to the high adjusted operating cash flow and the capital increase of roughly EUR 2 billion. Timing effects from the many CO2-related hedging activities by roughly EUR 0.8 billion. Another driver is the change in pension provisions by roughly EUR 400 million compared to year-end, resulting from lower discount rates given the current market environment. With the closing of the acquisition of the 2.7-gigawatt Nordex development pipeline, the purchase price of EUR 400 million will be reflected in Q4 net debt. Also, the redemption of the hybrid bond will have a net debt impact of roughly EUR 217 million. For year-end, we expect the leverage factor to be well below 3x net debt to core adjusted EBITDA. Finally, moving on to the outlook for fiscal year 2020. As I already said, we confirm our outlook for this year, adjusted EBITDA for the core business will come out between EUR 2.15 billion and EUR 2.45 billion. Adjusted EBITDA for the RWE Group will range between EUR 2.7 billion to EUR 3 billion and adjusted EBIT between EUR 1.2 billion and EUR 1.5 billion. For both adjusted EBITDA and adjusted EBIT, we expect to see results at the upper end of the guidance. Our guidance for adjusted net income is EUR 850 million to EUR 1.15 billion. We expect it to end up in the middle of the range due to the negative one-off in the financial results in Q1. The dividend target is unchanged at EUR 0.85 per share for fiscal year 2020. With this, I conclude my remarks, and I'm happy to take now your questions.

Thank you, Markus. Jess, please start the Q&A session. [Operator Instructions]

[Operator Instructions] The first question comes from the line of Alberto Gandolfi from Goldman Sachs.

I'll stick to two questions, please. The first one is that I've noticed from your bridge to the path towards 13-gigawatt that you only have 700 megawatts yet to secure, and it's November, mid-November 2020. So I wonder with construction time for solar, 6 to 9 months and construction time for wind about 12, what's the degree of confidence of finding those 700 megawatts? And could we actually, given the integration of the Nordex pipeline begin to exceed the 2022 goal? Because you don't seem to be short of projects nor of capital. I'm going to skip question on full year net income, but I'm going to stick a little bit to bigger picture here because we have discovered, not many weeks ago that the offshore auctions expected from now, let's say, until Christmas '21 are 25 to 30 gigawatts. So I was wondering, you are obviously not exposed to the U.S. East Coast, but of the 25 to 30, so of all the auctions that are expected to come in the next 12 months, could you maybe disclose with us which regions you're going to be able to bid into? And perhaps if you can give us maybe the seabed in those regions. So trying to figure out, can you be bidding for about 15 gigawatts of projects next year? And considering that most of the CapEx on those will come in 2025, '24, '25, '26, what's the limit? I mean, what stops you from trying to win all of the auctions you're going to? Just trying to see how you think about it.

Alberto, thanks for the question. The first one, how confident are we about the 13 gigawatt? I can confirm that we are very confident to reach that level. As I have said before, it's too early to speculate and now give interim update targets. We stick to the 13 gigawatt plus the Nordex pipeline where we said probably around 100-megawatt per year, which then brings you to 13.2, but I mean that is not enough to update the target now, right? So -- but very high confidence that we can achieve that. On the auction side, look, I mean, adding up numbers for auctions is sometimes difficult because you talk about different options. Sometimes it's a lease seabed auction. Sometimes it's a central tender. Sometimes it's a CfD auction. So we will participate in all tenders where we think we're going to be competitive, and it fits to our policy. And I mean, you know the regions. It's Europe. It's the U.S. where we are a bit more cautious because we have so far not successfully entered. And it's the 3 Asian markets, which we have named, being Japan, Korea and Taiwan. But you know that Korea is early days. So the upcoming auctions where we have something to bid in is Japan and Taiwan. But I'm a bit reluctant to now add up central tenders, seabed lease auctions and CfDs, we have nothing for the next CfD auction in the U.K. That's also transparent. But where I agree is that when you think about bidding in these processes, of course, you commit now capital. But financing is actually not a concern at this point in time. And if you get the right projects, these are all I mean marketable. You can find partners later or you even bid with a partner and do something. So that is not a constrict. So I think there is no limit other than having projects ready and think you are competitive in the process. So you can expect us to participate in many of these auctions.

The next question comes from the line of Sam Arie from UBS.

Just 2 sort of very straightforward ones from my side. I think the whole presentation is very straightforward, so I'm just keeping it simple. I think in the past, you've talked about the size of the renewables pipeline and some of your competitors have been updating those numbers. I'm just wondering if you can give us some sort of sense of the size of the pipeline at the minute? And then secondly, on the coal contract that we saw a draft of earlier in the summer. Have you got any update on where we are now with the kind of process for EU approvals? And if you have a sense of when that contract might get signed? I believe it hasn't been signed yet.

Yes. Sam, thanks for the questions. I mean on the first one, I have to disappoint you, we are not giving quarterly updates on the pipeline. You will get an update on the pipeline next year, a full-fledged update then. On the coal side, yes, we are expected to close the first unit end of this year. We are preparing for that because we are confident that will happen. The law has passed the German parliament. We are expecting to sign the contract with the German government within the next weeks. On the EU approval, which is a procedural question, I cannot give you an update because we are not part of that. It's a process between the German government and the European Commission.

Okay. But you will sign the contract first and then it goes for approval? Or you wait for it to be approved and then you sign it?

Yes. Let me put it that way. I mean, we expect also after recent interactions with the German government, we expect that we close the first unit. But in order to close the first unit, we need to sign the contract first also because we need to be sure what happens in terms of compensation for the workers, right? And so my expectation is now that we will sign the contract shortly, and we will close the first unit end of this year.

Well, congratulations on that. Good luck with the last stages.

The next question comes from the line of Ahmed Farman from Jefferies.

Two questions from my side. I was hoping if you could help us a little bit with a bridge for net debt to year-end. I think you mentioned earlier that you expect the net debt to be -- EBITDA to be significantly below 3x. But I was just hoping if you could give us a little bit more granularity there? Then my second question is, I guess, sort of a follow-up to the sort of your response to the first question, where you mentioned the 3 Asian markets, South Korea, Taiwan and Japan. Just hoping if you could just give us a little bit more color on your positioning, what sort of assets do you have? How you plan to sort of enter these markets? Is this within partnerships? And just maybe anything so you can sort of talk about the competitive dynamics in those tender auctions.

Yes. Ahmed, thanks for the questions on the net debt side. Nothing has changed. So we have said before we did the capital increase that we feel -- I mean, given our -- considering all COVID uncertainties, but currently, it looks much more stable when you look at interest rates and also commodity prices. We expect to stay even without the capital increase at 3x net debt to EBITDA. So -- and that is roughly also when you want a quantitative guidance, if you exclude the EUR 2 billion, we expect to end at a 3x net debt plus EBITDA, plus/minus a bit. Let's see where we are. And I mean what is driven, I mean, what I mentioned in the presentation is the redemption of the hybrid, the Nordex transaction. Of course, we have further investment in renewables. We expect a very strong cash flow, operating cash flow in the quarter, and we also expect some positive effects from other cash items like realization profiles or hedges and trading. And that all adding up and -- gives us high confidence that we ended at 3x net debt-to-EBITDA plus the EUR 2 billion from the capital increase. On the Asian markets, yes, I think on the assets, we are very transparent in our renewables presentation, but I can briefly walk you through it. So the Japanese market is a central tender market. So the government tenders, the sites, the predeveloped sites. And you can bid and everybody can bid into that. And we are -- we have formed partnerships to be very active in the first auction, which we expect now for next year. The Taiwanese market -- and we are preparing already today or we are weighing our options, who are the right partners for the next round, which will then come in the later years. Very active discussing with every local partner, whether we have joint interest. And I can tell you, I'm very satisfied with the progress we are making there. Taiwan is a different market. Taiwan, you develop the project yourself. And you know that we bought into one joint venture with Asia Cement. And this is one of the largest conglomerates in Taiwan, where we will now bid our predeveloped project into the route to market or there it's a grid connection auction. It's a bit similar to the U.K. model where you do your predevelopment as you bid into route to market or grid connection auction and secure prices. And here, we are looking into doing owned development activity and also maybe whether we spend some money in getting additional projects into the pipeline. South Korea, it's very early days because the framework is not set. We have recently established a presence there. We have hired a country Chairman. And we are now in discussions with partners, and we will decide, I would say, over the next couple of months with whom we partner up for the first more specific steps in that market.

The next question comes from the line of Peter Bisztyga from BofA Securities.

Firstly, E.ON yesterday outlined 200 projects that they're proposing to apply for under the EU recovery fund. And I was just wondering if RWE has done any sort of analysis and identified any opportunities for grants there, please? That's my first question. And then secondly, we've been hearing concerns sort of from some investors about the impact of competition in the wind and solar market from kind of small sort of gung ho players who are bidding with unrealistic assumptions about what happens to power prices after PPAs and feed-in tariffs roll off. So I was just interested to ask if that's something that you've seen, that's something you've experienced in the market? And also perhaps if you could provide us with some reassurances that your teams use more sensible assumptions when they bid.

Yes. Peter, thanks for the question. I mean, you would be highly disappointed if I tell you that we have not looked into potential programs to get support for our projects. Of course, we have, and especially our hydrogen projects. We have applied for support with our larger hydrogen projects in Germany and the Netherlands for EU grants. And we also expect to ask for more or apply for more when the new sources will open, you will also get more on European level, you will also get more on national level. Unfortunately, due to Brexit, our U.K. projects could not be bid into the European process. And I think the process is now that they will look into the applications of, I think, around 300 projects have been -- have applied for the first round, as we are talking about EUR 6 billion, EUR 7 billion on European level. They will now short list them until January, and then you have to do a full application when you're on the short list, and we expect the grants to be awarded in the second half of 2021. But this is not the only source. This is actually more the smaller one, the European one. I think the national support schemes, which are currently in the making are the even more relevant one. And we are active -- also actively in the discussion how these programs should be shaped. But I don't want to give you a number in terms of how much euros or how much projects because it's very early days. The moment it gets more specific, we will be transparent about it. Competition, it's always difficult to figure out what are the assumptions in bidding processes, right? And we have not seen so many yet because when you go into CfD bids, you have to have your predeveloped projects, so especially the newcomers, whom you are currently referring to, they have no pipeline. So they cannot bid into auctions. But what you can observe -- and there I partly confirm your assumption, what you can see is what needs to be a reasonable assumption to pay a certain price when you have second market transactions. So when somebody are willing to buy part of our onshore/offshore assets where we currently either process or when somebody might into a U.K. project or a U.S. project, you probably know what I'm referring to, you can always do because many assumptions are very close together. I think CapEx and OpEx assumptions are so close together that you have 2 major drivers. One is power price assumption, one is cost of capital. And what we regularly do is when we see it, you can come up with a 2-dimensional grid. What is the combination of cost of capital and power price assumptions to get this done? And there, I can tell you there are, let's say, interesting assumptions to come to these prices. But that doesn't mean that we see short-term, I mean, deterioration in bidding processes because, I mean, in a CfD project process, you need to have a predeveloped project. Let's see -- and that -- I said it before, I think it will be an interesting observation point is the U.K. lease auction, which is now postponed until early next year. Because there, everybody starts from 0 with everything, with the assumptions of its capabilities, but also prices and cost of capital.

The next question comes from the line of Deepa Venkateswaran from Bernstein.

So I have two questions. On Japan, maybe a follow-up. Could you maybe give us an idea of what is the size of the site that you might bid for? Just -- and I think your competitor Ørsted has talked about a specific site that they would be using. So maybe if you could just confirm whether you have both centralized and decentralized auction in Japan? And secondly, just a question on hedging. So for '22 and '23, your hedged margins have gone down by EUR 2. Could you maybe explain the dynamics? And should we basically assume that that's a downgrade to your outer years guidance for the non-core division?

Yes, Deepa, thanks. I mean, on Japan, of course, we are targeting certain sites because it's a very complex auction process with a many-dimensional criteria catalog and price is only 20% of that is especially about how you intend to do stakeholder management, local content and this. So you cannot bid on short notice in many sites. The one we are targeting and the first one with our partner is a site which is in the high 3-digit megawatt area, so close to 1 gigawatt. But I don't want to be more specific on that because it's, of course, sensitive information. On the second question, hedging, I mean, don't read too much into it because the production volumes are now significant lower, which we have. I mean, I think they are half of what you used to see at RWE 7, 8 years ago. So a movement in hedge prices is much smaller. So what is more relevant also is how much more capacity moves in the money. And what we have seen due to recent price moves, is that we have slightly more capacity in the money now, which then needs to be hedged from 0, which comes, of course, at current market prices and not very favorable. And that deteriorates the average. So when you do the multiplication of expected volumes times price, I can tell you that we see a slightly negative effect from the development, but that is mainly driven by lower price setting spreads, which we realized. But it is to such a small extent that it will not change our guidance for the segment.

The next question comes from the line of Rob Pulleyn from Morgan Stanley.

Two questions from me. Firstly, if we could talk about hydrogen, is RWE seeking joint ventures or partnerships with chemicals or oil companies for multiple projects like some others have been doing? Is there merit to such agreements? Or will collaboration be sort of on an ad hoc basis? And the second question, if I may, is when I look at the auctions available in 2021, I noticed, obviously, Germany and the Netherlands are part of that, for Offshore Wind that is, where we have seen 0 subsidy contracts in the past. May we ask whether RWE has appetite for those types of contracts as we look to 2021? And how you would obviously manage that risk?

Yes, Rob, thanks for the questions. So on the first one, the clear answer is yes. And we are already in consortiums. We are currently running the consortium for the largest hydrogen project -- of course, it's still in the project phase, so conceptual -- the largest hydrogen project in Germany, which is the consortium led by us, and it's an oil major and it's 2 chemical companies, a steel company and a gas grid company. And what we intend to do there is to produce significant green hydrogen in the northern part of Germany from our offshore wind farms. And then also start the establishment of a hydrogen grid to bring it to the Ruhr Valley here to the big off-takers, steel, chemicals refineries. And that is, for example, one project where it's not unreasonable to assume that we are asking for grants. And we are not only doing that in Germany. We are also doing that in the Netherlands. It's a bit smaller, but the same structure, and we are doing it in the U.K. So it's not on an ad hoc basis. It's a really structured approach to bring together the producers of green electricity, the grid operators and also the off-takers. And I think -- I don't know whether that's available also in English, but we have a nice summary video of all our hydrogen activities on the net and we will get it over to you. And the other one was on Offshore. I mean, I have always made clear that we would prefer a double-sided CfD because we think that's a much better model. Of course, we are also looking in these tenders, but I would always value them differently because we would value them as an option. You would bid for an option where you know what you have to pay as terms of penalty when you decide in 5 years not to build it, which is an option premium. And you have the right to work 5 years on a potential alternative offtake. So I think it's not a digital decision at the beginning. It's more a process where you need to consider how much option premium are you willing to pay at the beginning to get it. And you can think about many scenarios where merchant offshore wind farm, it's may be very valuable in 5 years' time because maybe we are too slow with our build-outs. We have significant higher demand for green hydrogen, whatsoever, but you can also think about many scenarios where merchant offshore position is a very bad position to be in a 5 to 10 years' time.