Solaria Energía y Medio Ambiente, S.A. (SLR) Earnings Call Transcript & Summary

[Audio Gap] 2022 Full Year Results Webcast. My name is David Guengant. I am the Head of IR of Solaria. I am joined today by Arturo Diaz-Tejeiro Larranaga, our Chief Executive Officer. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectation as of today. During this presentation, we'll begin with an overview of the results and the main development during last year, given by our CEO, Arturo. Following this, we'll move on to the Q&A session. I would also like to highlight that you have to submit all your questions via the web. Thank you very much again. I will now hand over the word to Arturo.

Thank you, David, and thanks everyone joining this conference call. I hope that all of you and your families are keeping healthy and well. Of course, we will introduce our 2022 results presentation. We will move extremely fast, and then we will pass to the Q&A session. Of course, Solaria 2.8 gigawatts under operation and in construction process. I think that's with this number Solaria today is the global leader in Iberia region from photovoltaic point of view -- photovoltaic technology point of view. Full visibility. We have full visibility of our target for 2025, 6.2 gigawatts. We have installed 1.5 gigawatts, and we have operating 1.5 gigawatts that probably from operational point of view. We are the leader in Iberia, as I have explained, and we have 2.5 gigawatts of new environmental permits on site. That is a great successful that we achieve, as you know, on January of this year. It's an enormous amount that we'll be develop and construct during next 2 years, but we will explain during this conference call. Of course, new connection points, 7.7 gigawatts of connection points. It's an enormous amount of connection points that give a strong level of security of our global target for 2025, 6.2 gigawatts, as you know. Of course, numbers. I think that during the last 5 years, Solaria has demonstrated that we have really good capacity for growth and for having or for developing a healthy growth. We are improving our numbers per year, not only revenue, revenues, EBITDA and net profits. From an EBITDA point of view, we have achieved EUR 147 million. It's a strong number if you compare with 2021, more than 70% of growth is the same in net profit, EUR 90 million. Practically, we have doubled the number if you compare with 2021. And we have demonstrated during the last 3 years, and I would say during the last 5 years that our ROE is a number that is growing per year, more than 38% in EU analyzed from a compound point of view. Of course, we have included in our presentation, like always, no new flagship projects that will secure our growth for the next years. We have achieved, and we have announced to the market on November of last year we have achieved a new flagship project in Alava in Basque Country, 1.3 gigawatts. And we have secured, as you know in the past years, large projects in Garona, in Cifuentes, in Villaviciosa and Trillo and of different sizes, 600, 700. But this project of vast country that is split in units of 50 megawatts will be the largest solar project in Europe, 1.3 gigawatts. That is enormous. Advantages and disadvantages in all CapEX, you know. Of course, this is one of the key points of our presentation. As you know, we are raising -- during last year, we have raised enormous amount of money of project finance. And one of our key partners was the European Investment Bank. We have good news for the future. European Investment Bank is going to continue the way with us. And they have approved a pre-agreement of EUR 1.7 billion. It's something extremely important for us because it's giving visibility to our pipeline for the future, our growth and our construction growth. And they are going to cover 50% of the total amount of the project financed by deal. And it's a great deal based on merchant basis that could include PPA, and it's a great opportunity for us. We are extremely happy with this deal, and we are extremely happy with our collaboration with European Investment Bank. As we have included in the slide, this amount will be split in different countries, Spain, Italy, Portugal. It's still early to explain. But obviously, Spain is going to focus the main amount, the most important part of the amount of close to 5 gigawatts. But this global deal will include assets in Italy and in Portugal. Of course, we are outperforming the sector, and I will move extremely fast around numbers, but production, sales, EBITDA, net profit, we continue growing. It's important to say that we have achieved more than 1.4 teras of generation. It's an enormous production of energy. We have growth 63%, if you compare with last year. This is extremely important. More assets, more asset generating. Probably the 2023 revenues will demonstrate our enormous capacity from generation point of view because I think that with Trillo and with other assets that we are going to include in the first half of this year, the amount of generation that we will present at the end of 2023 will grow a lot. We will continue having significant exponential growth during next years. Revenues, EBITDA, net profit, I have given some light about this, but net profit continues growing. That is extremely critical for us. As you know, is not only an issue of growth. It's an issue of healthy growth with profits, generating cash, and we have grown from EUR 48 million to EUR 90 million. EBITDA margin is critical at the same time because we have improved a few points from 85% to 88%. It's important because, as I always explain noise, not only an issue of CapEx, it's externally important, the OpEx. This is not something that you do and you forget about it. You need to stay all the time over the assets. You could improve the photo if you improve the OpEx cost. And in Solaria, with more volume, with more assets connected to the grid, we are going to improve more of the OpEx in the next years. Of course, cash position. This is extremely important because, last year, we did enormous effort. We made enormous efforts from investment point of view. We have invest enormous amount of cash via more than EUR 300 million. And we maintain and even we improve cash position inside the company. It's like, as we always explained, we are covering all of our CapEx with project finance. We maintain a really good ratio EBITDA, net debt to EBITDA, and we will explain in the next slides, but a critical point for us. We have invested EUR 331 million, and we maintain a cash position of EUR 150 million. Hopefully, this year, with more megawatts generating, cash probably even we will improve a lot the cash position at the end of the year of the company. 96% of our debt is nonrecourse. That is critical project finance structure. As you know, our growth is based on this, and this is critical because no limitations associated with that. We are not suffering limitations associated with that because project finance give to us the opportunity to grow without limits. The average cost of debt is reasonable, 3.1 fixed interest rate. As you know, today, interest rates are growing, but we maintain our extremely good and reasonable level of interest rate. This year, like past year, we have improved our ratio, net financial debt versus EBITDA. This is critical because growing, adding new assets, increasing our investments, increasing our debt, we improve our ratio. And it's something that we will do again in 2023. Of course, significant effort. I think that we are one of the companies in the renewables space that are not executing increase of capital or similar because we are extremely efficient from cost and CapEx point of view. This is a critical part of our business model. If you are efficient on CapEx, obviously, you are not going to increase capital or you need an equity. And this is the critical part of our business plan. We have invest close to EUR 800 million during the last 5 years. We are improving our CapEx per year, even with inflation situation this moment that we are living with a strong inflation in all the sectors, but we are improving our CapEx, and we maintain a really good cash position. Hopefully, as I have explained during 2023, we will improve more the cash position of the company because we will have more assets generating cash. This is the one of the key points of our strategy, as you know, CapEx. All years, we are extremely focused on this issue that is critical for Solaria. Today, we have a CapEx of EUR 0.42 per watt. It's not bad. I think it's probably the most efficient CapEx in the market. Not a surprise because all the years we have achieve the most efficient CapEx on the market. But we want to improve. We want to improve on 2023. Our goal, our target is to improve this EUR 0.42 per watt noise. Important to make efforts in order to improve the CapEx and in order to improve the OpEx inside the company. Of course, from OpEx perspective, the economies of scale that we are achieving is extremely important. More projects allocating same these similar areas or around close areas is something that is giving some advantage from OpEx point of view. Project IRR, as you know, we promised 12%. We have in all of our projects, more than 12% of Project IRR. ESG is critical for us. I think that during this year, we have achieved an important goal target is that we have improved our ESG rating MSCI. We have obtained the AAA rating is critical for us because, as you know, the company makes strong efforts in order to improve our rating valuations and in order to be an example from ESG perspective. I think that we have defined several goals target for 2030 to be carbon neutral. I'm completely sure we will achieve. And on this point, we will be extremely ambitious for the future. Of course, Solaria, in Iberia region. We are the leader from number of megawatts connected to the grid, from construction point of view. We have installed new capacity. We have done an enormous effort, especially in the second half of this year. We have construct more than 700 megawatts. This was an enormous effort. If you compare with previous year, the number was around 250. This year, it's 700. Hopefully, this 2023, we will do more than 1,000 megawatts. It's like redeem of construction. Permitting is improving. I think that hopefully, during 2023, 2024, 2025, especially, we will see a grass hour from construction point of view, from new assets for introducing, new assets in our balance. It's like problems -- we are solving problems of the past around license process, and we are optimistic about the future. From global numbers point of view, we have today a lot of projects under construction, some of them acquiring materials, transformers, substation construction, substation and waiting for final approvals or final permitting process that will come in the next month. As you know, government approved 2 years ago a law associated with pipeline. First step of the pipeline was the approval of environmental permit that was done on January -- that was achieved in January. Now they have 6 months for giving final permitting process. And I'm completely sure we will achieve in all of our pipelines successful on this point. And on 6 months, we will be ready for constructing a global volume of megawatts of 2.5 gigawatts. What does it mean? And this is important when we talk about our business plan until 2025. We have today 1.5 gigawatts finish and connected to the grid on the way for being connected close in the next month more than 500 megawatts. And we need to construct in the next 2 years, 2.5 gigawatts that will receive final approvals before June of this year. What does it mean? The company will have more than 4.5 gigawatts before the end of June 2025. Of course, link with my comments. Here, you have the detail of -- the details of all the projects that are under construction or with permitting in different states. The key point is that all of them will receive final approvals in 6 month before the end of June 2023. And we will have 2 years for constructing all of them. This is one of the reasons because we have raised with European Investment Bank is an almost deal of EUR 1.7 billion. Why? Because we need to be ready for constructing an enormous amount of gigawatts during the next 2 years. And it's exciting. It's extremely -- I think that it's -- it's one of the key parts of our business plan, and I'm completely sure we will accomplish. This slide we have included all the details of our projects. Obviously, we have a strong visibility of our global target of 6.2 gigawatts until 2025. Points secured. Of course, this is the future because we are not thinking only in our target of 6.2 gigawatts for 2025. We want to be more ambitious than this. And obviously, we need to secure connection points. On this point, I think that we made a really good job during 2022 with new projects secure, Basque Country, Cataluña, Castile, León. Portugal is like, as you know, it's extremely difficult today to find good location, good connection points and good land, and we did during 2022. It's something that give to us a strong level of security that we will continue growing after this 6.2 gigawatts, and this is critical. Hopefully, these projects will entry some of them before 2025 because now all of these projects are underway or on the developing way. And they will obtain permitting, environmental permits and all the different permits during the next 1 year, 1.5 years. Massive growth in European Union. This is extremely important. I think that you know that, United States, they have approved the Inflation Reduction Act that it's extremely ambitious global project for United States. I think that European Union needs to give an answer for this, and they need to approve something. Now we are talking with them with authorities from European Union. They are completely convinced about this. They want to be ambitious. I think that they need to be. They have spent subsidizing the will of consumers of European consumers in light last 18 months, they have spent EUR 750,000 million subsidizing. It's incredible. The only solution for them is, if you don't want to depend on third countries sometimes out of European Union, you need to invest in industry, in renewables and in solar. And they are going to approve something that could be the answer to United States Inflation Reduction Act. And I think that first step probably is associate, as you know, with European Investment Bank. They are going to allocate EUR 45 billion for supporting the growth of renewables, but it's the first initial step. We will see next movements. Of course, as you know, the ambitious plan of European Union includes 50 gigawatts per year for Europe -- for European Union. We are allocating countries that are going to grow according with our reading of 30 gigawatts per year. In our view, we are allocating the most important countries from solar point of view, photovoltaic point of view for the next years. Spain, Italy, Portugal, Germany, these countries are betting seriously for solar. For renewables in general, but especially in solar. We have great position. We will give more information about our European Union expansion in the -- in our presentation of June, but I think that we have a comfortable position today in Europe. We are focused on Europe, as you know. And we think that is the place to be. From price of electricity point of view, from expansion point of view, from supporting point of view for receive from European Union -- government from European Union. And of course, we have good experience, good routes inside these countries and probably slide the best-in-class from CapEx and OpEx globally in the solar world. Of course, last slide is for defining that, on June, we will explain our movement to Europe, where we are. I have explained that we will be in Portugal, Italy and Germany, but we will give details of our pipeline of our situation and hopefully of our future successful on these countries. If you want, we will pass now to the Q&A. I will now hand over the word to David.

So thank you, Arturo. I will now open for Q&A session. And once again, thank you for time. Unfortunately, there is a lot of interest, so we will try to answer to all the questions. [Operator Instructions] The first question comes from Fernando Garcia from RBC. On the 25% of merchant exposure, does it include the assets to be commissioned in Trillo in early March and the PPA expiring with EDF? Second question, could we provide some details on the financing with the European Investment Bank, timing, rates? And finally, can we provide strategy on PPAs?

Thank you for the question. Yes, Trillo includes PPA and the EDF has expired during 2022 and is not functioning in 2023 on 3 years under PPA agreements. The European Investment Bank, lifetime of the debt is 10 years. Basically, it's based on merchant concept, but we could include PPA and something that could modify conditions. It's still too early to talk about conditions because are for projects that will be developed and construct during next quarters, even in next years, and conditions will change. PPAs, our strategy difficult to say because market is changing all the time. As you know, the last tender process of the Spanish government was done using prices limit of EUR 45 per megawatt hour. Nobody entry on this deal. Today, price of PPA is around EUR 50 per megawatt hour. And we have the possibility to sign. And of course, as I have explained always, we have a comfortable position, we will decide. We could sign, and we are negotiating, but we are -- we don't have emergencies around this. It's like with a correct price, with a correct player, we could sign. But as I have explained, the financing that we are raising is merchant basis that could be improved with PPAs. We will see. Of course, merchant is possible, and the percentage of merchant channel as possible. I think that if we unable to maintain our ratio of 30%, 30% merchant, 70% under PPA, this is something that sounds reasonable for us. Obviously, we are flexible, and it could be some years 35 or 32 or 33, but 30/70 is reasonable for us.

The second question is coming from Alberto Gandolfi from Goldman Sachs. First question is regarding construction of the 1.3 gigawatts under construction. How much could arrive by year-end and how much next year? Next question is what is the permitting path on the 1.7 gigawatts that have already received environmental approval? How long do you expect this to be? And the last question is regarding Europe Ria. How much is this Europe Ria driving European vision, quantify market share and how will you find it, found it?

Of course, 1.3 gigawatts, probably 500 megawatts, 0.5 gigawatts will be done during the second, third quarter of this year. We will add 200 at the final part of this year. And Garoña, the 600 megawatts, will come probably for the first quarter of 2024. What does it mean? It's like approximately between 600, 700 will come during this year. and the other part will come for the end of the first quarter of 2024, approximately. Permitting situation of the 1.7 gigawatts. As you know, we have received environmental permits in 6 months, maximum period of 6 months, we should recipe all the different permitting process that will allow us to start in with the construction, and we have 2 years for connecting. I'm completely sure that government is going to accomplish with this period, with this schedule, and we will receive the approval for all of this pipeline in the next 6 months. It is like we will be ready to start with the civil works, with the civil construction works in a maximum period of time of 6 months, June of this year. What does it mean? We will start with the construction after June of this year, of this global volume of 1.7 gigawatts. And we will have 2 years for connecting. Obviously, we will try to connect as soon as possible. But 2 years is the maximum limit that we have for connecting to the grid before the end of June 2025. Europe, the Iran of Europe. It's difficult to say because, today, it's still under study, and we are receiving a lot of message from European Union. Germany is the most ambitious country. From new lows and new tax credits that they could include, new bank warrantees that they could include for supporting the growth of the renewable market, especially solar market. And industrial support for developing solar panel companies inside solar panel factories and solar cell factories and silicon inside Europe. But I prefer to talk about all of this information on June because I think that we'll have a lot of noise in the market about new inflection reduction act of Europe. I'm completely sure they are going to approve something extremely ambitious that will include industrial part and development part. But I think that we will give a global presentation to the market, focus on Germany and Italy on June in London.

Next question is coming from Fawwaz Janjua from Redburn. The first one is what was the installed capacity at the end of 2022? 1 gigawatts. And the second question is coming from the 2023 installation guidance, I think that Arturo already answered to this question. Maybe the question to clarify the status of Garoña and Volans 1&2. Why Garoña and Volans 1&2 and Juno are already under construction but have not received the administrative authorization. Next question is coming from the 300 megawatt in Italy. What is happening with that? And merchant exposure, I think we already answer.

I think about the Garoña, Volans 1&2, we have explained in other presentation. When we say that is under construction is because we are acquiring substation or we are acquiring transformer equipments. We are receiving project finance associated with these projects. Obviously, we are not developing civil works because we haven't received the final permitting from local authorities or cities or be late. And it will come in the next month, maximum limit 6 month. Hopefully, we will obtain before in 2, 1, 3 month. But in all cases, because we need to advance, we need to accelerate, we usually acquire or acquire components and materials that are the bottleneck typically and that could delay our connection process. Now in Garoña and Volans and, not only in Volans, in all the projects that are under construction, we are acquiring today material substation, transformers, modules, all the different components of the PV asset, of the PV plant. And hopefully, civil works will start in the short term. And 300 megawatts in Italy. Yes, of course, we have included in our presentation, and we have mentioned because it's linked with the deal of European Investment Bank, is true. In Italy, I think that we have a healthy business. It's extremely interesting for us, exciting because, in our view, Italy is a promising country with, unfortunately, for consumers' high level of price on tariff on electricity prices, and they need to develop. They are obligated to develop. They must develop renewables and especially solar. We see a great opportunity. It's nothing new for us. We opened a brand, a company in Italy a few years ago. We have a team of more than 25 people working there, developing pipeline, secures in land and good locations. And our intention on June is to explain all details of our pipeline in Italy and Germany, no, that it's nothing new. During the last 3 years, we made the strong efforts, and hopefully, we could announce something interesting on June associated with both countries.

Next questions are coming from Eduardo Gonzales Martin from Banco Santander. The first question is that if we register some revenue coming from infra in 2022. I will answer to this one. We registered EUR 8.5 million in 2022, a little bit more than EUR 3 million in the first quarter, and a little bit more than EUR 5 million in the fourth quarter. So it's more or less in line what with what we mentioned in the past now that more or less EUR 10 million from infra business per year. And in the fourth quarter, we also recognize, as you mentioned, other incomes. Other income in 2022 have been around EUR 28 million. From this EUR 28 million, EUR 20 million are coming from activation cost. And the other EUR 8 million are coming from penalties, mainly penalties pay from providers. Next question is coming from European Investment Bank. Can we give maybe some more detail about financial cost or something a little bit more detail about this deal with European Investment Bank.

David has explained perfectly the fast ratio on the numbers associated with penalties and -- But I want to mention that, for us, the infrastructure business is critical because it's something that will give to us a normal benefits, not only this year 2022, in the future. One is something that we explained 3 years ago or 4 years ago that it's extremely important to invest on the grid if you are going to develop a global business of renewables. And we have invested on the grid. We have secured substations. We have secure connection points with more capacity than we are using. Now we are obtaining profits and benefits because, obviously, we are receiving the call from competitors, colleagues, I could say, or friends that needs to be connected to our substation or to our infrastructure. They need to use our infrastructure. And obviously, they need to pay for using it. The European Investment Bank, I think that tends is associated project by project. Why? Because it depends of the quarter that we will connect or that we are going to execute. From price point of view, we haven't include any detail. Why? Why we are not including any detail? Because as I have explained, 50% of the deal associate with -- the European Investment Bank is going to cover the 50% of our project finance in all of our deal. But we need to cover the other 50%. And now we have a global tender with a lot of players trying to be part of this global deal. We have infrastructure funds. We have banks, extremely good banks, global banks that wants to be partnered with European Investment Bank in the global deal. The global deal is for EUR 3.4 billion. It's significant. It's an ambitious number that will include even more deals that we have announced and that include even a support of European Investment Bank for banks, for players that will entering the deal. We haven't announced the conditions of the deal because, today, we are on the tender process. And we are receiving interest and proposals from a number of entities, I don't know, 10 or 11 entities that was to entry there. And of course, we will report the global numbers of the deal after to select, to choose the players that are going to stay with the European Investment Bank.

Next question is coming from [ Nash Qui ] from Barclays. Two questions. First one is if we can provide some update on asset rotation plan. And do you think you could still achieve above EUR 1.2 million per megawatt? And the second question is regarding our pipeline, large pipeline. How do we ensure that we have a large enough workforce on the ground to keep the large installation rate plant?

I think that the rotation plan was announced a few month ago, and we have received a strong interest, paying really good prices, but we are extremely focused today in the construction, in the financing, adding new assets. And of course, we will see. It's like we don't have a strong pressure to close or not. It's like I know that probably if we close something and if you will rotate probably something that could give strong benefits to our shareholders. Our vision is a long-term vision. And I think today, price on these kind of assets is extremely good. But we always move extremely carefully with strong patience, and it's something that could happen but next quarter, in 2 quarters or whenever. I'm sorry if I don't give too much details, but we needn't the cash. We needn't the money. And of course, we are playing with time. And you have a lot of players today trying to sell assets that they need to receive money as soon as possible. It's not our case. And of course, we are generating a strong visibility for our assets because we are connecting. We are finishing. We are adding really good project finance in really good conditions. The value of the asset probably could improve in the next month or in the next month. We have a comfortable position. And about the pipeline and the construction. Yes, it's an enormous effort. In my view, not all the people that have received environmental permits are going to connect these assets. They want to sell permits, and they don't have capacity for constructing and, even from a financial point of view and even from a construction point of view. It's not our case. Today, we have a really good construction team. As you know, we develop and even we construct the asset with our own team, with subcontract basic works, but we have a strong construction team. It's not easy to construct practically in 6 months. More than 500 megawatts is not easy, but we have done. Today in the different places, we have more than 1,000 people working on different works on the construction side. It's like unit experience is not easy. All the players that have received environmental permits are not going to be able to connect or to construct. And if they do, they will suffer from CapEx point of view, but hopefully, it's not our case. And in this point, it's extremely important expertise and experience. And of course, the deal is on the details.

The next question are coming from Manuel Palomo from Exane BNP. First question is that is 6.2 gigawatts 2025 target is still valid?

Yes.

The second question is coming from PPA. Just to make it clear. Regarding this 2.8 gigawatts in operation in the construction, as we already mentioned in the past, the 2 gigawatts are already associated to PPA or merchant and already all finance. And as Manuel say, as the other 0.8 gigawatts are still not today associated to any PPA. Next question is how many megawatts we expect to be contributing to the EBITDA by the end of 2023. I think Arturo already mentioned this aspect. At least 2 gigawatts by the end of 2023 and much more in the first quarter. And maybe if we can provide some more detail about our view in PPA, evolution of price in the coming years if we want to sign more on that.

Yes, we have start construction or basically, we have -- we are acquiring equipments from projects, 4 projects that we haven't signed PPA, and we know. And as I have explained, I think patient is extremely important on this business. We have good merchant conditions. Good project finance conditions, and we will show, hopefully, global conditions, as I have explained in the short term, and we have a comfortable situation. We are investing money, and we have a good cash position, and we are investing money, and yes, projects without PPA. We will see. In the short term, we could announce something or not. But today, we have a number of projects without PPA, and we are acquiring components associated with these projects. And the evolution of PPA. Of course, as you know, we have a lot of rumors and noises of modifications of the regulation of the marginal cost system. European Union is studying modifications. Modestly, I think that is something that will need a lot of time, probably more than 1 year. Price is shaking all the time. But obviously, as you know, as I have mentioned, 45% that was the cap the limitation of the government in the last tender process was big failure because nobody entry in this number. Today, the number that all the people is touching is around 50. And I think it's reasonable, this EUR 50 per megawatt hour, but I think it's reasonable. We could sign PPA using this number, and we could stay comfortable with this number. Time and period is associated with 10 years, 10 years of period with investment-grade players. But I think that we will need to wait. We will need to wait. It's wise to wait a few weeks because European Union is going to approve new laws. If they are going to approve, as I have explained, the answer of European Union could be extremely powerful to the Inflation Reduction Act of United States. It could include some facilities, some support for PPA players. And I think that it reasonable and wise to wait and to see. This market is changing all the time, and to take decision extremely fast, it's a mistake in our view.

Next question are coming from Jorge Alonso from Societe Generale. I think we already mentioned some answer, but I think there is more question. Maybe this one, are we afraid of the huge amount of capacity approved by the government on 25th of January? Would this project go ahead? Why not. Financing PPA is the first question. And the second question is now EBITDA and net profit are maybe more important in the equity story. Can we provide some range for EBITDA on net profit for 2023?

I understand that you are afraid with this huge amount of capacity because it's a lot. And a lot of things could happen during the next 2 years. I could say that, first of all, the environmental permits includes limitation of capacity. It's like probably not all the projects that has received environmental permit are able to connect the full amount at the full capacity because environmental permit includes some limitations. And it's like the global number that all the people are saying is not exact number. Second, we know that a lot of projects are for being sold because it's impossible to be construct because they don't have good connection conditions, or they have other kind of problems. Honestly, today, I think that practically 70% of the total environmental permits that government has given is for being sold to third parties. From construction point of view, I don't see too much players constructing. You have a few players, serious players, large utility companies that are executing the projects, but you have a lot of speculating companies trying to sell paperwork. Probably in the next 2 years, we will see a clarification about the Spanish market, the real Spanish market and the real capacity that we are going to connect because you have companies of 1 or 2 employees that have received approval for 300 megawatts or even 400 megawatts, 1 or 2 employees. They are going to construct something. I don't think so. I think that is not serious. They are going to sell paperwork. And government knows the situation. And about EBITDA net profit, it was a long discussion -- internal long discussion. I think that we have decided not to give not yet. Why? Because electricity prices are shaking all the time. It's extremely difficult to know exactly the price of electricity. And as you know, we have talked about merchant. We will have a percentage -- or a significant percentage of merchant that will change a lot our EBITDA and our net profit for the end of the year. Difficult to say. We have decide finally not to give this interval. We don't reject the possibility we'll have more visibility in the next quarter to give an interval of EBITDA because, today, the numbers of Solaria are more serious. Let me use this word, are more serious than previously. But I could say that our intention basically for 2023, basically, this is global is to double the numbers. And -- this is not a guideline, not an official guideline, but our intention is to continue growing at least with double-digit numbers. And hopefully, if electricity prices continues the same situation than today, as I have explained, we are going to generate a lot of cash, and we are going to generate really good results.

I'm sorry, maybe we cannot answer two other question, but maybe the last 2 questions from Schwan investor, there is some question coming from European Investment Bank. Just to mention that -- to give some details, the EUR 1.7 billion is a total and direct participation would be EUR 1.3 billion, and they will fund other entities with 0.4 billion. So the participation for the 50% of the deal is EUR 1.3 billion. So for the 5 gigawatts is totally in line with our CapEx of DoD for something. And the second question is coming from the Basque Country project. Can we give maybe some more detail about this project, the new flagship project? And maybe want to tell you about the tax credit what could be the amount of this tax credit in the Basque Country project?

Yes. As David has mentioned, European Investment Bank is extremely important for us because it's not going only to give a direct line for giving financing to our projects, is going to give other lines that will support banks that will entry in the deal. And this is extremely important. It is the reason because we are not giving the prices because -- and the banks that will entry will receive some support from European Investment Bank and is still important for us. I think that great job from European Union point of view because they are supporting the growth of renewables. We are extremely excited with the support of European Investment Bank Union. They are extremely positive about solar. Germany. I think that Germany is doing an enormous effort, not only Germany, all the countries, but they have understood the situation, and they want to be the leaders in solar. And they are approving enormous amount of money. I have mentioned EUR 45 billion of European investment and will go to renewables, especially to solar. But it's not only Germany, all the countries, I will have positive message and calls from all the countries of European Union. It's the correct moment and a lot of money, billions of euros will come to solar. And this is one of the results of this enormous amount of money that will come from European Union, the collaboration with European Investment Bank. But in my view, it's the beginning. And is the reason because Solaria is betting strongly for European Union like the core place. For And tax credit in Basque Country. It's extremely difficult to say the global number, but 30% of the CapEx recognized by authorities, is the tax grade that we are going to reside. It's important this detail. 30% of the CapEx recognized by authorities. And -- it's like an important support if you invest there in solar assets. And we are extremely excited with this new flagship project probably will be the largest project in our region in Europe. And of course, from a tax credit point of view, we are going to receive several hundred millions of euros. This is important for us.

So thank you very much for all your question, of your time. If you have more questions, please let us know. So thank you very much for joining to the call, and I'll let Arturo just to finish this call.

Thank you very much for being part of this conference call only to give a final detail. We are extremely happy with the support of European Union to solar. I think it's timing for solar -- is timing for solar in European Union. Not only in Spain, that Spain has support our growth and will support our growth in the next years. Italy, Spain, Germany, all the countries want to stay there, and European Union have decided to bet strongly for this technology. And use approval, this Inflation Reduction of United States. That is great for United States. Needs strong answer from Europe, and I'm completely sure they are going to do. And as always, our Investor Relations, David especially, will be available for any additional information that you may require. Thank you very much and have a great afternoon.