Terna S.p.A. (TRN) Earnings Call Transcript & Summary

Hello, and welcome to the 2021 to 2025 Industrial Plan Update. My name is Josh, and I will be your coordinator for today's event. [Operator Instructions] I will now hand over to the team to begin. Thank you.

Today, we are presenting Terna's updated '21-'25 Industrial Plan. Terna is not just a company but also an institution providing for a public service, were to guarantee security of supply, system adequacy and quality of service at the lowest possible cost to end users, all these in the context of the new ongoing energy transition. Terna is a leading energy transition process by enabling the integration of renewables and electrification of consumption. The development of our grid will play a major role in decarbonizing the entire energy system based on renewable sources all accessible and emission-free. All our actions are driven by sustainability. Our sustainability culture is not something that's been imposed on us. It is actually part of our value creation process. Our management and our people, Terna's #1 stakeholder. Our future will be based on respect for people, gender equality, environment and citizens. Our people are at the center of our service to the community, ensuring that the generation of benefits for the system, putting people at the heart of what we do takes concrete for. This has led to the launch of an ambitious cultural transformation program we have called the NexTerna. The project represents a great challenge, involving the definition of a new leadership model in line with the new approach to work involving the introduction of new ways of working. The focus is on the digitalization of processes and tools to increase efficiency and productivity, bring logistical benefits and above all, improved lives quality of our people, tends to the change implemented the Terna was named the World's Best Employer in 2021 in the utilities category based on the results of a survey conducted by Forbes and Statista and Italy's best employer in 2022 for the energy sector. Decarbonization and sustainable development play a key role in our strategic thinking. COP26 held in Glasgow 2021, reinforced the share global commitment to ensure that the rise in average global temperatures will remain within sustainable levels in order to protect the future of the next generation. At European level, the future shape of the energy sector is set out in the clean energy package adopted at the end of 2018. This reflects the commitment contained in the Paris Agreement. The bar was raised at the end of 2019 by the Green deal, which aims to transform European Union into a net zero economy by 2050. This will require us to cut greenhouse gas emissions by at least 55% within 2030. In addition, in July 2021, European Commission presented package of a proposal to achieve the targets set for 2030 and 2050 for 55% at the national level. The National Energy and Climate Plan remains our reference scenario with the targets of adding 40 gigawatts of renewable energy capacity by 2030. However, the more ambitious decarbonization targets set in the European Green Deal mean that the electricity sector must go even further. This will require the installation of about 60 to 70 gigawatts of additional renewable capacity by 2030, mainly photovoltaic and wind. This will increase the proportion of gross electricity consumption covered by renewables to 65% compared to 55% of our original targets. The scenario in which we operate is we were also affected by the current energy crisis, which is clearly having a negative impact on businesses and consumers. In this context, we need to ensure the security of the system at the lowest possible cost is greater than ever. The best way to respond to the emergency is to cut our dependence on overseas supplies and to continue to develop renewable sources with reduced impact on the environment. Our ability to transport energy is becoming the future. The country is acquiring a great strategic importance to the presence of international interconnections. Italy is a natural hub in the Mediterranean. And this geographical position will increasingly ensure that our country will have a central role to play in supplying renewable energy to the rest of Europe. The Tyrrhenian link, the Adriatic Link, the interconnection with France, Austria, the interconnection with Tunisia and the upgrade in the connection with Greece are not only of national importance, but to also have a mature part of a play within the continental system. The energy transition will take place alongside the system strategy that will impact all the stages of the energy chain. This will increase the penetration for renewable sources and the electrification of finance consumption using technologies that are now mature. To achieve these targets, it will be necessary to implement a serious of action. Firstly, we need to accelerate the installation of renewable energy plants, including offshore, simplifying as much as possible the automatization processes. We must guarantee security of supply by exploiting the range of technologies we have. We must ensure a consistent approach in both the planning and plant installation stage in terms of geographical location. This reinforcement of the grid and international interconnections will play a key role in increasing the resiliency of the grid. In addition, it will be important to put in place new hydroelectric and electrochemical storage system to manage over generation, grid congestion and residual load ramping events. We need to fill the gap related to the storage system, bearing in mind that the National Energy and Climate Plan calls for about 10 gigawatts of additional storage capacity between now and 2030. Finally, redefinition and rationalization of the technical perimeter based on the shift in generation and consumption patterns will play an important role. This will also involve the use of technologies that until now have been typical of a medium voltages in 36 kilowatts that can be integrated in our grid to increase the efficiency of the energy system, an integrated approach to planning will be needed to ensure that all investments will be delivered on time, making this transformation, a major opportunity for the future in our accounts. The challenging targets set as a part of the ongoing transition will be fully achievable only by developing and enabling infrastructure. In response to the radical transformation taking place in the sector, Terna has decided to accelerate the investment for [ resin ] in our 10-year development plan, more than EUR 18 billion of investment over the next 10 years, a record for them and an increase of 25% compared to the previous plan. This investment is the key to the integration of our renewable sources and will lead to the progressive phase out of coal-fired power plants in line with the targets set in National Energy and Climate Plan and in the European Green Deal. In new plan, Terna has included over 50 new infrastructure projects. We have given high priority to all those projects strategic for the national electricity system. The most significant projects include the Tyrrhenian Link, the submarine cable that will connect Sardinia, Sicily and Campana with an investment of EUR 3.7 billion. The Adriatic Link submarine cable connecting Abruzzo and Marche with an investment of EUR 1.1 billion. In addition, we intend to implement a rationalization plan covering major metropolitan areas and the development of grids on island that are yet to be interconnected such as [ Go, Fabiana ] and Elba. Overseas interconnection will play a key role. Indeed, the Terna's planning includes a new line connecting Italy and Switzerland and the link of a new submarine cable to Greece, also the Sa.Co.I.3 project involving the refurbishment of connection between Sardinia, Corsica and the Italian Mainland is still part of the plan. This will result in significant benefit for citizen and the environment in terms of reduced emission and the commission of the power lines. Terna estimate that the work to be carried out towards the life of the fund will enable us to cut the CO2 emission by 5.6 million tonnes a year, almost double the target of the previous plan. It will also allow us to demolish 4,600 kilometers of obsolete infrastructures. The overall industrial project we are carrying out involves investments in the country's energy security, while providing value for money for end users. This is our mission. We also aim to achieve an ethical goal, which is to use our investments to give back something to the system in terms of benefits. Today, we are presenting an updated investment plan. The plan provides for an increase of investments despite maintaining the same time frame. Indeed, in the last couple of years, we have restructured the permitting methods and multiyear tenders and launched measured projects already covered in terms of procurement. All of these will now enable us to increase our efforts, and as a result, deliver other benefits for consumers and businesses. This has all been done without increasing the risks, making the system safer thanks to the use of technologies and competencies. As a result, our '21-'25 updated CapEx plan for is EUR 9.5 billion of regulated investments in Italy. This will increase the value of our regulated asset base to EUR 22.7 billion at the end of the period corresponding to an average annual growth rate of 7% over the plan period. Starting from development CapEx. The overall increase of investments is mainly related to high voltage direct current lines, submarine cable. In this regard, the Tyrrhenian Link will play an important. The remaining projects not relating to high-voltage direct current lines will focus on solving grid congestions, interconnections, the integration of renewables and the quality of service. The new plan for a total of EUR 5.6 billion of development CapEx. The renewable plan, which regards the replacement of the existing lines or the line of our underground cables, includes projects designed to increase the quality of service, to enhance processes through the digitalization of substations and the adoption of predictive maintenance technologies. It also covers the environment. For example, by using the complete replacement of fluid-oil cables and the installation of equipment with insulation using vegetable assets. The new plan for a total of EUR 2.6 billion of renewal investments. The security plan, worth a total of EUR 1.3 billion over the plan period, aims at boosting the technical and technological capabilities of the system to increase its functionalities. This involves investments in both regulators such as synchronous compensator, resistors and statcom in a new control and defense system and in infrastructure security. As you know, in the last month, the regulator has revised the WACC level for the period from 2022 to 2027. The WACC for transmission is now 5.0%. A portion of the remuneration comes from incentive mechanism linked to the achievement of specific targets these objectives related for example to the improvement of the quality of service, to the increase in transport capacity between market zone, to the resolution of congestion within those zones, resolution of grid constraints and master and unique necessity as well as the reduction in dispatching services market costs. With specific regards to interzonal incentives, thanks to technologies, we have revised and developed within house as well as to our people and to the digitalization of processes, we have been able to improve the system without increasing too much the related investments. This series of capital-light solutions has allowed us to boost transport capacity from the south by 400 megawatts, helping to optimize the country energy flows. Some of these solutions are physically such as, for example, the resolution of interferences that can reduce grid transmission capacity without having to redesign the lines. This involves simply to modify the line by, for example, raising the height of the support. The position in cable are changing the shape of the plans at a lower cost. Other solution regards to digital and engineering innovations linked to artificial intelligence, thanks to algorithms, digital technologies and in-house designers sensors, we're able to check cables by measuring their temperature. In this regard, we have also created increased the competencies in these technical areas that are so important to our organization. In this way, we have shifted from an approach based on timetables and procedures to one based on expertise innovative software and real-time simulation, enabling us, we may say, to drive the grid. Then I would like to mention Dispatching Services Market incentives. This positive mechanism multiplies the potential benefit for the system by cutting dispatching market costs. It represents a system evolution that goes exactly in the direction of TotEx. In fact, let me just remind that at the end of the current regulatory period, there will be a gradual switch on an approach characterized by the recognition of costs on the basis of the total expenses with a greater focus on delivered outputs and on the levels of service provider. More in detail, thanks to Dispatching Services Market incentives and to the work we have done with the regulator, we will be able to deliver a more efficient electricity system, generating benefits for EUR 1 billion in 3 years, that will translate into lower cost for end users. Equally important benefits are associated to the other output based mechanisms. In addition, this will enable us to rebalance overall remuneration and maintain our economic and financial stability, our ability to invest and a fair capital remuneration. So to summarize the system, not only based on the deliver of a mature infrastructure project, but also of lower cost investments, for example, in software, technical tools, sensor technologies and other resources that can provide significant benefit. In agreement with the regulator, Terna has already begun to move in this direction to create an even more efficient energy system. This increase in Terna's investments connected with incentive mechanisms is designed to cut the system costs will result in increasing benefit for the system. This means that Terna's interest are perfectly aligned with those of the system. Nonregulated activities bring business opportunities but at the same time are at the service of Terna institutional role. We will continue to grow our connectivity services, looking for opportunities based on our optical fiber infrastructure. Our network is one of the best in terms of coverage and quality. It represents a strategic asset that we would like to develop in partnerships with other operators. Samples include fiber hosting services and the installation of telecommunications equipment at Terna's existing sites. In the Industrial segment, we consolidated Tamini's results, with growth in order intake, revenues and margins. Brugg has enabled us to improve our distinct expertise in underground cables and synergies with the other business of the Terna Group. Thanks also to the new corporate structure, but we do not intend to stop here. We have identified a series of interesting opportunities for all our industrial activities. This will require to expand the production of cables and transformers in order to respond to a growing demand from the weather system. This expertise will also help us to secure the delivery of our plan. In addition, we will continue to offer O&M services for photovoltaic plants. The current maintenance market in Italy is hyper-fragmented. We are the #1 operator with a 5% of the market share. Photovoltaic will be one of the main energy source in the next 10 or 20 years. As a result, it is necessary to ensure it can operate efficiently and at full capacity. Also, too, the collection and analysis of data, our role in this market is to guarantee the security and performance of the system also by using satellite technology. Nonregulated activities will contribute to over EUR 450 million in terms of cumulated EBITDA over the plan period from a strategic viewpoint, with theme of optimizing the group risk return profile, we are proceeding to finalize the process of a valorization of our South American activities. At the same time, we will continue to scout for other opportunities. This may also be with partnerships and will be selected, ensuring a low-risk profile and a limited capital assumption leveraging on the know-how developed by Terna. We will refocus our attention on markets with a low count risk, but with attractive growth potential, such as the United States, a new market for them with a lower risk, involving projects that provide a good fit with our strategy. We will take a gradual approach, making available or extensive expertise in the design and operational infrastructure. Innovation and digitalization play and will continue to play a key role in the development of a new solution, designed to respond to the growing complexity of the system in line with our role as director and enabler. Innovation and the new technology will also create value for the entire system and the market. Our project focused on solution for the remote control of electricity substations and the key infrastructures. This involves the installation of sensors, monitoring and diagnosing system, including predictive solutions to improve the safety of both the grid and surrounding area. In 2021 alone, we launched 70 innovation projects. with about 70% dedicated to the maintenance of the national grid and dispatching. This included the trial use of robotics, drones and augmented and virtual reality. The plan also identify 4 technology clusters around which the new initiative and prospective will be focused, digital, intelligent energy and capacity management solution, Energy Tech innovative solution using more efficient greener technologies, advanced material, R&D resulting in eco-compatible materials, robotics, process automation. We expect to invest EUR 1.2 billion in Innovation & Digitalization over the plan all included in regulated CapEx. Having illustrated our vision and strategy for the next years, let us move on to guidance for 2022 and 2025. In 2022, we expect revenue of EUR 2.74 billion and EBITDA of EUR 1.9 billion. We expect to invest EUR 1.7 billion in 2022, with cumulated CapEx amounting to EUR 10 billion over the plan period, earnings per share for 2022 will amount to EUR 0.39. For 2025, we expect revenue at EUR 3.08 billion and an EBITDA of EUR 2.14 billion, earnings per share will amount to EUR 0.45. Despite the further acceleration in investment to meet the needs of the system, we aim to preserve a strong and balanced financial structure across the plan. We aim to ensure that our key financial ratios remain at sustainable levels. In line with the levels indicated by the rating agencies for our current rating level. In terms of our dividend policy, we expect the dividend per share to grow at a compound growth rate of 80% in 2022 and 2023 compared to 2021 dividend. From 2024 onwards, we expect a payout of 75%, with a guaranteed minimum dividend equals to the 2023 dividend. In conclusion, the management challenge we have set ourselves for the future related to the creation of benefit for the system and the confirmation of our role in driving the current energy transition. In the years to come, Terna will focus on creating sustainable value over time. Value created not only for our shareholders but for the entire community. Our institutional role is and will be to ensure that the country has success to a safe, efficient and effective system at the lowest possible cost for the end user. Our investment will allow us to continue to focus on enabling the energy transition and generating ever greater benefits for the system.

[Operator Instructions] We have a question in the queue already, and it comes from the line of Javier Suarez from Mediobanca.

Three questions. The first one is on the -- it's a broad question on current scenario. I would like to ask the CEO of the company, the lesson to be learned by Europe and by Italy as well from the current crisis and the implication that in your view, this has on the medium-term thinking of an energy network. I'm not just thinking on the electricity network but the energy networks in general. If what has happened and it is happening in Europe includes a different element to rethink completely the structure of the energy transmission rate in Europe. Any comment on that would be very helpful. Then the company has increased the CapEx to 2025. I just wanted to give you -- to ask you for your impression on the additional CapEx for the period 2025 to 2030 and is there rational for selling the LatAm assets has to do with a significantly higher growth that the company sees on the core business and therefore, does see the necessity to refocus -- the refocus on the domestic market, if that is a correct interpretation. And I would like to link that to your comment on the U.S. market, if that opportunity that you are referring to make additional investment in the U.S. is something for the period 2025 to 2030 and beyond that period. And then the third question is on the assumption -- the regulatory assumption that your business plan includes. So you set with us the WACC that you are considering in your business plan, if that is stable then the deflator that you included in the business plan. And also I would be interested on your assumptions from the contribution of outlook-based incentive.

Thank you for your question, Mr. Suarez. Regarding the scenario, you mean not only energy -- electrical energy network but energy network in general. The situation seems to be this, in Europe, all the governments are deciding, advertising to generate a possible increase of independence from the gas feeding coming from Russia. And it means -- and I think it may produce a certainly focus on renewable energy plants. We know that in the north of Europe in North Sea, there are a lot of new installations regarding wind generation, but also in the other countries in Europe are going on, some new applications for renewable plants. In Italy, it's really important to accelerate that the Italian national plan provide to fill a gap of more than 40, 50 gigawatts in this direction. And what we see that also at the Italian government level, something is changing in this direction. Some approvals, some authorization are coming on and also a specific role in the direction of simplification the government is applying. So I think that the general scenario will be a great focus on renewable energy, a great focus on infrastructure adequacy to guarantee and to allow this energy transmission and use possible solution for gas feeding and also storage. And I think also in terms of energy storage, generally we'll be -- finally, I think, an application also in Italy of energy storage installations. And I hope also that Terna will be involved on this topic. So these are the main aspects, I think. And the more we've gone more it will be important where the international interconnections. So that's not only at the European level, but also with other countries like for example, also with the north Africa. And you know that we have provided in our planned the connection with the Tunisia and maybe it will be not the only one in the next future in the next years. Regarding the second question, the CapEx -- focus on CapEx, you are right. You have seen that our choice to eliminate from our assets, the LatAm asset is related to the needing to stay more focused on investments that are related to the national grid -- our national grid. And also speaking about the U.S.A. market, what is really interesting for us is that U.S.A. is starting now a process that started some years ago in Europe and in Italy with the building of a new infrastructure and we did turn on the -- turning on the renewables energy production. And it's interesting for us to participate to such projects with our know-how. So as you can see in the plan, we have not provided big investments on this. We want to try to use our know-how, our technology and to collaborate with the possible partners also European partners and not only to sustain these kind of plan and also to reach possible new opportunities in this market. But during the -- this plan, you will not found a great amount of money spent from us, and you will not found a special focus on this. Our focus is always on the main business for us that is the local infrastructure and the interconnections. On regulatory aspect, you asked us about the level of WACC and the other parameters of the tariff. As you can see, we obtained a reduction of 60 points -- now 60 basis points, and we are now at 5% of value. For us, it was not so easy to recalculate all our behavior and business until the end of the plan. But in the meantime, we worked a lot on the incentives related specifically to the opportunity to create value for the market, value for the system. And so you can see that we recover the great part of the reduction or remuneration. If you want, Agostino, you can add something on this aspect.

Yes. Sure. Thank you, Stefano. Of course, in front of a reduction of the averaged too cost that will be operative from the 30th of January. By the way, you know that this new level has been defined as a consequence of the evolution of the macroeconomic parameters in the overseas including inter states. And now we will see which will be the evolution. We know that, that may come the 1st of January, we have our entire employees, but we also are perfectly aware that bringing in quite a different environment, you know better than us, which is the evolution of the interest rates -- interest rates in the short term. As anticipated by Stefano, we have included an additional portion of our full base incentives. You remember that up to the latest business plan, this amount was in the region of EUR 200 million to EUR 220 million. We have increased this up to EUR 490 million because there is an important contribution coming from MSD incentives and it has been announced by Stefano in order to reduce the total cost of MSP for the Italian market. This is something that has just been introduced and will be also part a further discussion with the authority. Regarding the Sorrento, so the WACC of 5% is what you can consider as average for the business plan and Sorrento, you can consider 1.3% average.

Our next question comes from the line of Stefano Gamberini from Equita SIM.

The first regarding the CapEx plan, you more or less confirmed the amount of money of each project, mainly to Tyrrhenian Link and Adriatic Link, while the inflation on raw material jumped. So is this conservative? And why -- or are you able to keep the cost of this product at the same level than 1.5 years ago? The second also regarding the CapEx, give us, please, probably on authorization everything is fine because the government is supportive, but on the other, do you see some rates on procurement? Or what is the share of procurement you already got on this project? And the second one is regarding what is the total amount of investments of these subsea line inside of your business plan? Then I would like to understand better as regard storage because if I'm not wrong, the storage are mainly in another field for power generators. So could we expect some changes in the regulation in the long term, this could be moved towards the network company like you, the grid manager. And the last one is regarding the output-based incentives. I didn't catch the figure. Is this EUR 490 million of the total amount of the output incentive that you expect during this period? And how these are shared in the different years? Or also what is the visibility that you have of this amount of money?

Okay. Regarding the CapEx evolution, it is, first of all, we didn't maintain the total amount, but we increased the total amount as you can see. And what you see is an increase of some EUR 100 million. That is a mix that comes from reduction and increase because we changed some priorities. And we also understood during the last year, which are the main projects that may be faster, which are the main projects that may have some delays. And so we reorganized our plan in this direction, and we obtained an increase of CapEx. It's a mix of our solution. In terms of costs, the raw material and so on, we have not a great impact at the moment also because our agreements are on a long period level and so no impact in a few years. Then we will see if something will happen. And -- but at the moment, no important impact. So the increase of CapEx is not an increase of the cost of the CapEx. It's really an increase -- a physical increase of our projects. On -- you spoke about our authorization, as I said before, for some important projects, we have no problems. I think more change. And also speaking about the main in projects like Tyrrhenian Link, Adriatic Link, they are going in a good way also in terms of timing of the authorization. And I think that we will reach the targets. In terms -- then you spoke about storage and which may be our involvement in this field, and also if you can -- we can imagine some regulation modifications and the evolution. On this, I can say that I am absolutely convinced that we are arrived to a new period for this. And I think that in the next months, we will success to finalize a new opportunities in this field together with authorities and institutions because it's so clear that it's necessary to proceed in this direction and to accelerate the installation of this kind of system, that I am convinced that we will be involved. And it will be on a certain part something like a regulated asset. I cannot say at the moment in which way which is exactly the method, but I am convinced that it will happen. So we will discuss about this in a few months. Then you asked something about the output-based incentives, and I can ask to Agostino to summarize our position.

Yes. Sure. I confirm that the total amount for output-based incentive is EUR 490 million, 4-9-0, including EUR 150 million for the completely branding category that we see, that is MSD. And the remaining portion are the updated amount for intrazonal and efficiency. Consider that, out of this amount of EUR 144 million have been already communicated by the authority, EUR 40 million has been already booked in '21, and EUR 104 million will be accounted between '22 and '23. So it is, let me say, a sound assumption, completely coherent with the announcements we've made in the past and a full continuity.

[Operator Instructions] The next question comes from the line of Harry Wyburd from Bank of America.

The first one is on the Ukraine crisis and the repower EU plan. I wanted to understand how much of the CapEx plan that you've just presented to us accounts for new initiatives as a result of repower EU or changes in EU energy policy? Or is there sort of nothing in there? Is this based on, I guess, the position in the grid development plan last year before the Ukraine crisis? And if that's the case, what potential further CapEx opportunities do you see from repower EU, there's obviously more renewables and more on the demand side, like heat pumps. I'm just interested to know if we should expect another grid development plan in 2022 with a further expansion in CapEx to respond to what's happened in the last few weeks? The second one is on inflation. You mentioned you're assuming 1.3%. And I believe the breakeven or the market breakeven assumption in the bond market is about 2.5% now. I think Snam said last week that roughly each 1% on inflation -- extra 1% on inflation would add about 2% to their EPS CAGR. So I'd be interested to know if you feel you've got roughly the same sensitivity there? And if that was the case, I guess, rough mass that would mean about EUR 0.48 of EPS in 2025 sort of 2.5% inflation instead of a EUR 0.45 in your guidance. I'd just be interested to get your view on the sensitivity to inflation. And then the final one is on the dividend. So I think post 2023, your minimum payout is 75%. So if you do that on the EUR 0.45 of EPS guidance for 2025, that's EUR 0.34 of sort of minimum dividends in 2025, which obviously is the same as where your dividend would be in 2023. So I'm just trying to interpret, are you suggesting that the dividend may not grow beyond 2023? And that will be understandable, I guess, given the CapEx requirements? Or is this very much a minimum, should we expect a continuation in growth post 2023?

Thank you for your questions. Regarding the Ukraine and geopolitical crisis, I think that we will have no direct impact like Terna investments. Maybe only that our role will be more and more central for the needings of the system. But our investments provided for the next 10 years are absolutely in line with these old and the new meetings. In fact, I spoke before about the needings to guarantee the connections, the interconnections and also to help the system for storage, energy storage definition and maybe also realization. So my opinion is that our plan is in line with this and no impact -- no direct impact will be. Regarding inflation, if Agostino wants to say something about this?

Yes, sure. First, when I talked a few minutes ago about the regulator, I mentioned on average of the period. So inflation, as you know, as a general statement, let me remind you that the acceleration of inflation has a neutral to positive impact on Terna of regulators activities. You know that the Terna regulator framework provides us the annual adjustment of the ramp, allow depreciation and allow both experience on the basis of the evolution of inflation and the fleet. On the other hand, higher inflation would imply an increase of the cost of debt associated to the inflation. But we consider -- we have also considered this impact in our estimation. Regarding the sensitivity you mentioned before, consider that for each valuation of minus or plus 1% of expected inflation, the impact on regulated revenues is about plus and minus EUR 19 million regarding about plus and minus EUR 140 million. That's the impact that we see.

And on the dividend policy, Agostino, we can confirm the CapEx for dividend share...

Dividend policy, we fully confirm what we have anticipated last year. Let me repeat it, it's an average flow rate of 8%, moving from the 29.11, just approved by the Board 1 week ago. Growth rate of 8% up to 23%, moving from 23%, a minimum payout ratio expected to be 75%, but with a guaranteed minimum dividend equal to the 2023 dividend.

Okay. So just a follow-up on the dividend. Should we expect it to grow beyond 2023?

I confirm that we expect at a minimum payout ratio of 75%. But in any case, with a guaranteed minimum dividend equal to 2023. This is the maximum guarantee that we provide to our shareholders. You know that in '24 and '25, we have some expectation regarding introduction of output-based methodology and growth methodology. We do see a lot of opportunities there, but we consider more serious to stick on what we have already communicated. You have the same floor that we have communicated last year.

And just to add one simple sentence regarding the possible perimeter of the company in terms of, for example, storage -- energy storage and other possibility, and in this direction will be some possibility opportunity. But at the moment, we cannot calculate anything.

There are no further questions in the queue. So I'll turn you back over to the speakers.

Thank you for everybody for your attention and to follow our company. Thank you.

Thank you very much for joining today's call. You may now disconnect your handsets.