Voltalia SA (VLTSA) Earnings Call Transcript & Summary

Good morning. This is the conference operator. Welcome, and thank you for joining the Voltalia Half Year 2023 Results Presentation. [Operator Instructions] At this time, I would like to turn the conference over to Sebastien Clerc, CEO of Voltalia. Please go ahead, sir.

Thank you, and good morning to all of you, and thanks to all of you to be here early this morning. I am Sebastien Clerc, CEO of Voltalia. And together with me -- and just after I make an introduction, you will hear from Loan, who's Head of Communication Then Loan will be followed by Sylvine who is CFO at Voltalia. And finally, Yoni will give us some extra information. Yoni, your Head of Investment and funding. And finally, I'll conclude and we will answer your questions. I will go Page 6 and to first look at the history of our EBITDA. We are here to talk about the half year. So you see here a series of half year EBITDA growth which have been growing every year. And this is the case again during the H1 of 2023. This -- you will see in the presentation that this is -- this growth is coming from our power generation activity. And this is quite normal. When you see the growth of our capacity in operation, plus 39% during the first half. And when you have capacity in operation, then of course, the number of gigawatt hours that you can produce is also growing, it has been growing even a bit faster at plus 41% during the first half. If we go to Page 7, then we go from the first half to the full year. We have for 2023, 2 objectives. The first one is capacity in operation and under construction of 2.6 gigawatts. And as you probably all know, we have already reached that objective. And then our second objective is our normalized EBITDA, which is now at approximately EUR 275 million. This updated target integrates the impact of a blackout that has happened in Brazil that was on August 15 where essentially all the grid of Brazil was disconnected. The -- this is a very rare event. It's happening more or less once in a lifetime. And this stayed for just a few hours, so nothing too important when you are the owner of portfolio of plants. What is even more unusual than a blackout is when you have a blackout where the cause of the blackout is difficult to understand, and this is what has happened in Brazil. Therefore, some studies are underway by the grid authority. And until they've been knowing what is happening, they have used the temporary measures including slowing down the process of connecting power plants, and this has affected the 2 plants that we have there ready for connection, namely Canudos and SSM3-6. This EUR 275 million target is a growth of 100% compared to last year. It is twice as big as last year's EBITDA. Going now Page 8. We are -- we have some data, which is useful to understand what will happen after 2023. And you see here, we -- and we have here some figures that are quite amazing. The first, the capacity we have in operation has been growing by 39%, but this I already said it a few minutes ago. The capacity, which is currently under construction, is that 1 gigawatt plus 5%, and this is also a quite amazing figure and Loan will tell us why. If you add to that, the capacity where we've been awarded the projects and the PPAs, which have been more than doubled, it means that our secured portfolio has grown by 45% at 4 gigawatts. To end this little introduction, I will go Page now 9, looking further ahead. And looking further ahead for us is most -- what is most important is to look at our pipeline of future projects under development. You see here the 5-year history of this pipeline in gigawatts. So last semester, it has grown again to 16 gigawatts, 16.1 to be precise, and another growth of this time, 18%. And of course, our growth -- this portfolio of projects is the foundation of our growth, both for building projects that we will own and also selling services. The project itself, the construction services and the long-term maintenance contract. Long-term future is also depending on new long-term power sales contracts, the PPAs. And you see here a selection of PPAs that we have signed in the first half, which again is helping us to look forward with a lot of pleasure. With that in mind, Loan, would you like to continue?

Thank you, Sebastien. Hello, everybody. So moving to Page 11. And speaking about the capacity in operation and under construction, we moved by 24%, plus 24% between last June and this June 2023, moving at 2.7 gigawatts. If now Page 12, I focus on the capacity in operation, we have been growing by 39% reaching 1,699 megawatts in operation in June and mainly coming from new capacities in solar with more than 440 megawatts in our different geographies. If now I give a snapshot of the capacity to date, Page 13, we have been growing very fast because we commissioned more than 189 new megawatts, so reaching 1.9 gigawatts in operation. So moving from 1.7 to 1.9. And you can see here examples of new plants commissioned. This arises from new construction. If you see Page 14, we have capacity today -- in June, sorry, of 961 megawatts under construction, plus 5%. The biggest level. Why I'm saying that? Because we have been able to move by plus new capacity, plus 473 megawatts of new capacity. And -- that we commissioned, and we were able to put under construction 514 new megawatts. So in fact, moving from 917 to 961 implies around 500 megawatts commissioned, 500-megawatts under construction in addition. You can see Page 15, some illustrations of ongoing construction and new build in Europe, for instance, in Albania or in Africa with South Africa or again in Europe and France. Page 16, we underlined that we signed new PPAs. Sebastien underlined that we are keeping, growing the portfolio of new PPAs. Here, you can see examples. Here, you can see our first corporate PPA in wind in France, so our first wind corporate PPA in France. 23.6 megawatts for Leroy Merlin. And today, we already are producing for our client Leroy Merlin. Second, PPA example, the -- we signed the third corporate PPA with SNCF for 37.4 megawatts, and we're now producing for our clients. And finally, an example in Portugal, this is the first multiclient project in Portugal, and all the capacity of 50.6 megawatts is backed by PPA with corporate. And this cluster called Garrido is now producing for the different clients, including an industry client called BA Glass. After speaking about power producer activity, I move to Page 17 to the services that we are doing for us and for third-party clients. Page 17, you can see that we underline the 2 segments of activity, development, construction and equipment procurement showing that for ourselves or for third parties, we have been sharply growing. Here you can see example that for instance, maintenance, we have been growing our capacity that we own and that we are doing the maintenance. And of course, we are winning every day new contracts, growing our capacity operating for third parties by 13%. If I move to some illustrations of the semester related to services contracts, we are not communicating every day on our contract, but here a good example in construction, Page 18. We signed more than 500 megawatts new construction contracts with Ireland’'s leading energy producer. Here, you can see 180 megawatts. And another example of 230 megawatts that we signed. Both of them are with construction that is very active. Page 19, maintenance contracts growing very fast here. I was telling you that more than 30% of growth of our capacity operated for third party. Here, one example with one global oil-major here, on the left part of the page. And another example with a leading Spanish construction company, Ohla. Page 20, we provided you an example that is a business highlight that is quite highlighting here is the acceleration of Helexia’ in Brazil. Three items. First production. First production in Brazil for Helexia with the contract with Telefonica. We signed the biggest partnership today for Helexia in Brazil with 90 megawatts with Comerc Energia. And finally, a more recent partnership is additional contracts with Prime Energy, 46 additional megawatts. So you can see the growth of Helexia, Brazil, here that we launched on to -- a 1 year after a few weeks -- a few months after the acquisition. Page 21 now, the announcement of today, we underline here that our 2 plants, Canudos and SSM3-6 in Brazil are fully achieved, completed and built and ready to operate. So Canudos, wind plant 99 megawatts and SSM3-6 that have already 128 megawatts in operation that is fully ready and -- to operate. As underlined by Sebastien at the beginning, we -- those 2 plants are affected by the Brazil blackout and are ready to be connected but are waiting for the possibility to connect on the grid. And finally, last announcement of the day that we underline the growth of the pipeline. Sebastien underlined the 16.6 gigawatts (sic) [ 16.1 gigawatts ] of development pipeline, growing by 18%. And you can see the geographic diversification, 39% in Europe, 40% in Brazil and 22% in Africa. Now speaking about the financial results, Sylvine?

Yes. Thank you, Loan. Good morning, everyone. So let's move to Page 23 about the financial results. And first, 4 key indicators, which drives our overall financial results. The growing activity is reflected on 1 hand by the capacity in operation and under construction, which increased by 24% in the year from half year 1 '22 to half year 1 '23. Looking at the power production, it increased by plus 41%, reaching 1,842 gigawatt hours. This illustrates that though we do have a stable turnover -- we'll come back to that, we have an increase in our EBITDA overall of 18%, reaching the EUR 56 million. Having a look how we go from last year to this year on the next Page 25. So the evolution is mainly explained on one hand by the power producer activity, so which increased by '22 out of which the overall increase, thanks to new capacity, amount to EUR 19 million and the performance year-on-year by EUR 3 million. Then you have the contribution -- external contribution of services plus EUR 10 million, adjusted by corporate and eliminations, we then reached the EUR 56 million of EBITDA for the half year 1 '23. But let's have a look to the overall activity internal and external. So first, on Page 26, energy sales. Energy sales grew EBITDA by 41%. How do we arrive to this dynamic? The turnover from energy sales reached EUR 138.3 million, thanks to commissioning of more than 470-megawatts in the 12 months. And on the second hand, thanks to improvement of wind resources, for instance, in Brazil and in France. We'll have a look on that right after. The overall production, therefore, increased by 41%. And this increase in turnover is reflected as well in our EBITDA, which is reaching EUR 75.6 million. EUR 75.6 million linked to first in Brazil. EBITDA is growing very strongly due to better wind conditions and full production at least SSM1-2 is one of them, equal to 320 megawatts and Helexia’'s first sales in the country. Looking at France, EBITDA as well benefits from wind conditions improved. And also commissioning of new plants in '22 and '23. We have here several illustrations we mentioned before in the Sud Vannier wind farm of Sable Blanc, which is a combined solar and battery. And finally, in other countries, we also had commissioning in U.K., Portugal, Spain, thanks to Helexia business dynamic activity. And as well in Belgium, Greece, Egypt and Jordania, I would like to point out that even though there is a low production on the other hand, we had an improvement on EBITDA margin. So overall, energy sales is an EBITDA increased by 41%, amounting to EUR 75.6 million. Having a look on the Page 27 to the resources. Indeed, we do have improvements of our resources compared to half year 1 '22. For instance, in wind, you can see in France that it grew from 22% to 26% as well as in Brazil, 30% to 35%. This is the first key important message. The second one is that, overall, on an annual long-term average, we have strong resilience in resources. For instance, wind in Brazil is 42% compared to a country annual of 34% as well as solar in France, though it decreased a bit between '22 and '23, remains on a long-term perspective, plus 18% compared to 14% in the country. Moving forward on the next Page 28, about service activities. The dynamic of the service activity is tremendous. Overall, EBITDA is multiplied by 2.4. Turnover from services, the overall internal and external increased by 81% at EUR 271.2 million. This arrives from first of all, development, construction and equipment procurement, where the overall turnover increased by 88%, reaching EUR 15.2 million compared to 6.1%, which is also an increase in EBITDA margin by 1 point. We definitely focused in the first part of the year on internal activity, which have been multiplied by 4.4 with 961 megawatts under construction. This focus on first half of the year explains as well the external turnover, which temporary slowdown by 41%, but still represents 550 megawatts of construction, which are earlier stage with very few billable milestones that will then move forward in the second half of the year. Finally, we do also have in that part development benefit from sales of projects to third parties in Brazil. Second part of services refers to operation and maintenance with as well the dynamic growth benefiting from the activity to third-party customers, up to 24% and reaching EUR 18.6 million. The total capacity under management, internal and external reaching 5.6 gigawatts, meaning plus 27%, including 3.9 on behalf of third-party customers. For instance, new contracts in Spain and Brazil, totaling for more than 550 megawatts. Therefore, operation and maintenance to EUR 1.3 million EBITDA multiplied by 3.5, benefiting from the growth. So services activity is having a strong dynamic with EBITDA multiplied by 2.4. Let's have a look now to the lines below EBITDA to the net result on the Page 19. So to sum up both EBITDA before elimination, we end up with EUR 92.2 million, which is 52% increase compared to prior period. After eliminations and corporate, we reached an EBITDA of EUR 56 million, the one we've seen before, increased by 18%. Then we do have depreciation and amortization amounting to EUR 47.8 million as an expense increased compared to prior period, mainly linked to, on one hand, amortization of our power assets put into operations, amounting approximately to EUR 8 million. And on the other hand, several nonrecurring items amounting as well for an overall EUR 8 million, which are, to give you more details, some depreciation on stock of solar panels linked to the drop of the price, market prices, then French regulatory exceptional depreciation, which is cap of prices. And then finally, a provision which was reversed in '22, decreasing the overall expense compared to EUR 23 million. And this is for an overall amount, nonrecurring item of EUR 8 million on the top of the EUR 8 million of amortization. Financial costs as well increase, reaching EUR 24.8 million, mainly linked to the commissioning of new plants and as well linked to the decrease of interest income earned on deposits in Brazil, which were bigger in '22 than in '23. Last point is linked to exchange rate effect. Taxes. Here, it's mainly related to the tax scheme and taxes in Brazil. So we end up after minority interest to a net result group share of minus EUR 19.4 million, which also reflects the seasonality of our business and therefore, EBITDA and net result construction. Moving to the balance sheet overview on Page 30. First, total assets are now reaching almost EUR 3.5 billion, out of which we do have EUR 2.497 billion of fixed assets, which increased by 20%, thanks to project development, but also construction in progress decreased by [indiscernible] and then amortization, which logically increased that way. Our cash position remains strong at EUR 278 million, and is definitely dedicated to speed up the power plant construction ahead of project financing. Other noncurrent assets and current assets are in line with the business growth, mainly refers to stocks and trade receivables. And on the liabilities side, the financial debt increase reflects the planned portfolio growth. Focusing on the financial debt on the Page 31. So it reached EUR 1.6 billion. 3 KPI, we keep track on. So indeed, the increase is EUR 297 million. How is it structured? We do have a contribution between project finance, corporate loans and green bonds. I'd like just to remind that all our development projects are financed through project finance. However, we do use temporary corporate loans to project finance, enabling us to benefit lower interest and are currently, of course, being refinanced through project finance. The second point is the debt is always denominated in the same currency as the one we collect revenue. That's on the right, the second shot about the currency. And finally, overall, we do follow a dynamic political hedging. Hence, we had only 15% of variable rates. Last page is about cash level. So we do have a strong level of cash, mainly as we've just seen, dedicated to financing our CapEx activity to develop and support the overall growth of activity. So let's have a look now further onto 2022 guidance with Yoni.

Thank you very much, Sylvine. Hello, everybody. Happy to be here with you today. So if we remind that on the guidance, we have fixed that guidance in 2019, so 4 years ago. And it was composed of 2 targets. The first one, the capacity target, 2.6 gigawatts, which is reached since last year and a EBITDA target, which is from now on, approximately EUR 275 million of normalized EBITDA. So this is disclosed on the Slide 34. If we go to Slide 35, how to deliver this guidance. So here, I will take you through the key steps needed to go from our H1 EBITDA to the normalized EBITDA full year of approximately EUR 275 million. So first, of course, there's some well-known effects, power production seasonality and full semester effect and new commissioning, but also less known effects which are, for instance, the high power prices, we managed to get pre- and post-PPA, long-term PPA, we will do a focus on the sales of project developments. And then we will see how the construction contracts and successes in the construction segment will be billable on the H2, which were slightly billable on H1, but more -- will contribute more to H2. And then finally, a focus on the growth of the maintenance business. So now going to -- if we go step by step. The first one is the seasonality of the power production, mainly in Brazil with the wind, which is an important which weighted a lot in our EBITDA, of course, as every year, we present you here the historical data for -- on this Page 36. Historical data. We know that the difference between the first semester and second semester is roughly 70%, meaning when we produce 100% on the first semester, we will produce roughly historically speaking and with the studies, 170% on the second semester. So this has an important impact on EBITDA. Going to the next Slide 37. We have here the -- this is the full semester effect. So here, we have the different plants which have been commissioned in H1 from France, Sud Vannier, Sable Blanc and till Helexia and all SSM3-6 and Garrido as Loan already described. Here, you can see also that the SSM3-6 and Garrido are not fully operational in H1 and will continue to ramp up in H2. Nevertheless, we can note that the effect of this full semester effect is all the more powerful as the commissioning of the -- most of these plants have been done at the end of the semester. Going now to the Slide 38. Looking to the further commissioning in H2. We have here some plants which will be commissioned in H2 as we already discussed, SSM3-6 and Canudos are ready to connect. Karavasta in Albania, 140 megawatts is -- should inject in a few weeks. And here, we have also Helexia, around 100 megawatts in diverse countries from Europe to Brazil. At least, we can have, of course, the second part of Garrido, which is now on full commission and also [indiscernible] which is PPA with SNCF, Loan already disclosed. So we will have in H2, the impact of the commissioning of more than 500 megawatts of new plants. So on the Slide 39, this is a focus on the power prices because, of course, before we -- so that we will have new production, new production, new megawatt hour is that. So this is very nice and very important, but it's even nicer when you can sell this energy with a high price. So here, you can see that most of the plants we just sold, Garrido, Karavasta and Various Helexia will benefit or benefits from a power price, which is more than 2x the long-term PPA price. So then on Sud Vannier and a bunch of projects in the portfolio, the French portfolio, we will also benefit from a significant upside with PPA price per megawatt, which is higher than the long-term PPA price of the former PPA we had on the French portfolio. So this will have a significant impact on the H2 EBITDA. If we now focus on the Development segment on Page 40, this segment will be fueled by over 500 megawatts of ongoing product sales. Let's have a small deep dive in those transactions. The first one, we have signed a share purchase agreement for the sale of 420 megawatts in Brazil. So this transaction is very advanced. All contracts are signed. There is only one condition precedent left to proceed with the closing, which should appear by the end of October. We can -- what we can say about this sale. This is -- let's say, this is definitely our strategy. This site have no long-term PPAs, and they are in Brazil. So in our strategy of rebalancing the portfolio and keeping -- to continuing to invest on long-term PPAs that site was not in our strategy, and we sold it. Within the strategy, we have stapled to that sale, services. So Voltalia will build and maintain for 3 years the site electrical infrastructures of the site. On other geographies, but also in Brazil, we have also ongoing negotiations for the sale of more than 100 megawatts which is 70 investors and received 24 offers. We are now in negotiation with the preselected buyers, and we expect a financial close by mid-December. One more time in that sale, Voltalia will provide various construction and maintenance services to the buyers. Here, you can see, of course, that we are rebalancing the portfolio. And this is also because, as you know, perfectly, our development team in Brazil continue to deliver a lot of projects, gigawatt of portfolio that we have to sell on the -- in the development segment in order to maintain our Brazilian portfolio as a power producer. Finally, if we go to the construction contracts and maintenance, we have signed and we discussed that in the highlights. We have signed some significant contracts in Ireland, for instance, but also in other geographies. Those contracts are now billable, and we will have a few significant milestones on H2. For maintenance, it's quite impressive to see that the growth on -- over H1 is around 40%. So the portfolio of contracts under maintenance have grown 40% between the end of '22 and the end of the first semester and will now deliver on H2 fully. I'll let now Sebastien on the ambitions. Sebastien?

Thank you, Yoni . And if we can now look at 2027. If we go Page 43, we -- with all that -- with everything we've been telling you this morning, you can tell that we've been building a lot which will be useful for this 2027 target. You see here our 4 objectives, which was set and announced during our last Capital Markets Day, 5 gigawatt for the plants we own, 8 gigawatts for our third-party clients. Together, producing an EBITDA of EUR 475 million. And we've set for the first time ESG target, which happens to be that our clients will avoid emissions of 4 million tonnes of CO2, thanks to Voltalia. These 2027 objectives are fully funded by our last capital increase. And we were happy to see that our secured portfolio that I mentioned at the beginning of this presentation is already at 4 gigawatts. We are just some months later than our Capital Market Day, and we are already at 4 gigawatts secured. When you compare this to the 5 gigawatt targets, you can tell that the teams have been doing a lot of work, and we are progressing rapidly toward our objectives. This concludes our presentation, and we are now happy to answer your questions.

[Operator Instructions] The first question is from Arthur Sitbon from Morgan Stanley.

The first one is on your new EBITDA target for 2023. If I remember well, in March at the full year results, you had indicated that EUR 235 million of EBITDA had already been secured. I was wondering if you could provide an update on that, trying to understand how far we are from the EUR 275 million that are targeted at the moment. And also, if you could give us a bit of detail on the bridge between normalized EBITDA targeted and potential reported EBITDA because I think your exchange rate assumption is quite different to what we've seen so far this year. There is the volatility on resources as well. So that's -- that would be interesting to know more about that. And the second question would be on the power cuts in Brazil. If it would be possible to quantify the impact it had so far on your EBITDA? And how much do you assume for the second half of the year to get to your guidance?

Thank you for your question. So first about the secured EBITDA, indeed, back in March, we've discussed this secured amount of EUR 235 million. This figure has progressed since then. If you remember well at the time, we were saying that a big portion of that were the long-term PPAs we have in our portfolio. Obviously, it takes some time to build the plant. So on the PPA side, almost all of our power generation EBITDA was secured when we talked in March. The only exceptions were some small projects for Helexia. So this has -- on that part, of course, it has not grown since then. So it's really on the services that the secured portfolio has increased. It's coming mostly from construction and development. And as Yoni has told us, gave us further details on what's going on for the sale of development projects where we do have signed contracts, yet we wanted to be more precise and we mentioned things like conditions precedent to give you even more granularity. So it has increased. But I think the full story is also to talk about the details that Yoni gave us, both by the way on development and construction with billable milestones, which have been small during the first half because the size of our lines are not depending on us. The progress on construction depends a lot on them. And the second half from that standpoint will be much bigger. And second also, because we have concentrated power force of the Voltalia team in the first half on all the growth that we have been explaining to you this morning. Then you're asking about the comparison between normalized and actual EBITDA, you probably noticed it was actually Page 35 that the normalized H1 EBITDA was quite close to the actual one at EUR 61 million. The -- this is coming from the fact that the Brazilian real is stronger than for our normalized EBITDA. And on the other hand, even though we had better weather than last year, we are still a bit below the long-term average. Finally, about the power outage, the national outage in Brazil, the effect started, as I said, on August 15, supposed to be just a matter of hours and days. Still today, we have consequences. So we had to take that into account, especially because we are one of the players in Brazil, which has a lot of plants which are ready to be connected. And as a measure of safety, the grid is conducting extra studies to be sure that the grid will be stable. And that -- some people think that the grid operator is doing too much under the pressure of people and the government who don't want to be criticized and take no risk. But anyway, whether it is for good or not so good reasons, it's delaying some of the connections, so it's becoming significant, and this is why we have describe that in detail. The effect that we have seen so far is not that big. This is why we are still at the EUR 275 million. But given the level of uncertainty of whether it will continue to be like that for just days or weeks and taking into account what has been the impact, we have to take into account this uncertainty, which is not enormous given the size of the Voltalia overall, but yet still is creating an uncertainty.

Just a very quick follow-up on the first question because -- so you say you've secured more EBITDA than before, but I don't think you gave a number. Just to understand, in terms of moving parts for the second half of the year, is it the additional billable milestone that you've made on construction contracts, that is the biggest moving part? Or is it more coming from the share purchase agreements that you're negotiating or that you've signed on the -- well, the 421 megawatts of ready-to-build project and the 100-megawatt of negotiation. What is the biggest moving part that you are expecting for the second half?

The 2 are significant, but the biggest moving part is development sales.

Mr. Clerc, there are no more questions from the conference call at this time.

Yes. Let's move to the question from the webcast. Oscar from Santander, I can see your question. I think Sebastien answered for the first one. Let's move to the second one on the follow-up on capacity. What is your intention going forward in terms of split solar, wind, onshore, assuming the 2.7 gigawatts and the one, it means 60 -- above 60% solar PV. What is the split for the 1.4 gigawatt awarded?

So on the on the split between technologies, clearly, the solar market is the most dynamic right now in almost all of our countries. Of course, batteries is even more dynamic, but it's a much, much smaller market globally. So even if there is an even higher rate, it is -- it doesn't have the same weightage as solar. Because of this dynamism of solar, we believe that solar will be 60% of our portfolio of assets in 2027. This means that since we have today less than 60% of solar, that year after year, we'll have more solar plants. And if we look at, let's say, our new PPAs, we have success both for solar and wind, but solar is majority. So it's an illustration of that trend toward 2027. Wind -- so solar will be at that time, 60%, the wind should be 25% with the other technologies representing 15%.

Moving to Nicolas Royot question. Any visibility on back to normal in Brazil?

Yes. Well, we do have visibility, and yet we still have a bit of uncertainty. Why do I say this? We have visibility because we know well the grid where are located our plants. It is quite obvious that we've been -- that people are connecting plants without creating difficulties on a grid, which is very big in Brazil. It's one of the biggest grids in the world. So we know that even though the grid operator has not yet identified exactly what has happened in August. The grid has been stable for decades. So there is no reason to be especially afraid. So that is what is giving us visibility. What is not giving us full visibility is that politicians take into account technical considerations, but probably others, even though I'm not in their hat, so I cannot ensure it for a fact. And they have some extra cautiousness, but we have good dialogue about connecting our plans, and that provides us still, I think, enough visibility to be able to give the guidance we gave today. You -- situation is a little bit different between Canudos wind farm and SSM3-6 solar plants because SSM3-6 is already half in operation. So the question is just starting to inject on the other half where Canudos is waiting to inject its first megawatt hours. But in both cases, the extra capacity of SSM3-6 and the full capacity of Canudos are fully built, fully authorized, connected physically to the grid. So it's just a matter of getting the green light from the grid operator as soon as he feels comfortable about the stability of the grid. I must say that my personal opinion is that there is probably a mistake done at a certain node of the grid, which created this, which will not happen again. But this is what most people think, and I'm among them, but let's wait for the panel conclusion of the of the analysis, which is probably getting close to its conclusion.

Now a question from Emmanuel Chevalier. What assumptions are included in your around EUR 275 million EBITDA target, normalized EBITDA target in terms of sale of project and in terms of impact of the slower ramp-up in Brazil due to the power blackout?

The -- for the power blackout, the impact, like Loan was saying during the presentation, we think it will be between EUR 5 million and EUR 10 million. I've already discussed it quite a bit, where we have enough visibility on that to come up with this figure. On the business of selling developed -- project being developed by the teams, the assumption has not changed actually. It's -- the processes are doing good with a series of proposals, with contracts being signed. So there is nothing -- there are always some small adjustments, but which are not material. And so no, nothing special to say about these assumptions.

Moving to Paul Chabran. Last time we talk about -- you had cautious comments about PPA prices in Brazil as high hydro resources are pushing prices down. Can you please give us an update on this?

Well, we were quite right to be cautious because the price -- the wholesale power prices are low today in the spot market. And the long-term prices for long-term PPAs, therefore, are not picking up to the type of level that we need on our side to justify an investment, the -- having said that, and if you follow the activity in the Brazilian market, and we illustrate that with our sales in Brazil, many other players are happy either with lower 20-year prices, but most of the time are also happy with some slightly shorter contracts often less than 15 years, which is creating an exposure to power price in the -- after the end of this PPA. As you know, at Voltalia, we are -- our strategy is that we make investments when the long-term contracts are big enough with a high price and not so long or longer, but anyway to provide the return, which -- where we have visibility from the contracts. And when we are a part of the cycle where we are not finding -- meeting our standards, then we are happy to continue to develop sites like we do in Brazil. And then to sell these sites to people who have other forecasts of price -- power prices after the PPA, for instance. So this is why, to conclude on this question, we were cautious. You are right, and we -- it was rightly so. And we will continue to be sure that in Brazil, but also in other countries, when we invest in a new plant, we continue to be coherent with our strategy.

A question from Paul Chabran, you present a long-term average annual load factor for wind substantially lower than the 51%, 52% previously presented. What is the difference due to? Does your normalized EBITDA take into account the long-term average of 42% of the 51%? In H1, normalized EBITDA was EUR 61 million, while reported was EUR 56 million and minus EUR 8 million difference. Can we take a rule of thumb to assume that the actual full year EBITDA is expected at minus 8% and below normalized EBITDA? Maybe just to start with the load factor. Indeed, you noticed the difference. So I just would like to highlight, and we mentioned it in the financial results, the seasonality in Brazil. And usually, when you compare the load factors for 12 months, so in a row, here, it includes more the second half of the year. And we do know that in Brazil, the seasonality has an impact overall on the load factor. So this is one point to bear in mind. We have, for instance, more solar in Europe in second half of the year. We have more wind in the port of Brazil. And this is part of the explanation that is for the first part of the question. Then to complete on the normalized indeed, just to remember the way we calculate. So indeed, we do normalize on the long-term average, what we call the P50, which is allowing us, enabling us to neutralize this load resources effect. Okay. Moving to last -- let me see Philippe Ourpatian question, are you comfortable about the SSM3-6, Canudos additional [ COD ]?

Yes, we -- this is -- this plant, as I said, is fully -- ready to operate from all standpoints, like Canudos, by the way. SSM3-6 has on the top of that, the benefit of being already producing at half of it capacity, half of the panels are already injecting electricity in the grid. So it's even easier from a time part. It should be done any time. Frankly, there are no challenges in terms of the grid operator for taking electricity, which are small volumes compared to the total grid. So it takes a bit longer for all the reasons I've mentioned. It's unfortunate. But yes, we have a lot of visibility happening. And as I said, a full blackout in a grid is happening once in a lifetime. And now I have gone through one, and I expect this will never happen in the rest of my life. Even though at the end, it's still a small event in the life of a power plant.

A second question from Philippe Ourpatian. Could you help us to quantify the financial costs expected for year 2023 as well as the amount of income tax?

So yes, as for financial costs, indeed, so it refers mainly to the financial costs related to plants which are already into operations. So taking this and bearing this in mind and the commissioning that we had between half year -- second half of the year '22 and the first half of the year '23, we will have a small increase in terms of volume of financial costs, which remains, I would say, lower than what we expected since in the second -- in the first part of the year, as I mentioned, we did use the cash to speed up the project finance with some corporate financing, then we move to local project finance. So financial cost, we do not have any significant increased expectation, and we remain supporting the financing of the plant into operation. As for tax, so I mentioned it previously, here for current tax, we do have incentive, I'd say, in terms of rates in Brazil, but then it's calculated on revenues. So you do not have a PBT calculation, usual one. So therefore, the main part of the taxes, we do have in our P&L on half year. And that's the same at the end of the year refers to the Brazilian taxes on the revenues of our legal entities, SPVs providing an already -- put into operation. This is the biggest part, and it's a percentage on the revenue.

And last question from Philippe Ourpatian. What are your current expectations in terms of D&A, excluding nonrecurring for 2023?

Expectations. So for D&A, we have -- we've seen that we have altogether depreciation and amortization I've mentioned that in depreciation, we have nonrecurring items, which increased and which are not expected hopefully to reiterate in the second half of the year. Therefore, we just expect amortization to increase in line with the -- put into operation of the plant, but not -- no more than that, I would say.

And I think -- let me see if we have other -- last question. Could you -- from Gonzalo De Cueto Moreno, Exane, could you give us more color regarding your asset rotation strategy that we don't call asset rotation? How many megawatts do you intend to rotate in the short term? And geographically, where are you seeing more interest and demand from investors to acquire your assets or projects?

Yes. Indeed, I mean we don't call it asset rotation because our -- it is our business model to has our own teams with many people employed to get the land, people doing technical studies and so on. So we -- rotation is the situation where you face one point, you rotate on yourself. And when you have finished your rotation, you are at the same position exactly. When for us, when we start to develop and then we sell, we go from point A to point B. Yes, of course, the end result for asset rotation for some others and for us, developing and selling comes with the same contract, which is a share purchase agreement to sell the share of an SPV with a ready-to-build project. And when we do that at Voltalia, more often than not, we also sell services, construction and maintenance. Now to answer your question, we pursue this strategy more or less in all -- everywhere we can with -- so all our countries. And we have, as a strategy to develop more than what we plan to keep, for instance, our pipeline of projects that we have revealed today as of June 30. We don't plan to keep all the projects in this portfolio. We plan to keep some and to sell some and this has 2 benefits, which are important in terms of understanding our strategy. The first effect is we create value by developing and then selling the projects we don't keep. And the second effect, which is so important that I need to underline it is that by keeping just the better half of our portfolio, we improve the quality of our balance sheet. We increase value creation. What I was talking about a few minutes ago about Brazil is a good illustration of that. The sites that we sell are -- don't have the long-term power sales contracts, which provide visibility as an investor. Some players are happy with this, but clearly, it is not as good as when you have the full visibility that we like. Our sales are mostly in Brazil for -- last reason, which is that Brazil for us is our largest country. And even when we -- even though we like very much this market, it is good to avoid having too many eggs in the same basket. And therefore, this is clearly the one country in the world where we have the biggest volume of projects for sales year after year for now around 10 years. My last point, and that could be the conclusion of this session is that these sales that I've just described now are doing well in the -- and we really provided us some information on that. And the -- we are cautiously estimating what we can do, and we can be too cautious about that. We -- and we have a true potential to do -- to have better-than-expected services, which is both, by the way, true for all services, as mentioned, development because it's the biggest item for the second half but also construction. And let's not forget operations and maintenance, which is smaller, but the growth rate is very high. So it is now time to thank all of you for having asked questions and listened to what we wanted to tell you. So thank you again for that. And I look forward to meet quite a few of you together with the Voltalia team. And meanwhile, I wish you a very nice day.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.