EDP - Energias de Portugal Stock

Good morning. We welcome you to EDP's 2025 Final Year Results Presentation Conference Call. [Operator Instructions]

I'll now hand the conference over to Mr. Miguel Viana, Head of IR and ESG. Please go ahead.

Good morning. Thanks for attending EDP's 2025 Results Conference Call. We have today with us our CEO, Miguel Stilwell de Andrade; and our CFO, Rui Teixeira, which will present you the main highlights of our strategic execution and 2025 financial performance. We'll then move to the Q&A session, in which we'll be taking your questions, starting with written questions, you can insert from now onwards at our webcast platform and then by phone.

I'll give now the floor to our CEO, Miguel Stilwell de Andrade.

Thank you, Miguel. Good morning, everyone, and welcome to the 2025 results conference call. Just before presenting our results yesterday, I just wanted to address the extreme weather events that impact Portugal. And as you know, Portugal was hit by a series of devastating storms starting at the end of January and then well into February to a certain point, had winds over 200 kilometers an hour, which really caused unprecedented physical damage to infrastructure in the country, including our own network infrastructure and also customers.

I think the first thing to say is that we immediately responded with a very coordinated large-scale support from all the internal and external teams. I mean we had people coming in from Spain, Brazil, France and Ireland, and I just wanted to thank also all those teams. The networks and the hydropower teams worked around the clock to limit the damage caused by the storm and to restore power to our consumers.

Naturally, the first thing is our thoughts are with the people and the communities affected. We understand the damage that this has caused, the frustration from people that had no power over those weeks. And from the beginning, our first priority was to reestablish power in the quickest, safest and the most effective way possible.

We have now recovered 100% of the customers, only a very few specific situations outstanding that will be resolved very shortly. But I think the worst is definitely over. I also wanted to extend a really sincere word of appreciation for the absolutely extraordinary professionalism and dedication demonstrated by the teams, both internal and external across all the country.

I mean the response from grid repair to the hydro power management, the community support, emergency logistics. I mean, it was absolutely exemplary. And I think it really showed the best of EDP in terms of the commitment to stand with our customers and with the communities that we serve, especially in the moments where they need us most.

So I will come back to this later in the presentation just to talk a little bit about the impact on us in more detail. But I would move now into the bulk of the presentation. And on to Slide 3, which essentially shows an overview of our results for 2025. And I'd start off by saying EDP had a very strong set of results for 2025. The recurring EBITDA reached EUR 5 billion, so outperformed the EUR 4.9 billion guidance. It's mostly on the back of a better-than-expected fourth quarter in the integrated segment in Iberia from above-average hydro resources in the fourth quarter.

If we compare that with 2024, EBITDA was up 1% year-on-year. So it reflected a rebound in EDPR's performance, which as you know, had record capacity additions towards the end of last year. Recurring net profit came in at EUR 1.3 billion, so also above the guidance, although it's down 8% versus 2024, and that's mostly explained by higher financial expenses.

Net debt ended the year very well. So at EUR 15.4 billion, better than the EUR 16 billion guidance, and that led us to have a great FFO over net debt of 21% compared with the 19% guidance. So the upside versus guidance at all levels allowed us to then increase the shareholder return. So we're proposing a dividend of EUR 0.205 per share. So that's a small increase, which will be paid this year already in 2026, obviously subject to the General Shareholders Meeting approval.

If we move forward into the next slide to talk a little bit more detail about the FlexGen and customers. So here, we see a structural uplift in the value flexibility. And I really wanted to highlight, if you see here on the left-hand side, there's a chart from the International Energy Agency recently that shows the capture rates in Spain by technology. And it shows how the market is increasingly rewarding assets that can respond to price volatility and the system needs.

And you can see natural gas capture prices obviously rising in 2024 and '25. Hydro with reservoir also trending upwards and more intermittent and less flexible technologies, particularly solar, you see obviously a decline in capture rates in 2025. The takeaway here is that flexibility is being structurally priced in and that we expect that to remain a long-term feature of the market.

And you can see that in the figures for EDP for 2025. The hydro net generation was almost 10 terawatt hours. It's down 2% year-on-year, but still a very strong year for them. Hydro premium versus baseload increased to 21%, so reinforcing the value of the flexible output. And on pumped hydro, the pumping volumes increased to 2.3 terawatt hours on the year, so up 24% year-on-year, with the pumping spread versus baseload reaching 75%.

If you look at the right-hand side of the slide, and we give there an update on the reservoir levels in 2026. So given the heavy rainfall, reservoir levels are at historically all-time highs. They've reached around 96% in February 2026, up from roughly 76% in January. And that's consistent also with the hydro production index in Portugal, which has doubled its historical average year-to-date.

So obviously, that's following the heavy storms, which I just talked about in Portugal in January and February. One important thing to note is that the market consequence of these extreme weather conditions is that we also had abnormally depressed pool prices, which together with higher ancillary services costs in February. It's shown by the Portuguese pool prices going from around EUR 71 per megawatt hour in January to roughly EUR 8 per megawatt hour until mid-February.

So more depressed pool prices in February and higher ancillary service costs. If we move forward to the next slide and just in a little bit more detail on the storms here in Portugal in the first half of 1st February essentially. First, as I mentioned, just highlighting the efforts made by the team. So a huge effort done to restore power and to make sure that the dams and that the flooding was limited.

The storms impacted around 6,000 kilometers of grid, damaged around 5,800 towers. We had more than 2,000 people mobilized on the ground, around 2,400 people. And as I said, we were able to restore 100% of the customers already by this week. On hydro, we continuously monitor the rainfall. And I think here it was great to see using advanced hydrological model, so we were able to proactively sort of anticipate what was coming down the road and to be able to also anticipate some of the discharges and coordinate that with the environmental authorities.

So I think there was a meaningful role in flood control. Then on the practical side with customers and communities, we have put in place schemes to ensure that payments and invoicing support for the customers impacted as well as the assistance with the solar DG reinstallations. On a more social level, we also delivered over 90 tons of essential materials, including fans, roofing tiles, parklands basically to help people protect their homes.

And we also helped people in more isolated areas get access to communications, including Starlink devices and power banks. In terms of financial impact, we're expecting that this will result in around EUR 80 million in CapEx with infrastructure to rebuild, will be partially supported by insurance. We're still evaluating additional cost and impact, and we'll update that in the first quarter results, but clearly shows increasing vulnerability that climate change is causing and the importance above all of resilient flexible systems and long-term investment in networks.

And that takes me to the next slide, where I wanted to just stress that already before these events as of last year, we're already significantly ramped up the investment to respond to the growing needs of the system. The electrification, the renewables integration, the grid resilience, gross investments for the period '26 to 2030 will reach EUR 4.1 billion compared to the EUR 2.6 billion in the '21 to '25 period. So that's a 58% increase overall in Iberia, slightly more in Portugal than in Spain, although both geographies are contributing significantly to Portugal around 66%, so almost 70% increase.

The big part of this is strengthening grid resilience. We're assuming around -- or more than EUR 500 million for grid resilience to ensure that the network is prepared for higher loads, more distributed generation and greater system complexity. And fortunately, this greater investment is underpinned by much stronger regulatory visibility, as we showed here on the right-hand side.

So as you know, the new regulatory framework sets up the 6.7% nominal pretax return for this period until 2029 in Portugal. And in Spain, the framework establishes a 6.58% return for the period out to 2031. So importantly, both framings closed as of the end of last year, giving us clarity and stability for the upcoming investment cycle. I think it's also important to note that in Portugal, the 2026 state budget clarifies and -- the conditions under which new investments in the networks are exempted from the extraordinary tax. So that supports really this incremental investment that we're doing in the networks.

Still on networks. If we move forward to the next slide, you can see that the new regulatory terms and approval plans will allow an EBITDA growth in Iberia for networks. So it grows to around over EUR 1 billion over this period. We have to consider that in this period in Portugal, there are legacy revenues that end in 2026 worth around EUR 40 million, removing that means that we'd have a normalized 2025 EBITDA of around EUR 0.89 billion and that then reaches the EUR 1.05 billion in 2028. So that's an 18% EBITDA growth for '25 to '28 with -- updated already with the new terms.

So this isn't just a one-off to 2028. This then continues to grow beyond 2028, and that's supported by the approved returns and also the investment plans that we discussed on the previous slide. So all of this gives us confidence in the continued momentum well beyond 2028 to 2030 and beyond that.

If we move on to the next slide and just talking quickly about Iberia. I think what I'd say here is that Iberia is entering a period of much stronger electricity demand growth, driven by electrification. On the left, you can see the power demand growth in 2025 versus '24. Portugal leads at 3.6%, Spain at 2.8%, which means Iberia clearly outperforming several of the European markets. And it's not just a 1-year effect. I mean obviously, we're seeing strong momentum into 2026.

So just in January, the demand was 7.9% in Portugal and 4.8% in Spain already adjusted for temperature. And going forward, we see our estimated 2% CAGR in the Iberian electricity demand over the period leading up to 2030. So demand growth should be supported overall, not just by the economy is doing well, but by more than 18 gigawatts of data center projects pipeline that have been announced or that are publicly available.

I'd have to highlight here that EDP is obviously engaging with a lot of these projects, 2 of the more advanced ones that's certainly here in Portugal are the Merlin Data Center, North of Lisbon at 180 megawatt. We had an MOU signed with them back in July of 2025. And also the Start Campus project in Sines with an MOU that we signed yesterday. And the Sines project, as you know, is expected to reach 1.2 gigawatt over the next couple of years.

And I can detail a little bit more what that means in the Q&A if you think that's appropriate. If we move forward to still to talking about Iberia. And this is a slide, which I think is also extremely important because it's not just about demand growth. It's also that Iberia combines this demand growth with structurally affordable power prices.

And that's supported by improving system fundamentals. And that's really an important advantage for customers, for electrification, for the broader competitiveness of the economy. So when there's so much talk in Europe and elsewhere about affordability and about competitiveness, Iberia has a really distinctive advantage in Europe, and I think we will benefit from that sort of on the electrification front.

On the left-hand side, you can see the evolution of the B2C electricity prices. And the key takeaway is that Portugal and Spain fit among the most affordable markets in Europe, around 17% below the European average. Going forward, at the European level, Northern Europe faces higher expected network investments that typically puts upward pressure and then user prices over time.

But by contrast, in Portugal and Spain, we have several structural elements that we think will support the affordability. One is that the historical electricity system that is expected to be fully paid by 2028. That means that there will be significant cost reductions in the tariff structure going forward. Second, there's a gradual phase out of legacy support schemes like the Feed in Tariffs in Portugal and the Recore scheme in Spain that also reduces access tariff costs. And so in Portugal, specifically, the regulator has simulated annualized reductions in the B2C reference end user tariffs from 2026 to 2030.

So that helps create room to accommodate new system needs like ancillary services, capacity mechanisms, additional investments in networks without compromising competitiveness. So I think it's -- we are able to get the best of both worlds, which is more investment, more ancillary services, more capacity mechanisms to make sure that we have a stronger, more resilient system and still have sort of annualized reductions in the end user tariffs.

Moving on to EDPR. Again, you have more detail on that yesterday. So just a quick note here. We are seeing really strong execution momentum and better visibility on the business and plan delivery. Over the last 6 months, EDPR secured 1.3 gigawatts of capacity. And on the left-hand side, you can see the main projects secured during this period. It's a combination of PPAs with utilities, global tech companies. We also have Build and Transfer agreements in the U.S. So it's really a diversified set of offtakers and structures.

And across the '26 to '28 period, we already have 2.8 gigawatts secured, and we expect to continue on securing more projects over the coming weeks and months. If we break it down year-by-year, 2026 is already 100% secured. So almost all of that under construction, a couple of projects coming under -- into construction in the very short term. So that gives us very good confidence on the 2026. '27 is already 65% secured and 2028 is at 10% secured. So that gives us roughly already 55% secured for '26 to '28. As I say, we have good visibility on additional projects that are coming down the pipeline to help us meet the rest of this project.

And with that, I'd stop here, I pass it over to Rui to go through the '25 results in more detail, and I'll come back for closing remarks. Thank you.

Thank you, Miguel, and good morning to all. So let me start with the EDP's results. Recurring EBITDA reached EUR 5.03 billion in 2025. It's up 1%, but if we exclude asset rotation gains and FX, the underlying growth was 7% year-on-year driven by strong EDPR performance in resilient network space. So looking at the recurring figures by segment, Renewables, Clients and Energy management increased by EUR 65 million year-on-year, reaching EUR 3.4 billion and all represent 69% of group EBITDA.

Within this segment, the Hydro Clients and Energy Management declined EUR 216 million year-on-year, mainly reflecting the normalization of gas sourcing conditions in Iberia versus the external environment that we have in 2024. This was more than offset by strong EDPR performance up to EUR 190 million year-on-year, reflecting 2024 record additions translating into higher generation.

On the network side, recurring EBITDA stood at EUR 1.54 billion, now representing 31% of group EBITDA. While EBITDA decreased EUR 68 million year-on-year, this is mainly explained by Brazil FX impact and the assets of capital gains, again, excluding FX and asset rotation, the underlying networks EBITDA increased 3%, supported by a positive performance in Iberia, both from a regulatory framework and reinforce operating discipline.

So finally, recurring OpEx decreased 2% year-on-year or 5% in real terms, reinforcing also the operational discipline, which I will detail in the next slide. So if you look to the OpEx, this slide highlights an important enabler of our EBITDA performance, which is sustained cost discipline.

Recurring OpEx decreased EUR 1.88 billion, trending down year-by-year, a total reduction of around EUR 160 million in '25 versus '23. Over the last 12 months, inflation was around 3%, and yet we still delivered a 2% nominal reduction in recurring OpEx. Excluding FX, OpEx is slightly below, which means that we are effectively absorbing inflation through efficiency and productivity gains.

This is translating into improved efficiency ratios. OpEx as a share of gross profit improved from 28% in '23, down to 26% in '25. Key drivers for these, EDPR is delivering efficient growth. We're reducing adjusted OpEx per megawatt by 12% year-on-year to EUR 40,000 per megawatt, this while scaling capacity, a leaner more focused workforce aligned with the company's growth priorities, digital and AI-driven initiatives to improve O&M efficiency, decision-making, customer experience. So I think the message is very clear. We are growing and investing while structurally improving the cost base. And obviously, this supports cash generation as we deliver the plan.

So now let me move to FlexGen and Clients segment. EBITDA for '25 stood at EUR 1.46 million. This is down 13% year-on-year, and this reflects the normalization versus an extraordinary 2024, but also flexibility revenues structurally increasing.

In Iberia, 2024, as you know, was impacted by extraordinary gas sourcing costs. 2025 baseload hedging price normalized from EUR 90 per megawatt hour to EUR 70 per megawatt hour. However, this was partially offset by stronger flexible generation revenues. Pumping generation increasing by 24%, pumping spreads reaching 75% over baseload prices. Hydro premium improving to 21% and CCGT generation increasing by approximately 3 terawatt hours, reflecting the system operator needs.

In Brazil, EBITDA declined from EUR 184 million to EUR 156 million, mainly due to ForEx impact. So overall, while the headline EBITDA reflects normalization, the structural uplift in flexibility was very solid with EUR 0.3 billion contribution to overall group.

So now we move to Slide 15, turning to EDPR, which we also commented on yesterday's call, recurring underlying EBITDA ex ForEx grew by 27% year-on-year. This growth, very robust growth reflect a significant step-up in the generation following the record capacity additions in '24, offsetting worse renewable sources and also normalization of selling prices primarily in Europe.

Overall, EDPR continues to deliver strong operational momentum and translate to capacity growth into earnings growth. Now looking at the Networks EBITDA on Slide 16. Recurring EBITDA reached EUR 1.54 billion in 2025, representing a 4% decrease year-on-year, but this is primarily explained by devaluation of the Brazilian real. The absence of asset rotation gains in Brazil, which amounted to EUR 71 million in '24, combination of deconsolidation of transmission assets, the decrease on the distribution company's residual value update and transmission inflation update.

But this is compensated overall by improving operating performance. Again, excluding FX and asset rotation, underlying EBITDA increased 3%. It has an important contribution of EUR 56 million in EBITDA from Iberia, the following inflation update in Portugal and RAB growth overall.

So all in all, the network segment is showing a resilient operational performance with a very supportive regulatory farmwork as Miguel just described going into the future. On financial costs, following slide. Net financial costs increased from EUR 865 million to EUR 989 million. There are 2 mains drivers to this. The first one is that net interest costs, which add about EUR 54 million. They reflect higher average debt and a higher cost of debt in Brazilian reals, where the average cost rose from 11.7% to 14.1%, reflecting the macro conditions in the country.

Excluding Brazil, the average cost of debt reduced to 3.3%. Second, lower capitalizations and other effects contributing with an addition EUR 69 million. This is largely explained by the EUR 1.2 billion reduction in work in progress as projects enter the operation, and therefore, reducing capitalizing interest. If you look to the right-hand side, average nominal debt by currency remains broadly stable year-on-year.

The portfolio continues to be predominantly euro-denominated with 64%, followed by U.S. dollar, 16%; and Brazilian real at 15%. Finally, in terms of recent financing activity, we issued a 6-year senior bond EUR 650 million in January with a 3.25% coupon. So this confirms the competitive access of EDP to funding in the debt markets.

Now let's move to the cash flow on the following slide. Organic cash flow reached EUR 3.3 billion, up EUR 0.5 billion year-on-year, driven by EBITDA improvement in working capital management. Net interest paid amounts to EUR 0.8 billion, partially offsetting the operating improvement. And on investments, gross investments totaled EUR 3.9 billion, mainly EUR 2.4 EDPR and EUR 1.1 billion in Electricity Networks, plus EUR 0.4 billion in FlexGen and Clients.

These gross investments were funded through EUR 1.6 billion of asset rotation and EUR 0.8 billion of Tax Equity proceeds. There are also EUR 0.5 billion of other impacts, mainly related with payments to fixed asset suppliers. So as a result, a total of EUR 1.7 billion of net cash investments, of which close to 50% in electricity networks and around 40% in EDPR.

Now on Slide 19, net debt stood at EUR 15.4 billion, down from EUR 15.6 billion at the end of 2024 and outperforming EUR 16 billion guidance that we gave to the market. The key drivers for the change in net debt includes EUR 3.3 billion of organic cash flow. Obviously, the EUR 0.8 billion of dividend annual payment and the EUR 100 million share buyback throughout '25. The EUR 1.7 billion of net cash investments that I just explained, also EUR 0.8 billion of regulatory receivables and about EUR 0.3 billion from FX and other, mostly related to U.S. denominated debt.

So as a result of cash flow management, balance sheet discipline and obviously, very strong operational cash flow, we do have solid credit metrics with 20.9% FFO net debt and 3.3x net debt EBITDA.

Now on the net profit. Net profit reached EUR 1.28 billion. That's a reduction of 8% year-on-year. And this is mostly reflected or driven by the higher EBITDA, EUR 74 million, higher D&A and provisions, increasing EUR 60 million year-on-year, reflecting the investment path, higher net financial costs due to higher cost of debt and lower capitalizations, slightly higher income taxes and noncontrolling interests.

Excluding asset rotation gains and the ForEx, the underlying net profit increased 3%, confirming a very solid operational performance, as we just described. Reported terms, net profit reached EUR 1.15 billion, including the negative impact of EUR 130 million, mostly related with some nonrecurring items in EDPR. Year-on-year reported net profit, therefore, increased 44% also driven by EDPR performance rebound compared to a negative 2024.

This improvement in net profit supports our proposal to increase the dividend to EUR 0.205 per share, up 2.5% versus the guidance to be paid in 2026, obviously subject to the approval at the shareholders' meeting. And now let me just address a topic, which I think is relevant regarding the net income sensitivity to power prices versus what we presented at the CMD.

So on this slide our -- just again to remind everybody. So our exposure to energy market is well diversified. And as you know, we have a very active energy management. The portfolio is predominantly long-term contracted. This provides strong cash flow visibility and obviously reduces short-term impact from price volatility.

In Iberia and Brazil, we have a structural short position in generation, which hedged through our supply business, so partially offsetting wholesale price movements. At the CMD, we disclosed that the simultaneous 5 years per megawatt hour movement in all markets, would imply approximately EUR 60 million impact on 2028 net income.

Since then, Iberia 2028 forwards have declined around EUR 10 per mega hour. But on the other hand, U.S. and Brazil forward curves are moving upwards. So this portfolio diversification plus an active energy management have actually reduced the sensitivity. So today, the same 5 years per megawatt hour movement across all markets in the same direction would imply approximately EUR 45 million impact on net income 2028 again versus the EUR 60 million that we presented at the CMD, so a reduction on the sensitivity. The merchant exposure split is about 65% Europe, 20% Brazil and 15% North America. So with this, I would hand over to Miguel for final remarks. Thank you.

Thank you, Rui. As you say, I think to push on the sensitivity to power price is an important point to note because I know there are questions on that. Anyway, if we move forward to the final slide, just before we open it up for Q&A.

So summarizing the 2025 results and how we're seeing 2026 and beyond. First in relation to '25, I think it's undeniable that it was very strong execution and delivery of what we had promised. Across the group, we delivered ahead of guidance, and we're seeing a clear structural change in FlexGen and Clients with the value flexibility coming through very strongly.

At the same time, EDPR also improved its performance, has its continued focus on A-rated markets. It's got better visibility on the business plan execution. In networks, we have significantly improved visibility with the regulatory periods closed in Portugal and Spain, and we also advanced in Brazil with the extension of the concessions.

And importantly, all of this was delivered with financial discipline and increased efficiency in Sweden. Spoke about, particularly on the cost side, but also on the debt side, supporting the maintenance of sound credit ratios.

Second, looking at the 2026 guidance. We expect to recurring EBITDA of around EUR 4.9 billion to EUR 5 billion, and this is supported by the balanced contribution across the portfolio. We have the networks around EUR 1.5 billion to EUR 1.6 billion. And EBITDA at around EUR 2.1 billion as mentioned yesterday. FlexGen and Clients is around EUR 1.3 billion to EUR 1.4 billion, and we reaffirm our recurring net profit of EUR 1.2 billion to EUR 1.3 billion.

On the 2028 targets. And over the course of the next couple of years, we continue to expect around EUR 12 billion of gross investments. And I say this will be funded with discipline and supported by around EUR 6 billion of asset rotations and disposals. We'll keep our balance sheet targets unchanged. So we're targeting FFO over net debt of around 22%. And in terms of earnings delivery, we remain committed to the EUR 5.2 billion of recurring EBITDA and the EUR 1.3 billion of recurring net profit by 2028. So overall, this is consistent. We executed strongly in 2025. We have very clear visibility for '26, and we are reiterating our 2028 guidance. With that, happy to turn it over to Q&A and back to you, Miguel. Thanks.

We will begin by addressing the questions submitted in writing. After that, we will move on to the live questions by phone. [Operator Instructions]

So we'll start with the written questions.

And we have for first question from analyst at RBC and the other analysts GB Capital, Deutsche Bank, CaixaBank regarding the guidance for 2026 that we provide. So we are guiding stable EBITDA versus what we present at CMD, while at EDPR, there was a slight revision. So if we can explain this in detail, this better guidance.

Sure. So as I mentioned, I think 2026 we're very comfortable with it. I mean a couple of points that have improved since the Capital Markets Day last November. The regulated rate of return for the distribution in Portugal was better than the initial proposal. So that was an upside.

The callback was suspended as of December. And previously, we're assuming that we will have that over the next couple of years. So that's also positive. January and February saw obviously very strong hydro inflows. And I showed you the numbers in terms of how the reservoirs are, they're sort of all-time highs. So full capacity there. So good visibility also in the next couple of months in terms of hydro.

On slightly negative low wholesale prices in February and higher than normal ancillary services in terms of supply, also some transmission grid restrictions due to the storms, still be fixed. So that's on the negative side. But we are expecting these to decline over the next couple of months and also the wholesale prices in Iberia to normalize again, also over the next couple of months.

On ForEx and FX, we have a slightly lower dollar versus the euro, as we commented yesterday on the EDPR level. But on the other hand, we're seeing a positive rebound of the Brazilian real. So we're now seeing BRL 6 per euro versus our business plan assumptions of BRL 6.6 per euro for 2026. So quite a few positives, a couple of negatives, but all in, quite frankly, we feel very confident with the 2026 guidance.

Yes. We have then a second question about net debt. So what contributed to the positive deviation of our net debt figure in 2025, so the EUR 15.4 billion versus the EUR 16 billion guidance that we have provided. And also a question around update for net debt expected evolution over 2026.

Thank you, Miguel. So first of all, Q4 was very good in terms of operational call, strong contribution from the integrated segment in Iberia. So that's the first one. Obviously, there is some impact from working capital that we will see then reverting in the -- now in 2026. So what I would say is that, first of all, 2026 we are looking at around EUR 16 billion of net debt towards the year-end. Typically, as you know, we have, during the first half rise in net debt coming either from this working capital. Also, bear in mind that we have the Greek transaction, but also dividend payments in the second quarter. And then as we start having the -- also the cash in from asset rotation tax equity proceeds towards the end of the year, it tends to go down again. So that's why we are looking at around EUR 16 billion by the 2026.

We have then a question around the news of yesterday regarding memorandum of understanding with Start Campus. What does it mean for EDP and this engagement? So questions from Alex from Bank of America, Fernando, CRBC.

So it's an interesting step. I think it's one of many we've been taking. It's -- essentially the MOU just an interest of both parties to explore the synergies between their activities. I mean, obviously, we as experts on the energy side and them on the infrastructure side. I'd say there's actually 3 parts to the MOU. I think the first is for EDP to be considered the strategic energy partner to the Start Campus projects, whether it's through power supply as is or through additionality of projects, sort of the Start Campus infrastructure to be built out.

The second is just synergy between the data campus center or project and the infrastructure that we already manage, for example, in the Sines power plant. So for example, like on the water side in terms of cooling. And the third is really potential collaboration for other data centers in Portugal that campus might want to develop, leveraging on EDP's assets and capabilities of land and generation assets that we own in Portugal and so explore potential collaborations.

I think above all, it's opening up the possibility for creating additional value from our existing assets and operations as well as getting additional visibility on future demand volumes, which could support the development of a sizable pipeline of renewable energy projects as we've discussed in the past. So overall, it's just, I think, a step, one of many that we expect to take in this area.

Then also a question from Pedro Alves, Caixa Bank regarding the effective tax rate evolution. So from the 28% in 2025 and also explaining where do we see -- so explaining the 28% and how we see the evolution for '26.

So 2025, 28% tax rate was primarily driven by the fact that we had lower asset rotation gains and some costs that are not deductible -- tax deductible and that was basically impacted the rate. But if you think about 2026, you could consider as sort of low 20s. And this is because we expect again to increase the capital, the asset rotation gains from the transactions and also the declining tax rate in Portugal, which as you know will be dropping by 1 percentage point every year until 2028. So '26 around the low 20s.

We have then a question from Pedro from CaixaBank regarding, if we can explain a little bit better the inflation update in terms of real, in terms of the impact in our EBITDA in Brazilian networks in 2025? And how do we see it evolving for '26, '28?

So in '25, we had the extension of the concession in Espirito Santo for another 30 years. And we expect to have that extension as well for Sao Paulo and that's been sort of approved by the regulator. We're just pending the final signature in the next couple of weeks. So there's a positive impact from the inflation update of this residual value, which existed in '25, which becomes immaterial from 2026 onwards.

To be specific, in '25 in the Electricity Networks in Brazil, we had around EUR 70 million of EBITDA from inflation updates in both the distribution companies and the transmission companies. And we had around EUR 20 million from EBITDA from the 2 transmission lines that we then sold in the fourth quarter of 2025. So the impact of this inflation update in the networks has declined in 2025 already versus '24, but in '23 -- in '26, it will be immaterial. I think it's important to note the following. We are under discussion with ANEEL and which is the regulator in Brazil. We and the other distributors, but we are more advanced in this process because we're the first ones to have our concessions renewed, but to change the recognition of investments in the company's asset base.

As I mentioned, I think, at the Capital Markets Day, and I'll just reiterate, they're currently only recognized every 5 years with tariff provisions. So there's still no conclusion, but we see a positive sign that at least the regulator is willing to consider this and that would allow us to have this intra-cycle recognition of investments rather than having to wait for the end of the regulatory period. So that's work in progress. We're certainly very committed to it, and we think others will be as well as soon as they start seeing our concessions being renewed as well.

We have a question from Jorge Alonso from Bernstein. Also, regarding the current power price environment, how confident are we to maintain our 2028 guidance. And regarding the assumptions that we provided at CMD and the current forwards as we see the guidance for '28?

So as I also briefly explained with that slide on sensitivity, I mean, effectively, we do have, as you know, short positions in both -- structurally short positions in generation in both Iberia and Brazil. This we hedge primarily through our clients' business, but we also have a very active energy management. And then on the rest of the other markets, as you know, we have from an EDPR standpoint, 85% is actually long-term contracted. On this, basically, what we have done since the CMD is obviously to increase the hedging. So we have been working actively on the hedging on the energy management.

So for 2026, 85% of the volumes are hedged at a price which is north of EUR 64 per megawatt hour. For '27, '28, we have about 50% of baseload volumes hedged above the current forward prices. So obviously, this gives us stability and predictability versus the changes in the forward curves. But also on the other markets, U.S., the exposure is mostly concentrated in PJM and MISO. We have -- we are seeing forward prices going up by around $5 per megawatt hour.

Also in Brazil, where we have lower exposure, but still relevant, the PLD has been rising significantly since the CMD. So that's why, all in all, again, this portfolio diversification, the very active energy management is giving us confidence towards the 2028 guidance. So more importantly, as I said, we actually reduced the portfolio exposure to these price movements. So at the CMD in November, we were estimating around EUR 60 million. And now we are looking at a substantially lower number.

We have now question Manuel Palomo, BNP. What is your take about increasing concerns about affordability and the approval of the energy decree to reduce price by the Italian government and if we could expect any contagion effect?

Well, I think this is an important point just to take a step back. I think we are all focused on competitiveness of the economy. And what's good for the overall economy is good for the companies. As I mentioned, most of our exposure is in Iberia, and we specifically put up a slide, which shows that in Iberia, Portugal and Spain, we already have some of the lowest prices in Europe. And they are expected to even trend lower as some of the existing costs in the system come to an end, like the tariff deficit payments, which are being amortized and like the feed-in tariffs, for example.

So the trend is -- it's already much lower than the rest of Europe and trending lower. So the affordability and competitiveness, I think, in Iberia is actually a positive. And it means they can take additional investment, they can take sort of some of the ancillary services without impacting the affordability. On the Italian case, I think it still has to go through the, let's say, finally prolongated, and I'm sure you have a lot of discussion at the European level. Conceptually, sort of understands, but disagree with what it's doing. There's been a lot of discussion already 2 years ago about market design, about how to make things -- make the wholesale market work differently. And ultimately, it always comes back to the marginal pricing system is the system that works best. CO2 has to be internalized and that continues to be a key priority for Europe. And so this is something to watch, but we don't expect it to have any material impact in Iberia.

So we move now to the questions on the phone, and we start for the first question that comes from the line of Fernando from Royal Bank of Canada. Fernando, please go ahead.

I'm curious because I am seeing a significant increase in CCGT's output in Portugal and this despite the strong hydro and wind output so far in the year, particularly in February. So my question here is this is explained by the elimination of the Portuguese clawback? And if this could be a potential upside to your estimated positive impact, I think you mentioned EUR 25 million for 2026.

Excellent. So you're right, CCGT output has increased. It's more related to -- so the ancillary services means the system operators wanted to keep these working sort of as backup as the system. So it's already this trend, as you know, following the blackout of last year. It then started to decrease. Now it's increased significantly because of some specific issues here in Portugal relating to all the storms that happened and sort of the disruption to the network. I wouldn't say it's an upside, probably it's a downside in the sense that higher ancillary costs would have a knock-on impact if they're not passed on to the suppliers. So it's something to watch. We expect this to normalize over the next couple of weeks, but it's basically the CCGTs working over time basically over the month of February.

And we have a final question from the line of Alberto Gandolfi from Goldman Sachs. Alberto, please go ahead.

So my first question is, I wanted to ask you about Brazil. Is it a region where you think you might be growing exposure? There are potentially assets for sale. You're happy with the status quo? Or is it something that given the better returns in Portugal and the clarity in Spanish networks, you might think about deemphasizing a little bit. The second question is a clarification on Slide 21. Am I right in saying that the EUR 45 million impact on net income is therefore adjusted for 50% hedging.

So in other words, without hedging, do we just double the EUR 45 million? Or is it -- so can you maybe help us on that a little bit? And last one, on this data center opportunity, it seems you're very active in this booming Portuguese market. Can I ask you if you are planning to build potentially incremental capacity if you were to sign a PPA there? Or would it be from existing? And would it be done at EDP or EDPR level if it were to happen?

So good questions. I think in relation to Brazil, listen, we have a long track record in Brazil over 30 years. I think we have a great business there. We continue to look at opportunities for growth there to the extent that it makes sense within the overall Brazilian exposure that cap that we've always talked about. Obviously, we continue to see how best to allocate capital. And so we've sold assets in Brazil in the past. I mean, even recently, we did the asset rotation of the transmission lines. We sold the hydro. So we will continue to adjust and fine-tune our exposure to Brazil and obviously, reallocate capital to where we think is best at any particular time, whether it's Europe or the U.S. at the moment.

But I'd say that we like having this diversification of geographies because it does allow us to allocate capital quite well, depending on the different cycles in the different geographies. On the third question, and then I'll let take the second question. On the third question, so essentially, what we're seeing is that there's a certain amount of power that can probably be supplied just as is because there's sufficient reserve margin in the system to be able to supply these data centers without necessarily having to go and build new power plants. And so that's a positive, I think, for the system. We just need to make sure the networks are there, but that's essentially the key issue because as long as there's reserve margin, you can feed it.

If the demand then starts getting above a certain level and if you start having to Start Campus and Merlin and others, then yes, then we need to think about incremental capacity of different technologies. And then depending on what that incremental technology is, if it's renewables, it will definitely be done through EDP Renewables, which as you know has the exclusivity for renewable development, well, certainly in Nigeria, but elsewhere in the world as well. If it's, for example, if it was to be like a thermal technology, then obviously it would be, for example, with EDP or if it was hydro, for example, would be through EDP.

But -- so there's a certain amount that can be done with existing capacity -- supplied with existing capacity and then above that level, then you start getting into having to build incremental capacity, and we're obviously looking at that and thinking about when that would come down the pipeline. But it will depend on also how the demand is evolving.

Alberto, so on the second one, I mean, this is also the result of different diversification effects. So looking at the portfolio as a whole, through the different trends, again, the active management that we run on every single market. This is how we are bringing down the sensitivity from the EUR 60 million to the EUR 45 million. And again, just bearing in mind, this is -- if all the markets would move in the same direction to preserve the plan. So no, you cannot sort of double the sensitivity if the hedging was coming down to 0. It's a bit more complex than that.

So I'll pass now back to our CFO for final remarks.

So final remarks. I just reiterate, again, 2025 was a great year for EDP. I think we delivered and delivered solidly on all of the different metrics, whether it was on EBITDA, net income, net debt, the credit ratios, improving the dividend. So a really solid, solid year for '25. And I think we come into 2026 also on a good footing with record high hydro levels and reserves with improved regulation, improved perspectives in both Spain and the other geographies we're in like the U.S. So really, I think we are very confident also on the guidance for 2026. And I think that's one of the messages that I really wanted to reiterate.

And going forward, we continue to see great projects coming down the pipeline, certainly on the EDPR side, which makes us feel confident in relation to 2028. I mean, obviously, we'll go on monitoring this issues around the power prices. But as Rui has mentioned, we are relatively protected in relation to that. And we think that is a discussion that will play out over the next couple of months in Europe. But at the end of the day, we're all aligned that competitiveness is important, but it's also important to keep the stability of the rules and make sure that there's space to invest or for investors to the capital allocation and feel safe about their investments, whether it's on the network side or on the generation side.

So listen, good '25, good prospects for 2026 and reiterating the guidance with confidence and looking forward also to the next couple of years, reiterating also our 2028 guidance. With that, thank you very much. Look forward to seeing you soon and keep in touch.

Good morning, ladies and gentlemen. Welcome to all of you both here in the room and virtually that are following us in the webcast. We have today here this capital markets presentation 2025 for EDP in which we'll start with the presentation by our CEO, Miguel Stilwell d'Andrade of our region and commitments and our platforms, followed by the presentation of our financials by our CFO, Rui Teixeira and then closing with the closing remarks by our CEO [Operator Instructions]

Without further ado, I'll pass now the floor to our CEO, Miguel Stilwell d'Andrade.

Thank you, Miguel. And good morning, everyone. It's really great to see so many of you in person. I know we've spoken a lot over the last couple of quarters. or sometimes on one-on-ones, but it's actually great to finally be here and to be able to talk about EDP and about EDP renewables.

We're going to be talking about 2028, but we're going to be talking about a lot more than 2028 and how we see the company develop over the next couple of years. And I think it's a particularly good time to be talking about EDP and EDP renewables. I think over the first sort of 6 months of the year, a lot of dark clouds in terms of what was going to happen to renewals in the U.S. What was going to be the framework for the regulatory or the distribution in Portugal and Spain, what was happening with the blackout and what was happening sort of in terms of ancillary services. And I think today, we can confidently say that we have much more clarity on the renewals in the U.S. We have much more clarity on the FlexGen and on the value -- the structural value of that. And we have much more clarity on the framework for the distribution in Portugal and also in Spain. So with that, I think we have the conditions to actually be able to talk credibly about what we see for 2028, but also talk very much about the trends that we see over the next couple of years.

And with that, I'd start by talking about some of those key trends. I think one of the first things to note is really this incredible growth in demand that we're seeing. And this is not just PowerPoint. I'll just give you one specific data point, which at least for me, really impressed me. There is a data center being built in Portugal, which is about 1.2 gigawatts in 6 phases if it gets all built out. Just that 1 data center could represent 10 terawatt hours of energy. That's 20% of Portugal's energy demand. That's 1 data center. So I think I learned about it, I mean I was just blown away. 1.2 gigawatts, 20% of Portugal demand, 1 data center. And this is happening in the world over. We're seeing that in the U.S. We're seeing that in Portugal. We're seeing that in Spain. We're seeing that pretty much everywhere. So if this builds up, we will see this incredible amount of demand that will drive electrification. It will drive the build-out of renewals over the next couple of years.

But we're also seeing other things. We're seeing EVs. We're seeing electrification, heating, pumping. So there does seem to be -- and again, a specific data point, we're actually seeing demand in Portugal and Spain after many, many years of stagnant growth actually growing to 3% plus, that's concrete data. That's not PowerPoint. That's not something that we're reading about. And that excludes the temperature effects and others. So concrete demand, we're seeing it. Renewables, we continue to believe that they are the most cheapest, certainly fastest, most scalable technologies that you can deploy. And again, I don't think that's very much debated. I know there's a lot of talk about nuclear. We're quite agnostic, to be honest, in relation to technology. We've had coal. We've had nuclear. We have a small stake. We have gas. We have renewables. So objectively, we believe renewables continues to be the fastest to deploy, the cheapest, most affordable and reliable. And we see that again 1 to 3 years to deploy in many of the different markets. I mean if you're trying to get new gas turbines built, for example, in the U.S., I think we all know that it still takes quite a number of years. They're not increasing manufacturing capacity.

And in terms of nuclear again, 2035 and beyond, it's not going to solve the short, medium-term issue around energy demand. Then we can talk about flexibility. I mean as you have more renewals coming into the mix, you're going to have a greater need for flexibility. And so whether that's batteries, whether that's pump storage or we have an Iberia again. I think that's the source of increasing value, and I'll show in a couple of slides, that value, how it's increased over the last couple of years and why we believe that, that's a structural trend that will continue going forward. And then that's driving networks investments as well. And again, this is just a macro trend, I'll then show you specifically for Portugal and Spain.

In particular, for Portugal, this is going to be driven by demand, but very much about modernization of the networks. And there are a couple of data points. But -- and I'll come back to this -- again, 55% of the transformers in Portugal, high and medium voltage, will be over 40 years old, which is very typical useful life by 2030, over half. There was a huge electrification back in the '70s and '80s, and that wave of investment is coming. And that's a trend that will carry well beyond 2030 until 2040. So again, a massive wave of investment that's necessary in networks. Certainly in Iberia, which is where we have a big part of our networks.

Regulation. I talked about regulation, the U.S. PTCs, ITCs, we know that, that's locked in a lot of stress in the first half of the year, I think for investors, for us about what would happen there. But we have visibility on ITCs. We have visibility on the PTCs. We have visibility on the IRS guidance. So I think we have a good road map now in terms of growth for the next couple of years. In Europe, there's been a lot of movement there, continuing to incentivize CFTs, continue in certified PPAs, action plan also in terms of network investments, the actual recognition that you should have capacity payments in the mix. That's something that's been worked on in Spain and also Portugal that will have an impact also on our portfolio. Again, capacity payments have been talked about for many years. that's now becoming a reality. We expect that to happen already in 2026 for Spain and in '27 for Portugal.

And then Brazil, I think one of the key things to highlight in Brazil was the extension of our concessions. Our 2 distribution concessions we now have visibility for the next 30 years. That was a question mark we had last year and the beginning of this year. That's now signed, that's now agreed. There's no doubt about that. And I think that was also a major step in terms of visibility. So wrapping up in terms of trends, growth in demand, I think that's undeniable. Renewables continues to be the fastest, cheapest source of generation to meet that demand. More flexibility in increasing the value of our generation portfolio in Iberia. Networks investment, regulatory tailwinds, I think we're all set up. And then EDP, leader renewables, resilient integrated position in Iberia and really extracting maximum value from that and then the strong electricity networks business going forward. So I think it's a really strong story. I think it's a particularly good moment in time to really capture that growth going forward. And these are trends, again, our business plan goes to 2028. But I think these are macro trends that last well beyond 2028.

Okay. Let's get into the commitments. So what are we committing to? I know we've already put out the presentation. So some of these numbers you'll know. But 3 key pillars: focused growth, optimizing the business and having a distinctive resilient portfolio. On the investment side, EUR 12 billion of investment, mostly focused on networks in Iberia and U.S. renewables. Net EUR 7 billion, we are doing asset rotations and we are also doing disposals of about EUR 1 billion to refocus on more core markets. We are seeing an uptick in returns, and I'll talk a little bit more about that. But so the investments that we do in renewals, we expect to have higher returns than in the past. We're keeping a very strong discipline on efficiency, and so 26% OpEx over gross profit. I think that's best in class, frankly, but we will keep in that -- be keeping that sort of a commitment.

A very important thing, a EUR 1 billion net debt reduction. This doesn't have any tax equity effects or any others. This is a real EUR 1 billion net debt reduction. And with all of this, you end up with an increase in EBITDA, an increase in earnings and decrease in net debt. So we are positioning our balance sheet for 2028 to capture that optionality going forward. We're building in optionality. We're building in headroom. We're taking a prudent approach to make sure that all the projects that we approved are bulletproof from a returns perspective, from a risk perspective. So when we take those investment decisions we are comfortable. We've derisked the supply chain and that we can capture that going forward. And so this headroom will allow us and will give us that flexibility going forward. All this powered by an extremely talented team in this room, and I think I'm standing here, just representing sort of 12,000 people at EDP, but also the leadership team, which is really going to help drive this and leveraging also on all the digital and AI applications, which I think is really making a huge difference, translating into efficiency and much better availability also of our assets.

Going into a little bit more depth now. So the EUR 12 billion of investment. Interest in fact, 90% in A-rated markets. Portugal is now A-rated. Last time we spoke back in '23, it was BBB. It's had a remarkable improvement. I think we will talk more about that, but it's now at around 90% debt to GDP. It's got the lowest spreads to the German bond ever. So it's now a solid A rating together with the other countries like the U.S., like Spain, like many others, including Singapore. We're keeping the around EUR 5 billion of asset rotation, mostly renewables, a little bit of transmission in Brazil. Net investment networks increased from 25% to 45% on a net basis. and renewables increasing from 50% to 60% in the U.S. So there is this greater focus on networks and on U.S. renewables. And as I say, with the optionality to accelerate throughout the plan and beyond. I think that's really a key thing.

Returns. We're seeing returns relatively stable in Europe. We're seeing them increasing in the U.S. Again, many data points we can give you, and we've got [indiscernible] here also the CEO of the U.S. can talk about that in more detail, but we really are seeing increasing prices and increasing returns on the investments on renewables in the U.S. But also on the network side, is just the regulatory improvements that we're seeing. We think there's still potential for more. That's what we're assuming. But very importantly, particularly in the case of Portugal is that we used to have the extraordinary tax on networks as well, which was a big reduction, if you want, in terms of the profitability of the networks. That is now exempt. So networks in Portugal are exempt from the extraordinary tax. That's an uplift in return of about 0.85% IRR just on that basis as well. So that's a big improvement certainly on the networks. And not even talking about other things like the incentives and regulatory parameters that I can get into in a bit more detail.

Asset rotation, this is something, I think, that has distinguished us over the years. We've done already 35 transactions, EUR 13 billion of proceeds, EUR 3 billion of cumulative gains more than 8 gigawatts of capacity rotated. Every year, we get asked this. Every year, there's some skepticism. Are you guys going to be able to do it. And every year, we have delivered. Every year, we have delivered on the asset rotations. We continue to see great demand for our assets, and we continue to see great multiples for assets. I mean, even this morning, you were asking about the capital gains in our French portfolio. Yes, it's true. Great capital gains. Great multiples. It's true these are scarce assets and people continue to want to buy on it.

So that -- I mean, if you look at our U.S. rotation, our asset rotation, what we call our Pioneer portfolio, 1.6 gigawatts. We sold 49% common equity, no structured equity, fancy structures, no. Straight common equity, great multiple, great partner. So that's going to drive our asset rotation going forward of around EUR 5 billion and then of around EUR 200 million of asset rotation gains per year. Efficiency. Listen, I think this is something that some of you have to comment on. We've managed to actually bring down nominal costs as we drive growth. We're increasing megawatts. We're increasing megawatts, we're increasing RAB and yet we're driving down costs. As I say, bringing down the OpEx of gross profit, increasing the megawatts in the RAB. And we're doing this by staying focused. We reorganized ourselves. We took out a lot of duplications. We took out a lot of redundancies. We've been focusing very much on digital automation. We've really been going deep on that to make sure that we can strip out all the costs, leveraging on those back offices to drive costs.

We know that this is a competitive business. We have the scale we have, and we need to be better and faster and more productive than others. And so that's been a big part of our drive as well. ESG. I know this is not a -- it's a forbidden word in some places nowadays, but this goes in cycles. So I don't think we've abandoned ESG on the contrary. I think we're leading. Still leading on the ESG side. I just call highlight a couple of points. Revenues from coal, pretty much 0. We're just waiting for final permission from the Spanish government to decommission some plants that we sold the same, we closed Sines, we converted [indiscernible], which is a major coal plant to gas and very profitably. So coal phasing out renewable generation, more than 90% emissions intensity. I mean, when I saw these numbers, I myself was surprised just how far we've come in terms of reducing emissions intensity in our portfolio. So committed still to net 0 by 2040 and continue to going down that path.

In terms of our other commitments, climate adaptation, communities, biodiversity, supply chain, making sure we comply with the ESG standards safety and leadership diversity. So we're keeping our ESG commitments. We're reinforcing them. We continue to think that it's an important part in value for the business and for the company going forward. Overall, in terms of our results, EBITDA. A big part of it is still coming from Europe. Obviously, North America increasing from 20% to 30%. As I said earlier, 80% in A-rated markets. 30% the U.S., 30% electricity networks. A big part of it is regulated and long-term contracted, part of it merchants, and this will allow us to reprice going forward. I'll come back to that, particularly in the U.S. But that's basically how our portfolio looks overall.

Net debt, strong commitment to the BBB. We maintain that. We're seeing a decrease or improvement in the ratios. Lot of organic cash flow. We have seen that in our results for the third quarter. We're having record organic cash flow that's important, keeping the low-risk business and the absolute net reduction over this period as we also increase earnings. So overall, in summary, in terms of the commitments, earnings growth, slightly better quality as well, I think. I mean, back in 2019, we had a higher percentage of asset rotation gains. We still have some asset rotation gains but they're going to be a smaller percentage. So increasing earnings, better quality, increasing dividends, stable scrip dividend offered EDPR, keeping our payout ratio between 60% to 70%, so towards the higher end, but having that increase in dividend also to $0.21 over the period.

So that's it in terms of commitments. Now let's talk about the platform, and I'll go in a little bit deeper on each of these platforms. The first one I'll talk about is the networks business. Again, many of you know, and you've followed us for many years. Networks business, we basically manage the high, medium and low voltage networks business in Portugal. We also have the networks up in the north of Spain, [indiscernible], then we have networks in [indiscernible] states in Brazil, and also Sao Paulo, Brazil. So about EUR 7 billion of RAB and a recurring EBITDA of around EUR 1.5 billion. Continue to work on efficiency. Obviously, the distribution business efficiency is absolutely critical, together with an improvement in quality of service. So this is what we've done so far. We've improved quality of service and improved efficiency. We are good managers of our distribution concessions. We got the 30-year extension. We're the first company to get the 30-year extension of the concessions in Brazil. Why? Because we delivered on quality of service, on investment and on efficiency. We delivered on the criteria.

So why wouldn't you extend the concession if you're doing a good job in managing it. And that's what we did. And we did it by leveraging on technology, by leveraging on the people and making sure we are managing well those concessions. Investments, around EUR 3.6 billion of investment over this period. This is already based on improved investment plans, so approved by the regulators. RAB increasing over the course of this period, EBITDA also increasing. We can go in a little bit more depth there. EBITDA in 2025 in Brazil have some effects that have to do with the extension of the Brazil. Most of this already locked in. So the regulatory context, as you know, in Portugal will be closed on the 15th of December. We're a couple of weeks away, but we already have a first proposal. That will represent about EUR 1.7 billion of gross investments over this period. Spain ongoing discussion. Many of you are following that around what is the regulatory context there. But one way or the other, it will be closed in the next couple of weeks serving by year-end, and we've got about EUR 0.6 billion there over the course of this period. And then in Brazil, at least for [indiscernible] already locked in until 2030 and for Sao Paulo.

At least the return on RAB is already fixed for this next period. And so that's also helping us define what are the returns. Overall, what you see is around a 10.5% return on equity for the distribution business sort of as the weighted average of these different businesses. We are assuming versus the current proposals, a slight increase on the returns still versus where they are, at least in Portugal and Spain. And I'll just talk about that in a second.

On the investment side, I just wanted to pause here just a little bit on the slide because I think it's an important one. investments in Iberia is going to be driven partially by demand. But even if you ignore the demand, this is what I was talking about earlier. This is the profile of the transformers in Portugal, their useful life. If you see here, there's a huge jump from 26 to 30, and it jumps even more from 31 to 35. This is the end of the useful life of most of these transformers. This means that this wave that we're seeing of increased investment in Portugal is going to continue well into 2040 because these assets need to be substitutive, they need to be modernized, they need to be replaced. And so this will drive this investment well over the next 15 years. So this is not predicated just on demand. This is driven very much by modernization. And I think that's what gives us that long-term visibility, which is a break from the past. It's true we weren't growing in Portugal because there wasn't a lot of need, but also the returns weren't there. I think the government and the regulators have recognized that they need to incentivize greater returns on the distribution, and we have the prospects for that over the next couple of years.

In terms of returns, so we're seeing, as I said, increased investments in Portugal, low voltage and the high medium voltage. This is already approved by the regulators. So we have pretty good visibility on this. In Spain as well, we can then get into that. But essentially, there is a tap on investment that's been increased. We may take advantage of that to a certain extent. But then in returns, as you know, in Spain, you've got -- it's been revised up slightly to 6.58. Maybe it'll go up a little bit further. It would be great. In Portugal, the first proposal was 6.33. We think it will still go up further. We're advocating for that. We think there are methodological issues with the calculation, which would allow us to still hope for a higher return. We'll know that on the 15th of December. But in any case, we believe that that's going to be the case. Importantly, there are add-ons on top of these returns in terms of the incentives, around 100 to 200 basis points, whether it's because you've been in the TOTEX or the efficiency or the quality of service or the improvement in losses. There are additional add-ons in terms of returns on the distribution in both Portugal and Spain.

The other thing to highlight, which is pretty good to Portugal versus Spain is that the returns are indexed to the bonds, which means there is some derisking of that. So if the yields were to go up, the returns will go up, so it go down, they go down. But basically, what's important is the spread stays relatively constant. So there's some derisking of the returns in that sense. In terms of Brazil, so as I mentioned, I think the key thing to highlight here is the extension, which gives us a long sort of road ahead in terms of managing that. The rate of return, as I mentioned, 6 for [indiscernible], already 6 for Sao Paulo as well. The phone already signed this one expected to be signed before the end of the year, but we've already got the approval from the regulator. And that will drive -- help us drive this sustained growth on the distribution side.

On the transmission, we also continue to see good opportunities coming up. And as you know, in Brazil, there's a very regular auctions sort of every 6 months, 12 months, of transmission lines. We just won another small lot recently with good returns. And so this is a repeated game. It means you can stay disciplined, and you don't need to worry about losing a bid or losing -- you can just keep your returns and make sure that you're capturing the best opportunities there. So that will also drive a big part of the RAB growth going forward. But the transmission Brazil is particularly attractive. It's typically 30-year locked in almost like a bond as long as they can build on time and on budget, and we've done that. We've typically built it under budget and ahead of time. So I think feeling very comfortable about the transmission growth also going forward.

So in summary, for networks, EDP Group, step change in investment, and this is something that we have good visibility on well beyond the business plan, increasing investment visibility, improvements of regulatory returns improved efficiency and growing EBITDA throughout the business plan period. These are the key numbers, and we can get into sort of more detail afterwards in the Q&A.

Now I'll talk about clients, renewables, FlexGen. And before I just get into more depth on that, I just wanted to put up this slide because -- just deconstruct the slide. What it is showing us is on one side, we have, let's say, the Iberian seen and clients, where essentially we have our hydro. We have our CCTs in Iberia. We have our customers, we have our integrated position. And on EDP renewables side, we have 20 gigawatts of generation assets with a lot of customers, PPAs, CFTs, big tech. So EDPR on the right-hand side. But we try to manage as much as possible in an integrated way. Why? Because we think that, that creates value. So generation assets run in terms of systems, in terms of managing availabilities, really trying to squeeze out as much efficiency as we can out of all of these operating technology.

In terms of Energy Management, again, we're managing energy in multiple different markets. There are correlations, there are issues. It's much better to manage an integrated portfolio than to just manage it piece by piece. So from a risk return perspective, we can optimize it here, obviously, safeguarding the interest of the minorities of EDP renewables. But this allows us to have a much more holistic view of energy management across the group. And then Client Solutions, again, it cuts across many of the different geographies because in many cases, some of these customers can be customers in the U.S., they can be in Iberia in Japan, and this is a true story. We have for Amazon, it's in the U.S., in Europe, Brazil and Japan, we literally have contracts with all of these people. So client solutions, it also makes sense to have a transversal view across the company.

So getting to a little bit more depth on FlexGen. You know our existing portfolio, so I won't get into much step there. I mean in terms of megawatts, the 5.5 hydro and then install capacity of gas, but 2 terawatt hours of electricity generation about 8 terawatt hours of hydro. In Brazil, it's mostly contracted, so I won't spend too much time there because it's basically a relatively fixed value. What I did want to talk about is the efficiency on one side on the sex Gen. So for example, customers continue to bring down that OpEx per year per customer per year. And in terms of the renewable generation assets also keeping relatively high rates of efficiency. We're doing targeted investments, around EUR 100 million of CapEx, double-digit IRRs, improving the output of some of these targets -- some of these power plants. And using robots, automation technology to really try to drive that efficiency going forward.

And now I'll get into 2 important slides that I want to just spend a little bit of time on. As Iberia gets more solar, you start getting more DUC curve. I think most of you are pretty familiar with them, and that's driving more ancillary services. This is 2020 to 2024, and you can see this increase. I'm not putting '25 where the number is actually EUR 17 per megawatt hour because I think that's pretty extraordinary. So we're not assuming that level. We're assuming somewhere in between the 2020 to 2025 -- '24 number sort of as a structural ancillary services value going forward, still going to be higher than what it used to be in the past. But that's, let's say, an assumption that we're making for the business plan going forward. And in terms of hydro, what you can see here is that the price premium for hydro versus the base load has been increasing over time. So we're assuming around 20% of premium over base load. And on the pump storage, we're also assuming more pump storage in terms of megawatt hours and also slightly higher spreads versus the base load. So the pump storage of baseload.

All that driving, it's the last slide on this section driving this profile of returns on the integrated Iberian business. This has been normalized to help guide you in terms of how we see the business evolve. So we've backed out, let's say, price and volume differences. And what you see here is essentially a growth of the flexible generation of the flexible services growing between 25 and 28. It is important to note that 2025 has a negative which is offsetting some of the positives on the FlexGen coming from the retail because you can't pass all of the ancillary costs on to the customers on to the market in the first instance. That will come off over '26 and '27 and so you see that uplift in the flexible services over the next couple of years.

We're assuming a baseload reference of around EUR 64 over this period, the '26 to '28 period. And so as I say, normalization of prices and volumes, '26 and '28. P50 for most cases and around 64. The increase in margins from flexible services, also partially offset by lower gas margins. So we have one other contracts of the gas contracts, which have slightly lower margin. The 3.4 million retail clients, here, we're assuming a relatively flat sort of margin coming from the customers. But all in all, if you want to focus, it's more on the side about where a big part of the growth is coming from in the flexible generation. So that's FlexGen and customers.

Moving on to EDP Renewables. Again, most of you know EDP renewal as well, 20 gigawatts pretty much spread globally with a very strong emphasis on North America, long track record 22 states, 10 gigawatts in the U.S. specifically, and I'll give you -- we'll go deeper on the U.S. in just a couple of slides. But before I go there, efficiencies come down has improved dramatically. I think as we scale, we managed to get the economies of scale. And so you can see the OpEx per megawatt coming down. We assume that stays relatively flat continues to improve slightly until 2028. Assuming improved renewables availability from some of the projects that we're able to solve some of the ones that had some technical issues. And so in very targeted in terms of the way that we allocate our resources to solving the issues that have the highest payback, the fastest. And so that driving AI, digital, technology, just using that to really drive this efficiency and availability.

Investment plan, EUR 7.5 billion over this period, EUR 4.5 billion in terms of asset rotations, net investments of around EUR 3 billion. In terms of growth around 1.5 gigawatts per year for '26 and '27. '26 is locked. '27 is mostly locked. We have flexibility on '28 and beyond. And that's why when I talk about flexibility, we're talking about '28 and beyond as having the potential to capture that upside going forward as the project's gotten arising. 2025 on time and on budget, as I mentioned earlier. Overall, the 5 gigawatts, so it's slightly more than 1.5% over this period. Obviously, it's accelerating towards the back end of 2028.

In terms of split, again, the 5 gigawatts, maybe things to highlight, already a big percentage of solar and co-located batteries. So this is becoming more and more one of the sort of the key issues here. So not just doing naked solar, but really doing it with matches. This is particularly relevant in the U.S. And the batteries in the U.S., we are getting great returns on them. So you're getting tolling agreements with double-digit IRRs, and that's really helping sort of the economics of the case. But even solar PV, just in general, we're still seeing a huge amount of demand coming through and helping drive those returns. Most of these technologies are let's say, under CFDs or PPAs. So as you know, we contract most of these we don't, let's say, take merchant risk on these projects only in the back end once the PPAs have come off.

Okay. Besides, I think it's relevant just to spend some time on because a lot of you have raised questions about how we see repricing. So just one and then another slide in the U.S. About 70% -- we're assuming about 70% will be long-term contracted. We have about 25% by the end of 2028. Part of that in the U.S., part of that in Europe. We're seeing different trends in the U.S., increasing PPA contracts and increasing merchant prices. In Europe, we're seeing slightly decreasing prices at least until 2028. So we're assuming an average selling price which is about flat over this period between '26 and '28. On the combined portfolio, Brazil and APAC has a lower weight in this, so -- but we're still seeing upward trending prices on that.

I wanted to talk to you just a bit about data centers because I know this is a topic that also comes up very often. We really -- I gave you that data point at the beginning. We really are seeing this incredible demand and growth coming from data centers, big tech asking for more PPAs and more power. And even today, we continue to get that type of inbound calls. It's coming through either directly through our contacts and we have more than 3 gigawatts already contracted with these guys with the big tech. So they have our direct line. They know who we are at the highest level, we interact with them. But it's also coming through very much with U.S. utilities because a lot of the big tech are setting up in utility centers in sort of in the regional space and the utilities are having to procure that power. So we're seeing more and more build and transfer agreements where the utility is essentially saying, "I'll buy the project from you. You build it and I'll buy it, and I'll preagree the margin on that project". So that's almost like a accelerated asset rotation, which we know upfront that if we build it, we get that margin and we're able to lock that in.

So we're seeing that demand coming through not just directly, but also indirectly through the utilities, and that's helping drive. So those type of contacts and relationships that we have are extremely important. And I'll go in deeper as I said in the U.S., but I just wanted to highlight that here. On the new assets, opportunities to contract PPAs for longer terms. You have seen yesterday, we put out a press release 30-year PPA. So it's interesting that how we've seen actually the contracts extending throughout the U.S. and the existing assets opportunities we contract. Just a second here on Powered Land because what is Powered Land. Powered Land is basically where we have access to the network, which can be used to either inject power into the network or it can be used to consume power from the network.

And in some cases, we have some projects, whether it's because they're older projects or they're more curtailed where we can actually be a window into the network. And so we can have, let's say, talk about co-locating data centers with our projects. So for example, in the case here, we're talking about a 400-megawatt Lone Star project in the U.S. where potentially you can have this co-location of a data center with an existing asset, which has curtailment issues, or which has lower merchant prices, and you can reprice those projects higher up. So we're looking and we're exploring our existing assets to see how we can extract more value from these assets. And so that gets me into the U.S. The U.S., I think you just have here an overview of where we are in the U.S. in terms of installed capacity, so pretty much spread out. But with a big concentration in MISO PJM, not quite a bit in [indiscernible] a little bit in ERCOT. MISO & PJM, as you can see is where we have a big part of our pipeline, it's also some of the area where there's biggest growth in terms of demand coming through from the data center.

So I think we're particularly well positioned to take advantage of that. And that wasn't by design. This is something we've been doing for many years. It just so happens that, that's where a big part of the demand is coming. So we're fortunate to be able to line up, let's say, the demands with our pipeline. Miguel Viana told me spend more time on this slide. So I'm going to spend more time on this slide.

This is the evolution of the PPA prices over the last couple of years. This is market data. This is not our data. This is -- I think some of you will know Level 10 data. In 2018, '19, '20, contracting at around $30 per megawatt hour. These PPAs will run off, let's say, 2035, 2030s, 2035. First, if you're contracting here, you're contracting much higher prices. This is a fact. I know you have higher CapEx. I know you have higher cost of capital, but we also have higher returns. They're contracting new assets at these higher prices. But then you're also going to have these PPAs, the PPAs that we contracted a couple of years ago running off and that will allow us to reprice. So we don't expect any impact in the context of this business plan up to 2028 because a lot of the PPAs are already locked in. We do expect to already be signing, let's say, contracting power at a premium to merchant price. This is not theoretical. This is a fact. We've already signed, for example, a 10-year PPA at $11 premium to merchant prices. Why? Because people are willing to pay a premium to lock in long-term energy.

So we've got energy, for example, from one of our projects, [indiscernible], $11 for the next 10 years, starting in 2029. In 2031 to '35, that's when some of the PPAs that we signed back sort of pre-2020 at around $20, $30 per megawatt hour are coming off. And that's where you see the 12 terawatt hours of energy that becomes available that you could potentially recontract at higher prices going forward. So I think higher prices for what we're contracting today and the potential for repricing of contracts as they come off towards post business plan period towards the end of the decade and beginning of early next decade. So in the U.S., what are we expecting? '26, as I said, well. '25 is obviously locked in. '26 is locked in. A big part of '27 is locked in. So what we're looking at is '28 and beyond has been where we can position ourselves to capture those opportunities. And that has to do, but what I -- what we didn't want to do is to commit to a lot of megawatts where we're then in a position where to lose-lose, either we comply with the megawatts and maybe have sacrificed returns or we comply with the returns and we sacrifice the megawatts. So we're not going to put ourselves in a lose-lose situation. When we get the projects, and we believe we will, we'll communicate them, and that will be an upside.

So that's what we're driving at. We're not -- we will be taking solid investment decisions to make sure that as those projects come through, we will be able to surprise hopefully on the upside and not be in this potential losing situation. I say we have good visibility on the safe harbor, and we can go into that in more detail, but we already have about 5 gigawatts plus that either safe harbor or already or on track. We have the supply chain. You know about our contract with First Solar, now about the relationships that we have, for example, with [indiscernible] with the factory that they have in the U.S. So we feel pretty good about the supply chain set up. I don't think there's a lot of tariff risk there. And we have a good pipeline, and I talked about that a little earlier on.

So honestly, we're feeling pretty good about the U.S. I know we had a first couple of months of huge uncertainty, but we are in a different position now from where we were. Let's talk about Europe. So Europe continues to be an interesting market. We got that question this morning about the capital gains in our portfolios. There's less volume but they are really good projects when you can get them. And we're making sure we're getting those good projects and rotating them. We did the French rotation. We did the Italian rotation. We did the Greek rotation. So these are good projects. There's an issue about how you can scale them up and make sure we get more. I think we're well positioned in terms of pipeline. I mean, particularly in places like Italy, France, Poland, Germany, Portugal and Spain. Let's see how the demand picks up there. But I'd say that our key markets or we are in the key markets that we want to be, and these are the ones that we'll be focusing on going forward.

We're assuming about 0.5 gigawatts over the next couple of years, but the same thing. Again, we have the opportunity to flex up if you see those opportunities, most of these CFDs and pays produced. A lot of hybridization also going on, so using our installed base and putting on multiple different technologies on the same interconnection point. And then in APAC, what we're seeing in APAC is actually we've opened up Australia and that's potentially bringing through a pretty big growth towards the back end of this plan or towards the back end of this decade. In the meantime, we continue to have a pretty solid growth in Singapore, places like Japan. Those continue to be, let's say, the places where we will be delivering growth and keeping that optionality also in Southeast Asia. So I think it's an interesting market to be in. Like it's a relatively high return option in the sense that like there's a huge amount of consumption there, a huge amount of potential growth there -- not potential, the growth there.

So being able to even capture a part of that, I think, is a great option. It's a question of finding the right projects being in the right countries, and I think we've refocused significantly over the last couple of months to be really in the key markets we want to be. On Ocean Winds. The key word here is discipline, focused on extracting value from our existing pipeline. We're not going to go for huge growth. I know we have a partner 50-50 that we also need to manage or we need to work with, but our objective is to extract value from our existing portfolio. So we finished Mary West. We are doing the Polish project, which was already under. So we've taken FID on the Polish project. We're finishing up the French project. We have continued to evolve our existing pipeline also, for example, in Australia and South Korea. But I'd say the key focus is getting the existing projects done and just been very disciplined about additional projects that we take on.

And so that takes us globally to EDP renewables. Just a sort of overall summary, EUR 7.5 billion of gross investment, of which 60% in the U.S., good equity returns, strong asset rotation plan, EUR 4.5 billion, EUR 1 billion of disposals, basically refocusing to more core markets, continue to drive efficiency. And with that, you get an increase in recurring EBITDA doubling of recurring net profit. We get the net debt down, and we build up all of that optionality in that headroom. And we keep the stable scrip dividend at around 30% to 50% throughout '26 to '28. So that's basically a summary of EDPR, I think, good optionality, good growth. We're in the right markets. We have refocused and we have very, very clear what we need to do here to create value.

And with that, I pass it over now to a video just before I then turn it over to Rui. It's on technology, on engineering, on innovation because I know a lot of these sites, we talked about AI, we talked about technology, and it's very right. It's difficult to sort of actually show what we're talking about. And I could spend hours talking about it, but there's nothing better than to actually see it. So we have a short video we'll put it on, and then we will take over for the finances. Thank you.

[Presentation]

So again, good morning. Thank you for your time today. I'm afraid I have to ask to be apologetic with the people remotely because there is a lag in terms of the -- both the voice and the slides. So it's just a bit awkward that we just saw the video about what we are doing in innovation. But today, unfortunately, It's not working here as well as I would like to. So apologies for that.

What I would like now to take you through is to show how the strategy that Miguel just presented turns into solid financials for EDP as well as EDPR. Maybe starting by looking at the EUR 5.2 billion EBITDA that we can meet to this business plan, the EUR 1.3 billion that we commit to this business plan, but looking also over a longer period of time. If you look on a 9 years basis. So let's say, from 2019 all the way down to the end of the period, this is actually showing a stable 4% CAGR on earnings. So I think it's important to highlight that we're looking backwards. We have a company or we had a company that was around EUR 0.8 billion, EUR 0.9 billion in net profit. and then it stepped up to become a EUR 1.2 billion up to EUR 1.3 billion of net profit by the end of 2028.

Also highlighting that we keep a very stable dividend policy, DPS floor increasing to $0.21 by the end of the period. But also in something that we always highlighted as being a strategic pillar in the company's business plans is that we are very keen to keep our BBB balance sheet. And this is shown by the ratio, the leverage ratio is improving. So from 3.7x net debt-to-EBITDA in 2019 to 3.2 net debt to EBITDA ratio by the end of this period of 2028. What I would like now to take a -- take you there is really how we look at the quality of the portfolio and how the different segments are playing within the evolution -- or within this period in the evolution that we're expecting. So obviously, the renewable segment is where we see an important growth contribution up to EUR 2.2 billion of EBITDA by 2028. And this is on the back of the growth that we are seeing in the U.S. And obviously, resulting from the capital allocation towards the U.S. given the opportunities that we are seeing in the renewables.

The networks, reaching EUR 1.6 billion of EBITDA by the end of this period, which is a consequence, not only of higher CapEx, but also improved returns, improve incentives and even in particular case of Portugal, the fact that we are not longer having the sales, that cash hold special tax for new investments. And let's say that normalization impact that we are expecting in the flex generation segment. So if you normalize from hydro years and high prices in Iberia, that is being compensated by higher value coming from the FlexGen. So there is a pool of value there that is increasing its contribution and that gives us this expectation that we get to the EUR 1.3 billion of FlexGen EBITDA contribution by the end of 2028.

Capital allocation. So it's a plan where we will be investing on average EUR 4 billion per annum. The bulk of it obviously continues to go to renewables, where I would like to highlight that 60% of the investment in renewables is going to be allocated to the U.S. In the past, we used to have around 50%. So that's an increase, obviously, taking the opportunity to capture higher returns in the projects that we are seeing available in U.S. Also grid, the networks is increasing in terms of relative weight. So in the past 2 years, we allocated about 21%, of capital to the grids in this plan until '28, we are getting to 30%. But I would also like to highlight that it's as well about focus. We are reducing the number of markets where we are investing. So 95% of the CapEx will be allocated to less than 10 markets. And also 90% of those are A-rated. So it's also a question about management focus and the quality of this capital allocation across the different markets.

I would like to spend a couple of -- well, not minutes, but at least a minute or so on the asset rotation because, as you know, and Miguel said it very clearly, I think that we have shown that we have been executing for the past 10 years. But even if we look to the 2025 asset rotation program that we knew that many people were doubtful that we would be able to execute. We committed to a EUR 2 billion in asset rotation proceeds program and we are delivering that. It's a combination of mostly coming from the renewables, different portfolios in Spain, in Europe, United States, also asset rotation in Brazil and the transmission. So we are delivering in that building.

The asset rotation in the U.S., I think it's worthwhile highlighting what Miguel said before. It's a very large portfolio, 1.6 gigawatt, 49% sale straight equity, common equity, there is no structured cash flow allocation. We sell 49% of the cash flows. Very importantly, this was a competitive process. Very large investors, high-quality investors. So we're really happy that we are delivering this with such a quality phenomenal -- quantitative but quality outcome. And that is giving us confidence for the future. So as we look at the EUR 5 billion asset rotation target for the remainder of the period, so '26 to '28, approximately 4.5% in renewables. The rest will come from the rest of the EDP business, namely in the transmission. We are including in this asset rotation, those build and transfer projects that Miguel referred to. So this also helps not only to derisk in the sense of once you sign the contract, you pretty much signed already the asset rotation as well.

And in terms of the capital gains, we consider that throughout the plan, we'll go back to a normalized capital gain of around 15% and over invested capital. And that pretty much should give us EUR 0.2 billion of capital gains on average per annum. The funding also has 2 important contributions. There is EUR 1 billion of disposals that we are considering in this plan. This means that we will be exiting countries and businesses that as of now, we don't feel that they are core to the growth of the company to '28 and even beyond '28. Those are markets are where we have established very small positions or we are on not seeing the synergies. We are not capturing the synergies from being there. So that's one element. There's another element which is not new to us and not new to the market, which is the tax equity market. So we target to raise about $1.5 billion of tax equity in the U.S.

And maybe here just a couple of notes. So the first one is given that we'll have more investment in solar battery storage as opposed to wind. This skews the tax equity to ITC-based tax equity, not PTC-based tax equity. We estimate that we have about 40% of our invested capital in U.S. in the next few years, raised through tax equity structures. The fact that these are ITC-based structures has some implications. The first one is on earnings. As you know, we depreciate this over a 5-year period. But very importantly, from an economic exposure perspective, the moment the investor locks in or closes a project, he gets the ITC full. So if you look to our economic liabilities, we'll go from around USD 1.6 billion in '25 to around $1.4 billion in '28. So there's actually a decrease. And it's just because of the dynamics of how the ITC works.

So we feel really comfortable that we will be able to raise this EUR 1.5 billion. We have been doing that since 2007. We have an excellent relationship with the largest investors and even the new ones that are coming into the market. So really comfortable that we will be delivering this one. So this is how we see the plan being fully funded. So we have a 12 building investment program, a gross investment, an additional EUR 2.5 billion in terms of dividend distribution. This is funded primarily through organic cash flow, EUR 9 billion cumulative throughout 3 years. And then we have another block, which is a combination of the asset rotation, the disposals as well as the tax equity funding. So at the end of the period, what we are seeing is a reduction of our net debt. So our target is to end this year with around EUR 16 billion, and the plan is to be at EUR 15 billion by the end of 2028. So there is a net debt reduction.

And again, I'll just remind that we are showing an EBITDA increase and with a paired with a net debt reduction, which obviously supports the improvement of our financial ratios and our debt ratios. Our FFO net debt is expected to go from around 19% as we close this year to 22% by the end of 2028. So again, this shows that not only we are completely committed to our BBB balance sheet. We are improving the ratios. And this is also what gives additional flexibility from a balance sheet perspective to think in '28 and beyond. So life doesn't end in 2028. Actually, there's much more life to come after 2028. And it's super important to have this balance sheet reinforced by that moment.

I'll spend a minute, if you don't mind, in Portugal. But I think we definitely see this as really positive. Portugal came from being a BBB company -- sorry, country in 2022 to an A-plus rated in 2025. The spreads are close to the minimum if you compare it to the German bond. The public financing net debt or debt over GDP is below 100%, it's at 91%. This obviously has a reflection in terms of the overall public accounts and the budget. So the government already approved that throughout these years, until 2018, there will be a reduction in corporate income tax. It will go down to 27.5% by 2028. That has a positive impact in terms of our earnings. Secondly, also already announced that it's included in 2026 budget, that special tax that is applicable to investments in what concerns new investments will not be applicable. So we want to have that burden in our books.

We still believe that by the end of this period, we should also have a positive court ruling and that will -- that special tax will go away in 2028. But in what concerns the public financing, it's in a very, very well positioned. And obviously, this has also implications in terms of consumption, in terms of how the economy is growing. But also on the electricity system because not only Portugal today is one of the most affordable places in Europe in terms of consumer tariff. It's 25% below the European average, but also in terms of the system debt, which is converging to 0 within this period, again shows how sustainable the system is even today and moving forward. Cost of debt, and I will spend a little bit of time here on this slide just to explain the different building blocks on how cost of debt is evolving.

So overall numbers, it will move from around 5% to 5.1%. I'll break these down only 3 different dynamics or blocks. So there is one coming from Brazilian real denominated debt. Brazilian real today is at 14% or the interest rate. We are looking at the forwards, it's coming down to 11%. Actually, today, probably is around 10%. All of our debt in Brazil is floating, so we will benefit from this. In terms of weight of the Brazilian debt into the overall portfolio is also reducing from 32% to 27%. Second, building block. What's happening to the euro and the U.S. dollar denominated debt. What's happening here is that we do have bonds that were issued some years back with extremely good components. So if you look to the bonds that are maturing in '26 and '27, the coupons are 1.7% and 1.8%.

As we refinance these ones, and if you consider, for example, what we issued already in 2025. So senior bonds were issued at 3.4%, hybrid bonds were issued at 4.5%, as we refinance the maturing bonds in '26, '27, what we are assuming is that there will be an increased cost of funding. The third one, however, the building block is that when we get to 2028, our bonds maturing in 2028 are actually at the 4.1%, which are higher than today's refinancing costs. So what we are expecting is that we would see an increase in terms of the cost of funding for '26, '27 and then starting to decrease from '28 onwards. And that is basically what is justifying or these dynamics around the cost of funding. No big changes on our funding policies. We keep 80% of our funding through holding. We keep 80% our debt fixed. The 20% is primarily Brazil. And we have a funding according to the currency that we operate in the different countries.

Again, just to highlight that U.S. There is a big funding coming through the tax equity and that obviously, you don't see this year on this debt allocated by currency. No change whatsoever in terms of our new issuances. We will -- all of our new issuances will be both green and are sustainable. That means that when we get to the end of '28, 90% of our stock will already be under this taxonomy. And it follows, obviously, the investment as you saw the investment is fundamentally into networks and renewables. And I think this is widely recognized by the investor community on the bond side as well as different indexes.

One last word on the financials. Liquidity. We will keep our strong liquidity position and conservative policy. So we have at the end of September '25, EUR 9.4 billion of cash and equivalents. So plenty of space to refinance all of our needs throughout the period. The chart also includes the hybrids. As you know, the hybrids is different. We will be issuing new hybrids to refinance the existing ones so that we preserve the equity content that we can only have in the stock. So to finalize and just before I hand over to Miguel, again, this is showing strong financials as we deliver the strategy. We get our net profit to EUR 1.3 billion. If you compare straight to 2025, that's an additional 8%. 6% in terms of EBITDA compared to 2025 as well. Net debt coming down, so increasing EBITDA, reducing net debt from EUR 16 billion to EUR 15 billion. That supports that strong improvement on the FFO net debt and there for super keen to meet the BBB criteria and keep that strategic part of the plan. And last but not least, dividend also improving to the EUR 0.21 at the floor in 2028.

And with this, I would hand over to Miguel for final remarks and happy to take questions later. Thank you.

Okay. So the final slides, just really to wrap up and then to pass the Q&A. The first is to wrap up the commitments, the EUR 12 billion investments, the focus on U.S. renewables and networks, the EUR 5 billion of asset rotation. And I think, again, the credibility to deliver on this. The EUR 1 billion of disposals, I think this is an important part also of the funding and the refocusing that we're doing. Efficiency. Again, I think, best-in-class. I would love to know others that are getting there. 80% EBITDA in A-rated markets, highly contracted profile, BBB rating. So these are some of the commitments.

But very importantly, increasing EBITDA while decreasing net debt, and that gives us that optionality, increasing net income and increasing dividends, okay? So this is not let's say, something that is not clear because I think there are some sort of doubts about whether we are reducing debt or not. No. We are reducing debt, keeping that optionality and then we can manage that over the next couple of years. Why are we comfortable with this? As I say, a big part of the framework on the electricity side is already defined for the distribution. So there's not really very much risk there. There's only some potential upside over the next couple of weeks. Safe harbor. We already have more than 5 gigawatts, safe harbor. We can still work on that. We have until June to continue working on that if you want to upsize that. 2 gigawatts already secured for '26 and part of '27 and the supply chain, as I said, with good long-term visibility. So we feel pretty comfortable about the assumptions both on the distribution side and also on the renewable side.

And then we have the optionality. As I say, I think we need to think we're running the business for the long term. This doesn't stop in 2028. This trend in the distribution business will go well beyond 2028 and up to 2030. I think I showed you that slide on the distribution, the assets that are sort of coming to the end of their useful life for 2040. That's a major step up versus the past that will stay there for the next coming years. On the FlexGen, we're in a great position to capture that, and that's a structural change also versus what happened in the past. We're not saying you assume what happened in 2025. So you can be a little bit more prudent than that. But it's certainly not going to go back to what it was when there wasn't that much solar or wind in the sector.

And finally, EDPR. Structural demand growth in the U.S. and Europe, we're seeing that today. Repricing in the U.S., we're seeing that, and we already have a concrete data point and then a solid pipeline in the various different markets and the ability to leverage more on our existing assets, whether it's our hybridization strategy, whether it's on even, for example, thermal assets in Iberia, there is, let's say, that optionality that we can take advantage of that. And so we can continue to grow well beyond the business plan. And people may say, why are you not being even more aggressive in your growth? And I think what the message I really wanted to pass here is we are taking solid steps to invest with great projects. And as we go on seeing that optionality and capturing the optionality, we will then be able to accelerate. So we're not going to promise you things that we cannot deliver on. As we see those projects coming in, we will take advantage of that, and we will have the flexibility to be able to take on those projects and upsize that.

So that's essentially, in a nutshell, the presentation, you'll see a moderate growth in networks over the many coming years, well beyond 2028. You see high growth in EDP renewables over the next coming years particularly on the earnings side, you see FlexGen capturing that optionality, that structural ancillary services in Iberia. And that's also something that we think is a long-term trend. And we'll have the balance sheet flexibility to then go on capturing growth beyond 2028. So that's a little bit the thesis of EDP. The focus is on profitable growth, focuses on value creation for shareholders.

I just wanted to end with a thank you to all the teams that have worked on this and a lot of people here on the sidelines, leadership team, the various different corporate bodies. But above all, I think the 12,000 people at EDP. I know this represents a lot of work that's come bottom up, not just to get EDP to where we are today and through the many different sort of crisis and issues, but I think also to then work on the execution going forward. And I think it's really a privilege like highly talented team. I really am privileged myself [indiscernible] be here representing the wider team, but I think we really do have the right conditions to carry the company for it. So it's been great to talk to you. looking forward to the next couple of years of execution and delivery. And I think we can now turn it over to Q&A.

So thank you. I'll pass it back to Miguel d' Andrade, and then we can take Q&A. Thanks.

Well, again, like we said, sorry for the initial issues in terms of webcast. We have 2,500 people connected. So this beginning a little bit more trouble. But then all the presentation, I think went quite well. And so we'll move now to the Q&A question. Again, from the website, if you want to make your questions, you can insert it in the text box, and we'll address here also the questions in the room to discuss other teams around the business plan presentation. I invite Miguel and Rui to come to the stage and to maybe we'll start with the first question.

Maybe here, Javier Garrido.

Thank you. Good morning, and thank you for the presentation. Well, I have thousands of questions, but I will try to limit myself to three. First, on 2030, I agree with you that there is a lot of potential Vision 28. So talking two questions about the 2030 potential. Firstly, you showed the chart, bar chart with your capacitization to '28 and illustrating an increase in gross capacity additions for '29, '30, how much capacity will you have by then with the increase in FFO to net debt with a reduction in the debt, how much capacity will you have to 12 megawatts in '29 and '30?

Second question on 2030. Previously, your strategy and you mentioned ESG is not -- your strategy was to be a 100% renewables company in 2030. It has not changed. What is your view on your gas assets for 2030 and beyond because the future of renewal gas is, let's say, a bit questionable.

And then the third question for this plan period, '26, '28. You are talking of EUR 7.5 billion gross CapEx in EDPR to build 5 gigawatts of gross capacity. That's EUR 1.5 million per megawatt when you are building a lot of solar and batteries, how much -- I mean, there has been a lot of debate with your CapEx, '25, '26, you have contributions to Ocean Winds, et cetera. But now this is starting to be more a cleaner number. So can you elaborate first on what is your assumption for CapEx per megawatt per technology? And second, how much work in progress would you have at the end of the plan period? Because if I am correct, there might be a decent amount of work in progress at the end of this plan period.

So capacity additions beyond 2028. I think you'll see from the 5 gigawatts, so we're already assuming slightly more than EUR 1.5 million already in the business plan. And even so we're having that balance sheet net debt reduction. And so I think if you do the math, it will probably be like EUR 1.7 million or EUR 1.8 million that you'll have in 2028. I think going forward, we can upsize that to EUR 2 million plus. That will depend then also on the asset rotation strategy that we have at the time. So I think we can do then the maths on the multiples per megawatt to calculate the number of megawatts. But I could see us clearly going -- if we are already at, let's say, EUR 1.7 million, EUR 1.8 million in 2028, we could go higher than that because we'll have the balance sheet flexibility for that. Specific numbers will then depend on our strategy for funding and the asset rotation.

On the ESG, it's a great question. I think we're still 5 years away from 2030, but I think one thing is for sure. I mean, gas continues to be a very important part of the mix, and it's not going to go away for the next many years. But it's -- I think you'll see that we've probably been the company that decarbonize our generation most already in terms of emissions intensity, in terms of the percentage of renewals in our mix. So we're not in a rush to sell the gas assets, and there are many different ways. I don't think the gas assets will go away. They'll certainly be in the system. The question is then whether you want to consolidate them or not. But I don't think it's a short-term question, so I have time to manage that.

I think the road is more important than is the role that we've been going down, which is to decarbonize our generation and I think that track record is best in class. And I think that's our commitment.

For the question on the CapEx per megawatt. So bear in mind that a big part of the CapEx in renewable is now going -- or more is going into the U.S. and U.S. has structurally higher CapEx per megawatt. And so even solar in the U.S. is at high multiples, and I'd probably say around EUR 1.5 million per megawatt. Europe will be lower, maybe EUR 0.7 million, but then you also have some wind assets, which will also be higher and so I don't know if you have any specific numbers, but that structural shift to the U.S. is already going to be pushing up your CapEx per megawatt sort of numbers.

So if I break it down, technology and markets. So as Miguel said, maybe starting with the solar. In Europe, average 0.7 in the U.S. 1.5 and some projects could be a bit higher than that. In Euro terms, let me give it all in euro to just be comparable. Wind actually U.S. is likely to be around the 1.5 but because it's a repowering what we are doing. And in itself, it also shows how valuable can be every powering in the U.S. it's not only about the repricing, but really the reduction of the cost per megawatt battery storage. I think it's ranging somewhere between 0.6, 0.7 in Europe and around 1.3 in U.S., and that's full cost, all-in cost. Okay.

Regarding your question on working capital, I would say probably around the EUR 4 billion by 2028. So looking into what is the construction going into '29 and onwards, so give or take around the [indiscernible].

The next question here from Arthur Sitbon.

Just a first question, a follow-up to Javier's question on the unitary CapEx. I was wondering if there is any upside risk to this unitary CapEx assumption that could potential change a bit on deleveraging trajectory, knowing that there are still question marks in the U.S. on [ fear of ], I think, anti-dumping investigation as well. So that would be the first question.

The second one was you touched in the presentation on the power land opportunities for data center. I was wondering if there is anything on that included in your guidance to 2028 or if that's just optionality on top of your numbers? And what can we hope there? Are there deals that could materialize in that time frame? What are your expectations around that?

Sorry, and your second question was the guidance beyond 2028 on?

[indiscernible].

On the powered lands. Yes. On the powered lands, I mean, those are opportunities that we're working on. Those could translate into two things, either one is new projects, but it can also -- and that would probably be the primary value driver would be existing projects that we have that we can share with a data center, and that can result in a slightly higher pricing, lower curtailment, particularly if it's co-located, better ancillary services. I mean -- but it's basically having some synergies with actually that co-location. And so I talked about, for example, the U.S. project because that's a good case. It's a project which is a little bit less performing, but it actually would be a good place in terms of land and et cetera. So that's on the powered land. I think in terms of the CapEx, the additional guidance.

So to be clear, whatever is secured that we are presenting is secured, we see no risk on that CapEx for several different reasons. A, we take no tariff risk. So that is by contract with the supplier with the OEM. The prices are locked in. There is no indexation. So that's clear. Even if you think now what is still not contracted, all the contract that we have with the [ First Solar ] is yet to be starting to be deployed in -- I mean we get the panels in '26, for delivery in '27, '28. So all of that is not subject to tariffs and definitely not subject to any [indiscernible] rules. The contracts that we have in place that we could start closing [indiscernible] start closing with other solar manufacturers. They will be from U.S. facilities. So as you know, we have been working with Longi and off-taking from their facilities in Ohio, we'll continue to do so. Again, we take not tariff risks. I think that we will still need to wait and see the clarification on the [indiscernible], but I would say probably more to the battery storage side, definitely, we don't see many issues on the solar side. So that's why we feel really comfortable with this CapEx plan. And of course, we'll see what the rules are in terms of [indiscernible], which is of today, probably what we expect is that not before the end of '26, we'll have that clarity.

Jenny Ping from Citi here in front.

So a couple of questions from me, please. Just firstly, Miguel, you talked several times about how conservative this plan is. Can you just kind of give us a feel of where you could be wrong both on the upside -- sounds more likely? And on the downside, so where are the moving parts where things could change from what you've set out?

And then secondly, one for Rui. One the things that we've noticed in your results is obviously several impairments coming through one-off and that's you tidying up, I presume some of these sort of assets for noncore countries. Can you give us a sense of -- how much more of that is still to come? And I presume the sort of guidance you've set out today on the net income level is excluding any further adjustments as we look through into 2028?

And then lastly, just on the FFO net debt numbers you talked to. This is more applicable for EDPR than EDP, but there are quite a bit of debate around the methodology rating agencies going to use looking forward around off-balance sheet debt, project financing debt. Has that been taken into account when you look at your FFO debt ratios and therefore, your net debt reduction targets?

Okay. I don't think I said conservative. I think I said we feel good about the plan and that we have the optionality as the projects arise to be able to commit to them and take them up. And so -- and I think I did mention is what we don't want is to be in a situation where we're either pressured to do the megawatts and sacrifice returns or we keep the returns, and then you'll tell us so we miss the megawatts. And so I think by taking this approach, what we're saying is we're seeing good prices, and you saw the PPA prices. We're seeing good repricing opportunities. And so we'll go and taking advantage of that. And as we go unlocking in those projects, we'll give you visibility on that. And we think that the sort of the 5 gigawatts is a pretty -- it's a healthy number. As we go unlocking in additional projects, we'll be able to upsize that. If the projects aren't there because the market crashes or whatever, okay, we haven't committed to doing those megawatts and -- but fortunately, at the moment, I think we are seeing that demand, and we are seeing the projects, and we are seeing the Googles and the Amazons calling us up and we can -- even after as we can talk about that. But like even this evening, we were talking about like getting like two big tech, which -- who do we go with like the project. So it is literally a seller's market. It's a great market to be in. But let's go step by step and then take advantage of that over the coming months and years. I'm not suggesting that it's conservative in that -- in the sense of like we're holding back or something.

So starting with the first question on the nonrecurring. Yes, we did that. I mean it's normal that every quarter and definitely every year-end, we'll just review not only the viability of the pipeline that we have in the different countries. And if we feel that it is not moving forward, then if there is any write-off, we will do it. I mean we've done that in the past, this summer and we do the same. When we think about those disposals, the EUR 1 billion disposals, we are not really considering any material impact in terms of additional write-offs. It will depend obviously on the price at which we sell, but we are not considering or we are not expecting anything material.

On the project finance, maybe starting with the -- so we don't use a lot of project finance, as you know, the project finance that we use in projects that are consolidated by BP, that is treated as debt, that's normal. So we fully consolidate that debt, and we don't treat that as nonrecurring. So basically, we know that we will not or the rating agencies already know that we will not let those projects default, and therefore, they are part of the ratios where the increase since the inception of the JV in offshore Ocean Winds, I mean those projects, which we own at the 50%. And actually, at the project level, Ocean Winds sells down. Those are funded through project finance. And we are only booking whatever is a net contribution from Ocean Winds. We are not expecting any change whatsoever as of now. So we know that there is this report out but right now, we don't have any different view from what we have in the past. So we continue to treat that as our balance sheet. And of course, we have that equity injection into our books.

And Jen, sorry, I just realized I missed the second part of your question, which was the upsides and the downsides. So there are certain sensitivities and actually, you find them also in the appendixes of the document. But in terms of some of the key sensitivities, as you know, one is hydro. That's going to be up or down. That typically levels out over the long term. the power prices. That obviously impacts sort of our integrated margin principally. I'd say on the upside, there are certain things that are not in the context of this business plan, but we pointed to in terms of the repricing post 2028. I think those are some of the upsides that we're seeing. We're not capturing that within this business plan, but that could be obviously quite material in terms of the megawatts what I said. So I think we prefer to build up. So I wouldn't say there's an upside. There's an upside there, of course. But yes, that's what I'd say about that.

Next question here from Manuel Palomo from BNP.

I'll speak to three. The first one, I'm sorry to go back to the investments. Renewables historically, I think, has proven to be quite a cyclical business. As of today, it looks like there's a good amount of opportunity, good prices, pretty much everything looks pretty positive. So why not accelerating now? Why waiting up to 2028? That would be my first question.

Second one and somehow linked to this. We all agree about these increases in demand, increasing power prices, particularly in the U.S., thanks to AI and data centers. So -- and you've shown that slide with the PPA prices going up materially. So I think in the case of the U.S., the reserve margin is already pretty tight. So there's need for electricity. So my question is what's preventing off-takers from signing PPAs or maybe developers? So that would be the question.

And lastly, I'd like to ask you about the installed capacity in renewables because you're pointing to 5 gigawatts over the period '26, '28, that's the gross installation capacity. I don't know if deliberately you decided not to give us the net, but I'm going to ask about it.

And just following up on that net capacity, I would like also to know whether that gigawatt of disposals is included there.

Manuel. So just on the first, and just to be very clear, '26 is locked. '25 is locked obviously, '26 is locked. Big part of '27 is locked in the sense that it's very difficult. Don't forget that the last 12 months, we were risk off. There was a huge amount of uncertainty in the sector, particularly in the U.S., a huge amount of like volatility about Big Beautiful Bill, about the IRS, about all that. And so we held off from signing PPAs for the future. So we are resuming that and making sure but the PPAs we are signing now. And as I say, we just came out yesterday, and I'm sure we'll come out with more. So that's happened, let's say, post summer. And so we're picking up basically to see now signing '27 and '28.

So in terms of acceleration, we hope to be able to accelerate, let's say, more towards '28 and beyond. That doesn't mean that you won't see those being announced maybe over the 12, 18 months because that's when we would be signing them. So you won't need to wait for '28 to know if there's been an acceleration or not. You will know probably over the next 12, 18 months, how those megawatts for '28 and beyond are beginning to pan out. So I think the accelerating, we are accelerating, but you'll start seeing that probably from '28 and beyond.

On the second point in the -- on the PPA prices, I'm not sure I quite understood. The PPA, Yes, the merchant has been trending up. So for example, I gave you that data point for one of the projects where we're signing a new PPA for 10 years, starting in 2029, already at a premium like I think it was an $11 per megawatt premium to the merchant price. I mean we have only about 4 terawatt hours merchant in 2029, 2030 and then about 12 terawatt hours from 2030 onwards. So a big part of the energy will only become available from 2030 onwards. And so that's where you can then see a more material let's say, increase in the number of megawatt hours that we can contract. But is that what you're asking?

My question was more on the PPAs on why you're not signing more PPAs [indiscernible] as you announced yesterday...

Well, we've resumed -- so don't forget that we weren't signing PPAs until end of August. Like we were not moving forward a negotiation because those until we have firm visibility on how the safe harbor was going to be on how the tariffs are going to be and sort of on the Big Beautiful Bill. And so we had good visibility on that. It was difficult in terms of negotiations to be able to sit down with the offtaker and say who's going to pay for the risk because six months ago, like if you don't know if the PTCs and ITCs are going to be around, like you're not going to commit to a PPA and that. And so basically, that's resumed post summer, and these things then take time to be able to develop the projects into -- or to develop the negotiations on the projects with the offtaker. So these things also take time, and that's basically started post summer.

As I said, these are negotiations where we want to make sure that we are derisking. And so we are comfortable on the project that we have the permitting all in place. We don't want to take risk on permitting in the U.S. Trust me, it's not a good time to go out and commit to doing PPAs and then you suddenly look around and okay, well, actually, [ experiments ] are not there or the interconnection is not there. So even in terms of the way we are approaching the project, we're taking a lower risk approach to make sure that when we're locking in, we're looking in the CapEx, we're looking in the -- we've got perfect line of sight on the permitting, on the interconnection. So we're not going to commit to PPAs in this current context, we're not going to be committing to PPAs without certainty that we will then be able to deliver the projects as well. And so I think that's something which maybe will take a little bit more time. But we don't -- we will not put ourselves in a position where we are taking on a liability that we can then deliver on.

On the installed capacity, it's very straightforward, 5 gigawatts growth, about 2.5 gigawatts net asset rotations, so 2.5 net installed capacity and then about 1 gigawatt disposals. We are, let's say, disposals is also a relevant part, not just with the funding, but also in terms of the megawatts that we're assuming we will be divesting to then reinvest in the core markets.

Pablo Cuadrado there from JB Capital.

Two questions on my side. One will be on the regulatory reviews, particularly on the Portuguese one. You hinted before that the [ 633 ] is not enough but you have allocated EUR 1.7 billion of CapEx. So I was wondering whether that figure is written on a stone or basically you can be touching that during the plan, whatever you see on December. And also it would be good if you can also share a little bit of details on the 100 basis points of, let's say, additional return that you are seeing, looking efficiencies, [ quite ] services and et cetera.

And the second question is also, I don't know if you can comment a little bit on how you see the integrated margin on liberalized activities. I think you mentioned as well that you are seeing clients and somehow not growing. Clearly, the competitive landscape has been difficult in Spain, at least what we have seen in the last few quarters. And yes, power prices, if we look the forward curves provider going down a little bit. But how have you reflected that in the assumption of the plan, and it will be good to have an idea.

Sure. So on the regulatory review. So we are allocating about the [ 1.7 ]. That's -- we have some flexibility. The [ 633 ], we don't believe will be the final number. We think that there are good rational arguments to make to the regulator to have a bump on that in the final proposal. But in any case, we can adjust somewhat the CapEx. This is the headline number. I mean this is what typically most of us focus on, but there are a lot of other parameters which have improved. For example, efficiency gains are now split 50-50 before there were 75%, 25%. So that's an additional upside. In terms of the actual efficiency, it used to be inflation minus 0.75%. It's now minus 0.5%. It gives you a little bit more upside there. So there are other regulatory parameters, which typically, we don't talk about as much but that has improved as well.

So it's important not just to take the headline number, but let's say, the expected overall return, and that has improved. And then the other thing that's also improved significantly is the fact that we don't have the extraordinary tax. And so that's also a big bump in our returns in Portugal versus where we were in the past. So between 0.85 of the non-extraordinary tax, plus the -- of about 0.8 of the already improvement to the [ 633 ] [indiscernible] even a little bit higher. We could be talking about closer to 2% bump in terms of returns on the regulatory in Portugal. But this is playing out. I think the regulator has been constructive. There's still room to play over the next couple of weeks, and we'll see what happens. Sorry. So that was on the regulation.

On the integrated margin, look, I don't know if I can completely understand your question. The clients are relatively flat. But I think the team has done a great work in just -- like in this year, in particular, we've completely changed our game in Portugal in terms of the competitiveness of our strategy, in terms of like stabilizing the net adds. Obviously, with the incumbent in Portugal. And so it's natural that you go on losing some market share. That's pretty stabilized or stabilized much more. We actually have some net adds over the last couple of weeks versus the past. So we're stable sort of around 60% market share. I think we've managed to find a good balance between being competitive and having a reasonable margin in our business.

Is that -- I'm not sure -- is that what you're asking about in terms of -- Okay. Great.

I think we have here Gonzalo from UBS.

I have a couple of -- well, I'll say themes to go through. I'd like to go a little bit deeper on the U.S. side of things. First, a clarification on the 5 gigawatts, do you have safe harbor? Is that including both the old and the new regime? And I guess the question there is how much more you think you can add or how much more are you working to add in before the end of the [indiscernible] period? That's one.

And then the follow-up on that, which links a little bit with what we've been talking about before is whether that would drive higher additions, I guess, within the plan. So basically, not in '26, '27 as you've already mentioned. But whether it is soon enough in '28 to get more out of that or not?

Then the next question on the U.S. side would also be on -- I'm quite curious about the conversations you're having. I mean you've mentioned the [indiscernible] market and you're having these debates with which -- with hyperscaler going with or not. Traditionally, if I'm not wrong, and I guess that's the question, you've been focused more on signing PPAs with utilities rather than hyperscalers or tech companies, although you have a good combination of both, but there's been more on one side or the other. I'm curious about how you think about this, where the market is changing, whether you are seeing different dynamics based on obviously the demand increase and how this is going.

So that's the first kind of group. Second group of questions, Sorry, I'm -- it's taking a bit long. This one is shorter. I'm going to make the question anyway. And I'm anticipating [indiscernible] I guess, but are you seeing any changes in the corporate structure between EDP and Ocean Winds?

And I guess a follow-up there, which I think might change your view in some years is if you are thinking about all of these increases in prices renegotiating all the contracts in the next 5 to 10 years, particularly in the U.S., will you leave some money in the table with all these minorities within the structure at different levels? So those are the very long questions.

Thank you, Gonzalo. So in terms of safe harboring, you mean old regime, new regime, the 5% like working, so what we had in -- so we have about 1.5 gigawatts that was safe harbored already at the end of 2024. I said probably that's mostly old regime, let's call it the 5%. Since we -- when we started getting more visibility sort of before the summer about how the safe harboring rules we're going to change for the summer sort of during July and then August, we also started moving much more towards the specific assets metric. That's actually an easier one to do than the 5% because it actually is cheaper. I mean, to be honest, in terms of the optionality, you need to put in less money to get the same basic outcome. So what we did do is make sure and working obviously with the team and the lawyers and the regulation guys to make sure that there is no doubt about our qualification for those safe harboring. So you need to have those specific assets, let's say you ask for a specific transformer, it needs to be allocated to a specific project, and that's being worked on. So I'd say the remaining, let's say, 1.5 was in 2024, a big part of the rest is probably under the newer regime. [indiscernible], correct me if I'm wrong, but -- or Miguel.

But -- and then what we do going forward until mid-2026, which is when we can still go on safe harbor and additional projects that will be under the new regime. That was the first one.

More additions 2028. I think the question there, I mean I think I've talked about it, but -- so we're assuming about 1.7, 1.8. Your question is can we do more like.

I guess that's based on the 5 gigawatts [indiscernible] 7 gigawatts on top of [indiscernible]

It will be towards the end of the decade. '28, '29, '30, that would be sort of the range when we would start getting projects locked in. So as we go on getting more visibility on the -- we'll have visibility on the safe harboring and we have to try to tie that up with PPAs and with the negotiations that are ongoing and with our existing pipeline of projects, to make sure we can triangulate between all of those. And then as I say, over the next month or so, we'll be giving more visibility on what we're already locked in for '27, '28 and -- and beyond that, we'll need to wait till end of '26, '27 to then start getting visibility on '29 and '30. So I think that's one of the things that typically we don't lock in things with three years in advance because then that also puts you in a big position of risk unless you can -- because you [indiscernible] lock in also the CapEx with all of that sort of time ahead.

So as I say, I think the point here is to make sure we're getting good returns, but also derisking the projects so that we can deliver them with the returns that we want.

The conversations with the high tech. I think I showed this slide, we have more than 3 gigawatts already signed with the high tech and a lot of the conversations are going on also with the high tech. It's true that we also have good relationships with the utilities. I wouldn't say necessarily the dynamics have changed. I mean, let's say, the intensity has probably changed. We're seeing the utilities being very aggressive now about their demand growth. You saw AEP, you can talk about the NIPSCO. I mean, they are seeing a lot of load growth in their region and they are having to procure. And as I mentioned, a lot of them are then resorting BTAs and -- build transfer agreements. And so we're seeing more of those. But I'd say we have pretty good relationships with both the big tech and the utilities. And then it's a question of what are the projects that they are most interested in and sort of [indiscernible] that's through in the discussions.

On the issue of the corporate structures, I mean, you can probably guess the answer of it. I'd say don't assume any changes, keeping the current structure. I don't think it's a question of leaving money on the table. I mean, we have more than 70% EDP, more than 70% of EDPR. So that will flow through naturally to GDP. And at OW level, as I say, our focus there is extracting value. So it's not taking risky growth or sort of merchant positions or -- I mean we've seen a lot of auctions actually go deserted with no one actually showing up those auctions. So I think there is also a fundamental just change in mindset about the way that people are approaching those types of auctions. And certainly, in our case, we are very conscious of the fact that these are very long. I mean people are worried about solar and wind, which take maybe 18 months -- 24 months between sort of starting to get a CapEx to time to cash. I mean in the case of offshore, it's really long. So you need to be very comfortable that you've locked in all of those risks, whether it's on the CapEx side, whether it's on the interest rate side to make sure you don't lose money in that process because if you're out for 4, 5, 6 years just in the development of those projects. Well, and I don't need to mention names, but you can be out by a lot of money very, very quickly. So we don't want to take that type of risk on the offshore business, and that's been our position in the [indiscernible] partnership.

Maybe I would just also complement on the minorities, just to be clear. So the 49% sale that we did this year in the U.S. in the plan, we are not considering to replicate that. So in the plan, what you can find is in the U.S., we typically sell 80%. That has been the structure, but we need to keep some skin in the game. In Europe or elsewhere, we'll sell 100%. So there is no new minorities coming in through the asset rotation.

Pedro from Caixa Bank.

The first one and coming back to the balance sheet optionality because I'm pretty sure that people looking at 12 to 14 equity IRR significantly higher than your cost of capital. So there is this potential. Can you please quantify what is -- because for us sometimes difficult to triangulate according to different rating agencies, metrics and the firepower, how much headroom do you have to invest by 2028 more and still comply with the BBB. And if eventually that firepower can even increase if you are certainly more aggressive also on the asset rotation side, you mentioned the build and transfer agreements, for instance, in the U.S., and futilities continue to see this massive load growth if you have opportunities to increase asset rotations.

And the second question is how much of your CapEx in this plan is really secured, is really closed? And so it's most of it, but if you can provide a rough figure, it would be helpful. And if eventually, if you see the risk of an increasing shift towards domestic manufacturers in the U.S., putting your cost inflation up to a prohibitive level. At some point, PPA is not compensating for that. Thank you.

Okay. So maybe starting with the balance sheet optionality. So what we shared was this FFO net debt 22% by the end of 2028. I mean, S&P and Moody then they have different adjustments. So the number will be lower than that when you look to the different numbers. But we are comfortable profitably above the minimum threshold on those metrics. If you take as a reference, I mean, we are going from this 19%. In the past, we said that the bare minimum would be 20% so consider that we have this sort of 2% points of additional headroom that we are creating on the FFO net debt towards the 2028.

On the CapEx. And I believe that we share a slide where actually we show how much capacity we have already secured. But on the domestic content, and again, I just want to clarify a few topics here. In the U.S., and this is something that we decided back in 2022, we completely shift our procurement strategy and supply chain strategy. We went from having a global supply chain strategy towards having a U.S.-centric and U.S. domestic supply chain and then rest of the world. And that was what enabled us to then sign the contracts with First Solar. The prices are locked in until '28, it enable us as well to build that relationship and lock in the contracts with the manufacturers in you, that have brought their factories in the U.S., namely in the case of [indiscernible] in the higher factory, South Koreans as well. Since then, we have been also creating stronger relationships with the main EPC contractors. So you can think that we buy the main equipment and then the EPC contractor will be buying the rest. We'll also buy some of the main transformers and [indiscernible] transformers, they may pay themselves on our behalf. But that is also a U.S. supply chain, and that has been built over time.

CapEx is Higher. If you're -- and I think I may have shared this example in the past, exactly the same module, the solar module in Europe may cost us around $0.09 per watt, in U.S. it's going to cost us $0.25 to $0.30 and that's why you have a CapEx per megawatt higher. That's why then it drives higher PPA prices and domestic content on the ITC. So you recall that we have shared that we target around 40% of our invested capital in the U.S. being funded through tax equity. That means that not only are capturing the base 30% for the ITC, but that additional 10% adder from domestic content project by project, we may have an additional 10% from the local communities, the energy communities. So that's why, yes, there is this higher CapEx in the U.S., getting reflected into the economics of the project and therefore, meeting the return targets.

We have a question there from Meike of HSBC.

I'll keep it to one. You're going for a spread over WACC of 250 basis points going forward. Can we think of a higher number post 2028? I think that's a question in a nutshell. And why I find that the absolute level of PPA prices in the U.S. hasn't been very indicative of your margin because when those prices were low, you had one of your best spreads of more than 300 basis points over the WACC. As the prices have gone up, you've actually had one of your worst spreads because everyone needed to reprice as the cost went up and then we needed to follow up with the pricing.

Now if it's such a seller's market, why are we not above 300? Or is it the same as you already explained now, we still have the project that have been locked in during the difficult phases as an actually [ plus 28 ]. We could be looking at 300 or actually if the U.S. is so eager, shouldn't that actually be 400? So just wondering where you see the long-term spread over that going for the project?

So first of all, we said more than 250 across the portfolio and across the different geographies. And so I think -- and actually, we've got even better than that. I don't know if you have that number, but the currency is about 280 basis points across the portfolio, which means that in some geographies, it's better and others, slightly worse. And in the U.S., we've typically been above the 250. It is a competitive market also. I mean it's a good market to be in, but it doesn't mean that you can ask for any price you want. So I think the 250 keeps us competitive, it keeps us having a good growth profile. It gives us a good margin that allows us when we asset rotate to still make a good capital gain. And so I'd say we're relatively comfortable with that range, so above 250 million on the overall portfolio. And as I say, whether it's in the U.S. with gas rotations, whether it's in Europe, you've then been able to capture good percentages of asset rotation gains.

So from a question of competitiveness and trying to find this balance between returns and growth. I think that's where we feel it's a good balance.

[indiscernible] mentioned about the margins in the past. Cost of capital has gone up substantially. And I think we -- even when you were talking about, for example, is debt, we used to have a cost of capital where we are refinancing ourselves the hybrid at 1.5%, and that was a pretty much nothing. So obviously, you had much lower. You're having a good spread, but it was a lower cost of capital. Now we're having a higher spread. But let's say, at the high point of the cycle. So hopefully, that's -- that is a spread that if anything, it can only expand if interest rates were to come down over time. So we feel comfortable about that.

Here from the room from [indiscernible] from Alantra.

Just a couple of follow-ups, please. The first one is on the PPAs that you were mentioning in the U.S., especially. Do you have any kind of protection clause because the U.S. is a market that we -- that has proven very volatile for obvious reasons. Any kind of protection close in those PPAs that you are signing now in terms of, I don't know, permitting or whatever the current administration changes in the -- during the game?

And the second one is on asset rotations. Just half of your view on what you believe it's going to be easier [indiscernible] in terms of technologies and countries or regions where you believe you could sell the -- all of this asset rotations that you are targeting.

Sure. So on the PPA, on the protection causes, yes, I think that's -- when I was talking earlier about why we also haven't been signing PPAs in the first half of the year is because we're having those discussions around how we could protect ourselves in the PPAs, either issues of tariffs, issues being able to walk away. For example, if there was some CP, some permitting issue that comes up, making sure that we can step out of those contracts. So as I say, derisking the contracts. So that's been part of the discussions that have been going on is to try to share the risk with the off-takers and protect ourselves also from as I'm making sure we're not out of pocket with some liability on some PPA.

On the asset rotation side, I think what we've shown is that we've been able to do that across geographies and across technologies, whether it's wind, solar, Europe, U.S. I mean, the truth is we've managed to do a bit of everything over time. And this year is a good example of that. As I say, many portfolios in Europe, a big portfolio in the U.S. and all done successfully. You get different types of appetite, different types of investors sometimes in different geographies, so probably more financial investors in the U.S. at the moment. We got quite a few strategics also in Europe. Obviously, everyone likes wind, but that's also a scarce asset. People like assets here in Europe very much, certainly places like Italy and France and all that. That all gets a lot of attention. So I think we've shown that across the board we are able to find sort of good buyers and good multiples.

[indiscernible] here from [indiscernible].

The first one is a clarification on the capital gains of the asset rotations. That is only linked to the asset rotation capacity or the disposal as well? And if so, if you expect some capital gains as well on the disposals?

The second one is on the Ocean Winds. The main question is why keeping House and Wind in the portfolio, you are exiting or rationalizing the portfolio, why House and Wind is so core for the company? And what is the -- to the contribution in terms of CapEx that you are to put in the plan and the contribution of Ocean Wind to the earnings of EDPR.

And the last one is regarding the -- on the Flex yen, hydro and supply in Iberia. If you can give us some more color because I mean, normalization of hydro production is going to be material, probably maybe 2 terawatt hours, normalization of power prices as well, especially because not the wholesale price, but as well the hedges that you had in the past. So if you can guide us, I mean, how can you really offset that big impact on that? Is it through supply or simply at the pumping is providing much more profitability or the [indiscernible] plans?

So we have a stable, long-term partnership with [indiscernible]. There's even a lockup associated with a part of that. So it is a stable partnership. I would keep it at that and say that, that's -- I mean if you can get good projects that give you good money. So it's just a question about staying disciplined on those projects and making sure that it's delivering what you expect to deliver and we're not taking sort of risks that we're not comfortable with.

So in terms of contribution to CapEx in '22, maybe then you can get that. But I'd say with OW, it's let's say, it's the partnership that we have for offshore. It did open us open up a new technology. I think it's been interesting to also follow that. We've had great -- some great projects there. For example, the French projects, we're talking about double-digit equity IRRs. I mean, super attractive. We had Mary East, super attractive project, and we got a huge windfall on the, let's say, on the -- when the energy crisis came up. So I think it's given us also some positive surprises over time, the offshore business. We just need to make sure we're managing that from a risk perspective.

On FlexGen and hydro, so actually on the slide, I think one of the slides we had, we had already that normalization effect. And so I think it's closer to 1.5 terawatt hours, if I'm not mistaken, in terms of delta, for example, for 2025. And in terms of prices, again, if memory serves me right, we're going from 70% to 64%, and that's sort of the type of range. So we're already assuming a certain normalization in the numbers that we're giving you. And then what we're saying is on a normalized basis, you're seeing the unwinding, let's say, of that retail piece of, let's say, the ancillary services been passed on and you're seeing sort of that flexibility piece increasing. And so you have actually an increase on the integrated margin on a normalized basis going forward. But again, we try to decode it for you on the slide if you need -- you can then go in deeper off-line.

So just to clarify, on the offshore. In the plan, we are considering about EUR 0.8 billion, and that's the combination of the picking of the construction of the project in Poland. Some final equity contributions to the French projects, which are finalizing construction. And then in '26, we'll have the equity bridge loan repayments for the Moray West project in U.K. So altogether, which is the biggest chunk of that, the 0.8%. So all in all, that's the 0.8%. In [indiscernible], I'm afraid I referred to the presentation about the secured capacity out of the 5 gig, 2 gigawatts are secured. So then the rest will come.

I think we have here Olly from Deutsche Bank.

Just a question on the gains. I think in 2023, you achieved gains over investments above 60%. This year and last year, I think it was closer to 10%. And in the plan, it's greater than 15%. And -- what's the reason why we're not seeing that return to higher numbers because I think from 2026 onwards, your -- I thought you were selling vintages again, we're at this higher return to [indiscernible] you've achieved?

Talking about the 16% capital gains. It's a great question. So I think two things to bear in mind. One, it's more -- we're going to have more U.S., it has a higher CapEx. And so if you think about it in terms of absolute let's say, take a simple example. But if you have EUR 200,000 per megawatt gain, if it's on a EUR 2 million per megawatt CapEx, that's 10%. If it was on a EUR 1 million per megawatt hour, that would -- per megawatt, that would be a 20% gain. So the fact that you have a bigger CapEx base means that the percentage ends up being a bit lower.

The second thing to note is that there's a lot of tax equity, obviously, in the U.S., you have tax equity. And so the gain is really if you take out the tax equity, our net equity in is lower. So then if you do that percentage on your net equity, effectively, it's a higher percentage. So let's say, the fact that there's a more bigger skew to the U.S. ends up distorting a little bit that metric. But I mean, in terms of underlying, let's say, in this case, dollars per megawatt of gain, it's still a pretty healthy gain.

We have here Alex from Bank of America.

Just one follow-up actually on Ocean Wind and another 1 on tax equity. On Ocean Wind. I think you were talking about extracting value but can we assume that you're keeping the current perimeter as it is? Are you no more further sell-down perhaps of your stakes in Ocean Wind? And just a follow-up on the previous question, how much earnings -- are you expecting incrementally from Ocean Wind by 2028 compared to today?

And then the second question on tax equity, similar on earnings. Just wondering, given that you are deploying more capacity in the U.S. and there's more, I think, been contributing how much income from tax credit should we expect in that income from institutional partnership that you've got still consolidating, I think, at the EBITDA level, I think you had a guidance for EUR 450 million for this year. What would it be in 2028? And just a clarification on how much of that flows to net income. I think there's nothing in the free cash flow because you've monetized that, but just a clarification on that.

Okay. So on OW, I think I've talked about the discipline. In terms of no sell-downs you're talking about at the [ top co ] or are you talking about -- because in the projects, we'll continue to do sell-downs of stakes. And we recently announced for example, the sell-down of one of the French projects, [indiscernible]. So we will continue to sell down at the project level. At the corporate level, we have no plans to sell. On the tax equity side, so we've given some visibility on that. I think we've even put in the appendix, we put in a specific slide on that. I think the biggest jump in terms of the contribution of tax equity income at this point was from '25 -- actually '24 to '25 because you had a big almost 2 gigawatts coming in from the U.S. at the end of 2025, and that's effect, sorry, in '24. That's reflected in the '25 numbers. So again, it's never certainly right. I don't think there's a very big increase from '25 versus '28 a big example was from '24 versus '25. But again, I think we've given some visibility to that and also in the appendix.

So on that, that EUR 450 million referenced that it's going to be around EUR 500 million across the years on the plan. So there's the jump, as Miguel said, it was to '25, then from here onwards, it isn't also because there is some -- we sell some of the assets, so that's basically sort of stabilizing around the EUR 500 million. The cash in was upfront. So at the moment you commissioned the project, you lock in the tax equity [indiscernible]. And basically, you have that. where we do have is that some of the financial costs, and this is actually quite relevant from moving from PTC to ITC because in the organic cash flow, actually, there is an improvement because some of the financial costs that we still bear over 10 years on the PTC based transactions, they do not exist on the ITC basis because basically, we just -- it's much more shorter. So there is actually an improvement in organic cash flow coming from reducing the financial cost on the tax equity structures.

I think you asked a question as well on the contribution to earnings from Ocean Winds. I would say it will range somewhere between EUR 30 million to EUR 50 million. Some years, it will depend on if there is an asset rotation on one of those projects are reducing minority portion from an Ocean wins perspective, then it may pick up. So depending on when that happens, it might have a pickup, but give or take some more between the EUR 30 million to EUR 50 million.

I think we have here a question from Zach from Jefferies.

I have three. Firstly, on repricing. I think you shared some information on the slides about the extent of the repricing impact from 2029 onwards. Are you able to share what the length of the repricing contract would be during that time? And then secondly, on power prices, I'm thinking about the 25% roughly of merchant exposure you have on 2028. I know you assume some upside from wholesale power prices in the U.S. But if you think about the potential kind of like where power market fundamentals are in the U.S., there's an argument to be had that maybe power prices in the U.S. could go up even further. I was wondering if you were able to provide any sensitivities on U.S. power prices, I think at the end of the slide, you provide sensitivity to pool prices, but not necessarily U.S. power prices.

And then finally, just I think a clarification on Jenny's question about impairments. I'm not sure if you addressed it, but when it comes to the $1 billion of disposals, are you expecting any kind of impairments? Or is the message from you guys that we've done what we need to do from this year onwards. And going forward, you can expect the streamline business to not have any more of these kind of like negative speed bumps, but yes.

So on repricing, I think the length of the contracts that we've been seeing in typically 10 years when you get them sort of extended, but obviously, that's something to be discussed sort of ongoing. But at least a data point that we have was like a 10-year contract. Bear in mind that often this is post -- the end of the PPA, and therefore, it's the useful life is 30 or 35 years. you also can't extend it too much because then you bump up against the end of the project life. So I'd say that, that sort of -- I would assume that, that's more or less the length of the contract.

In terms of the merchant post 2028 I mean, yes, for sure, and we've seen sort of a lot of also independent analysis pointing that there could be, let's say, a surge demand, the generation is not increasing. You get a push up in prices. And we are seeing that and also sort of in the capacity, the revenue assurance, I mean, some of the markets, I'm sure you've seen that as well. What we did say is that we've got about 4 terawatt hours that could be coming let's say, there are merchants in that period. And that typically, we go on hedging forward. So as we go on getting closer to that time, we will be on hedging at whatever prices at the time if they're higher, even better.

What about the merchant expenses?

That's the 4 terawatt hours, I think, is the merchant, and it's 12 terawatt hours post 2030. So that's the volume of merchant that we have in the U.S. PPAs that have already expired or that sort of are in hedging hedges that will also go on expiring so it's the energy that we can play around with in terms of future power prices. On the disposals, I mean, we're not assuming gains. We're not assuming impairments, but we'll run processes and the price will be what it will be. I think our focus here is really to just maximize value that we get from -- getting out of certain markets or certain businesses and redeploying that capital back in. But at the moment, we don't have neither positive or negative. We're not assuming anything. We're just saying let's refocus.

I think we have here last question from the room from Skye Landon from [ Redburn ].

First question on FlexGen prices in Iberia. You mentioned that curves and the impact of solar, deeper troughs, habits, et cetera. Ultimately, what this means is your hydro generation can capture price above peak-price, above base price [indiscernible] time. So how do you see those capture price abilities change and as more and more so they'll continue to be out of the grid? And can you provide some details around what assumptions are embedded within your forward guidance for the integrated business. And then secondly, battery storage, you mentioned very good returns in the U.S. tolling agreements. You also noted that battery CapEx is around half the U.S. in Europe. So can you talk a little bit about your European battery plans? Is this more of a '29 '30 thing? Or is there a particular reason why batteries aren't the bigger part [indiscernible].

Yes. Okay. So on FlexGen, I think I actually put up a slide in the presentation, which talks about the realized price that we expect or premium that we expect to get from the hydro, it's about 20%. I think it's gone from like 10%, 15%, 20%. So that was on the left-hand side of one of the slides, you've got that data point. And then you've got the hydro pumping which has increase in volume of hydro pumping and an increase of the spread. So I think based on those two data points, we should be able to get to a relatively good approximation of the value from, let's say, both on the realized price of hydro and also on the ancillary services from pump storage.

On storage, so great question. I mean we have a lot of debate internally about batteries in Europe, particularly in places like Iberia, for example, where you've seen really high penetration of renewables. It's great that we have the storage and the pump storage. I mean it's a fantastic asset, but why has -- why haven't batteries taken off? And the simple reason is that there hasn't really been a business case for it yet. There aren't capacity payments in a lot of the markets. If they start introducing them, as I said, we're expecting Spain to introduce them in '26, in Portugal probably in '27. Then you start seeing sort of a the batteries, I mean, at least in our case, we're not going to invest in batteries just based on a pure arbitrage because that can get competed away very quickly. So it should have a certain amount of regulated -- certain regulated piece or other revenue streams to make the business case work. That exists in places like the U.K., it exists in some places in -- for example, in the U.S. Italy and Poland have also come out with some schemes, which now are incentivizing batteries. And so we're looking at that, and we've been participating in some of those auctions. So I think you will see that begin to develop. It's not a major part of our plan, but I'd say it's an upside to it. I have some very bullish people on the team who believe a lot that, that will happen. And so we're keep looking at it, looking at business case and just making sure we're going to get comfortable with the risk return profile. But I would say it's probably a piece that we believe will happen, but we're not incorporating in the plan yet.

So we have time just to address just two final questions from the web from Alberto Gandolfi from Goldman, which was not able to be here today with us, and I hope he is better. And the first question comes from what do you think is the outlook from data centers in Europe? And what is the business opportunity that brings to EDP?

I mean, I think Europe is clearly behind the U.S. in terms of the build-out of data centers, but we do see movement. And so one of the first things I think I talked to you about was -- the one example, let's say, that we have in Portugal of that 1.2 gigawatt 10 terawatt hour data center that's been built up in 6 phases and they're already on the second phase, moving on to a third. So things are happening. There's a second data point I could point to, which is the partnership we did with MERLIN, also in Portugal, 100 megawatts. We're actually doing 100 megawatts behind the meter. So we actually direct line into the data center. That's something that's being worked on, looking at another opportunity in near Madrid, that's also happening.

So we're seeing movements, obviously, maybe not on the same scale at the same speed that we're seeing in the U.S. But when I talk to a lot of these guys, one of the things that they say, which is quite interesting is that, I mean, the world is becoming more protectionist, more fragmented. People will want to control their data. And I'm sure you've heard comments also even by European politicians talking about Europe doesn't want to be digital colony of the U.S. So there is a mindset at the moment in Europe that -- and also because of the Data Protection Act you need to store some of this data in Europe. Again, I don't know if some of you guys saw the news flow when the Amazon data center went down in Virginia and people were unable -- lost their WhatsApp in Spain. And it's like, "Guys, we're depending on a data center in Virginia for the WhatsApp in Spain", like how does this work? So I think there's this realization that we need to build up capacity in Europe as well, and that will drive some of that data center demand also in Europe. And well, we certainly see a lot of people betting on that and sort of taking positions on that, and that should flow through also to us.

And the final question was around potential for acceleration of net -- also from Alberto Gandolfi, potential for acceleration of net profit growth of EDPR post-2028, what would be the drivers that we see.

I mean the drivers for EDPR, we talked about them to a certain extent. So it would be megawatts, additional megawatts that you bring in and the repricing. I think those are the two key drivers. I mean EDPR at the end of the day is a relatively simple business. It's installed capacity times a net capacity factor gives you a certain generation times the price. And so you either have more megawatt hours or you have a better price. And that's what drives the net income at the end of the day. Obviously, you need to manage our costs, financial costs, OpEx need to be best-in-class in that. But what's going to drive the top line is either volume or price. And so one of those two -- I mean, to see that acceleration, you need to have one of those two moving [indiscernible] time frame.

I think we conclude the Q&A session with this question from the web. Miguel?

Perfect. Thank you very much. Thank you for your patience. Thank you for coming here in person. It's great to see you. And I think we have an interesting story. I think we're in a much better time to be talking about this. Originally we're thinking about doing this at the beginning of the year, but I think the right decision was to do it now. We can give you credibility on the framework for distribution. I can give you credibility in terms of the FlexGen and the ancillary services. I think that's stabilized and we can give you much more visibility certainly on renewables growth going forward. So I think it's a good moment. I think there's a lot of excitement, a lot of enthusiasm, a lot of potential. We obviously have to manage the next couple of years, but I think it's going to be an interesting time. So thank you very much for coming, and I hope to speak to you soon. Thank you.

Good morning. We welcome you to the EDP and EDP Renewables 9 Months 2025 Results Presentation. [Operator Instructions]

I now hand the conference over to Mr. Miguel Viana, Head of IR and ESG. Please go ahead, sir.

Good morning. Welcome to EDP and EDPR 9 Months 2025 Results Conference Call. We have with us today our CEO, Miguel Stilwell d' Andrade; and our CFO, Rui Teixeira, that will present you the main highlights of EDP and EDPR financial performance in the first 9 months of 2025.

The presentation will be followed by a Q&A session in which we'll be receiving just written questions that you can insert from now onwards in the text box available in the webcast. As we'll have just later on at 10:00 a.m. London time, our Capital Markets Day presentation. So the Q&A session will be focused on teams around the 9 months financial performance.

I'll pass now the floor to our CEO, Miguel Stilwell d' Andrade.

Thank you, Miguel, and good morning, everyone. So thank you for attending our 9 months 2025 results conference call. As Miguel said, we'll be doing the EDP results and then the EDPR, so really a 2-in-1 call, but for the reasons that Miguel has already mentioned. And so I'll go straight into the EDP overall numbers.

If we go to Slide 3, we'll see the recurring net profit has reached EUR 974 million in the first 9 months of the year. So that's up 5% in underlying terms. And that reflects basically higher wind and solar installed capacity, higher generation and also the resilient electricity networks. On the wind and solar front, underlying EBITDA is growing 21% year-on-year, and that's supported by almost 20 gigawatts of installed capacity and generation up also 14% year-on-year.

Electricity networks, they continue to show good resilience. Underlying performance, excluding asset rotation gains and FX is increasing 3% year-on-year. And our integrated business in Iberia is also delivering solid results. So although year-on-year comparison was impacted by higher sourcing costs, lower hydro volumes and lower contracted prices, this was partially mitigated by the performance of our FlexGen fleet in Iberia.

It's also important to note that the asset rotation gains were lower at this point in the year, so EUR 55 million versus EUR 250 million last year, so the same time last year at the EBITDA level. And I think that just reinforces the strength of our underlying performance. So if you look at the numbers ex capital gains.

Finally, just to mention, we'll also show -- or we continue to show an improvement in efficiency with lower costs and better productivity metrics, for example, in things like OpEx per megawatt, et cetera, and Rui will get into that in his slides. So overall, these results underscore the strength of our integrated model even in the context of reduced asset rotation gains.

And with that, I'll pass it over to Rui to present the EDP and the EDPR financials.

Thank you very much, Miguel. Good morning to you all. So let me start first with EDP's results. And then moving to Slide 5. So our EBITDA reached EUR 3.7 billion in the 9 months of 2025. That's a 2% increase on underlying year-on-year or actually 4% when excluding FX effects. So let's look to the recurring figures. Renewables clients, energy management decreased EUR 99 million year-on-year. And this is coming from EUR 198 million decrease in this segment, the hydro, clients and energy management, comparing last year, the fact that we have now lower hydro volumes, lower contracted price and higher sourcing costs. This is mainly in Iberia, and there is also some FX impact in Brazil.

Strong performance of EDPR, EUR 1,100 million (sic) [ EUR 111 million ] year-on-year. If we compare last year's asset rotation gains of EUR 179 million with this year's EUR 59 million, this means an increase of EUR 231 million in underlying terms. driven by the increase in installed capacity. And obviously, this is following the record additions we had in 2024.

On the network side, EBITDA is declining EUR 91 million, but this is mostly due to the absence of asset rotation this year compared to the EUR 71 million or the capital gains from the asset rotation, compared to the EUR 71 million that we booked in the 9 months '24 and also the loss of EBITDA from the transmission lots that were sold, which together, they -- with the asset rotation gain represent around EUR 102 million reduction versus last year. Additionally, this segment is also impacted by the euro-Brazilian real depreciation.

If we now move to Slide 6, the performance on the wind and solar segment. Recurring underlying EBITDA grew 21% or 23% when excluding FX impacts. It's a robust growth. It reflects a significant step-up in generation following our record capacity additions last year. Although this has been negatively impacted by worse renewable resources in Q3, mostly in North America, you may have seen that it was one of the worst quarters in 20 or more than years, I think, since 1989. So I won't spend too much time here. We'll provide a bit more color on EDPR's performance in the next section.

So let me move now to Slide 7 and deep dive into the hydro activity in Iberia. So hydro inflows, 38% above the long-term average, higher than the 33% level that we saw last year. However, despite this increase, the hydro generation was lower year-on-year since the rainfall was primarily used to reestablish reservoir levels, and this was mostly in Q1, as you can see by the chart on the right-hand side.

So even with lower generation year-on-year, hydro output remained above average and the uncontracted volumes were sold at higher prices compared to 2024, with the Iberian pool price reaching EUR 65 per megawatt hour versus EUR 52 per megawatt hour in the 9 months of '24. The contracted volumes were sold at a lower price of EUR 70 per megawatt hour in this year compared to the EUR 90 per megawatt hour in the 9 months last year.

Regarding the outlook for the remaining part of the year, October was dry with the hydrological index 36% below average. Meantime has starting to rain. In any case, we see reservoir levels still above average, but obviously decreasing. So I would say that we can expect a weaker fourth quarter as compared to previously expectations into Q3.

If we now move to Slide 8 to our hydro, clients and energy management segment. As a whole, EBITDA stood at EUR 1.1 million or EUR 1.14 million. That represents a fall of 15% versus last year as expected. It's a mix of different dynamics. So Iberia in the 9 months '24 were impacted by extraordinary gas sourcing costs. In one hand, hydro generation volumes net of pumping were 7.2 terawatt hours versus 8 terawatt hours last year. So that's a 10% drop. While on the other hand, pumping generation increased by 28% and CCGT's generation increased by more than 3 terawatt hours as requested by the system operators, both from Portugal and Spain.

I would also highlight that in line with the trend that we saw in the second quarter, in the 9 months, we had an increase in flexibility revenues from generation, but also some costs on the supply side, which we expect to persist in the fourth quarter 2025. Finally, in Brazil, EBITDA declined from EUR 141 million to EUR 106 million, but this is primarily due to FX impact. So overall, despite the decline in headline figures, following a very strong 2024, the segment continues very solid.

Now moving to Slide 9 on the networks. Recurring EBITDA reached EUR 1.18 million -- billion in the 9 months this year. That represents a 7% -- minus 7% year-on-year. This decline is primarily explained by the absence of asset rotation gains in '25, as I introduced before, which amounted to EUR 71 million in the 9 months last year. But there's also some other moving pieces here. So let me break this down probably in 3 main building blocks. So the first one is a EUR 33 million increase of EBITDA in Iberia following inflation update in Portugal and RAB growth in Iberia in Spain.

Flat EBITDA in Brazilian real, driven by the improvement in operations being mitigated by the loss of EBITDA from transmission lines that were sold. And naturally, the Brazilian real devaluation and no capital gains and the segment is minus EUR 53 million versus last year. So all in all, EBITDA for electricity networks, excluding asset rotation gains and ForEx increased 3%, showing the resilience that is expected from this segment.

If we now move to Slide 10. Net debt stood at EUR 17.3 billion from EUR 15.6 billion at year-end 2024. This is obviously reflecting the execution of the investment plan, the annual payment of dividends and the fact that we will have proceeds from asset rotation and tax equity, we expect it to be mostly concentrated in the last quarter. So the key drivers for the change in net debt include EUR 2.1 billion organic cash flow, reflecting an improved working capital performance with organic cash flow increasing EUR 0.5 billion year-on-year from EUR 1.6 billion in the 9 months last year, EUR 0.8 billion of dividend, annual payment -- dividend annual payment executed in May. EUR 2.4 billion of net cash investments, including EUR 3.1 billion of cash CapEx, including EUR 0.5 billion related to working capital changes with PP&E suppliers. And this is offset by EUR 0.4 billion of asset rotation proceeds and EUR 0.3 billion of tax equity proceeds.

And then we have about EUR 0.8 billion from regulatory receivables and others. For the year-end, we expect to reach the EUR 16 billion net debt, considering the EUR 2 billion asset rotation proceeds in total expected for the year and the EUR 1 billion tax equity proceeds in total expected for the year. And that, as I said before, it's -- we are expecting that to come -- so the remaining piece is in Q4. And with this, we will be reaching a 19% FFO net debt ratio and therefore, meeting our BBB goal in terms of funding net debt ratios.

Now on Slide 11, recurring net profit, EUR 974 million. So that's a 5% increase year-on-year. This is coming on the back of a lower EBITDA, as I explained before, EUR 139 million, lower than last year, a combination of lower asset rotation gains and the decreased results from the integrated segment in Iberia. Higher D&A and provisions, increasing EUR 107 million, resulting from our investment path and the increased net financial costs driven by higher cost of debt, 4.5% last year and this year, 4.9%. And this is primarily due to the higher cost of debt in Brazilian real, which is it's floating and also the average -- the higher average nominal debt. So we also have some lower income taxes, lower noncontrolling interest. And basically, this takes us to the net profit.

So highlighting again that excluding asset rotation gains, the underlying performance on the net profit shows a 5% increase versus last year. So definitely a very solid operational performance. In reported terms, net profit reached EUR 952 million, including the negative impact of around EUR 22 million, mostly related to some EDPR impacts.

So I will now turn to EDPR's performance for the first 9 months of 2025. So on Slide 14 (sic) [ Slide 13 ], you can see that EDPR delivered a strong set of results. I mean, this is marked by robust underlying EBITDA and net profit, continued capacity delivery, solid progress on the asset rotation plan throughout 2025. Operationally, EDPR reached 19.8 gigawatts of installed capacity with generation up 14% despite this lower renewable resource that we experienced in Q3.

The average selling price declined 9% year-on-year to an average of EUR 54 per megawatt hour, reflecting the changes in the generation mix, lower average prices in Europe, mainly from hedges normalization and the lower feed-in tariff prices in Portugal.

Recurring EBITDA reached EUR 1.4 billion. That's up 9% year-on-year, with underlying EBITDA growing by 21%. I think it's important really to note that asset rotation gains were EUR 59 million this period compared to EUR 179 million in the same period last year because this really shows the strength of the underlying business performance.

Recurring net profit came at EUR 189 million or if we exclude asset rotation gains, EUR 153 million. So that's definitely a very important increase, EUR 111 million versus 9 months 2024. Overall, these results underscore EDPR's ability to combine the growth, efficiency and value creation, reinforcing our confidence in the outlook for the remaining of the year.

So now let's go a bit deeper into EDPR's results. So if you focus on EBITDA, Slide 15 (sic) [ Slide 14 ], this was driven by EUR 1.6 billion from electricity sales, EUR 308 million of tax equity revenues from North America. That's a 20% increase in generation and new capacity additions. On the back of this, EUR 59 million of capital gain from asset rotations that we closed in Spain and France and Belgium, with the remaining gains to be concentrated in the fourth quarter. And then we have less the impact of EUR 574 million from core OpEx, which is mostly in line with last year's. And I would highlight here the strong efforts in cost and efficiency improvement that we have been implementing across the company. And you also can see that on the ratios on the OpEx per megawatt that have been really under control, and I think they are probably one of the best-in-class in the sector.

EUR 22 million from other net costs that improved around EUR 80 million on the back of no material impacts this year. As you may remember, last year, we had some headwinds in Colombia, also Romania. This year, we don't. And therefore, that's a significant improvement impacting our EBITDA. So these results highlight improvement in the underlying business as a whole from an operational perspective as well as this enhanced efficiency that we've been deploying.

So now turning to Slide 16 (sic) [ Slide 15 ]. I'd like to look at EDPR's cash flow evolution for the first 9 months of this year. So organic cash flow reached EUR 458 million, representing a EUR 0.2 billion increase year-on-year, reflecting a solid performance of our operating portfolio as well as the changes in working capital, distributions to minority interest and the tax equity partnerships. I'd like just to note that organic cash flow excludes tax equity cash proceeds, which are typically received at the project completion and have an immediate positive impact on net debt. First 9 months of this year, we received EUR 278 million, and we remain on track to reach EUR 1 billion for the full year.

As of September, net debt stood at EUR 9.2 billion. It's up EUR 0.9 billion since December last year. The increase is primarily driven by the EUR 1.6 billion in net expansion investments, obviously supporting the portfolio growth. And this is partly offset by the asset rotation proceeds from the transactions, as I mentioned, closed in Spain, France, Belgium and also U.S. Looking ahead, we do expect net debt to converge to around EUR 8 billion by year-end, supported by the timing of the asset rotation and tax equity proceeds. As I mentioned, this will be concentrated now until the end of December.

Also highlighting that already in October, we closed a transaction for a 1.6-gigawatt portfolio in the U.S. Again, just to emphasize, it's a 49% sale, straight equity, no structure. And I think it came in the context, as you know, quite a lot of uncertainty throughout 2025. So definitely a great transaction executed on top of the one that we have been executing in Europe. And as you know, we have already signed some European transactions that we are expecting to close before the end of the year.

Now moving to Slide 17 (sic) [ Slide 16 ]. So as previously highlighted, EDPR's recurring underlying EBITDA rose by EUR 231 million, again, on the back of the solid performance on the operational side. Depreciation and amortization increased, obviously, on the back of the new capacity additions. We do have some one-off impact from accelerated depreciation of repowering wind farm in the U.S. Financial results increased on the back of higher nominal financial debt, lower capitalized financial expenses, partly offset by some FX and derivatives. Contribution to minorities improved year-on-year following the completion of the buyback of CTG minorities in late 2024. So at the net profit level, we recognized around EUR 40 million of one-off impacts this quarter, and this is mainly from impairments in Europe related to noncore countries.

So all in all, recurring net profit reached EUR 189 million. Excluding capital gains, this represents a fourfold increase versus last year. Again, just underscores the strength of EDPR's underlying performance. Summary, EDPR's performance during 9 months, I think it's a testament to the ability to execute, to adapt, deliver sustainable growth. We will have -- Miguel will be presenting the strategy for the next few years. But I think that we are definitely on a good track in terms of how we are delivering the results this year.

So I would hand over to you, Miguel, for final remarks. Thank you.

Thank you, Rui. So just to wrap up and moving on to Slide 18. Just to reinforce the guidance. So we're expecting a recurring EBITDA for 2025 of around EUR 4.9 billion, and that's supported by strong performance across all of the business segments, and you can see that already at the 9 months numbers. Breaking this down by segment. So the integrated generation supply should deliver about EUR 1.4 billion of EBITDA of about -- of which EUR 1.1 billion was already recorded in the first 9 months. Wind and solar, including EDPR, expected to contribute roughly EUR 1.9 billion, including EUR 0.1 billion of asset rotation gains and having the 2 gigawatts capacity additions on time and on budget. And electricity networks forecasted at around EUR 1.5 billion with the distribution performance mitigating the transmission asset deconsolidation and the Brazilian real devaluation.

Recurring net profit, approximately EUR 1.2 billion, impacted mostly by a higher cost of debt on the Brazilian real debt, an average higher debt since the asset rotation proceeds and the tax equity proceeds are expected to be received more towards the end of the year. Net debt expected to stand near EUR 16 billion, so assuming about EUR 2 billion in asset rotation proceeds and about EUR 1 billion in tax equity proceeds for the year. All in all, guidance reflecting resilience, reflecting the strength of our integrated and diversified portfolio, as Rui has also mentioned. And obviously, we'll be providing further color on the outlook for the years ahead in the next presentation, the CMD.

But for now, I'll pass it back to Miguel to see if there are any questions, so we can take those, mostly concentrated on the 9 months numbers. Thanks.

Thank you. So we have here some written questions. And the first one from Pedro of CaixaBank BPI regarding the capital gain at EDPR in the first quarter, if it relates only with the sale of the 121 megawatts wind portfolio in France and Belgium? And if we can clarify the good capital gain per megawatt implicit in the transaction.

Okay. So thank you, Pedro. Yes. So in the first -- in the third quarter, the capital gain is mostly related to the French and Belgium portfolio, and it's around EUR 0.4 million per megawatt. So the multiple was great. It was an EV per megawatt of around EUR 1.6 million per megawatt. And that implies around 28-or-so percent capital gains on invested capital. So yes, it was a great deal.

I think this just reinforces that we continue to see strong demand for these portfolios. We continue to see great multiple for these portfolios. And in Europe, we've been consecutively able to deliver on good numbers here. It was a good operating portfolio with around 11 wind projects in France and 1 wind project in Belgium, all with COD around 2020. I mean in this case, the buyer is a financial investor. And as I said, we continue to see strong interest for our assets at attractive implicit yields.

We have also a question about what impact we have in our 9 months '25 accounts regarding the extra cost with the ancillary services in Iberia related with the increase of these costs during this year, namely supported on the supply side?

Yes. So ancillary services, as you know, post blackout, there was a big increase, but there has already been a structural increase before that. And I'll talk a little bit about that later in the CMD. I mean the value is estimated at around EUR 150 million. But just bear in mind that the revenues on the generation side have to then be passed on to customers. And in some cases, those contracts are already fixed. So on a net basis, we continue to benefit from our FlexGen portfolio, but obviously partially offset by sort of then the pass-through to the customers taking just happening over the next couple of years. But we can give you more detail on that also when we talk in the CMD.

So we have also a question regarding the guidance for 2025. So we see now the EBITDA on the EUR 4.9 billion, which is at the top of the previous range provided. Net income at EUR 1.2 billion. So if we can comment on this evolution for the guidance for 2025.

Yes. So what I'd comment here on the guidance is, listen, we're very confident on delivering the guidance for all the different business segments, including the integrated in Iberia. I mean we did have a weaker October, and that's also incorporated. But we are also seeing -- so that's sort of at the EBITDA level. There's no doubt we're sort of at the top end of the range. But we are seeing slightly higher financial costs, especially in Brazil and also tax rate expected to be around 25%, 26% by year-end. And therefore, the net income coming in still within the range, but close to the EUR 1.2 billion end of the range.

We have also a question regarding our current exposure, regarding offshore in U.S. And if we have any comments regarding latest news regarding permitting in U.S.?

So there was some news that came out. I think it was an article, that's probably what you're referring to, article that came out in the New York Times or something like that, around offshore in the U.S. and around the permitting. As you know, offshore in the U.S. is pretty much in hibernation mode at the moment and sort of it's been much more about just riding out this phase. We have an exposure, and we said this multiple times. We have a total exposure at the EDPR level of around EUR 300 million. It's about EUR 200 million at the EDP level. We already partially impaired that at the end of last year, assuming that we're going to delay the project 4 years. So we're keeping this exposure contained and sort of at a minimum.

And we're just focused on building the legal case to defend the project permits and the value and also just then focusing on what could be the next steps. Essentially, we're at the same stage as many other of our peers are in relation to offshore in the U.S. I think the key issue here is what is the value it's taken. As many of you know, it's around the EUR 300 million at the EDPR level, which has already been partially impaired.

We have also a question in terms of the -- how we are evolving in terms of hedging for 2026, where we are in terms of contracting in terms of hedging volume and prices in Iberia?

So for hedging, as you know, we typically hedge 12 to 18 months ahead. So in this case, for 2026, we're already around 85% hedged at a price that's north of EUR 64 per megawatt hour. This is something that we do sort of on a rolling basis. But for 2026, it's pretty much all set. I would say we normally don't -- we wouldn't hedge more than this just because of -- just to make sure from a risk perspective, we don't become overhedged. So 85% is -- I would consider to be already the level of hedging that we want for 2026, and that's at the EUR 64 or north of EUR 64 actually in this case.

We have the last question just in terms of execution of 2025, if we -- how do we see our delivery in terms of the target 2 gigawatts in EDPR in 2025?

So we are on track, on time, even slightly under budget in some of the projects, but overall, very much within the budget for the 2025 project. And so I'd say that, that's -- it's a good year from an execution point of view. There's been no issues around supply chain, everything sort of is on site, and we're just wrapping up sort of -- and we'll be wrapping up sort of by the end of the year. So I'd say everything on time, on budget and on track.

So we have no more questions. Miguel, just if you want to just closing remarks.

I'd say, listen, it was a good set of -- it's been a good year, good 3 quarters. And I think we're well positioned to have a good full year and looking forward to talking to you about the next couple of years at the CMD. So look forward to seeing you all then. Thanks.