ERG Stock

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the ERG First Quarter 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Paolo Merli, CEO of ERG. Please go ahead, sir.

Good afternoon, everybody, and welcome to our first quarter results webcast. Here with me, as usual, Michele, our CFO. Let me start with our economic results. EBITDA in Q1 closed at EUR 167 million, plus 16% year-on-year, benefiting from the contribution of new installed capacity and let me say like this, from an easy comparison in terms of wind production in light of the very weak conditions over Q1 2025. So to this extent, we can talk about better wind conditions, but let me say, still below the historical average. But that trend was already captured in our full year guidance at the time of our previous webcast in mid-March.

These positives were partially offset by lower clearing prices. I mean the higher productions following this better wind conditions were partly compensated by lower capture price, in particular, clearing price linked to short-term hedging transactions as these contracts, as you know, are typically executed 3 years in advance of the delivery date. So therefore, in Q1 last year, value of hedging still benefited from the very high prices recorded in 2022 and 2023. It's worth noting the strong performance in the U.K.

U.K. contributed to the EBITDA with EUR 25 million, basically 3x more than last year. This thanks to the higher installed capacity that was partly organic. I'm referring to the 47-megawatt greenfield we executed in Northern Ireland in the second part of last year and partly through M&A, the 73 megawatts wind portfolio that was acquired at the beginning of 2026 and contributing or consolidated as of the beginning of the year.

Conversely, we had a fairly weak performance in the U.S. impacted by exceptional weather events translating to lower wind availability and then lower productions. And there were a lot of grid congestions in the grid and this for the price mechanism that is in the market in U.S. had a negative impact on capture prices. Those events -- so we tend to see those events as one-off. But nevertheless, they had a negative impact that we estimated at about EUR 6 million negative, minus EUR 6 million in the quarter -- the quarter EBITDA.

So quite substantial. In Q1, we invested talking about CapEx, EUR 148 million mainly related to the acquisition of the U.K. portfolio I've already mentioned, coupled, say, with the expenditures associated to our asset under construction, Italy, France, Germany. Adjusted net profit in Q1 was EUR 61 million, up 24% year-on-year, reflecting the greater operating -- the better operating results just commented, partly offset by higher depreciation, higher financial charges and taxes. Net financial position at the end of March was EUR 1.8 billion, more or less, down 4% so slightly down compared to the end of last year, thanks to, let me say, solid -- a very solid cash generation over the period.

I'm moving now to Page #5. Over the period, we also kept delivering on our strategy. We are progressing very well on our project pipeline, let me say, on top of the already announced assets under construction, namely the 230 megawatts I already had the chance to explain during the last webcast. We made just yesterday, not just this morning in our Board of Directors, we made final investment decisions on a couple of projects that have now entered into the construction phase.

I'm referring to a 25-megawatt greenfield wind farm in France and the revamping of 41 megawatts PV farm in Italy, farms because there are more than one farms that are still under the Conto Energia scheme. We also obtained a final authorization or so-called a for our largest wind repowering project in Italy, the 121 megawatt in Sardinia will be plug. Probably I already said that during the last webcast. But now in the meantime, we received properly the piece of paper from the region that is the last award to this long -- very long process to obtain this authorization.

Okay. On finance, let me say, discipline continues to be one of our key strengths. yesterday, Fitch, the rating agency reconfirmed our investment-grade status with a stable outlook. So we are quite proud of this achievement, which reflects, say, the appreciation for the work we have done so far. In this regard, I would like also to mention that during the period, we further optimized our financial structure through liability management amounting to almost EUR 500 million, EUR 0.5 billion that was refinanced by extending maturity and improving cost of debt. So -- and part of this refinance debt was subscribed, as you can see the logo in the chart by CDP, which is a state-owned key financial institution, so something we are, again, very proud of.

On ESG, ERG was included in the top 5 of the electric utilities sector in the 2026 Standard & Poor's Global Sustainability Yearbook. We are also proud to have completed together with Greenpeace installation of solar panels in kindergarten in Ukraine as part of our social purpose. As regards shareholder remuneration, you already know, the AGM approved the EUR 1 per share dividend that is going to be paid next week with a yield of over 4%, which is, I may say, within our peer group. So I now hand you over to Michele for his review of first quarter results.

Thank you, Paolo, and good afternoon, everyone. Let me walk you through the quarter, highlighting the key drivers of our financial performance and underlying trends across our portfolio. Looking at power markets, prices were lower year-on-year in almost all countries where we operate. This trend, coupled with short-term hedging fixed at lower prices compared to last year, leads to reduction in the unit revenues in most countries.

However, as expected, the impact on our revenues was only partial, reflecting the regulated nature of our portfolio, where a large share of volume is already secured through PPAs or CfDs. I would like to highlight the higher capture price in U.K., driven by our newly acquired asset in England, which benefits of renewable obligation certificates in. On the other hand, the trend of U.S. wind unit revenues reflects an extraordinary increase of the basis cost due to temporary congestions, outages and grid constraints in the period.

Moving to production. In the first quarter, ERG reached 2.2 terawatt hour of generation, 15% more than previous year. This trend is influenced by higher wind compared to 2025 characterized by exceptionally weak wind condition across all Europe, but also thanks to the contribution from new capacity. This was made possible by the continued expansion of our portfolio with roughly 90 megawatts of additional capacity contributing during the quarter.

In the first quarter, we doubled the production in U.K., mainly thanks to the new acquisition in England and the production of new greenfield plant entering into operation in Northern Ireland at the end of the year. On the negative side, U.S. was influenced by extraordinary weather events impacting the availability of the plant and compares with the first quarter of 2025 influenced by very high wind.

In conclusion, we have a quarter with a substantial increase in the European production, but that remains, in any case, below the long-term average of our assets in the sense, not representing the full potential of our portfolio.

Now let's look at the EBITDA. In the first quarter, the EBITDA reached EUR 167 million, a very good result if we compare it with the first quarter 2025. But remember that as already commented, the first quarter 2025 was affected by wind well below historical average in Europe. The main driver was the wind, coupled with the perimeter effect from new capacity in a more challenging price environment. After the new acquisition in England and -- after the new acquisition in England and the greenfield plant entering operation in Northern Ireland, U.K. reached 3x the EBITDA of previous year.

On the other hand, the United States suffered the decrease in prices and the low availability of the plant. Overall, the group recorded a result higher than last year by EUR 23 million. A comment now on the investment. In the first quarter, we invested EUR 148 million, mainly for the acquisition in England for EUR 115 million and for the ongoing activities on repowering and greenfield projects in France, Germany and Italy. These investments are fully aligned with our strategy, combining selective M&A deals and organic growth, particularly in repowering and greenfield projects across all geographies.

Let's take a look at the cash flow statement and the net financial position. The net financial debt at the end of the quarter is EUR 1.8 billion, minus EUR 70 million versus the end of the year, also thanks to the disposal of the Swedish assets in January. This reflects a well-balanced combination of solid cash generation from EBITDA and continued investments to support growth. Finally, here, you have a snapshot of our debt structure, which has not changed in its component as it remains largely made up of green bonds, EUR 1.6 billion, but corporate loans component for EUR 500 million has been materially improved.

In April, we finished the liability management of our 2028 corporate loans maturities and the prepayment of the project financing of our latest U.K. acquisition. By way of repayment of the previous loan and drawdown new loans, including the one from the European Investment Bank for EUR 240 million at a significant lower margin for longer maturities, we shifted all corporate loans beyond 2030, increasing the tenure and securing a significant saving in yearly financial charges.

We leverage on existing hedges and exploit the credit rally before the Iran war to get the most out of this excess, which will contribute to secure ERG competitive financial charges expected at 1.8% in 2026. Cost of gross debt will remain highly competitive until 2030, having only one maturity in 2027. Based on such financial strength, alongside our solid business profile, we got the confirmation of the investment-grade rating with a stable outlook by Fitch, which remain a cornerstone of our strategy. Indeed, high value opportunity will be posted constantly with our rating by leveraging on the option available to investment-grade corporate like ERG. Thank you for your time. Now I leave the floor to Paolo for his final comments.

Thank you, Michele. Let me now conclude by looking at the guidance for 2026. Reality, it's a very simple and quick exercise since all our indications are confirmed. We still confirm EBITDA within the range of EUR 520 million, EUR 590 million. For sure, some upside could come from the current energy price environment, but please also consider our exposure to merchant power is limited as regard to 2026 because we have already our short-term hedging in place. So we still have roughly 1 terawatt hour of energy exposed to merchant. CapEx is expected within the range of EUR 330 million, EUR 380 million.

And this includes also the acquisition of the U.K. portfolio. And let me say the investments we approved that were been approved by the Board of Directors this morning will have just a marginal effect in 2026 as most of the payments are expected in 2027 so next year. Finally, at year-end, we forecast a net financial position within a range of 1.95 and 2.05, including the above CapEx and, of course, the cash out for the dividend. So I concluded, and we are now ready to take your questions.

[Operator Instructions] The first question is from Beatrice Gianola of Mediobanca.

I have 3. My first question is on the operational performance. First quarter was good, as you commented and representing almost 30% of your midpoint guidance. So I was wondering what prevented you from upgrading it? And which elements do you see as critical to eventually reach the upper bound of such range? My second question is on the energy decree adopted by the government in mid-February. We know there are ongoing discussions between the Italian government and the European Union. So I wanted to have your thoughts and expectations in this regard.

And then my last question is on M&A. during the latest conference call, you mentioned that the company is working on an asset rotation strategy and defining an asset rotation strategy. So I was wondering whether you could provide an update on this, which assets and geographies could eventually be targeted in your view?

Okay. Let me start from the first question, the operational performance in the quarter, I confirm was good. And say the first quarter, as you know, it's one of the most important throughout the year along with the 4 quarters. So a good start for sure, we are satisfied. It could have been even better if U.S. had performed in line with our expectations because in the end, the contribution of U.S. was short of roughly EUR 6 million, EUR 7 million compared to our expectations.

But in the end, say, the good performance in U.K. and the better wind in January and February, particularly in Italy, allow us to post a quite good performance in the quarter. We decided to stick on our guidance range because in the end, honestly, April was not particularly good in terms of wind, even though over the last few days, wind seems to be back very strongly, and then we are quickly recovering. What -- so the question, if I understood well, you asked for what should happen to reach the upper part of the guidance.

I'd say as we like to define ourselves internally, we are a company people [co]. So price multiplied by volumes. And what I can do to help you, you analysts to make your best estimate is to provide you with a very simple sensitivity. And the sensitivity is EUR 10 per megawatt hour in prices higher of our internal estimates are worth basically EUR 10 million, EUR 9 million, EUR 10 million of EBITDA because we just have roughly 1 terawatt hour of production still exposed to merchant.

Why in terms -- as regard production, say, 100 gigawatt hour of more production means, of course, it works also the other way, the sensitivity, but 100 gigawatt hour is worth more or less EUR 10 million. So very simple. EUR 10 per megawatt hour in price, EUR 10 million EBITDA, 100 gigawatt in production equal to EUR 10 million. So to reach the upper part of the guidance, we would need, say, from EUR 10 to EUR 20 per megawatt hour higher in the selling price as regards the merchant volumes and from 100 to 200 gigawatt hour of higher production. Is it that possible? Of course, yes, because in terms of forward prices for Q2, Q3 and Q4, in particular, in some countries such as like Italy or U.K. that are, by the way, our 2 main countries right now.

We have already forward prices higher from EUR 10 to EUR 20 compared to our budget. In terms of production, who knows? I would need a crystal ball, difficult to predict how wind is going to blow, especially in the fourth quarter because honestly, the fourth quarter usually is going to be the swing quarter. If you want, I can because we are becoming experts more and more on hat climate and meteorological matters. experts and in particular, the world Meteorological Association is expecting at least with 40%, 50% probability that El Nino super Nino will come during the fourth quarter of the year, actually in September after the summer. And this usually is associated to good wind in the past was like this. So let's see. But I repeat, I haven't got the crystal ball, but we have elements internally to be a little bit optimistic.

I hope to have answered your question. So about the guidance, please don't keep asking me because the only thing I can say, make your best estimate, I provide you with the parameters to calibrate it as best as possible. Energy decree, you open subject that make me very angry because we are basically very, very negative on this decree. And fortunately, let me say, the European Commission just last week on May -- on the 5th of May, published on the official journal of the European Union communication, which is the -- I can read you because -- sorry, I want to be more precise because I got the document just in front of me.

The Middle East crisis temporary state framework. You can find it on the website for sure, Googling. And this document, which is an official document, I repeat, loaded on the official journal of the European Union at Article 45 says states that member states can -- I quote because I'm reading by the official document, member states can consider measures to mitigate the impact of high gas prices, but at certain conditions. And those conditions are 6, 7. The first one is they have to be time limited, I mean, these measures. The second condition, they are designed to prevent internal market distortions.

The third condition is they preserve long-term investment signals for clean energy. The fourth condition is to not cover the compliance cost of ETS nor use ETS prices as a proxy to determine compensation, that's total in contrast with the Italian decree. They include the fifth condition, they include safeguards to ensure full pass-through of benefits to final consumers. And the last, if the member state decides to charge the cost of the measure on consumers, only consumers that benefit from the measure should contribute to its financing. I can tell you very, very sure of what I'm saying that none of these conditions are met by the Italian law. And I think I can stop here.

So I'm quite confident that in the end, this law will be reduced in power because the European Commission is working on it. And I think the fact that this article, I repeat, published last week was so detailed it's, to me, an implicit answer to the Italian law. And the third question -- it was about M&A. In this respect, we are working. We are mapping all our options, but I repeat, I can say much more than what I've already said in March because this is one of the main reasons we decided to postpone the presentation of the business plan to the end of the year or more likely at the beginning of next year because we are working on this, and this takes time, as you can imagine. I hope we have answered all your questions.

The next question comes from Roberto Letizia with Equita.

Well, the first one is on the U.K. So I'm just wondering if the very good results of the U.K. are simply because of the external and internal growth, so the new plants and the acquisitions under normal conditions that we can eventually project for the remaining of the part of the year? Or if the good results of the U.K. includes any, say, one-off benefit in the sense that the commission has been above forecasted or budgeted expectation for the country. Just wondering if it's a normal very good contribution of the U.K. or if that includes a special condition, which anyway compensated, of course, the special negative in the U.S. But just wondering how to calibrate the performance of the U.K.

You mentioned the Sardinia plant on the 121 megawatts. Can you tell us when eventually you expect this potentially to contribute to numbers? Then a question on the guidance, but I'm sorry for that, as you said not to as much on the guidance. But I just want to calibrate the indication that you provided us last time on the guidance, the expected lower production and the fact that you reduced the guidance on the current 520, 590 million.

But at the time you provided that guidance, the trend in the power price was not so strong. So basically, you already had some months ago a condition in which you were able to reach the EUR 590 million of EBITDA. But then we are adding something more on top, which is the sensitivity on the power price that you just provided us, which actually was not forecasted at the time you provided the guidance. So I'm trying to compose the puzzle if actually the sensitivity you provided us may also target anything above the EUR 590 million because you have dual condition under which you can arrive at the EUR 590.

And on top of that, you have the prolonged situation on the power price, which added the sensitivity you provided. I'm not sure if I have been clear, but just to compose this picture. Sorry, I have another question on the green certificate. Can you tell us how many green certificates you have this year and how many you have next year? Because unfortunately, we have this very crazy regulation in which next year, unfortunately, the green certificate price will suffer from the very high price that we have today. So if you can tell us on what could be the potential impact on that side?

So let me go in the order to pose the questions. The first one is U.K. U.K. number doesn't include any special item. It's a correct number, reflecting the very good performance of the portfolio. We are very satisfied because I think it's quite clear that with the recent acquisition, we now have and we can now rely on a very well-spread portfolio across U.K. because we are in England, we are in Scotland, and we are in Northern Ireland. And it happened to be a good locations for the wind, especially in this first quarter.

But let me say behind this good performance because last year, we posted, if I remember well, EUR 80 million EBITDA and now 26 million, almost EUR 25 million, 26 million. So it's, let's say, EUR 18 million EBITDA more than last year. 2/3 are associated with the new assets.

I mean, the 47 megawatts Corlacky Wind farm in Northern Ireland that we started up in the second part of last year, plus the 73 megawatts of portfolio in England that don't forget is entitled to ROC, I mean, kind of green certificates. That was one of the reasons we explained at the announcement of this acquisition when we made this asset swap between Sweden and England. And this is part of the result.

The 1/3, the other EUR 6 million came from, let me say, higher availability of plants. Don't forget that our plants in the U.K. are all branded new. So they were started up, especially the ones in Scotland and the one in Northern Ireland just a couple of years ago. They suffered the ramp-up phase at the very beginning, and they got progressively recovering their better performance in terms of availability. And maybe we are not completely at the full potential, but we are approaching it.

We are getting better and better from this point of view. And the third point which is a double point, but I would say I summarize in just one single point is the service market and the curtailments. Curtailments were lower finally in Northern Ireland, where they are not refunded. So any megawatt hour that are cut from your production is lost in your P&L.

We are having a strong connection with the TSO there in order to prevent these congestions to happen from happening. And some achievements have been reached from this point of view. And the other, which I put in the same point is the fact that the Scottish assets are participating to the balancing market that is a premium compared the day ahead market. I mean the operator, the grid operator can ask plants to stop to reduce production. But this production, given that you are helping the system to be balanced is paid the day ahead price plus a premium then translating to higher EBITDA. So -- but in the end, we expect these flows to remain in the picture.

So I would say nothing nonrecurring in those numbers. About the newly [indiscernible] project, again, we are very, very, very -- I repeat 3 times because we submitted the first documents for authorization in 2018, I repeat it. And we received the formal authorization from the Sardinian region just over the last few weeks after a long tragic path to Court of Justice and blah, blah. So -- but in order to make the final investment decision on the investments, we need -- this is compliant with our business model to secure the route to market.

So our energy management is working to find potential PPA or we can wait for the next FER X Decree auction that is expected to be by year-end, but still uncertain because in Italy, there is no clear calendar for this kind of auctions while in other countries such like Germany, there are every 3 months, there is an auction. So we are waiting, but we are not -- still we are not doing nothing. And nowadays, we are working to find a PPA, a long-term PPA, which can guarantee, say, the LCOE of the plant.

You said about the guidance, I knew you couldn't resist to ask something about the guidance. We decided not to change the range as we did last year. In the end, last year, we finished at the bottom part of the guidance because numbers can change very, very rapidly depending on the wind presence. And the fourth quarter, as I said, is the swing producer. I don't want to correct you, but let me say that forward prices were not that different compared to mid-March because the year-end situation was already broken up. And then there was no very big difference from this point of view. even though in the meantime, you are right, we made some hedging, short-term hedging at prices and values that were higher than we could expect for sure at the beginning of the year, but was already included in our guidance.

About production, I repeat the first months of the year were good compared to last year and -- but below historical average. So to be frank and very transparent, we lost roughly 300 gigawatt hour in the first 3 months of the year. But that item was already fully included in our guidance because in mid-March, when we presented the guidance, we already knew the production over the first 2 weeks, and we have in our hands forecast for the next weeks. So this was already fully captured by our guidance. But this is just to say that 300 gigawatt hour less or more can happen very, very quickly.

According and based on our intelligence, say there is a good probability that in the fourth quarter, maybe instead of a minus a plus could be there. But we are not taking this as an estimate right now. So let's leave the range as it is, and I provided you with all the elements and the rule of thumb to make your own estimates. Green certificates...

1.1 terawatt hour in 2026 and 0.6 terawatt hour in 2027. These are the figures that we still have in our -- for our Italian assets that benefit from this kind of intent.

The next question comes from Francesco Sala with Banca Akros.

The first one, I wonder whether you can split this 1 terawatt hour of merchant exposure by country? And if you can give us an indication of your merchant exposure also for 2027. Secondly, you made the final investment decision on revamping of some solar assets in Italy. I wonder what the impact will be in terms of stoppages and after the revamping new generation potential. Those are the 2 questions.

Okay. I'll start with the last one, and I leave Michele to answer more details the first one. I say this morning, the Board of Directors approved a couple of investments, one in France. It's a greenfield 25 megawatt wind that has already got CFD for the next 20 years. I mean, for the 20 years starting from the commercial operation date, which is expected to be in Q1 2008 -- sorry, in Q1 2028. This long time is just based on the connection time because we need to have the connection. In fact, the CapEx and the expenditure in '26 will be very, very limited. The CapEx -- the cash out for CapEx will be especially in the second part of '27. And -- but as regards to the PV investments, as you asked, this is 36 megawatts. Basically, we are revamping, we mean changing the panels, changing the inverters and most of the time also having called the tracker, sorry, to have the plants to track and to follow the direction of sun.

And given this kind of intervention, we can increase production of the order of 40%, 45%. So it's a very big amount will a big increase when you change everything, including the tracker. -- where tracker -- old trackers are maintained anyway, we are talking about an increase in production of 20%, 25% because the new panels are much more efficient, consider that the panels that are mounted in this kind of installations are -- were there since 2010. So a lot of steps from technological steps have been made over this window of time.

This investment is particularly interesting. So I mean the return is double digit because according to the norms and the law, the operating rules by GSA, Electric -- the stoppage of the plants is permitted to be recovered with incentives, I mean, with Conto Energia incentives at the end of the period. And during the next years, all the production benefiting from the upgrade of the quality of the plant can enjoy the Conto Energia. So there is a big jump in EBITDA, a big jump in net profit. So that's why these investments got a return which is above 15%. But it's normal.

The regulator wants to support the rejuvenation of the fleet in the country. If not at the end of the useful life, you shut the plants, blah blah. So this is the nature. In terms of stoppage, I think you asked this, the impact is quite limited. It's less than EUR 1 million in 2026 because we want to stop shut down the plants, say, in the last part of 2026 and then implement the revamping in the next few months of 2027 in order to have the plants under the new industrial layout for next summer when the sun heat more, let's say, in order to maximize the return of the invest.

Yes. On the second question, we still have in 2026, 1 terawatt hour of merchant exposure. We do not expect to have a material hedging before the delivery because we need to maintain a merchant component in order to take in account the volatility of the production of our wind farms mainly. Of this 1 terawatt hour of production that is merchant as of today, so for the remaining months of the year, 0.4 is in Italy, 0.1 between France and Spain, 0.3 in Eastern Europe, 0.2 in U.K., Scotland. On 2027 total merchant exposure is around 2.5 terawatt hour, in Italy, 0.4 in France, 0.5 in Eastern Europe, 0.3 in U.K. and the remaining Spain and Germany. Taking consideration that this 2027 exposure will be hedged during this year because you know that we have a policy of rolling hedge. So we will start 2027 with a merchant exposure that will be much more limited than today essentially because in the next months, we will continue to hedge the production 2027, mainly 2028 and to a minor extent also 2029.

The next question comes from Emanuele Oggioni with Kepler Cheuvreux.

The first one is an update on the wind availability in April and May so far. What is the visibility? What is the comparison year-on-year? This is the first question. The second one is on 27, but as regards to the hedged part. So you can provide an update on the level of pricing of the hedging at least in qualitative terms compared with the average of the hedging in 2026. So what is higher to what extent et cetera.

Then third question is on the U.S. I suppose after the disruption affected weather condition affected Q1 operation were only temporarily due to weather conditions. So we should expect a normal contribution in Q2 and in the remaining part of the year. And still on the U.S., a final question on the M&A side, acquisition side, opportunity side. Is there an update? I think you are still exploring further opportunities to increase your capacity in the country. So there is some update on this.

Okay. About the wind availability, I more or less already said April was not particularly good as well at the beginning of May, there was an ant situation over Europe, Continental Europe. But over the last few days, wind is back and is very strong now. So we are recovering and the guidance we are saying today is fully including already the performance in April and the first day of May. So we are very confident about what I have already said also because I repeat the fourth quarter will be the game changer. I mean, if the wind will be strong, and we have some signs that it's going to be like this, at least according to institutions that are making this kind of long-term forecast, we can be positive on the full year results in 2026.

But I repeat, we would need the crystal ball to know exactly how wind is going to blow in the fourth quarter or in the third quarter. About the U.S., I'm going to answer the 3 questions and then leaving Michele the hedging. The U.S. performance, yes, you're right. There were multiple events, not strictly correlated each other. So in January, there was a blaze, there was a storm no storm and also a transformer failed in a nearby substation where our wind farm is connected.

This has got impact on the availability of the plants in February, but now the availability is back to normal, let's say. And at the end of -- not at the end of March. In March, in particular in March, but also in February, there was a particular tough market conditions in terms of grid constraints, congestions that basically influence had a quite huge impact on the nodal price and the PPA we have on the wind farm, there is a financial settlement between the real-time price in the nodal market versus the day ahead price in the hub market. Let's say, the 2 points got the same price based on supply and demand.

I mean, like our day ahead market, there is just one price. So the 2 prices are aligned. But in the American market, the local price is affected by the congestions. -- and the constraints. So if a certain node got congestions and blah, blah, something hurting, say, the transmissions, et cetera, the TSO is going to charge this cost on the node and then we are paying for that. The PPA is not providing hedging or covering this risk. This is exactly what happened during the first quarter. We had a light queue in April, in the first weeks of April, but now it seems everything is back to normal.

So we are confident that results going forward should be in line at least with our budget. And the third, again, as regards U.S. M&A, we keep working with Apex. We have this preferential right agreement. So far hasn't dealt many deals because there was still a gap between what we were prepared to pay and what they wanted to achieve from the sale. I can say the gap is narrowing. So we are working on it, at least that's what we hope. We will see. But for sure, it remains a point of a big attention for us. I hope to have answered all the 3 questions. Now I leave Michele for the fourth.

Yes. Regarding the hedging level, we currently have hedging level on the term component, so short-term hedging on 2027 lower than 2026 because as I explained before, the level of hedging that we have in place for 2027 is the result of hedging policy that is built up over 3 years. So today, the current level of the hedging are lower than in 2027 are lower than 2026, taking consider that a large part of the hedging of 2027 will be executed during 2026. So the final number for 2027 is also the result of what we are doing in this month. Just to give you a figure, for example, in 2026, we have hedged on a short-term hedging 1.4 terawatt hour, while the amount already hedged in 2027, 0.5.

This means that we still have to build up roughly 0.9 terawatt hour of hedging during 2026 to cover 2027. And so the final figures that we will have in 2027 will be the result of also the hedging that we are doing today in an environment that is for sure more positive than a few months ago. Just I would like to clarify a previous question regarding a number of green certificates because I need to be more specific, maybe just to be sure that everything is clear. The figure that I have given to you is the total number of incentive in Italy, wind and solar, so green certificate Energia, so 1.1 terawatt hour in 2026. Just the wind green certificate, if it was the question, I'm not sure, it's just 0.8 and while in 2027, total incentive in Italy is 0.6, of which 0.3 solar, 0.3 wind.

So I hope that the explanation about hedging is clear.

The next question comes from Davide Candela with Intesa Sanpaolo.

I have 3, you explained very clearly about the AC guidelines with regards to the energy market disruption. I was wondering if you can share your view about the long-term perspective saying related to the so-called acceleration you planned. So what are your wishes or the elements that could really change or at least changing positive the game for renewables and for you as well over the next months and years? Second question related to the pipeline is just a clarification if you update -- can update us on the would say, ready to build and execution projects you have on your hand with an eye to this year and the next couple of years? And final question, very broad about the leverage.

We used to see leverage in the threshold level in the region of 4x, 4.5x debt to EBITDA. That seems in the recent period changed a bit in the way that some peers have been deleveraging even maybe related to the fact there are less opportunities. And related to that, do you see this kind of level still in place as good for you for rating agencies? This is, of course, related to the potential you have on the balance sheet for further growth maybe coming for opportunities we can have in the future?

Let me start with the pipeline because it's something we are working very hard on right now. And we have already 230 megawatts right now under construction, at which you have to add the more or less 36 plus 25 megawatts we have approved this morning, which brings the total above 300 megawatts basically under construction right now. On top of this, as we said in mid-March, we are working on a pipeline of projects that is wide, but we are very now focused on roughly 700 megawatts, half of which are repowering projects, mainly wind, mainly in Italy. And part of them are roughly 200 megawatts or even more are already fully authorized.

But I repeat it, we have to wait for the final investment decision. So I mean the start-up of the site work to secure the production to secure the revenues, to secure the P&L for the next 20 years or 15 years with either through a PPA or through a CFD awarded through a public auction. So we are not still there, but we are working for that. It's not all our fault, let's say, because we were expecting a FER X auction in Italy to take place in the first part of the year, but according to rumors, according to news coming from the ministry, the Energy Transition Ministry, this auction should be held at the end of the year.

So we have to move accordingly to the market, the route-to-market option available. On top of the wind, we got -- we received just a few weeks ago, a few days ago, maybe full authorization also for 80 megawatts of battery storage system, which is quite a very nice project because it's close to our wind farms, and it's close to a connection point that we know very well. So now we are -- and on top of this, we already had another 12 megawatts project already fully authorized, as always best.

So now we are working on the procurement side and on the route-to-market side in order to define the business plan of these 2 plants with the aim of approving those investments again by the end of the year. In fact, that was the real reason we decided to postpone the business plan presentation because we want to gain a better idea of the potential of our pipeline in the very short, medium term. Connected to the first part of your question, yes, something is changing. This geopolitical situation basically is bringing to the table the fact that Europe didn't, in particular, Italy, didn't do what was suggested to do when the Ukraine-Russia case broke out a few years ago.

You should remember that we were all committed to renewable. We were all committed to investing in wind, gas and et cetera, but that was not enough, especially in Italy.

Renewable has not grown as they should be. But now something is changing because I think this situation is bringing back on the table on the agenda, the importance of developing and pushing on renewable because they are competitive in terms of cost of energy. I mean the LCOE is well below the current prices on the wholesale market that are set by gas technology.

They provide for independence because we don't need to import wind and radiation or water because those natural resources are available, while gas is mostly imported by U.S., by Middle East and still a bit from Russia. And -- but we need to have a clear calendar for options in order to proceed as we should in deploying megawatts. But now some headwinds are moving into tailwinds that make us more positive, let's say.

Yes. Regarding leverage, you -- for sure, you have noticed that yesterday, Fitch has confirmed our rating. And financial policy that we are following is essentially to maintain this investment-grade rating. And this translates in FFO net leverage that should stay below 4.5x. That will translate in roughly a ratio of net debt to EBITDA in the region of 4. We consider this at an appropriate level for our business that is a business that has a strong component of all the regulated revenue. So a good visibility, very good visibility on our cash flow. We do not see in this moment as a strong constraint to our growth because we have flexible opportunities also to increase to invest more.

We have other instruments are available on the financial markets like hybrid bond that can allow us to exploit even better our capital structure. And also asset rotation, as explained by Paolo before, could be a way to create to have a better portfolio, more concentrated in area where we can get better synergies. So this is something that we have already commented 3 months ago. So again, we do not consider this leverage as excessive, but consistent with our regulated business profile.

If I may add, we are very satisfied about the confirmation of rating by Fitch in a time where there is more pressure on renewable players because the increasing interest rates, inflation expectations, et cetera. Some companies, I can mention them, but in order to maintain their targets, the rating have been forced to suspend the dividend or to transform it into a scrip dividend. It's not our case. Next week, we are going to pay EUR 1 per share dividend that has been approved by our AGM. So I think it's a quite important achievement that is based on the quality of our portfolio and on our track record and credibility. But it was not to be taken for granted. I mean, these results.

The last question comes from Andreas Qoury with Lemanique.

I have a couple of questions. The first one is on the postponement of the business plan. Could you please elaborate a little bit more the reasons behind the postponement of the presentation of the business plan? Because I struggle to understand why a definition of the pipeline could be a valid argument to -- for the postponement of the business plan.

This is the first question. Second question, considering that basically from what I understood from this call, the glass is half full rather than half empty looking at your guidance. Could you please give us an update on potential buyback in addition to the dividend that you are paying next week?

I'd say probably, Andreas, you hadn't had the chance to follow in our last webcast when I explained in more details the reason why we decided to just present to the market because it's not true that we didn't present anything. We present the guidance, and we confirmed the objective to keep growing our renewable portfolio in accordance in line with the 24-'26 business plan, which was the last plan basically we presented. But apart from the work we were doing on the pipeline, which is quite I don't see eye to eye with you about this because it make all the difference of the world.

If we have 700 megawatts fully permitted by the end of the year, we're going to -- we need to invest more than EUR 1 billion, and then we need to calibrate the business plan.

And on top of that, as said more in details in mid-March webcast, we are working on mapping all the options we have in our pocket to generate value, including asset allocation and build to sell assets, et cetera. So these are elements that will be part of the business plan, are not used to proclaiming targets without having a clear picture of that.

This is part of our story. And the third reason, which is very important, is the fact that the Board of Directors is going to terminate its mandate next April.

It will be then renowned in 1 year, it's quite use of the house to present a business plan approaching this date. That's as simple as that. The buyback, yes, buyback is an option. Sorry, I forgot to say buyback is always an option. You said the buyback instead of dividends. It's an option. But as said even recently, every year, when we close the P&L for the year, we decide what best for us dividend, buyback, mix of the 2.

This kind of decision will be taken early next year when we have a clear picture and understanding of the balance sheet and the economics of the company. For the time being, we decided this year to pay EUR 1 dividend, which is pretty in line with our policy declared to the financial community. Thank you to you. I think we have Okay. So thank you very much for the attention and see you in August or end of July, I remember. Thank you very much, and I wish you -- thank you a pleasant weekend.

Thank you for your attention. And I wish you a pleasant weekend.

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

Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the ERG Full Year 2025 Results and Strategic Guidelines Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Paolo Merli, Chief Executive Officer of ERG. Please go ahead.

Good morning, everybody, and welcome to our webcast. Here is the agenda for today. I will begin with an overview of the results and milestones achieved in 2025. I would then like to provide the financial community with the main strategic guidelines we are working on. Here with me, as usual, is Michele, our CFO; and Emanuela, Chief ESG, IR and Communications Officer, who will elaborate on the topics as per the agenda.

So let me start by briefly outlining the context we are operating in. It's a rather uncertain and rapidly evolving business environment. Gas price volatility amplified by geopolitical tensions, the energy bill in Italy, which has begun the parliamentary process should be passed into law by mid-April. Therefore, it will take some time before we see in what form it will ultimately be approved, particularly I'm referring to the ETS clause, which is subject to the approval of the European Commission. In this scenario, our strategic direction is clear. We will push even further on wind repowering and organic battery systems development. In other words, if I may say, we are prioritizing organic developments over acquisitions.

Looking ahead to 2026, our goals are clear, and there are 3 goals, 3 main goals in our head. We intend to proceed with the construction of 230 megawatts currently underway, some of which will be operational this year. We are also working hard to finalize the development of approximately 700 megawatts, equally split between wind repowering and BESS, some of which has already been fully authorized with the goal of making these projects eligible for either for auction or PPA by the end of the year.

The third priority into 2026 is about the definition of the geographic scope on which our next 5 years industrial plan -- industrial business plan will be based. In fact, we aim to present the new business plan by the end of this year or the beginning of next year ahead also of the new Board of Directors term at the 2027 Annual General Meeting. Today, we want to offer a clear and transparent vision of the strategic lines approved yesterday by our Board of Directors on which the new business plan will be based.

But let me start with our economic results in 2025. Looking at highlights for the year. EBITDA closed at EUR 540 million, slightly higher year-on-year, but at the bottom of our guidance range. The economic contribution from new assets, which was in excess of EUR 60 million was unfortunately largely offset by lower volumes due to an extraordinary lack of wind across our European markets. I'll comment on wind in the next chart.

In 2025, we invested EUR 235 million, less than half the amount in 2024 that I remind you was characterized by the acquisition of the U.S. portfolio. '25, around 30% CapEx came through M&A, and I'm referring to the acquisition of a wind farm in the U.K., while the remaining 70% was allocated to organic developments.

Adjusted net profit in 2025 closed at EUR 155 million, down 11% year-on-year, mainly due to higher depreciation linked to new assets, together with higher financial charges.

Net financial position at the end of 2025 was EUR 1.882 billion, 5% higher compared to the end of '24, but bang in line with our guidance.

Based on these results, the Board of Directors will propose a dividend of EUR 1 per share at the Annual General Meeting, in line with our dividend policy.

I'm on Page #8, commenting on these particular wind conditions we had in 2025. Let's face it, was a rather disappointing year for wind availability across Europe. Unfortunately, the last 2 months, I mean, November and December, November when we announced the last -- the reaffirmation of the guidance. And typically, the last 2 months, as you know, are the windest of the year were no different.

So according to a report by Terna, the Italian TSO, wind productions in Italy dropped by almost 50% year-on-year in December. The 2 maps clearly show how unusual this situation was with a prevalence of blue and dark blue areas, which indicate a wind speed below or well below the historical average.

The long-term historical analysis, I'm referring to the graph below on the left side, reinforces how exceptional this year was. The chart, in fact, represents the average wind speed deviation compared to an historical baseline. And 2025 ranks clearly among the weakest years on record.

Nevertheless, the very same analysis, and we gave you all the transparency on it led us to a couple of conclusions. First, wind speeds have always been erratic and historical data shows that this type of event has already occurred. It's true, and this is a point of great attention for us that this is the fifth consecutive year with this index lower than average, historical average. But the graph clearly shows that this has already occurred in the past.

This is public satellite data, a fact, so everyone can form their own opinion and draw their own conclusions.

In this specific situation, geographic diversification across Europe proved less effective because the wind route was well distributed all over the continent. So while this is not an unprecedented phenomenon, it clearly had a very significant impact on our full year results.

So let's move to Page #9. During 2025, we kept delivering on our strategy. On growth, we added around 150 megawatts of new capacity since January 2025. We have open construction sites for another 230 megawatts currently under construction. We made progress in developing our pipeline, in particular, we refocus all our efforts towards wind repowering and battery storage systems.

On route-to-market, 2025 was a solid year. We signed 8 PPAs with Tier 1 offtakers, both corporates and utilities, totaling 8.7 terawatt hour along the entire period, durations of those contracts. We secured 3 auctions for 40 megawatts new wind capacity in Germany. In Italy, we were awarded to repowering projects total of 141 megawatts in the last FER X auction.

Finance, our discipline remains a key strength. We confirm a EUR 1 dividend per share. At the beginning of 2025, we completed 1.1 million share buyback. Fitch, the rating agency reaffirmed our BBB- rating with stable outlook, and we drew our first European investment bank corporate loan, further diversifying our funding sources.

Finally, on ESG, our leadership is well recognized. We rank -- we ranked Tier 1 at least or top performer across major indexes. Overall, we are advancing our strategy with, I think, discipline and sustainability.

Among the achievements -- recent achievements, let me mention these 2 transactions. I'm commenting on Page #10 because they are a quite clear example of what we mean by geographical refocus. With this move, in fact, we exited a noncore country, Sweden, and we acquired 73 megawatts of operating assets in Northern England under the ROC scheme with attractive repowering potential. We have strengthened our position in the U.K., which is now our third largest market with over 400 megawatts of installed capacity. So this is exactly how we intend to shape our strategy going forward. We are consolidating in markets where we have scale and industrial presence and reducing exposure to those markets with fewer possibility for further growth. This is an area we intend to work on more during 2026.

Let me now, let's say, talk about the strategic guidelines that were approved yesterday by our Board of Directors. Page #12 here is just a snapshot of ERG's asset portfolio. It's a chart that you are familiar with, updated to today. I would say, a solid international renewable platform with around 4 gigawatts of installed capacity and a diversified European pipeline of about 5 gigawatts, focused on wind repowering and BESS, which are the technologies that will drive our next phase of growth.

In 2026, we will focus on the first 2 histograms of the pipeline, the ones highlighted. On top of the European pipeline, we can still count on a preferential right agreement with Apex in the U.S., partly due to the context in the U.S., which makes us a little more cautious. This agreement hasn't brought any concrete results yet, but we are continuing to work with them to identify the right opportunity. I don't think there is much to add on this chart other than to say it's a starting point to work from.

Now Page #13. I think this is a key chart in our presentation. Let me walk you through the 4 pillars, strategic pillars at the core of our strategy going forward: performance excellence; maximizing availability of our assets through predictive operational maintenance and digitalization. This remains the backbone of our industrial model in recent years and continuing today, we have invested in the digitalization of our portfolio. We are evaluating also how artificial intelligence can support the management and maintenance of our facilities.

Organic development, our focus is clear, wind repowering to rejuvenate the fleet and secure long-term revenue visibility and battery storage system as a new strategic stream to capture market volatility and support system flexibility. Asset rotation and geographic repositioning. In 2026, we will explore any opportunity that could come from leveraging this pillar, which could range from exiting a country to selling a single asset or even a selective build and sale asset. It could be also a way to fund projects in our pipeline while -- to fund, sorry, projects in our pipeline while keeping a solid balance sheet. We don't know the end game yet, but we'll be working on it during 2026.

Route-to-market, we confirm our commitment to have an 85%, 90% quasi-regulated profile with CfD s and PPAs as our preferred route-to-market options, together with an evolution of energy management model to extract value from flexibility. These are the 4 pillars our next business plan will be built on and then elaborate a little bit on each of them.

Operational excellence remains a key value driver for ERG. The good news is, in 2025, performance in this area was positive with increased availability across our entire portfolio, confirming the effectiveness of our industrial approach. Over the course of the year, we work to promote digitalization. As said, we created a technical task force to manage actions aimed at mitigating the effects of fleet aging and introduce greater digitalization across all operation and maintenance process.

We can now basically monitor each asset in real-time from our centralized control room no matter where they are located and thus minimize intervention times and their effectiveness.

Okay. Let's move to Page #15. After a period -- I'm talking about the pipeline, the organic pipeline. After a period of strong growth, we added roughly 1.9 gigawatt over the last 5 years. We now want to grow more selectively by extracting value from projects developed in-house. We have around 230 megawatts already under construction, mostly repowering projects with route-to-market secured and CapEx fully committed for about EUR 300 million.

We are also working hard on about 700 megawatts, 50-50 split between wind repowering projects and BESS projects, and we expect all of them to be ready to take part of the next auction rounds with a potential code commercial operation date, say, by 2028. We expect to take the final investment decision by the end of 2026. And the overall expected CapEx to cover the construction is in the region of EUR 700 million, which is a mixture an average between EUR 0.7 billion for BESS, less, even less and EUR 1.4 billion, EUR 1.5 billion per megawatt for wind. So we can rely on 1 gigawatt of highly visible projects to be potentially in operation by the end of 2028. And it's not said that we are going to construct all of them because it depends also on the associated returns. But part of it, part of the 700 megawatts for sure, will be included in our next 5 years business plan.

Page #16, you have just the list of the 230 megawatts, so you can have a clear idea of the projects that are right now under construction. Importantly -- very important is that, all these assets have already been secured with a long-term tariff, either a CfD awarded at auction or a PPA negotiated with a private offtaker.

Moving to Page #17. Here, we have more details on our repowering pipeline, which continues to grow as we extend screening and feasibility analysis to all our assets. The goal is twofold to rejuvenate our fleet while ensuring the route-to-market for these new productions.

Looking at the table at the top left of the slide, I think you are familiar with the numbers that repowering can help achieve, reducing the number of turbines while increasing installed capacity and even more production, which is ultimately what we are aiming for. You will likely recall larger numbers, I mean, up to 2, 3x the capacity and over 3x for the production. But this is because the current pipeline also includes multi-megawatt turbines as shown in the picture below, whereas in the initial development phase, and I mean also the current megawatts are under construction consisted only of kilowatt turbines. So turbines equipped with turbine below 1 megawatt per tower. So where the gap with new technology is greater.

Here, you can find a little bit more details on the current status of our pipeline, a total pipeline of 1,600 megawatts to be that compares to the existing assets of 890, so an increase of more than 700 megawatts. Looking at the most advanced on top of the 200 under construction, 285 are already fully permitted. And mainly are all wind power in Italy, most of them are still kilowatts. As I said, we may not build them all in line with our value over volume strategy. Projects will be pursued only when returns are consistent with our targets.

Page 18, BESS, again, is becoming a new and essential stream of growth for ERG. We have our first asset in operation in Vicari, and we are learning from managing it. We can count on a solid European pipeline of roughly 1.5 gigawatt of storage under development, mainly in Italy, Spain as a second country and then U.K. Roughly 300 megawatts, particularly in Italy are at a very quite advanced stage of permitting.

Storage, in our view, is crucial as it adds flexibility to the portfolio. We are starting a multitude of route-to-market options, I mean, ranging from MACSE auction that another auction would be held this year, a mixture of capacity market, tolling and even merchant. And we will assess the proper -- say, the proper choice to maximize profitability. I mean, by -- our objectives for '26, by the end of '26 to define a sustainable route-to-market to finalize our BESS developments. This is anyway without doubt, an area we intend to focus heavily from now on.

Let's move to Page #19, a little bit more color on what we expect from asset rotation and geo focus. First of all, we expect 2026 to be a very important year to define the geographical scope of our long-term plan to be pursued through asset rotation. Also rotation can also become a source to finance, as I said, our main developments, wind repowering to rejuvenate our asset base and BESS to add flexibility to the portfolio.

I know there will be some key questions, or at least I expect some key questions to come from you later on. Where will ERG grow? What is the final geographic scope of asset portfolio in the future? Is the United States part of it? Or could it be sold in the future? Which countries will ERG divest from and which will it invest in? Honestly, we don't know all the answers yet, which is why we said that we want to present a comprehensive business plan later. We need time to evaluate all options and find the best one to maximize value creation and the long-term sustainability of our industrial business model.

I'm confident that asset rotation could help rebalance our geographic footprint and free up financial resources to support our organic developments. But we are only willing to pursue it under the right condition. That must be very clear. We are not forced, we are not obliged. We just will do it if there is value creation and convenience to do it. But that's why we need more time to assess its potential. We'll also explore an opportunistic build and sell approach, leveraging our industrial track record that said that we built roughly 900 megawatts internally in recent years.

Last but not least, I'm on Page #20, the 4 pillar, the fourth pillar, the route-to-market. In a time of high volatility uncertainty, we think it's becoming particularly important to secure the route-to-market for our energy. In this respect, our track record speaks for itself. Over the last 4 years, we have signed several major PPAs with Tier 1 corporates, tech companies and utilities. As of today, about 40% of our entire portfolio is covered by long-term PPA. Our PPA portfolio is made up of contracts of various durations, ranging from short-term, 5 years, particularly for old assets to up to 20 years for brand-new assets. We have been able to attract large corporates and utilities, I think we think with a value -- thanks to a value proposition to cover needs to improve their carbon footprint. In a scenario of expected growing power demand over the next decades, driven by data centers, AI, cryptocurrency and all manner of new and energy-intensive technologies, we believe, based on our track record that we are very well positioned to capture this coming opportunity.

As mentioned, 2026 will be a very important year. So I conclude this first part by saying that we need to, as we say, roll up our sleeves and continue to work hard in the coming months to develop a successful plan, that is going to be presented, as I said later this year or early next year. I'm confident we have everything we need to do so.

And now I leave the floor to Emanuela for comments on our ESG strategy.

Thanks, Paolo, and good morning, everybody. We still believe ESG is important as long as we look at substance over form. ESG consider sustainability a strategic lever for growth and long-term value creation rather than simply a compliance requirement. In an increasingly complex global environment, ESG reaffirms its commitment to credible decarbonization pathways to advance the green transition. We continue sharing value, building partnerships with local communities and through initiatives like the ERG Academy, engaging the next generation in the energy transition.

Safety, of course, is a top priority, and we have also a clear D&I goals to strengthen engagement and belonging across the organization. At the same time, we are enhancing our governance model to ensure integrity and transparency, and we are working with our supply chain to promote decarbonization, human rights and D&I.

In a few words, ESG is not a separate track. It's how we run the company. Although decarbonization seems to have lost popularity, we not only confirm our net zero target in 2040, but we can also proudly say that we achieved 90% emissions target reduction 2 years in advance, so now in 2025. The strength of this approach is reflected in the recognition we continue to receive from leading ESG rating agencies, including top 5 positioning in the S&P Corporate Sustainability Assessment, inclusion in the S&P Global Sustainability Yearbook 2026 in the A list of CDP and the first place globally in the 100 global ranking by Corporate Knights.

And now over to Michele for his comments on financial strategy and on full year and fourth quarter 2025 results.

Thank you, Emanuela. The phasing out of the incentives affects the oldest part of our portfolio and relates mainly to Italy, where in 2026, we expect 0.2 terawatt hour less of production with green incentive in comparison to 2025 budget figures. Obviously, this is already factored in, in our 2026 guidance. We are managing the otherwise increasing merchant exposure through the repowering of our assets and securing PPAs also for older assets.

More precisely, in 2025, we took the final investment decision for the construction of 141 megawatts of wind repowering secured thanks to 20 years CfD. The Green Certificate of this asset expired some years ago. In the same period, we secured 5 to 10 years PPAs with Ferrovie dello Stato planning to [indiscernible] to cover 180 megawatts of assets whose incentive again expired last year. So a securitization strategy that delivers results.

As you can see in the right part of the chart, most of our 2026 production is hedged, thanks to Green Certificates, long-term PPAs, CfD and short-term hedge. Only a limited portion of our production is still exposed to merchant volatility. That is unavoidable considering the nature of our sources wind and solar. And it can deliver some positive effects in case of sustained market prices.

Credit-wise, our debt structure remains solid and competitive as before as we have significantly mitigated the impact of 2025 refinancing by pre-hedging the 2024 issuance. As a result, the average cost of our liabilities remain the lowest among power producer and it is almost entirely hedged.

We remain solid investment grade as confirmed by Fitch. And at the beginning of 2026, we have exploited the very favorable credit conditions by shifting maturities on more than EUR 400 million corporate loans beyond 2030, while also improving their commercial terms, most notably by growing the EUR 243 million long-term EIB finances.

Our liquidity position remains comfortable with basically no maturity in 2026 and is further strengthened by a fully undrawn EUR 600 million revolving credit facility maturing at the end of 2028 with the option to extend to end of 2029.

Now a look to the last quarter of 2025 results. In the fourth quarter of the year, EBITDA reached EUR 147 million, slightly higher than Q4 2024, mainly thanks to perimeter effects, EUR 80 million linked to newly acquired assets and organic development. Overall, productions are substantially aligned to last quarter of last year that already reflected wind significantly below historical average. The quarter was also influenced by a widespread reduction of energy market prices.

In Italy, EBITDA reached EUR 73 million, a decrease of EUR 14 million year-on-year, primarily driven by lower captured price due to lower short-term hedging and lower wind, partly offset by perimeter effect both in wind and solar.

In France, the EBITDA is EUR 22 million higher than last year, supported by better wind conditions and perimeter growth, partially offset by lower captured price.

In Germany, EBITDA is EUR 9 million, slightly lower than previous year, mainly due to a weak production.

In East Europe, EBITDA is EUR 15 million, aligned with previous year, driven by lower wind resource offset by higher captured prices.

In U.K. and Nordics, the EBITDA is higher than in Q4 2024, thanks to the perimeter effect coming from the plant entering operation in September in Northern Ireland and the acquisition made at the beginning of 2025 in Scotland. These adjusted figures include the contribution of the Sweden wind farm recently disposed for EUR 1 million in the quarter.

In Spain, the EBITDA is lower than last year, impacted by reduced production and lower captured price.

In U.S.A., EBITDA is EUR 13 million, in line with previous year. In 2025, EBITDA is EUR 540 million, higher than previous year by EUR 5 million, mainly driven by perimeter effect, partially offset by the extraordinary low wind condition in Europe and the lower capture prices, mainly in Italy and Spain.

A comment now on the investments. In Q4 2025, we invested EUR 70 million, mainly due to new repowering projects in Italy and Germany and the ongoing construction activities in Germany and U.K. In particular, we spent organic CapEx for EUR 34 million in Italy for the beginning of activities on repowering wind farms and EUR 17 million in Germany for the construction of our greenfield and repowering projects. In 2025, investments amount to EUR 235 million, of which EUR 72 million for the acquisition in U.K. versus EUR 550 million of 2024, which included M&A for a total amount of EUR 390 million.

In Q4 2025, amortization and depreciation are EUR 70 million, aligned with Q4 last year due to perimeter effect offset by the end of useful life of some older plant components. Net financial charges are at EUR 13 million versus EUR 9 million in Q4 '24. Financial charges versus bank and bondholders net of liquidity remuneration stand to EUR 9 million, plus EUR 5 million due to perimeter effect and lower remuneration on cash. The complement to EUR 13 million, EUR 5 million are noncash accounting items such as effects coming from tax equity partnership and curative is interest expenses according to IFRS 16. The tax rate in the quarter is 26%.

The adjusted net profit of the quarter amount to EUR 46 million, aligned with last year, mainly driven by net financial charges net of fiscal effect. The adjusted net profit of 2025 amounts to EUR 155 million. The reported net profit for the year is EUR 65 million. These results include EUR 46 million of impairment on solar plants in Spain, EUR 26 million of write-down on Sweden asset sold in January and EUR 16 million of write-down on assets that will be dismantled for repowering in Italy.

And now finally, let's take a look at the cash flow statement and the net financial position. The net financial debt at the end of the year is EUR 1.9 billion, plus EUR 89 million versus the end of 2024. The cash generation from EBITDA is offset by investment of the period, dividend payments and the change in net working capital, affected by ordinary dynamics also due to payable for invest.

Thank you for your time and attention. Now I leave the floor to Paolo for his final comments.

Thank you, Michele. Let me conclude by looking at guidance for 2026. EBITDA, we expect it to be in the EUR 520 million, EUR 590 million range. We expect better wind conditions, more in line with the historical average. January and February were in line. March, unfortunately, was well below. We nevertheless expect larger production to more than compensate the phaseout of incentives and a more conservative price scenario, also including short-term hedging at lower levels compared to the previous year. Some upside, of course, could come from the current spikes in energy prices that are not factored in our scenario, but please consider our exposure to merchant power is limited as regards to 2026.

As usual, the midpoint of this range represents our best estimate at the moment. We are fully aware that this may fall short of consensus expectations and our guidance provided last year. The gap is mainly due to 3 factors: a lower capture sales price, particularly in some countries, such as Spain and France and to a lesser extent in Germany. This item is worth around EUR 30 million compared to the previous scenario. It's not just the capture price, but it's also the -- a little bit lower value for the incentive in Italy, which came out from a mathematical formula and the much lower value and price for Origin Certificates. All in all, say, the downward revision of scenario accounts for around EUR 30 million in this bridge. Fewer megawatts installed, including the sale in Sweden that was not factored in before.

And the third factor is a greater number of repowering projects in the decommissioning phase in 2026, representing approximately EUR 10 million less EBITDA than our previous forecast. So I mean, in the old indication for EBITDA was not factored all these repowering projects. And when you have a repowering project, first of all, you have to shut down the plant and dismantle the old turbines before erecting the new ones. This is an impact that was not factored in the previous plan.

CapEx is expected within the range of EUR 330 million, EUR 380 million, including the recent acquisition U.K. and the investments associated to the asset currently under construction.

Finally, at year-end, we forecast a net financial position within a range of EUR 1.95 billion and EUR 2.05 billion, including, of course, the above CapEx and an ordinary dividend at EUR 1 per share.

We are now ready to take your questions.

[Operator Instructions] The first question comes from Beatrice Gianola of Mediobanca.

Actually, I have some questions. The first one is on the European power price outlook. In recent months, there have been several discussions at European level regarding the ETS mechanism and more generally political debate on potential measures to contain energy prices. So in light of the guidance you provided for 2026, could you share with us what price evolution scenario you are currently incorporating into your assumptions compared to your last business plan? And then looking further ahead, for example, towards 2030, how do you expect the European energy price environment to evolve? That would be my first question.

The second one is on the outlook beyond 2026. You have provided some indications for this year. It would be helpful to understand your thinking for 2027, maybe on the EBITDA or just even qualitatively, let's say, do you expect some of the drivers influencing 2026 to be somehow absorbed in 2027? Or do you anticipate that some of these dynamics may persist beyond this year?

And then the third and last one is on the governance structure and growth opportunities. Recently, some articles have circulated regarding a possible change in the company's governance structure. The question is not whether you think this will happen, but rather whether you believe the current governance structure allows the company to fully size growth opportunities. In particular, where do you see the main expansion opportunities primarily domestically in Italy or abroad? And if abroad, which geographies do you currently consider most attractive?

Okay. Beatrice, thank you for your questions. So let me start in order. I say ETS evolution and outlook is really $1 million question in the sense that it's a fully regulated market depends on several mechanisms that have been set in Europe like the reserve adjustment mechanism or the free allowances. So based on the current market framework, we should have expected a growing price for ETS because over time, the constraints for emitters are growing and then in this kind of market with this kind of rules, every, say, price scenarios were expecting this price to go up. But the discussion is open now in the U.S. and -- sorry, in Europe next week, at the European Parliament, they will open this kind of discussion about the mechanism because on the one hand, there are consumers that are putting pressures to soft the mechanism and then reducing the charges associated to ETS.

And on the other hand, there are producers like us that are pushing to keep the ETS mechanism as it is. In fact, yesterday, I think 100 companies involved in -- mainly involved in renewable generation, but not just that, sent a letter to the European Commission in order to say, "Hey, guys, let's keep this ETS system because it has worked very well." In fact, if you look at the emissions in Europe have been declining hugely over time.

But let me try to give you a more pragmatical answer. I think you know that the energy bill that has been issued by the Italian government and is still now under the journey of -- to be converted into law. There is an article, the Article 6, which is the most controversial. That basically is trying to artificially lower the cost of producing energy from gas by reimbursing some elements, some cost and charges to gas producers. I mean, energy producers from gas. And one of this component is ETS. But this clause is subject to the approval of the European Commission. And I -- that's my personal view.

This clause was put in the energy decree just to open a discussion because I suppose Europe -- European Commission can't accept this clause because it's going down exactly the opposite way any European policy is going towards.

So let's see what is going on. This is one of the reason we want to postpone -- we postpone the presentation of a full comprehensive business plan because we need to understand how the regulatory and then the price scenario is going to pan out because of all these points of discussion.

In our, let's say, short-term scenario, I mean, '26 and '27, we still expect ETS to be a contributor of the electricity price, but we are not assuming price that is skyrocketing because the energy price we are factoring in our '26 and '27 numbers are basically in line with the current forward for electricity.

Let me even say that we are now conservative because over the last few weeks because of the year-end situation, we have seen spikes in the TTF gas price in Netherlands. Now it's trading above EUR 50 per thermal megawatt hour. So that has pushed the forward also for electricity up quite substantially, and this is not factored in our guidance, neither in our guidance nor in our projections going forward.

So I hope to have answered your questions. For sure, we will see next week if the President of the European Commission on the line is going to open a table to discuss this ETS. But we are quite confident that ETS will remain there. Probably they will soften just some mechanisms in order to lower a little bit the price compared to the expectations for all the stakeholders.

'27, please, we don't want to give an indication because as said, in '26, we are -- we'll be working a lot on defining the geographical scope for the future and long-term. So we will assess any opportunities that can create value in reshaping our geographical footprint. So it's very difficult. I don't want to give a number, say, because we are still working on the geographical portfolio going forward. So for instance, transparently said is U.S. there or we should reinvest even further in the U.S. or we should take into consideration to sell the portfolio? My premise is, we are very satisfied with the performance of the U.S. portfolio. The relationship with Apex, which is our partner in the U.S. are very good. We became a little bit more cautious because with Trump administration, there is a little bit hostile environment, at least in the narrative.

But we are -- on the other hand, we are positive about the fundamentals because there the electricity demand is growing. The electrification is growing more than in Europe is a real market not influenced by, I mean, CfD awarded in auctions because there -- it's all based on PPA. So it's a market that still is very interesting for us. And 2026 will be spent to understand if there are real opportunities to increase our positioning in the U.S.

So your third question is basically the same where ERG wants to invest, but I repeat, for sure, there are some markets like Italy that is evergreen for us for sure because we have a strong industrial positioning, France, U.K. But I repeat, we will be very flexible in deciding the long-term geographical scope also based on tactical and opportunistic opportunities.

So, Beatrice, I hope to have answered your questions. You asked also about the rumors and the governance of ERG. I think the governance of ERG is recognized excellence also in all the ratings. But when it comes to rumors, let me say, as per our policy, we are not commenting any rumors. But in this case, let me say that ERG and its management are currently not involved in any discussion, say, regarding merger, business combination or whatever. So we are not a company to which ask this question, as you may understand.

The next question, sir, is from Roberto Letizia of Equita.

The first one is on 2026 number and specifically the U.S., you just said U.S. is a pending decision, but that's, I guess, beyond '26. Just wonder if you can clarify where the guidance for 2026 is based on the same perimeter of U.S. assets. So that meaning that you're not so far, including additions on M&A or new assets from that geographical area?

The second one is on '25 results. I see that actually net income includes a lot of nonrecurring. So particularly the reported net income is much lower because of the write-down of assets. But the adjusted net income also includes the EUR 27 million contribution from the asset held for sale. And I need here some clarification on how should we read the underlying net income for '27. So should we exclude as a base for '27 accountancy, those EUR 27 million or these are not going to be then finally included in '26? So can you please clarify how should we read this contribution in '26 rather than '25 figures?

Then you introduced on the strategic guidelines, this idea of asset rotation and build and sell opportunity if it comes. Can you just say to us from a qualitative perspective, if this means that potentially you are growing more, but then the net effect will be unchanged because you're going to sustain potential higher new addition through also the asset rotation. Can you qualitatively just indicate this for us?

And then 2 very, very quick questions, but the BESS contribution is becoming very, very strong. Can you help us just to understand what's the order of magnitude of or a range maybe of EBITDA contribution per megawatt, just as a reference, market reference, if you want not to be too much precise on ERG-specific figures? And then what is the total amount? You just mentioned qualitatively, but can you tell us how much of the production is still open in '26 and '27 because forward curve are increasing also for next year, which is a positive on the open position?

Okay. Roberto, I'll try to answer the list of questions. So the first one, I confirm you that the guidance for 2026 is based exactly on the same perimeter of assets in the U.S. And basically, it's based on the current assets and not including any M&A. I mean, not just in U.S., but any M&A.

And for sure, a couple of points, we know and we acknowledge the guidance is lower than the consensus and also lower to the indication we gave ourselves, honestly. Please consider that the guidance for '26 includes also some one-off effects. One is associated to the fact that we have several projects, several wind repowering projects that are in the dismantling phase, and that was not included in our previous indication because exactly we didn't know at that time if we were going to invest in greenfield M&A or repowering.

Now we are more oriented to repowering because repowering is a way to, on the one hand, rejuvenate the fleet, and on the other hand, to secure with 20 years CfD or PPA, the value of production over a long period of time. So this -- the fact that we right now have roughly 120 megawatts that are going to be dismantled soon and for downtime in the area of 6 to 8 months. That's usually the downtime expected when you repower a wind farm. We should have an impact in 2026 EBITDA of around EUR 10 million or even more because 120 megawatts in Italy, in France, in Germany because right now, we have projects of repowering, but there is a list in a chart in the webcast.

If you apply the simple rule of thumb multiplying by 2 because we're not assuming 2,000 equivalent hours per year and then divide it by 2 because more or less the downtime is 6 months, you arrive to 120 gigawatt hour lost one-off for this effect, and this is value roughly EUR 10 million.

About the write-down, yes, you are right. There is a write-down of EUR 46 million in Spain, which is very much related to the current business environment, not at all related to the performance of the assets because the assets are performing quite well. But it's a matter of captured price in the wholesale market in Spain. We have some PPA covering assets, but they got a floor. And this floor is not in line with the expectation, the price expectation we had at the time of the acquisition of the construction of these plants.

And this is -- this write-down has been included all in the '25 reported net profit. And the very same is for the EUR 26 million in Sweden because the asset has been already sold. And this write-down, which is a noncash item has already been accounted in the 2025 reported net profit. So no effects in 2027 P&L -- sorry, '26 P&L.

About BESS, we are not in the position to provide any guidance on this because for the time being, we have just got a small plant, 12 megawatts in Sicily. But the objective going forward is to push on this revenue stream. For the time being, as I said, we have 1.5 gigawatts of pipeline. But let me say the objective for 2026 is to get at least 300, 350 megawatts at a ready-to-build status, which means to participate to auction, MACSE auction or because we are starting other route-to-market for these kind of assets or tolling agreement or even merchant because they are very flexible and you can manage these kind of assets as compensatory, let me say, and complementary asset with the rest the traditional wind and solar assets you have in the portfolio.

So depending on which route-to-market you pick, you have different returns, different multiples, different EBITDA contribution. Let me say, MACSE, at least according to the outcome of the last auction, is yielding the lower return because it's a fully regulated business model. We are now more oriented something in-between because we can also have a business model that is partly secured through capacity market or through tolling agreement and part left merchant. In this case, we are looking at return high single-digit unlevered returns. In this case, given the lifetime technical -- useful technical life of these plants are lower than a traditional wind or solar, you can assume an EBITDA multiple much lower even when the plant is at its beginning of the life.

So the contribution in terms of CapEx per -- EBITDA per million invested in BESS should be higher than for wind or solar. But give us time to perfectionate our business plan and later this year or early next year, when we'll present a comprehensive business plan, we'll give more details on it.

About the open production, maybe Michele can give you more precise...

Yes. For 2026, we have an open production of 1.8 terawatt hour spread over the various countries. As you can imagine that the large majority of this open position is in Italy. At current market price, we can consider also substantially open also the production that is covered by one-way CfD because in a certain moment, the current market price are above the floor of this one-way CfD. And the total amount for 2026 of these volumes is around 0.7 terawatt hour, for 2026 again. Figures, as you can imagine, increase for 2027 because we have 2.6 of merchant exposure in 2027.

Next question is from Emanuele Oggioni of Kepler.

The first one is still more details on -- I struggle to understand basically the effect, the bridge, the negative bridge compared with your old targets on '26 EBITDA as regards to the power price scenario and power price impact. You mentioned before Spain or Germany, for example, weaker than expected 1 or 2 years ago. But overall, if you consider the other countries in Italy compared with 1 or 2 years ago, overall, the spot and the forward prices have increased compared with 1 or 2 years ago, even before the war against Iran. So even before this short-term movement. So -- and in the mule is true that the formula, the T plus 1 formula, if you have a higher price the year before you get lower incentives the year after, okay? But in the meanwhile, in '25, you should have hedged or should have had the opportunity to partially hedge at higher level for '26 onwards. So it's a bit difficult for me to understand all these moving parts. So this is the first question, basically.

The second one is on the more high-level considering that you are now prioritizing the organic development rather than acquisitions. And in the meanwhile, you are saying that you are in a new mode of asset rotation, asset rotation could become more structural, et cetera. So I wonder why now you basically are changing the historical strategy considering that your leverage is still far lower than your peers. So you are not in a hurry to sell assets to finance the growth or to -- or why you are you -- you have the intention to reshape in geographical terms your portfolio also considering that compared with other companies are still in a buyer mood a buyer's market for brownfield assets, et cetera. So it seems that also for you could be still interesting to buy assets in the market, brownfield assets.

Emanuele, thank you for your question. So I try to explain a little bit with more details, say, there is a bridge with the guidance, because it is really important. So compared to the previous, say, indication, there is roughly EUR 50 million, more or less. If you take the midpoint of our guidance as our best, say, estimate right now for EBITDA.

Let me say, first of all, I said the price scenario all in all was about EUR 30 million. Yes, you are right, the -- I mean, the national -- the expected national price in Italy for '26 is not lower than it used to be 1 year ago, but we are an international platform. So when saying EUR 30 million compared to the previous scenario, we are basically referring to other countries such as Spain, where the captured price is very, very low. Right now, all the scenarios are expecting a recovery in the medium-, long-term because of boom in demand coming from data centers. But right now, the market is really under stress. And there, we have, yes, a little bit of protection from our PPA, but they got a floor. So part of the upside based on the forward that we had 1 year or 1.5 years ago is not there anymore. This is true in Spain. This is true in France because in France, if you look at the price now are much lower than they used to be 1 year and 1.5 years ago. And this is the same in Eastern Europe. So there are several markets on top of Italy.

Italy, it's right what you are saying. You correctly said that the value of the incentive a bit lower. This is one other item we have to consider because it comes -- it stems from a mathematical formula based on the actual price in 2025 because it's conversely proportional to it, and bring it higher than results in a lower green incentive value in 2026. But also consider that part of the revenues for a renewable company is also associated to Origin Certificates, which means basically the price consumers or offtakers are ready to pay for having energy that is produced from green assets. And the Origin Certificates is in a European market. And the value of Origin Certificates collapsed from EUR 2, EUR 3 to less than EUR 1 per megawatt hour. And this is affecting all the production of renewable company.

So all in all, these effects accounts for roughly EUR 30 million compared to the previous scenario. But I stimulate you to take any scenarios I know, I mean, Baringa, AFRY, Aurora or whatever and compare the last release of price scenario, I mean, in the countries where we are present, compare it to the scenario they issued 1 year ago, and you will see a gap and the revision is for sure downward. That's the first moving part.

The second, I already explained, the repowering projects right now under the dismantling phase, this is basically worth roughly EUR 10 million. This is totally one-off because next year, when they will enter into operations, they will keep -- will start generating revenue. So this is a one-off, let me say.

Sweden was not included in our previous guidance, while the acquisition in U.K. that we made in January was already included in our unknown megawatts because if you look at the indication we gave 1 year ago, they were based on a number of megawatts installed higher than the current one. I mean, very similar net of Sweden, but Sweden is not there anymore because we decided to exit that gas. And this cost -- this item is worth roughly EUR 6 million.

Last but not least, maybe this, I wasn't clear enough or probably I didn't say in my speech, but we also factored the production year-to-date, say, yesterday. And while January and February were in line with our estimates over the last 3 weeks, you are in Italy. So just look outside the window, there is a wind drought over the last 3 weeks, and we lost roughly 150 gigawatt hour compared to our analysis. So we factored this item into our guidance for an impact of roughly EUR 10 million. So this is already factored in our guidance, and we cautiously -- we didn't assume any recovery going forward of this effect registered, say, over the last 3 weeks. It can be taken as a cautious stance, but we -- after the experience of 2025, we prefer like this.

So, Emanuele, I hope to have given a little bit more color on -- that was important.

[Operator Instructions]

[indiscernible] other questions from Emanuele. The organic, yes, I confirm we are now more oriented in developing organic projects. It's not just a matter of organic versus M&A. It's a matter that through organic and in particular, repowering we can rejuvenate our fleet and secure it for a long period of time. Please consider that all the assets we have currently under construction, they all got a tariff, either a CfD or PPA, securing the production and the value of the production for the next 20 years. And this is the model we are looking at also when developing other projects in our pipeline.

Asset rotation, why asset rotation now enters into our business model. I'd say, even last year, we said asset rotation will be part of it, but we had to study. We then made our exercise. We did our homework, say. And now we believe that reshaping our portfolio, maybe having a stronger presence in some countries and exiting countries maybe where we have just one asset can provide for a more robust business model. But again, we do not yet the end game because we are assessing with flexibility all the opportunities that can help us create value. So we hope to be, by the end of the year, in a position to be more precise on the geographical scope going forward.

Maybe just you are right that our leverage is below our peers. But -- and you are right that we are not in a hurry to sell for -- to defend our rating or something like that. But at the same time, we have a financial discipline to be maintained. We have an investment-grade rating that we want to maintain. And so we will continue to manage our growth and consistently also with our financial discipline.

The next question gentlemen is from Davide Candela of Intesa Sanpaolo.

Actually, I have one that is quite high level and perhaps a bit provocative. It regards what you said, what you answered first with regards to the ETS mechanism. So it is true that helped the emissions to go down over the years. But in the end, it looks like has been burdening the industrial backbone of Europe with regards to the cost related to that transfer to the final energy prices. And my question would be, do you see a scenario in which if there won't be deep change in ETS, but in the end, there could be opening discussion with regards to decoupling the -- at least the renewable power prices for the formation of the final power prices from the gas and CO2 components because I would say, at the end of the day, renewables are the ones that are truly benefiting from the higher gas and higher CO2 costs because they are not system hit. So maybe if you can elaborate on this and how it is your view on that apart from the impact that you could see on ERG in general?

Okay. Davide, this is quite complex question because it involves many factors that are at the base, say, of the price formation in the market. I repeat ETS is something Europe is going to discuss. I don't think that's our view. ETS is a system we can accept to be eliminated. Europe can accept to be eliminated because ETS -- an ETS mechanism is also in the U.S., in some states in the U.S., in China, in Korea, in other parts of the world. For sure, the cost of ETS in Europe is stronger than in other geographies is because Europe was super committed in increasing the renewable presence in the portfolio also because we can't rely on our own reserves of gas or oil. We are more dependent on imports, gas imports than all these geographies that I mentioned.

So our outlook, if you know, the ETS market is very complex and very super regulated, and there are at least 3 elements in the ETS market that in the end are creating the price. One is the market stability reserve. It's a kind of mechanism that absorb or release allowances depending if the market is long or short. Then there is the free allowances. I mean, basically, it's kind of shield for some companies. And there is also the so-called obliged quotas. So how much every segment, the industrial segment has to pay for their emissions.

By leveraging on these 3 elements, Europe can, for sure, modulate and adapt the price of ETS. In fact, if you look at the forward market for ETS is expected to remain in the region of EUR 70, EUR 80 per ton, while if you take all the price scenarios issued by the big names, I mean, AFRY, Baringa, Aurora, the most famous one, they are all pointing at EUR 120, EUR 130, EUR 140 per ton in 2030. Why? Because this value of CO2, I mean, EUR 130, EUR 140 is the one that should trigger the switch from gas to hydrogen or to other form of energy substituting the gas, I mean, a fossil fuel with a zero carbon fuel.

So the question in the end is, are we still looking at becoming net zero or not? That's the point. I don't know the answer. I hope so, but I don't know the answer. So let's see what's going on. But I'm quite confident. Maybe I'm wrong, but I'm quite confident the Article 6 proposed in the energy decree by the Italian government is not acceptable for Europe. And being subject to its approval, we do not expect to be implemented like it has been proposed.

The final question is a follow-up from Roberto Letizia of Equita.

Yes, very quickly. I just want to know if the write-down of EUR 26 million are generating any benefits on the D&A this year and how much?

No. EUR 26 million Sweden, no effect.

I mean all the write-down. I mean, all the [indiscernible], no benefit of the D&A.

No. For the EUR 46 million regarding Spain, we have a very limited write-down -- a very limited benefit on depreciation because part of it will -- a part is goodwill and other part is not goodwill and so we have a limited benefit also on depreciation in 2026.

Mr. Merli, there are no more questions registered at this time, sir.

Okay. Thank you very much to all for listening, and we will see a catch-up in May, probably with the first quarter results. Thank you very much.

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

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the ERG Third Quarter 2025 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Paolo Merli, CEO of ERG. Please go ahead, sir.

Good afternoon, everyone, and welcome to our third quarter results webcast. Here with me, as usual, is our CFO, Michele. So let's get started with the usual overview of results over the period.

I'm on Page #4. EBITDA in the first 9 months closed at EUR 393 million, a touch higher year-on-year. While looking at the third quarter, as was the case in Q2, results are up year-on-year with EBITDA at EUR 119 million, plus 9% year-on-year. The performance of the quarter mainly reflects the full contribution of the new capacity as well as better wind conditions. I'd just like to remind you that the third quarter in '24 was very weak from this point of view. These 2 positives, I mean, the full contribution of the new capacity and the better wind conditions were partially offset by lower capture prices, also due to the progressive reduction of hedging pricing, which tends to follow the price scenario with a 1 to 2-year time lag.

As far as the first 9 months results, the economic contribution of new assets, which was quite remarkable, was mostly offset by lower volumes due to weaker wind conditions. This was particularly true as we had already a chance to comment over the first half of the year. The good news is that we have been making up for the shortfall of EBITDA registered in the first quarter over the last few months -- over the last few -- 2 quarters, say.

Investments in the first 9 months of the year amounted to EUR 164 million, down significantly year-on-year. The reduction is mainly due to the fact that last year, the CapEx included the acquisition of a wind and solar portfolio in U.S.A., in particular, also a smaller portfolio in France. Out of the total invested in this first part of the year about 40% was through M&A. In particular, I'm referring to the acquisition of wind farm in the U.K. while the remaining 60%, about 60% was spent on organic developments. I mean, greenfield and repowering projects that are under construction in France, Germany, Italy and U.K. and to the completion of the first battery storage plant in Sicily. So I believe this trend, I mean, the lower CapEx spent on a year-on-year basis is very much consistent with our value over volume approach.

Adjusted net profit in the first 9 months was EUR 110 million, down 16% year-on-year, basically due to higher depreciation related to new assets, coupled with higher financial charges as a result basically of a mix of higher net debt, higher cost of debt and lower yield on cash management, given the trend in interest rates. But again, the good news is that earnings direction was positive over the quarter with net profit at EUR 27 million, up 9% year-on-year. Net financial position at the end of September was EUR 1.88 billion, plus 5% higher versus the end of 2024, also discounting total distribution, I mean, dividends and buyback in excess of EUR 160 million.

Let's move on. I'm now on Page #5. Over the period, we continued to deliver on our strategy. In terms of installed capacity, we had 2 important additions over the quarter for Corlacky Wind Farm, 47 megawatts in Northern Ireland came online at the end of July and is now ramping up production, which we expect to reach full potential, say, in a couple of months as of the start of 2026. We are also very pleased with the commissioning of our first battery storage plant in Vicari, 12.5 megawatts as flexibility, as said, is becoming increasingly important in our plan. We are also pursuing our revenue securitization strategy with the signing of 3 different PPAs during the period with FS Group, which is basically the state-owned railway company for an aggregate amount of around 180 gigawatt hour per year with a tenure of 5 to 10 years.

This is an extremely important achievement as those contracts are related to existing plants. I mean plants that have already exited the -- any incentive scheme. So basically, they are merchant, and they will now be covered by this long-term contract.

On top of this, we participated in the FERX auction with 3 projects for a total of 148 megawatts, out of which basically the biggest part was made of 2 repowering projects in wind, 141 megawatts and very small greenfield projects in solar. We expect the outcome to be made public in December by GSE. But we are quite confident, finger crossed about the outcome. We also took part in the recent auction in Germany with a smaller projects of 12 megawatts. And again, here, the outcome is expected in the coming months. So we are consistently on track both with our strategy to grow the asset portfolio, but also with our strategy on the route to market to secure revenues through [ CFDs ] and PPAs.

As per our ESG strategy, we maintained our top-tier position, a couple of rating that have improved Sustainable Fitch, increased the score from 79 to 83 and also GRESB confirmed ERG as a top performer with a 98 out of 100 rating. So very, very top. We also unveiled our fifth project of the Social Purpose for Solar Revamping program, this time with Banco Alimentare, Sicily. And these kind of projects are something we are particularly proud of.

And now to Michele for his review of results in more detail.

Thank you, Paolo. In third quarter 2025, baseload market prices have been lower than third quarter 2024 in most of the countries where ERG operates. However, as you know, this trend had only limited effect on our revenues due to the regulated nature of our business model. In Italy, the wind unit revenue stood at EUR 121 megawatt hour, lower than last year, mainly due to hedging at lower prices and lower spot market price, partially offset by the increase of the green incentive value rising to EUR 55 megawatt hour from EUR 42 megawatt hour.

In France, the increase in unit revenues was driven by higher short-term hedging prices. In Germany and Romania, capture price are aligned in the 2 quarters. In Poland, unit revenues were slightly lower than third quarter 2024, mainly driven by the short-term hedging. U.K. capture price is around EUR 68 megawatt hour higher than third quarter 2024, thanks to higher short-term hedging. Note that this figure does not include revenues from balancing services. In Sweden, the unit revenue is higher than third quarter 2024, driven by higher spot market price. As for solar [ OE ] unit revenues, we recorded a decrease in the quarter in Italy, mainly due to lower hedging prices. In Spain, capture prices were impacted by the current market environment with a significant profile effect during daylight hours and by short-term hedging at lower prices. In France, solar revenues are sold at feed prices compared to 2024, where the energy produced by newly acquired assets were sold at merchant prices. Energy plant in the United States are unit revenues that reflects the PPA prices, so very stable.

Now focus on production. In the third quarter of 2025, the group's overall production was higher than the previous year, mainly due to perimeter effects, coupled with better wind in the period compared with the third quarter of 2024 characterized by wind well below historical average. In Italy, we recorded 622 gigawatt hour, plus 36%, mainly due to better wind and radiation coupled with the perimeter effect due to repower assets. France, 260 gigawatt hour, plus 12%, thanks to new greenfield assets entering operation during 2024 and second quarter 2025, but also to better wind condition on existing assets.

In Germany, 95 gigawatt hour, minus 5% due to lower wind conditions and also to the extraordinary out of service of 2 substations that are in the process of being resolved. U.K. Nordics, 159 gigawatt hour, 59 gigawatt hour, higher than last year, mainly thanks to the new assets acquired in January in Scotland and new greenfield assets in Northern Ireland operation during the quarter, coupled with better wind overall. In Spain, 160 gigawatt hour, minus 5% due to lower irradiation and some curtailment during negative prices. U.S.A., 167 gigawatt hour, minus 7%, mainly due to lower wind conditions. Eastern Europe, [ 125 ] gigawatt hour, minus 13% due to worse wind condition, especially in Romania.

In the 9 months, the production has been 5.3 terawatt hour higher than 9 months 2024, mainly due to perimeter effect 0.7 terawatt hour, of which 0.3 terawatt hour related to U.S. in the first quarter, partially offset by extremely low wind conditions mainly in the first half in Europe.

In the third quarter of the year, EBITDA reached EUR 119 million, EUR 10 million more than third quarter 2024. This growth was mainly due to perimeter effect, EUR 11 million linked to newly acquired assets and organic development as well as better wind condition compared with the third quarter 2024 below historical average as already commented. These positive drivers were partially offset by lower capture prices in Italy and Spain.

Italy, EBITDA reached EUR 81 million, an increase of EUR 10 million year-on-year, primarily driven by the higher wind and solar condition, coupled with new investment in both wind and solar. This was partially offset by lower capture price. In France, EBITDA is EUR 7 million higher than last year, supported by higher capture price in wind and perimeter growth and better wind condition. In Germany, EBITDA is EUR 4 million, slightly lower than previous year, mainly due to a weak production. In East Europe, EBITDA is EUR 9 million, EUR 4 million lower than previous year, mainly driven by lower resource. In U.K. and Nordics, EBITDA is aligned to the third quarter 2024 despite the higher production. This is because in the third quarter of 2024, we benefited from liquidated damages and other reversing from contractors.

In Spain, EUR 3 million EBITDA lower than last year, impacted by reduced production and lower capture price. U.S.A. EBITDA is EUR 9 million, slightly higher than previous year, 9 months EBITDA is EUR 393 million, higher than previous year by EUR 3 million, mainly driven by perimeter effects, partially offset by the low wind condition in Europe, in particular, as you know, as already commented in the first half of 2025.

A comment now on the investments. In the third quarter, we invested EUR 22 million, mainly due to ongoing construction in Italy, U.K., France and Germany. In particular, we spent organic CapEx for EUR 6 million in U.K. for the completion of the Corlacky wind farm and EUR 9 million in Italy, France and Germany for repowering. In 9 months 2025 investment amount to EUR 164 million, of which EUR 72 million of acquisition in U.K. versus EUR 500 million of 9 months 2024, which included the acquisitions in France and U.S. for a total amount of EUR 319 million.

Let's now comment on the financials commenting on the other items of the profit and loss. Amortization and depreciation are EUR 68 million in the quarter, higher than last year due to perimeter effect. Net financial charges are EUR 13 million versus EUR 9 million of third quarter 2024. Financial charges versus banks and bondholders net of liquidity remuneration to EUR 9 million plus EUR 3 million due to perimeter effect and lower remuneration on cash. It complement to EUR 13 million, sorry, EUR 5 million are noncash accounting items such as effects coming from the accounting of the tax equity partnership in the U.S. portfolio and figurative lease interest expenses according to IFRS 16.

Tax rate in the quarter is stable at 25%. The adjusted net profit in the quarter amounted to EUR 27 million, higher than last year by EUR 2 million, mainly driven by the already commented EBITDA, partially compensated by higher financial charges and amortization. The adjusted net profit of 9 months amounts to EUR 110 million.

Finally, let's take a look at the cash flow statement and the net financial position. The net financial debt in the 9 months is EUR 1.9 billion, EUR 0.1 billion higher than the end of 2024, mainly driven by the dividend payment and the investment of the period, partially netted by the cash generation of EBITDA. The net working capital is affected by ordinary dynamics, also affected by payable for investments.

So thank you for your time. Now I leave the floor to Paolo for his final remarks.

Thank you, Michele. Now let me wrap up this presentation with our guidance for the full year with just 1 quarter left. In short, we essentially confirm all our guidance. EBITDA still expected within the previous range. Let me give you some more details. October was very good, above the historical average in terms of wind. While these early days of November are conversely quite weak. Nevertheless, our best estimate points near the midpoint of the range. Everything will depend on this last part of the year, which usually, as you know, tends to be winder, I mean, December in particular.

In all honesty, reaching the upper part of the range will be very, very challenging given the wind levels so far. We would need extremely favorable conditions, which can't be ruled out that are sincerely unlikely. With this caveat, we confirm our EBITDA guidance within the previous range, but looking at more at the midpoint. CapEx is also confirmed within the range of EUR 119 million to [ EUR 140 ] million. And the same for net financial position at year-end, which is confirmed within the previous range.

So thank you for listening, and we are now ready to take your questions.

[Operator Instructions] the first question is from Enrico Bartoli, Mediobanca.

The first one is related to the storage business. You highlighted that you started your first project in this technology. First of all, I would like some comment on, let's say, the revenue partner that you expect from the Vicari battery. And in general, it would be appreciated your view on this technology going forward, both in Italy, if you expect to participate to the MAX auction and in other European countries, what kind of opportunities you see there? And particularly, if on the MAX auction, you can provide a comment on the level of pricing that has been achieved in the first one.

Second question is regarding the U.S. market. Several utility companies there, renewable companies are commenting on an improvement in the outlook. If you can give us some comment on how you see the U.S. market in this moment and in particular, if, let's say, better market condition could, let's say, accelerate the acquisition of the [indiscernible] part of the asset in the pipeline, which you have a preemption right in the country.

And the last one is on the FERX auction. Terna has provided some preliminary indication of possible prices, if I'm correct, around EUR 80 per megawatt hour. If you think that if your projects are awarded at that level, if you think that the profitability would be interesting? And in case when those projects you think could be start to contribute to your EBITDA? Sorry for the many questions...

You, Enrico. I'll try to answer in order as you asked about the storage business. Yes, we are very pleased to announce that our first plant, battery storage just started basically in July, and now it's ramping up its services and its functioning. This plant is totally merchant. I have to be direct on this, but it's located in a specific area where we have another wind farm. And we consider that location particularly attractive given the local conditions of the network. The plant is now also do whatever is needed to take part of the services provided by the TSO. So we expect to add, say, some revenues going forward coming from the participation to this kind of frequency services to the network.

For the time being, it's just a month or more of operations, it has already made a margin of 100,000 or a little bit more in terms of contribution margin, which is pretty in line with our expectation. But let me say this first plant is a sort of training area for us to learn competencies, how to manage this kind of plan vis-a-vis the network. So we hope just the very, very first move into a larger stream of revenues going forward. In fact, the second part of your question was related to [indiscernible]. I can confirm what I can announce because we said we hadn't say nothing about this. We participated to the auction with a couple of projects. All in all, roughly 80 megawatts or even a little bit more than that. And as many other operators, we were not awarded the tariff because our bid was in the region of EUR 20,000, EUR 20,000 per megawatt hour, which resulted higher compared to the average awarded price in the region of EUR 15 -- 13,000 per megawatt hour, a significant discount compared to the price cap of the auction that was [ EUR 37 ] per megawatt hour.

But nevertheless, let me say, we remain very committed to this kind of stream. And we are now starting a different business model, different from, I mean, the MAX, even though we recognize the MAX was a quite good mechanism. And now we are starting a hybrid business case for these 2 projects. Hybrid means maybe part of the revenues coming from a tolling agreement and part from merchant use of the plant and maybe part from capacity market because this plant could participate to the next auction of capacity market, which is different from the MAX.

In the meantime, we are also working hard on developing a large pipeline of projects of battery storage, I mean, not just in Italy, but also in Spain and in U.K. Those are the countries where we recognize the better value in developing this kind of assets. In Italy, for instance, we have a quite large pipeline. Part, of it is well advanced. And we hope, say we are working on 600 megawatts pipeline right now, and we hope half of it could be authorized in the next 12 months.

The second part is second 300 megawatts are a little bit behind this. But in a couple of years, we are ready -- we would be ready also for this second wave of the pipeline. In the same -- so more or less the same in Spain. We are working on several projects, even though, let me say, Spain is not paradoxically because it probably is the country where storage would be needed more, but they are lagging behind in terms of regulation, in terms of connections and so on. Now something is moving. our, say, job is to get ready when the right conditions will be there. So I hope to have answered your first question.

The second one is about the U.S. market. Yes, it's true. We noticed that the baseload prices are going up, at least where our current assets are operating in Illinois and Iowa. And yes, we are also aware that this undergoing trend about data centers that are pushing up demand and then driving prices higher. I have to remind all of you that the 2 assets in our portfolio are covered by long-term PPA. So in the short term, in the medium term because those PPAs have a duration of 10 years since the code, so still probably 8 years to go. So by then, we don't see any particular upside from the market. But for sure, we would -- it's legitimate to think that probably the renewal of those PPAs will be a premium compared to the current pricing.

On the development side, you know that our model is learn and grow. I mean we are buying just in case some CPs are met. And among those, for sure, the fact that the plant is already started up with a commercial operation date in place and a PPA and tax equity scheme already negotiated. So basically fully derisked asset. For the time being, we still see in the U.S. market a gap between bid and ask. And we don't want to derogate on our financial discipline. So we are waiting for the right moment. We have a kind of methodology to value these assets, and we want to stick with this methodology. The U.S. market probably also for what you have just said, are still based on expectations that are not in our, say, approach. So we are very cautious.

The third question is about FERX. Vice versa, we are very positive, say, on repowering. Repowering is a wonderful tool through which we can, on the one hand, rejuvenate our asset base. And on the other hand, to secure a long-term mechanism, CfD or whatever a PPA to stabilize the revenue. And yes, we took part to the last auction with 150 megawatts more or less, basically 3 projects to say. But the one we are looking at more carefully are the 2 wind repowering projects that are very important for us. The total of those projects is 140 megawatts, and we are quite confident to be well positioned to get the tariff CfD. As you probably know, GSE issued a press release saying the pricing of wind fell into a range between EUR 70 and EUR 83 per megawatt hour. So the average point in 76, we -- our bid was slightly better than this. It may seem a lower price compared to the initial expectation, but let me say that we managed to negotiate CapEx per megawatts, which are better than what we thought at the beginning.

So in the end, the return at which we think we can install those 2 projects are in line with our objectives. And on top of that, please, I want to remind you all that we got some financing from the European Investment Bank that makes the levered return on these projects double digit, low double digits that's our expectation.

So Enrico, I hope to have touched and cover all your points, if not any.

The next question is from Roberto Letizia, Equita.

And just a clarification on the guidance, if it's possible and the moving parts that drives to the guidance. So if we stick to the midpoint of the guidance, actually, the implied fourth quarter would be in the region of EUR 180 million, EUR 78 million, EUR 80 million, EUR 178 million, EUR 180 million, which would be a significant increase year-over-year, above 20% basically. And actually, I worked out Corlacky new plant should maybe potentially add up only EUR 2 million, EUR 3 million. Just wonder if you can a little bit compose this picture that drives to a plus 25% considering, of course, the other delta change in the perimeter versus the trend in the wing just to get how visible is also the midpoint that you are targeting right now.

Then again, I was also interested in the battery. And well, if I take it out EUR 100,000 for just a few weeks of operations and I take it on the full year, could it be that we have a EUR 0.4 million, EUR 0.5 million of EBITDA over the year for that Vicari plant? That would be nice to have as a reference to understand what's the profit potential of you being involved in the pipeline you said you're working on?

Then I'm afraid, but on the incentive, I know we are still getting out an understanding on what's the outcome of the FERX, but we always look ahead and we'll start talking about the potential [ FERZ ]. I don't know if you have any idea of how this could be shaped in the future for the incentives on the '26 and '27.

And the last one is a consideration of the data center. You mentioned for the U.S., but it's also a driver for Europe and Italy as well. I was wondering if you are already starting to think about it as a potential business model also for you? We saw in the past days, both A2A and Enel yesterday also starting to present this direct involvement into construction of sites and gain on rental fees for the hosting the energy provider and the services. I don't know if that can potentially work also for renewable groups that can add on top of the energy service provided the very cheap sourcing cost and as well as the green footprint to any potential IT development.

So Roberto, there are many questions. So let me try to go in order. The guidance, I'd say, I already had the chance to comment during my speech. October was very good, started off very good. Finally, basically, the first months closed significantly above budget. Unfortunately, the very first days of November were very weak. So part of the upside we had in October was eroded. But from next week, at least according to the weather forecast, something could change and wind could be back, difficult to say.

But I repeat, we are very, very confident about the fact that the number should be within the range. And near the midpoint. We are looking our best estimate today is something a number of ballpark figure nearby the midpoint of the range. To go in the upper part is pretty unlikely, even though not impossible because we would need an extraordinary wind significantly above historical average. It happened -- it has already happened in the past. It's not I repeat impossible. But our real target is nearby the midpoint of the range.

And today, I would say the consensus also from new analysts are more or less slightly below the midpoint of the range because according to our data, it's about 560, the consensus, and we are nearby, say. Yes, it's true. It would imply a fourth quarter significantly up year-on-year. But it's not a secret that the last -- the fourth quarter of '24 was pretty weak from wind condition point of view. So it's a reasonable number. So it's a sustainable number also considering the very -- the larger portfolio we can rely on right now because it's not just the best for sure, but it's above all the assets that enter into operations during '24 and the first part of '25.

And please consider, and this is always more true that to bring new assets to its full potential required times. So we are also having an improved performance from, for instance, our U.K. portfolio, our repowering projects and so on. So the contribution of new assets is improving quite significantly over the first 12, 18 months of operations, please consider also this. About BESS, I say I don't want to enter into more detail than I have already given in the sense that we are now working operationally on this 12.5 megawatts and we expect margin, say, in excess of EUR 1 million for sure on '26, between EUR 1 million and EUR 2 million from these assets. But let me say, the game changer will be the next projects. And as I said, we are trying to elaborate a business case, which is different from MAX for the time being, even though MAX, 2 MAX auctions are expected to take place in 2026 -- in 2026. So we are at a crossroad with different option. We'll pick the one we consider the best for us, but we are not ready to give an answer more precise than what I just said.

[ FERZ ], yes, it's on the pipeline. The main innovative concept is to introduce noneconomic criteria and that those maybe are welcome because our powering projects, we believe are bringing value added to the system because we are doubling the capacity, tripling the productions without occupying more soil. So it should be favored, I mean, by the regulator, but also from a technical point of view, the Fair should introduce kind of -- I don't know yet how, but some kind of ability, let me say, the Fair want to stimulate the creativity operator of operator to follow the profile of demand.

To me, it's quite difficult because wind and solar are unpredictable. I mean, they are producing when sun or wind is out there, but let's see. For the time being, we are focused on short-term FERX because we would be very, very pleased if those 2 projects can go on in their construction. They could enter in their construction phase.

Data center, yes, it's the topic trend of these days. Nowadays, we can keep talking about data center. We are positive on them. We still need to see the real upside of them in terms of demand because everybody knows that one of the problem is the weakness of demand across Europe, electricity demand. The European Commission recently stated through their 2040 climate framework that they should push more on electrification of consumptions. And one of the pillar of this electrification is exactly data center. So we are not studying right now a precise business model on data center, but we will definitely benefit if this kind of electricity stream will keep growing going forward.

So Roberto, I hope to have touch your point.

The next question is from Emanuele Oggioni, Kepler.

I have 3 questions. The first one is more high level related to your strategy and the fact that in the last 2 business plan, you cut the development CapEx and the growth basically of the company waiting for an improved scenario. But it seems that, in my opinion, at least that this scenario has a bit improved compared with 1 year ago, for example. So you have we are lower interest rates, probably lower CapEx per megawatt. Then I have also a question more specific on the CapEx, but not higher for sure.

Also, the outlook for -- in some markets, not only in the U.S. has improved as regards to the electricity prices or at least before everyone would have foreseen a decline in power prices. Now probably the outlook has improved, et cetera. So do you see the condition -- so this improved condition to resume and to accelerate basically your growth in terms of development CapEx the next business plan? So this is the first question.

The second one is more short term on '26 hedging. If you can provide an update. And the third one, I said, is on the supply chain. So if there is an update on the CapEx per megawatt for onshore wind and solar.

Okay. About CapEx, yes, you are right. We mentioned a little bit lower interest rates, some aspects of the outlook that has slightly improved over the last few months, 12 months exactly. But we are very concentrated on our business plan and part of our business plan is based on repower. So the fact that you are seeing lower CapEx is just a matter of time. I mean, if FERX would have taken place -- had taken place when it was supposed to, probably right now, we were spending -- we would have spent more in terms of CapEx. So we are just adapting our deployment in terms of time line, say, waiting for the proper conditions to go on with our investment. That's the real reason behind the profile of CapEx.

So if in a month, say, GSE we confirm that our 2 projects are among the awarded one, we will start the construction and then we'll approve the CapEx. And in parallel with those 2 projects, we have other projects ready to be launched, not just in Italy, but also in Germany, in France and so on. But it's not -- so this environment is not for us stimulating an acceleration beyond what we have already announced during the business plan because you said just the positive, but also there are point of attention in the market, looking, for instance, the negative hours and so on.

So for us, it's crucial when we approve an investments to secure its return in terms of IRR. And to do that, we need to have the route to market already secured. We will need to secure the CapEx per megawatt. And behind this, there is a huge -- a big, a big work to do. That's our approach, and we don't want to get away from this kind of approach. We are still on that approach, and we keep it. So we don't see particular acceleration. We hope to accelerate on our organic pipeline, that's for sure. And we are working on the next business plan, and we hope to say a little bit more in March '26 when we'll update the financial community on our plan.

Regarding hedging, we are entering November with 2026 volume that are hedged on 75%. So we have exposed to market 25%. What we expect in the coming 2 months is to reach our target that is around 80%, 85% by the end of 2025 to start 2026 with our target hedge volume. So this is -- you know that we are following a 3-year rolling hedge policy that some short-term hedging to the long-term hedging provided by tariffs or PPAs or green certificates. So this is the situation of the hedging today.

Regarding the supply chain, you are right that we are seeing for sure, stabilization, some -- also some improvement in the supply chain. In particular, we have experienced in this moment of projects in Germany, France and in Italy, in wind in particular. In particularly in Italy, the competitiveness of the auction has some effect also on the behavior of the wind turbine suppliers because they recognize that if they want the projects that are based on their technologies, they know that they need to be competitive in their offer. Otherwise, there are no projects for them. And so I think there is an alignment of interest between -- in this specific case between [ IPP ] and technology provider to be competitive in the auction. And this is something that we see happening on the market. Regarding the remaining part of the cost per megawatt, civil works and so on, I don't see any particular disruption in the market, in particular for wind project and in particular for ERG that is an established player in this market.

Just a follow-up on the -- still on the hedging. You mentioned the volumes, but as regards the pricing overall, there is any improvement in this 3-year hedging?

I cannot comment on specific figures on the hedging. We are following in the 3 years methodology, the price on the market. So in this moment, on the term, I don't see any particular change in respect of 2024 regarding the price that we are building up for 2025. The price for 2026, we are not seeing any material change regarding the price of 2025.

The next question is from Davide Candela, Intesa Sanpaolo.

I have 3, if I may. The first one is still on batteries. I was wondering if you can share your view about the cost trajectory of the technology that to me, it looks like there are some room for improvements also on a technological point of view. So I wonder if this is a good positive case for the technology going forward.

Second question on M&A, you partly already answered with regards to U.S., but with moving to Europe. I wonder if you can share your view how the market is going, if you are considering [ Sandoies ], which is the gap actually between the bid ask in this part of the world?

Third question with regards to the PPAs market. And this question is related maybe to the demand growth expected from data center. In the PPAs, do you see utilities that are actually some of them downsides in their CapEx in renewable as key clients in future to lock in some new capacity that renewable operators like you could develop in future?

Very, very quickly. BESS, yes, you are right. We noticed a huge improvement in the capital intensity that is getting lower and lower. In particularly, over the last few months, the few months before the launch of the MAX auction, we noticed a significant drop the CapEx intensity. As a matter of fact, say, in July, the cap was set at EUR 37,000 and then the outcome came at EUR 13,000. So with a very huge discount because the pricing of the furniture went down quite significantly.

So this is an upside for sure going forward. It's not a secret that scale is crucial. I mean the operator that won 70% or even more of the MAX auction was a large-scale operator. So you need to be -- to have a significant pipeline to reach this kind of pricing, but we are working in this direction. M&A, U.S. is still an area at which we are looking at despite what I said before, but still it's interesting for us also for the reason Roberto mentioned before, the trend in terms of data center and whatever. But still, we are looking for the right moment to increase our presence there.

About Europe, yes, we are involved in some beauty contest, in particular, in countries where we have a quite sizable positioning and it's not a secret like France, U.K., Germany, these kind of countries. But as you know, M&A, you can't say anything until you have closed it because until the last moment. But yes, we are working on some very specific asset acquisitions that could create value from our perspective.

PPA market, I think we are delivering a lot, much more than we ourselves could think just a few years ago. In 2021, in 2021, we had 0 PPA in our portfolio. Now we have 3.7 terawatt hour per year of production covered by PPA with high-level offtakers across the world in Europe, both in Europe and U.S. So we believe to have been a leader in this segment. Even in this quarter, in the third quarter, we closed down 3 important PPA with FS, the train operator in Italy. We are now working on other PPA on some assets outside Italy. We hope to be in the position to announce something -- sorry, in the very near future.

And if the question was to understand the PPA market is still alive, yes, it is, and we expect it to develop even further because as you said correctly, most of the integrated utilities are moving capital from RES to other segment like regulated ones in particular. And then from this point of view, they would need to sign more PPA. In fact, ourselves ERG itself has signed a few PPAs with utilities recently. And this trend should reinforce in our opinion going forward. So, I hope to have answered your...

The next question is from Alex Roncier, Bank of America.

I have 2, if I may. The first one is just regarding the lower capital intensity or at least CapEx per megawatt, I think, that you were talking about. I just want to kind of make sure I understand correctly because I think historically, you had a CapEx per megawatt guidance that was a little bit higher than the rest of the industry due to your own integration as well as Italy and repowering, so some specific.

And I think you've been talking down CapEx per megawatt for yourself in terms of your next investment. what you've been doing as well, and I'm glad to see that comment being made again today during the call because you made that first, I think, last time at the H1 call was regarding turbine prices perhaps coming in lower than what you were expecting or at least the European OEMs being a bit more conscious of Chinese competition and perhaps lowering prices. I think that's a message that very opposite of what the OEMs themselves are talking about. So I would be interested to really have your view about what you're seeing in terms of turbine prices for Europe.

And I'm just also wondering if the lower costs you are getting on your projects is perhaps due to other factors as well? I mean, is it because of the balance of power, system, transformer, connection, [ PC ], some better integration or maybe some lower costs that you're trying to put in, in terms of risk conversion for the project themselves because I know historically in the past, you were getting a lot back from compensation.

And then the second question, perhaps, and sorry for the first long question, is that given that perhaps organically, you are trying to accelerate, I'm conscious of that, but you're perhaps not deploying as much capital as what you were thinking. Should we safely assume that, that means there is even more upside regarding higher dividend per share or higher share buyback into next year which was already the case at the beginning of the year. So any kind of color on capital allocation? And ultimately, if you had any more directionality being given by the Board and by both your main shareholder groups.

Okay. Alex try to answer your question very rapidly, and then I leave Michele to elaborate a little bit more on your first question as a CFO, is also accountable for our procurement. So he's negotiating every day with all the names you mentioned. I mean, the Chinese and OEMs, Western OEMs and the Chinese one.

MAX, historically, honestly, we had a CapEx per megawatt, which was lower, not higher than other operators because in 2020, 2018, we managed to sign a framework agreement with Vestas and Enercon at the price at that time. So we had a wave of investments 3, 4, 5 years after that framework agreement supported by a lower CapEx per megawatt in terms of wind turbines. Then unfortunately, those frameworks expired and then back to normal, let's say. So that's the reason behind the increased CapEx per megawatt over the last, say, 2 years.

Having said that, over the last 2 projects I mentioned before that took part to the FERX auction, together with our partner because we consider the OEM with which we work as a partner and they were aware of the competitiveness expected in this auction, we found an agreement to reduce the CapEx subject to the fact that we order a certain kind, a certain type of machine and turbine. So I can confirm that the reduction was strictly limited to the wind turbine supply agreement, subject, of course, we were -- we are awarded by the CfD.

Of course, there is also, let me say, I don't want to enter into the shoes of OEM, but there is a kind of reversal engineering exercise also for them. I mean, if they know the pricing at the FERX option is going to be 75 or 76, they adapt their value proposition for wind turbines in order to get the order. So it's a double interest. And fortunately, it's an interest that we have in common. This kind of partnership, we hope is going to work as regards the FERX.

About the Balance sheet, I think it's a nice problem to have. I mean, having a stronger balance sheet than other peers, and this is definitely our picture because as you have seen, the net debt has remained broadly flat, notwithstanding we distributed almost EUR 170 million in '25, dividends plus buyback because in January, don't forget, we spent more than EUR 20 million in buyback.

Going forward, we like to have a strong balance sheet because whenever opportunities will arise also from an M&A point of view, we are ready to get the in March, when we are -- when we close the profit and loss, for the full year, usually, we have a confrontation, I mean, a discussion internally to set the dividend, think about maybe buyback and whatever. As we said, buyback is considered a flexible tool to allocate properly cash. But for the time being, I'm not ready to take any commitment from this point of view, except confirming the EUR 1 per share dividend that was our minimum, say, target from this respect.

So Alex, do you have any...

It's super helpful. Just maybe if I can, just one very quick follow-up. So you mentioned you had a historical framework with Vestas. Any comments you can give us about the partner you're adding for the FERX procurement?

No. But -- I don't know if you want --No, no. I mean maybe what I can say is that we have a history of working with Western O&M, so Vestas, Enercon, Nordex and so on. But we cannot rule out the possibility to work also with the Chinese supplier. We see that they are entering the market in Europe. So have very small market share up to now. And not all projects are good for their technology in terms of size of wind turbine comparing to the permitting that we have in our project.

Notwithstanding that, we have discussion ongoing also with them to understand if we can benefit from lower cost technology, but without compromising on the asset quality that is one of the characteristics of our group that is to maintain a quality in our asset base that can deliver value in the long time.

Okay. So haven't selected yet, but keeping all options open, including Chinese provider.

Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Thank you. Thank you all for the interest, and we will see the next one in March for the full year results and also for the update on the business plan.

Thank you very much, and have a good weekend.

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