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Earnings call: Solaria reports record growth and ambitious expansion plans

EditorAhmed Abdulazez Abdulkadir
Published 03/02/2024, 05:44 PM
Updated 03/02/2024, 05:44 PM
© Reuters.

Solaria, a leading renewable energy company, has reported significant growth in its 2023 Full Year Results Webcast, with CEO Arturo Diaz-Tejeiro Larranaga announcing a 62% increase in energy generation and a robust financial performance.

The company's revenue reached EUR 230 million, and EBITDA grew by 36% from the previous year. With 1.7 gigawatts of capacity installed and an additional 1.5 gigawatts under construction, Solaria is on track to meet its global EBITDA target of over EUR 300 million for 2025, despite a new 7% tax on renewables by the Spanish government.

The company's expansion into Italy and Germany and the construction of the Garona project, one of the largest PV plants in Spain, underscore its commitment to diversifying its geographic and technological portfolio.

Key Takeaways

  • Solaria's energy generation surged by 62%, with revenues at EUR 230 million.
  • EBITDA increased by 36% in 2023, contributing to strong net profits.
  • 1.7 gigawatts of capacity is installed, with 1.5 gigawatts under construction.
  • Secured EUR 1.7 billion loan from the European Investment Bank for a 5.6 gigawatt portfolio.
  • Announced a record-low price for PV modules and plans for an additional 500 megawatts deal.
  • Adjusted EBITDA targets due to a new 7% renewables tax, maintaining a 2025 EBITDA goal of over EUR 300 million.
  • Expansion into Italy and Germany, with the Garona project highlighting its growth strategy.
  • Emphasis on ESG principles, strong cash flow, and effective debt management.

Company Outlook

  • Solaria aims to add 0.5 gigawatts of capacity by year-end, targeting over 4 gigawatts installed by summer 2025.
  • The company is expanding its infrastructure business, including substations for third parties.
  • Asset rotation plans include selling 500 megawatts at a fixed price of EUR 1.15.

Bearish Highlights

  • The Spanish government's 7% tax on renewables has led to an adjustment of EBITDA targets.
  • Uncertainty around electricity prices due to factors like the closure of nuclear plants and new renewable projects.

Bullish Highlights

  • Strong financial performance with record growth in energy generation and EBITDA.
  • Expansion into new markets in Italy and Germany, diversifying the company's portfolio.
  • Secured significant financing and low PV module prices, enhancing competitiveness.

Misses

  • No specific misses were reported in the earnings call summary.

Q&A Highlights

  • Solaria discussed project IRR levels, asset rotation, portfolio diversification, and new business opportunities.
  • Mentioned the Iberian exception for inframarginal technologies and the focus on infrastructure.
  • Negotiating new asset rotation deals, including a 500 megawatt deal in the Basque country.
  • Waiting for final government approvals for a 4.5 gigawatt pipeline, expected in Q2.
  • Recent PPA deal with Endesa, with PPA prices ranging between the 40s and 50s.

Solaria's strong performance in 2023 sets a positive tone for the company's future, as it continues to navigate the renewable energy landscape with strategic expansions and financial prudence. The company's commitment to ESG principles and infrastructure development positions it well for sustainable growth in the years ahead. Investors and stakeholders will be watching closely as Solaria works towards its ambitious targets and navigates the evolving regulatory environment.

InvestingPro Insights

Solaria's impressive growth trajectory and strategic expansions are noteworthy, but it's essential to consider the broader investment context. Here's a look at some real-time data and InvestingPro Tips for SEYMF, a company in the same sector, that may offer additional insights for investors interested in the renewable energy market.

InvestingPro Data for SEYMF:

  • Market Cap: 1.5 billion USD, reflecting a substantial presence in the industry.
  • P/E Ratio (Adjusted): 12.9 as of the last twelve months ending Q3 2023, suggesting a valuation that may interest value investors.
  • Revenue Growth: A significant increase of 44.62% over the last twelve months as of Q3 2023, indicating strong sales performance.

InvestingPro Tips for SEYMF:

  • Analysts anticipate sales growth in the current year, which may signal potential for similar companies like Solaria.
  • The stock is currently trading at a low earnings multiple, which could be of interest to investors looking for undervalued opportunities in the renewable energy sector.

For investors seeking more comprehensive analysis and additional InvestingPro Tips for SEYMF, there are 15 tips available on InvestingPro. By using the coupon code PRONEWS24, you can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing you with a deeper dive into the metrics that matter. Visit https://www.investing.com/pro/SEYMF for more details and to take advantage of this exclusive offer.

Solaria's successful year and ambitious future plans are part of a larger trend in the renewable energy sector, where companies like SEYMF are also making significant strides. These insights can help investors make informed decisions as they explore opportunities within this dynamic industry.

Full transcript - Solaria CFD (SEYMF) Q4 2023:

David Guengant: Good afternoon, everyone, and welcome to Solaria 2023 Full Year Results Webcast. My name is David Guengant. I'm the Head of IR of Solaria. I'm joined today with -- by Arturo Diaz-Tejeiro Larranaga, our Chief Executive Officer. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. During this presentation, we'll begin with an overview of the full year results and the main development during this year, given by our CEO, Arturo. And following this, we will move on to the Q&A session. I would also like to highlight that you have to submit all your questions via the web. So thank you very much again. And I will now hand over the word to Arturo.

Arturo Larranaga: Thank you, David, and thanks to everyone joining this conference call. Like always, I will move extremely fast in the presentation of 2023 results of Solaria and then we will pass to the Q&A session. Of course, here, this year, I think that we have achieved a record from generation perspective. We have increased our generation if you compare with last year in 62%. Revenues continue growing. We have achieved EUR 230 million. EBITDA, additional 36% of growth 2023 versus 2022 and net profit, like I think that this year was extremely good financial year for Solaria. We continue growing. All the numbers continues growing EBITDA, net profit revenues and energy generation. And from a capacity perspective, we have finished with close to 1.7 gigawatts of capacity installed and connected to the grid. And we have under construction more than 1.5 gigawatts. With these numbers, we could say, we can say that we are the leader in the Iberia region in Solar Photovoltaic Technology with more than 3 gigawatts installed and under construction. Extremely important for us was the approval that we received on January of Garona, the final approval, the final permitting process that we obtained at the beginning of January. Garona today is under execution. Civil works we are doing and we are executing now the civil works. And hopefully, in the next 10 months, 12 months, we will connect to the grid. It's our second flagship project, extremely important. As you know, after 3 Garona for us is the second flagship project of our portfolio in the north of Spain, close to -- in Burgos, close to the city of Burgos and one of the largest PV plants that will be construct in Spain. In order to give a global idea of the situation is something that we have explained during the past presentation, but we have secured the financing for the 5.6 gigawatt portfolio that we are going to construct in the next two years. We have secured the financing with the European Investment Bank with a credit loan of EUR 1.7 billion, project finance structure. It was a great successful that we announced on September of last year and now that we are using now, and we are using this project finance capacity in all the projects that we are going to construct during this year. Extremely important, price of PV modules, 500 megawatts that we have signed this contract a few months ago. One month ago, approximately two months ago, approximately, price, record price of EUR 0.093 per watt. That is the lowest price in the history of Solaria from a purchasing point of view, from purchasing of modules point of view. Good point. I think that in the next days, probably next week, we are going to announce a new deal of 500 megawatts, a new deal of acquisition of PV modules, 500 megawatts -- additional 500 megawatts. And probably we are going to stay in similar or even less level of price of modules. This is extremely important. At the end of the day, is CapEx. CapEx that we are improving all quarters. And as you know, PV modules is one of the key parts of the CapEx of the global CapEx of the PV assets. And this price is a record price and it's extremely important for us. Of course, we have adjusted EBITDA targets, 7%. Why? Because as you know, the Spanish government at the end of last year approved the 7% tax for renewables for renewals for all the generation, not renewables globally for all the generation and is 7% of the sales. And we have adjusted our EBITDA targets according with this new tax approved by the government. Of course, we continue with our business plan 18 gigawatts until 2013. And the key point here is that we are including today more information about Italy and Germany. We are spending activities out of Spain. We have today a good situation from a pipeline perspective in Italy and in Germany. I think that more than 50% of our global pipeline will come from these countries, and it's extremely important because it's a geographical diversification that we are going to execute during the next years and extremely important because Solaria in the next year will be the key player in European Union from renewable energy point of view. Of course, in order to enter in financial numbers, capacity increase and Garona, as I have mentioned, we have to start with the civil works in Garona. Extremely important for us from a strategic point of view, and we will explain deeply during this conference call. But Garona will be one of the key assets, not only for Solaria, globally for Spain, and I will explain. The good point is that we have increased our capacity originally was 595 megawatts, and we have get additional capacity and it was approved. And today, the project is 700 megawatts. I can say that it's the largest PV asset in Iberia region and the largest development or the largest photovoltaic development in Iberia regions. As I have explained, 10 months, 12 months will be connected to the grid. Of course, as always, we maintain our -- some concept that for us are fundamentals. We need to be the top from ESG point of view, and we maintain high level rating in ESG concepts. And we continue thinking that is one of the key points, especially if you work in renewables, especially if you are a renewable energy company, diversification, not only from a geographic perspective that I have mentioned, Italy, Spain, Portugal and Germany and not only from a geographical perspective, in technology, wind and solar, from wind perspective today, we have more than 18% of our pipeline is associated with wind technology and will be developed and construct during the next three years. And of course, this is extremely important because today, we can say that Solaria is not only a photovoltaic solar energy company. It's a renewable energy group involving different geographies and involving different technologies at the same time. Even I can say that we are not exactly only a renewable energy group. No, we are an infrastructure group that groups not only in generation that works in other applications, and we will explain during this conference call. And profits is something that we always explain. We need to maintain a profit and a healthy financial situation because, as you know, we are not rotating assets, we are not increasing capital. And obviously, all the cash comes from actual assets and future assets, 12% of minimum project IR that we have always explained. Probably Solaria today is the best-in-class from CapEx and OpEx perspective, globally in Europe or probably in Spain and globally in Europe. We don't acquire pipeline or similar. We develop all of our pipeline with our own team, and we are not raising capital and we don't see this option for the future. And we maintain all of our financing associated with project finance instructor, deals that I have mentioned, European Investment Bank and additional deals that will be announced. And today, this predict finance is covering close to our -- to the 100% of our CapEx. Of course, financial numbers, production record. I think that I have mentioned, but it's important to say again production record, sales record, of course, EBITDA record. It's important to mention because all the market is extremely worried about this. No merchant exposure today. Our merchant exposure is around 30%, 70% approximately is closed with fixed price with PPAs and 30% go to the merchant markets. EBITDA, net profit, we continue growing, as I have explained. Cash flow, we maintain a really good level of cash after to invest more than EUR 320 million that we have invested during 2023 that it was a strong effort for a medium-sized company like Solaria, we maintain a really good level of cash, without any asset rotation without any increase of capital or similar. And with the cash flow and the generation of our PV assets and covering our CapEx with project finance. Debt and situation of the debt is important to mention, especially with the actual situation of interest rate. All the market is worried about the situation of interest rate and when it's going to decrease. The average cost of debt is 3.5%. That is not bad. It's good, especially because it's long-term debt. The average tenure for our project finance debt is 15 years, 14.4 and 3.5, 15 years is reasonable in our mind. And more than 90% is project finance debt associated with our assets. Our level debt-to-EBITDA is good, 4.9%. Hopefully, during this year, we are going to improve. And hopefully, during this year, especially with the reduction of our CapEx, we will improve all of these numbers. And quarterly, you will see the evolution. Of course, as I have mentioned, we adjust the numbers that we present with a 7% tax. Unfortunately, government has decided to approve again the 7% tax. In my mind, it's an enormous mistake. Because it's an old tax that it was a mistake of the previous government, and they have decided to introduce again in the system. I think it's a normal mistake that delay or damage in general -- generation, not only renewables in general. But today, we have over the table, and we have to include in our projections. But even with this effect of the 7%, we maintain global EBITDA target for 2025 of more than EUR 300 million. That is significant, probably is best-in-class for solar photovoltaic companies. And good news at the same time that government has recuperated 7% tax that I have mentioned. At the same time, they have canceled a claw back that it was a direct attack to the renewables energy technologies and good new because they have canceled the claw back and they have canceled the very an exception that it was an hopeful law approved the government. Good point today, we compete apple-to-apple with other technologies in the same situation because 7% is something that affects to all the technologies, not to renewables or infra marginal technologies. Claw back an Iberian exception was approved for inframarginal technologies. We have included here this is extremely important for us. As you know, at the end of the day, the key point for us is project IRR levels. And we have included here an estimation based in our CapEx, EUR 0.375 per watt. And of course, the projection about electrical prices is extremely difficult to make or to execute projection based on electrical prices because, as you know, it's all the time shaking and changing all the time. And I think that all the people is like in soccer, all the people know about soccer. All the people knows about the future situation of electricity prices. All the people has opinion about price in the future of electricity. Honestly, after 25 years, I'm not completely sure about the situation of prices of electricity in the next 10 years, 12 years, 15 years or 20 years. But usually people, all the people has opinion, but we will talk about this. I'm completely so in the Q&A session, we will talk about this. But even in the worst scenario that we have included EUR 39.6 per megawatt hour average price. The project IRR that we obtained, the theoretical project IRR is 14.2%. That is acceptable with our criteria of 12% of minimum project IRR. Asset rotation, as you know, Solaria is not extremely focused in asset rotation. It probably is the only company that is not focused today in asset rotation. All the renewables and energy market is focused on asset rotation. I understand with the inflation situation. But in our view, asset could be rotating the correct price and in the correct strategy and the correct price could be rotated. Like always, we have explained. As you know, we closed an asset rotation one year ago or more than one year in 2022. We closed a small asset rotation of 100 megawatts. We are negotiating new asset rotation in the Basque country for 500 megawatts that could be increased, but today is based on 500 megawatts, 25%. As you know, Basque Country has a special law from a tax point of view that they include 30% of tax credit on CapEx invested, and this is extremely relevant for us. And probably this operation could be closed in the next two months, three months. And it's good from a financial perspective and it's good from a tax point of view. Of course, this is something that I have mentioned, the portfolio, we are focused on the diversification of our portfolio, not only from a geographic perspective, technology perspective, solar, wind and geography, Spain, Italy, Portugal, Germany. And I think that more business will come. I think that Solaria at the end of the day is an infrastructure player looking for new business based, obviously, on generation on renewable energy generation. But for us, it's important to innovate and to make new business. Flagship projects. And when we are going to enter in this new flagship projects, you know because we have explained in all of our previous presentations, Basque Country, a normal project that will be extremely strategic for us and more than 2 gigawatts and almost probably the largest PV asset in Europe and probably one of the largest in the world, Garona that we have started with the construction of civil works, Trillo that was done, and we have now the second phase we are constructing the second phase at 150 megawatts and more projects. We have included here Italy, but because Italy is today an important country for us. We think that during especially 2025, 2026 will give to us a lot of surprises and good news. And of course, we'll have included here. Italy, we include the detail. As you know, our target for Italy is 5 gigawatts. It's a complicated country, not easy to develop pipeline, not easy to construct PV assets or wind assets, not easy to sign PPAs. Great for us. It's the perfect place for us, no, not easy, great. And I think that we are getting good successful. It's a complicated country. I love it. And 2.28 gigawatts was secured during last month, last quarter, and we are growing. Hopefully, in the next quarter, we will give update about new development, situation of our pipeline. And hopefully, during this year, we will start with construction, massive construction in Italy. Of course, new concepts and things that will happen in the next year and during this year. And a lot of things could happen here, but new business that we have over the table. As you know, Solaria, as I have mentioned, is not only our renewable energy generation company, it’s an infrastructure player. We are constructing a lot of new substations. As you know, grid and substations is one of our key investments and it's important in our CapEx, the substation and the grid. And this grid and this substations is used not only by Solaria, used by third parties. And even we are constructing substation and grid for third parties. It's one of our activities today because some players of the business of the renewable energy space, they appreciate our know-how and they are contracting and subcontracting us in some works, specialized works associated with substation with grid it's good because it's healthy for us. And it's a diversification of our P&L. Power lines, we have today hundreds of power lines contract -- constructed and under construction. And hopefully, we will have more than 1,000 kilometers of power lines in the next one year, two years, and it's important because in two years, we will be one of the key players from grid infrastructure point of view in Europe, not only in Spain, globally and the countries that we are working now. And this is extremely important for us because I think that will borne a lot of new business associated with this. And we are going to rent. We are going to offer services to our not competitors, our friends and colleagues and new business will come from this investment that we are doing now. And like always, an area is growing. We continue to acquiring land or using hectares of land, and we continue growing. Hopefully, an area during this year would give news, and we will see opportunities. If you want, we will go to the Q&A session, and we will answer the questions.

David Guengant: Thank you, Arturo. I will now open the Q&A session. And once again, thank you for your time.

A - David Guengant: The first question comes from Fernando Garcia from RBC. First question is what our assumption in terms of power price that we use for the new guidance of EBITDA? The second question is do we expect to connect more renewable in the short term? And then if we can give some capacity reading for the coming two years?

Arturo Larranaga: I think that the assumption that we have used and that we usually have used in previous presentation was the central scenario of advisor, the name of the advisor in this case, is Baringa [ph], usually, we -- today, we are using Baringa in the past, we have used other advisors. In this point, I know that it is extremely, as I have mentioned, it's extremely difficult to predict movements on power price. I have my own idea about the situation of the power price market, Spanish market, especially in the next years. But in order to be fair, we have used a central scenario of Baringa Advisor. In my view, is optimistic of -- my view is it's good. It's okay. And we will see the evolution of power price in the next three years. About the connections and what we are going to do during this year, hopefully, we will connect more assets during next quarter. We haven't included in our assumptions, but we are trying to do as much as possible in order to connect as soon as possible. Unfortunately, sometimes you depend on third parties when I talk about third parties infrastructure of Red Electrica, and we depend on them. Sometimes we finish our installations, and we are waiting for the final connection one year or even quarters. And unfortunately, it will depend of third parties. Probably during the second half, we will have new connections, but we haven't included in our assumptions and -- but hopefully, in the second half, we will add 0.5 approximately gigawatts of additional capacity.

David Guengant: Second question are coming from Jorge Alonso from Societe Generale (OTC:SCGLY). I think that part of the question was already answered, but the next question are coming from if Solaria is adding 1 gigawatt to 1.5 gigawatts in 2024, as those merchant currently. Next, asset rotation to which assets are related, COD in 2025 or 2026. And just maybe on the European Investment Bank agreement, if we require another 50% for us to fund as the growth.

Arturo Larranaga: 70:30 sounds reasonable for us is something that could change. For example, I can say that we are negotiating. We have a really good volume, and we are negotiating with our customers add to our customers because some of them needs to sign PPA as soon as possible. And we are negotiating with them really, I could say, large volume, the signature of a large volume of megawatts in a PPA contract. And we are negotiating. And if we achieve the correct price and the current conditions, we could close. No, it's something is like what I'm saying that we will change this mix, 70:30? If we have the correct price under PPA with the corporate partner, we could increase this number. And even with the strange situation actual today, with a strange situation in the power prices, we see a strong interest from our customers to sign additional PPAs and to increase the PPA deals with us. And we are reasonable. If we obtain a good price. And you know that in the last quarter, we have signed a good PPA. And if we obtain good prices, we could increase our PPA exposure. And the asset rotation and the concept of asset rotation. As you know, Basque Country, the global project of 2 gigawatts probably the connection will happen in 2026, probably. And the rotation is based on this project assets that will be connected in 2026. We are going to rotate now, but we'll be connecting 2026 and the European Investment Bank. The European Investment Bank, the deal is associated with 50% of individual deals is EUR 1.7 billion, and they allocate 50% of the individual deal. If you have a deal of EUR 250 million, they allocate EUR 125 million. But sometimes, they support at the same time to the bank that entry with them, and they allocate capital to these banks. For example, in large deal, they have allocated 50%. At the same time, they have support with credit loan to the bank that has entered with us. You know that the large deal was signed with Santander (BME:SAN). And of course, sometimes even they acquire position in the deals of the partner.

David Guengant: Next question is coming from Enrico Bartoli from Mediobanca (OTC:MDIBY). I think we already answered part of them, but the following one are when do we expect to receive final constant authorization for the whole 4.5 gigawatts that are target to be complete by mid-2025. And maybe we can give some PPA price evolution in this negotiation with PPA counterpart?

Arturo Larranaga: We have to ask to the government but in order to try to answer today, homework of Solaria was completely done. All the process was done. All the paper were work on. All the projects was presented to the government. They have a study, they have done -- they have preapproved all the paperwork. I think that we are waiting for the final answer of the government. Theoretically should come shortly. But honestly, you know that the Spanish government, they have approved a delay of additional, they have approved a new additional six-month period in order to answer -- to answer all the request of approvals of new pipeline and hopefully, in the Q2, we are going to reside the final answer of the government. The good point, today, we are really busy in the constructing activity. Honestly, I think that in Spain today, if you see from a construction point of view, the only one that is closing deals, the only one that is constructing, real construction, the only one that is acquiring modules is Solaria. Other players are waiting for final approvals. But today, Solaria will have more than 1.5 gigawatts under construction, and we are acquiring modules. We are executing projects. It's like we are living -- we are extremely busy working on the projects that we have today under construction, hopefully, in the Q2. PPA prices. About the PPA prices, I think that you know that the large deal was announced with Endesa and the price that we think that is reasonable is between 40s, 50s. What does it mean between 40s, in 40s, it's reasonable? If you go, the good point for us is when you talk about customers and about PPAs, the key point today is you have a lot of players talking about PPA that they could sign to supply electricity in one year, two years, three years. Honestly, in this case, you are going to see a strong reduction on prices of your PPA. The good point of Solaria is the PPA that could be signed the PPA that we are offering to our customers is PPA that could sell electricity tomorrow. And this is an extremely important point from a price point of view because for customers risk zero risk, they are going to reside electricity tomorrow. And I think that this is an important advantage of Solaria that we signed PPA and we supplied electricity. I think that all of our customers are external satisfied with all the deals that we have, and they want to repeat. And of course, PPA price today is obviously is not in the best moment today for negotiating because price of electricity under noises that we have in the system is not good. People today is touching 40, around 40, 40, 41. Hopefully, in the next two months, we will see a positive evolution of prices. In our view, if we see 45, 46, 47, we could close higher value.

David Guengant: Next question is coming from Alberto Gandolfi from Goldman Sachs. The first question is regarding the EBITDA target. I am right in saying that EBITDA target were only adjusted for the 7% revenue tax. What is the power price assumed on the merchant position in 2024? And what would be the mark-to-market price you think you can achieve this year? And the second question is on asset rotation. Is the valuation show in Slide 12 is the result of a binding offer or is just our own estimate?

Arturo Larranaga: We have adjusted all including the 7% revenues tax, our EBITDA target. Power price assumed, as I have mentioned, is based on the advisor central scenario. It could be optimistic or not. It's difficult to say, but it's EUR 64 per megawatt hour that of merchant prices that, as I have mentioned, is around between 25% to 30% of our global situation. And the price that we are able to achieve this year is difficult. I'm talking about a scenario of advisors. My opinion is different. I think that this is shaking all the time. We will see the evolution in the next month. I think that we are living probably the worst days of the year because wind is in a strong situation, as you know, and the gas in an extremely weak situation. The good point of Solaria that we have a really strong situation with really good PPAs and with really good CapEx that is the key part, the key critical part to be extremely efficient in order to be able to compete with worse prices. As I have mentioned, today, PPA deals are touching prices of 40, 40, that is not bad. It's not bad, especially if you add the EDR and it's not bad. On the asset rotation, we haven't done a biding process, no. We are talking with a strategic partner, and we are negotiating with only one partner. It's not something, as you know, Solaria usually, if we want to sell an asset, we are not extremely exciting with assets rotation. In our view always is not only a financial issue. It's important, obviously, to achieve a good price for us. But at the same time, we are looking for good partners for the long term. In this case, in the Basque Country, is an extremely good partner and extremely good financial partners, strategic and financial partner. And we will announce to the market and you will see.

David Guengant: Next question is coming from Tomas Reyes from CaixaBank. First question is, can we provide some more detail on this new 500-megawatt asset rotation program in the Basque Country? And also the way this tax credit cash in works? And second question, I think that we already answered.

Arturo Larranaga: Tax credit is the government -- the Basque government is not only for Solaria for all renewals energy investments. The Basque government approved a law that say that they recognize 30% of tax credit of the CapEx involved in the project. I suppose that you recognize 30% of your CapEx is, I don't know, whatever, EUR 1, they recognize tax credit of 30%, EUR 0.3 per watt. And CapEx is based, for example, if we assume that a partner entering the asset, paying EUR 1, the CapEx recognized is EUR 1. And this is externally important for us. For this reason, it's strategic for us, the asset rotation because it's not only an issue of money paid in the operation, the EUR 1, EUR 1.1 in this case, is EUR 1.15 is not only the price that is good, in my view, especially because this asset will be connected in 2026 is the recognition of tax credit that for us is the key part that is improved with this entry. And...

David Guengant: So next question is coming from Manuel Palomo from BNP. Regarding PPA market, I assume that we already answered. Regarding the voltage price, I think we already answered, but Manuel is asking if we plan to still follow the strategy of 70:30 despite the evolution in wholesale price. And can we give maybe a little bit more update about the installation target for 2024 and 2025?

Arturo Larranaga: PPA market, we have mentioned. I think that I'm optimistic about the deal that we are going to announce in the short term in the market. High volume, probably the largest volume that we have announced and good price, good price, I have mentioned, previous deals for us include a good price. And I have mentioned today, the situation of the Spanish PPA market, if you talk with our customers, and if you ask to them, it's around 40. Around 40 price for PPA, if you supply electricity from now, 40, it depends on the player, but 40 reasonable. But it's not the price that we are able to accept merchant exposure and situation. If the price is good or bad, we will see. I think that all years, after the last 10 years, I think I have these discussions about wholesale prices. And I know that all the people, as I have mentioned, different opinions, different views. And honestly, during the last six years, seven years, during the annual results presentation, I remember three years ago, four years ago, always is the same question. During February or March, price of electricity goes down with a wind effect. Gas effect always is the same. And from all the people start to talk about the volume of renewables that could affect seriously the price. At the same time, nobody asked about if it's not profitable, why people is going to construct renewables. And nobody ask at the same time, why we don't introduce massively renewables in the system because if you see the numbers in 2023, unfortunately, we haven't achieved good numbers. If you compare with other countries, Spain, unfortunately, it's far away from Germany and even it's far away from Holland and other countries. I think that in Spain, like always, we talk a lot, we execute not too much. And a lot of bubbles around renewables, a lot of people talking about the normal development, enormous amounts of gigawatts that will come, but never come. And we will see decisions of the government. If they are going to close or not nuclear plants, they will continue or not. If the renewables will achieve for not all the expectations that all the market is talking and the evolution and the situation in a few months. And installation targets, as I have mentioned. During this year, hopefully, we are going to add additionally approximately, but it's complicated to predict because we depend on third parties. We could add 0.5 gigawatts that could enter during this year, but will depend, as I have explained, of Red Electrica and infrastructure that should be construct by them. And we are going to stay focused in the construction of 1.5 gigawatts. When it's going to entry? We have decided to say, in 12 months. Because it's reasonable for us 12 months, 15 months in reasonable. If we are able to achieve before, great, but 12 is reasonable, and we have included in the presentation.

David Guengant: Just to make a quick comment on that. You know that we already have under construction at the end of December, more than 350 megawatts. And on top of that, we have received 1 gigawatts, okay? So it's 1.3 gigawatts that we may be able to connect in the coming 12 months. So Arturo was speaking about end of the year 2024, just because this 1.3 gigawatts are expecting to be connected to the grid before half of 2025. So we'll be already a 3 gigawatt spare in the third or second quarter of 2025. Next question is coming from Eduardo Imedio from Renta 4. What is Arturo personal view on electricity prices? And with demand decreasing and new capacity coming to the system, which are the drivers that you see for an increase in prices in the coming years?

Arturo Larranaga: As I have explained, it's complicated to predict the movements in the electricity prices because it depends on a lot of different factors that affect seriously. But from a global perspective, long term, talking about long term, the next years, but next year could affect price of today of electricity, especially from a speculative point of view, the central nuclear plants, what are going to do. The government has decided to close, but it's real or not, they are going to close or not. If they decide to close, it's something that will affect seriously the price of electricity, not in three years or four years or five years from today because speculation will start, and we will see. But honestly, I'm not sure if the government is going to close or not the nuclear plants because they change the message. And I'm not saying that it's a good idea for Spain to close the nuclear plants. I'm saying that I don't know because I talk with them, they say, yes, we are going to close, but I don't know. And it's something that we will see renewables, people is talking about the normal volume of renewables. Government thorical should approve a normal volume of gigawatts that will come. Two points of view for us. From an infrastructure point of view, it's great for us because we will have a lot of customers asking to us, give me a quotation for substation. I need the construction of the substation of discrete. I'm not able, I'm a fund. I need to subcontract you and from an infrastructure point of view, I think that it will be a great business for us if Spain decided to construct massively 40 gigawatts from infrastructure point of view. But of course, it's something that will affect the price of electricity. But it's serious. We are going to construct 40 gigawatts. Banks are going to finance, 40 gigawatts. If the price of electricity, if we move and we enter in the system with 40 gigawatts, banks are going to give project finance associated with 40 gigawatts. If they think that the price of electricity goes to not zero, but 10 or 15, my thing that is not the reasonable. And at the same time, which is the CapEx of the players that will be involved in the construction of this massive volume because they are subcontracting us, and we are expensive, for example, and which is the CapEx of these guys. It's EUR 0.4 or it's EUR 0.8 per watt with EUR 0.8 per watt with the actual situation of price of electricity and interest rate, it's interesting for them to construct. Why? They are going to lose money. I don't understand. And we need to see the evolution of this. Because during the last four years, five years, I'm asking and I'm answering questions associated with price of electricity. And we have lived the Ukrainian world. We are living a strange situation around LNG gas because I'm -- I have a lot of information about LNG. It's changing all the time. Is today's speculating technology, is shaking all the time. Price of gas is shaking all the time, massive capacity conflicts associated with this. It's like, honestly, I'm sorry if I'm not asking your question saying the price of electricity during 2025, 2026 will be this because it's extremely complicate to predict. The key point for us, Solaria is the most effective player from a CapEx point of view and OpEx. Probably, we are the key guy from project IRR perspective. It's like we are the most competitive player. And our work today is to be the most competitive player. If we have good price on PPAs, we will sign. Today, we have a good coverage on PPAs. Probably, we are going to announce a new deal, the largest deal PPA deal of the history of Solaria and if we have good prices, it's good for us. And we could close. And of course, our job is to maintain this project IRR of 13%, 14%. And this is the key point.

David Guengant: Next question are coming from Marina Fuentes from Morgan Stanley. And from Alberto Gandolfi from Goldman Sachs. And from [indiscernible] Santander, since they're all doing the same question, and I may -- I will answer. In our CMD guidance, we gave -- we prepared now the EBITDA guidance was EUR 87 per megawatt hour in 2024 and 67% in 2025. In this new EBITDA adjusted with energy tax, we are just power expectation as Arturo say, to mid-60s. So the adjustment is not only the 7% tax, but it's also an adjustment in the power price for 2024. Next question is coming from Gonzalo Sanchez-Bordona from UBS. Good afternoon. You mentioned we could have news on your infra division during this year. Can you please elaborate on these potential expected developments and potential financial impact?

Arturo Larranaga: I think that the EBITDA guidance is based on three concepts. Three concepts based on infrastructure business that is growing a lot. During the last quarter, we have obtained really good numbers. Based on works execute on substation for third parties, basically, today, I can say we are a construction company, but we are executing work for third parties that needs to be connected and they don't have the capacity. We are the owner of substation, and we are executing for the works that are giving to us really good results. And I think that even for us was a surprise, the good results that we have obtained in the Q4. We think that if the -- if the government finally approved all the volume of gigawatts and if they execute the works that hopefully, they will do, this amount will be increased. Then the price of electricity and the cost of electricity, 70%, as I have said, the sales of electricity. 70%, as I have said, is associated with PPA that the price is the average is close to 40 something. And the 30% is merchant. Honestly, I think that we always follow view of advisors because here, we don't include any personal or view of Solaria. And the asset rotation that in the third quarter, we didn't have too much visibility of the asset rotation, the 25% that I have mentioned. And we didn't have too much visibility about the price of the asset rotation because we were talking with the player, but without too much visibility. Today, we have more visibility on price and the rotation and the volume, the final volume and the final price. The final volume was beside 500 megawatts that I think that we have decided to sell or to rotate this amount, 500 megawatts, and the price was fixed and a price of EUR 1.15. And -- but I think that is something that will affect the EBITDA guiding, I don't remember if in the third quarter, we have included -- probably we include EUR 0.9 or something like this. But it's an update that is based in the visibility that we have today of this asset rotation price of electricity and PPAs.

David Guengant: Maybe just last question from Tomas Reyes from Caixa and Jorge Alonso from Societe. Just maybe to clarify. And I will try to answer, we can clarify new capacity to be connected, as Arturo said, it's quite clear. Today, we are 1.65 in operation. And on top of that, we have another 1.5 in under construction, 0.5 that may be connected at the end of this year and another 1 gigawatts connected in 12 months. So it's more or less it will be at more than 3 gigawatts at the beginning of 2025. On top of that, you know that we are waiting for new gigawatts authorization, including via [indiscernible]. That's the third flagship project, Helena project is a 600 megawatt, and we may obtain the ready to build off Helena in the second quarter of this year. So in -- according to the second quarter really to be status in -- by summer 2025, we may be able to have more than 4 gigawatts installed. So I think that we don't have any more questions. So thank you very much for joining the call today.

David Guengant: Thank you. As David has explained, I think that we have decided to include a global number of 1.5 gigawatts. When will be connected, we have decided to include 12 months. Honestly, we will try to do as soon as possible. And we depend on third parties and ourselves. This is a good point. Third parties is Red Electrica basically because words of Red Electrica and our internal job. The good point is that today, we don't depend on license or permitting of the government. But we have decided to include this conservative view of 12 months. And if we are able to connect before, be sure that we will do. Thank you for the call, and thank you for all.

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