A2A Aktie

Hello, ladies and gentlemen, and welcome to the A2A 2026 Q1 results presentation conference call. My name is Zach, and I will be your operator for today's event. Please note this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Marco Porro, Head of Investor Relations to begin the conference. Please go ahead.

Good afternoon, everyone, and thank you for joining for the first quarter 2026 results. Today, the results will be illustrated by our CEO, Mr. Renato Mazzoncini; and the CFO, Luca Moroni. I will immediately lead the floor to Renato.

Okay. Thank you. Thank you, and good afternoon, everyone. Thank you for joining our call today. I'll start with a statement Alfred North Whitehead once said, that the art of progress is to preserve order amid change, and to preserve change amid order. And let's say, in the last 3 months, we have seen a lot of changing inside the energy landscape in Italy and in Europe. So let me start with a brief overview of the macro scenario and how we are responding to preserve both order and change in our mission to be ready to power. So in Q1, Q1 was marked by uncertainty and super like volatility in the energy market, fueled principally by two external factors.

The first is the proposed measures in Italy and in Europe to mitigate the impact of rising energy costs and industrial competitiveness. In Italy, it's the [ societad decreto ] for Decreto Bollette, the decree for the tariff. And after a couple of days, the geopolitical tension in the Middle East in Iran. So what happened in Slide #2 is that, for example, the PSU gas price peaked at around EUR 6 per megawatt hour, while the PUN spot price ranged around EUR 80 to EUR 170 per megawatt hours amid continued moves in the forward curves. So visibility is still limited, but conditions are well below the 22 extremes. You can see in the graph at Slide 2 in the left part of the slide.

Against this backdrop, our action are geared to support short-term system stability and to deliver on the targets we have communicated to shareholders. And our first step was to give customers, especially households, greater stability by maintaining our fixed price contract offers. And this now account for around half of our mass market exposure. So consider that 50% of our customer base mass market is in fixed price. Our '26 renewable generation, in line with our policy, is already hedged for more than 70%, giving us full visibility for this year. We will continue to closely monitor developments and to respond as necessary navigating an environment that remains highly fluid. So that's the short-term picture.

But as you know, A2A's vision is built on long-term resilience. And this commitment remains unchanged. And let me say that exactly in this situation, to have a 10-year industrial plan is fantastic because in this situation, where short term is a problem to face, but it's not, let's say, the polar star. So the contingent geopolitical phenomenon of today only serve to underscore the long-term importance of Italy's energy independence. And for this reason, the expansion of our renewable and high efficiency flexible capacity remains a key driver. For example, during the quarter, we commissioned the [indiscernible] plant, adding around 30-megawatt of wind capacity in Southern Italy. And we reiterated our investment strategy, almost half of the quarter spending direct towards generation plants and in our power grid to remain the backbone of the energy transition. Electrification of consumption remains a sector trend underpinning our capital allocation choices.

And it is super interesting, the fact that in Italy, the demand was up to 3% in Q1. You know that there is sometimes a discussion if really, the demand will grow. And we can say that in this Q1, there is a visible growth of the demand, especially in Lombardy, in which the growth arrives in double digit, 10%. And this is encouraging, an encouraging signal, of course. Equally, encouraging is the fact that data centers will continue to emerge as a new high consumption customer segment.

And we see confirmation of this in the fact that the connection request in our electricity distribution network, in particular, and in the province of Milan, in particular, Duereti, that is the company that we bought 2 years ago from Enel, now amount around 330-megawatt. Consider that is medium voltage, let's say, non-broadband 10 megawatt. That means 33 new data center, at least, that ask for new connection only on Milan. So despite ongoing volatility, I can confirm that our resilient business model, diversification, and the long-term perspective, supported by strong execution, enable us to maintain our investment commitments. So let me give you a few highlights.

Looking at Slide #3, in which you can see our numbers, our economics. Also, we see both positive and downward variance in these figures taken together underscore two crucial factors. Our financial resilience and our commitment on targeted investments. And I think the most evident metric of this is our net financial position, which remains sound and under control at EUR 5.6 billion versus EUR 5.5 billion at year end '25. The movement is entirely consistent with the typical business seasonality. The leverage ratio also at 2.5, broadly stable year-on-year, confirming the group financial discipline and balance sheet resilience, even in a quarter of active capital deployment. In short, the figures confirm our resilience with -- which is far confirmed by our continued commitment to target the investment.

And the Slide #4, we continue in our CapEx plan deployment confirming our commitment on our long-term strategic vision, you can see 4% more of CapEx compared with last year. But what is super important is that we have 21% of growth in the development CapEx, EUR 210 million refers to development project. And the key pillars of our investment strategy are improving the efficiency of power distribution networks, accelerating our development path towards renewable energy, increasing the flexibility of generation plants. And of course, the CapEx in circular economy, if you remember, it's also district heating and water cycle. So that's a big picture. Now let me turn to Luca for a more detailed analysis of the results. Please, Luca.

Thank you, Renato. Thank you, everybody, and good afternoon. As Renato pointed out, at the beginning of 2026 presented a challenging conversion of contingent external factors. So as I unpack our EBITDA performance, I wish to emphasize how we respond to this. I think this slide is a clear summary of how diversified and integrated portfolio of activities underpins our ability to optimize our risk profile. By leveraging the diversification of our business, we were able to face negative effects, including some unpredictable costs, delivering an EBITDA of EUR 647 million. In particular, this reflects our higher renewable energy production, the ability to capture trading opportunities, and the strong performance in market and electricity distribution business mitigated the adverse impact from hydroelectric concession fees, lower achieved price, and lower contribution from treatment plants.

Naturally, this performance start with how we generate an optimized energy. So let me turn to Generation and Trading. In Generation and Trading, increased production during the quarter helped offset the impact of adverse headwinds. EBITDA was EUR 202 million, a decrease of EUR 22 million compared to Q1 '25. Starting with renewables. We delivered higher renewable production. Also, this positive contribution was impacted by two contingent factor beyond our control, higher hydroelectric concession fees, which affected by EUR 11 million, of which EUR 6 million related to previous years, and lower achieved price based on the scenario.

Moving to flexibility. A good performance in trading confirmed our ability to capture market opportunities, although this was partially undermined by fewer chance in gas portfolio management. To sum up, our operational performance remains solid with our production volume and affecting trading execution in face of market condition and regulated cost component that represent a headwind in the quarter. Overall, this confirm both the resilience of our integrated model and the importance of diversification across generation and trading activities to take volatility, but of course, generation energy is only half of the equation. The real impact happened when we connect it to customers.

So let me turn to the encouraging results that emerged in Q1 for supply business. Looking at the market segment, the first quarter confirmed the persistence of our commercial performance. EBITDA was EUR 136 million, with an increase of EUR 3 million compared to Q1 2025. In market, our performance was primarily supported by the growth in electricity volumes, particularly in the free market segment. At the same time, profitability was partially impacted by lower unitary margins, reflecting a more competitive environment on pricing dynamics. Overall, the quarter was marked by solid volume-driven growth, with margin pressure partially offset by the underlying strength of the business. But of course, the future of the energy isn't just about consumption. It is also by circularity.

So let me turn to the performance of the circular economy. In the circular economy, the quarter shows a performance affected by a lower margin in Treatment segment in particular. Adjusted EBITDA was EUR 190 million, a decrease of EUR 12 million compared to Q1 2025. The pressure on margin in treatment was mainly due to the new Acerra service contract signed in February 2025, and the lower availability of Parona and Trezzo plant for maintenance activities. Prices showed a slight increase, and we also saw positive contribution from district heating in particular, related to white certificates sold -- some white certificates sold and higher allowed returns from the integrated water cycle.

Overall, performance was slightly softer mainly due to operational and contractual factors in waste-to-energies, with some support from positive trend in other activities. That said, let me turn to Smart Infrastructure. In Smart Infrastructure, the overall performance reflect growth in allowed revenues, partially offset by a change in the gas distribution perimeter, as you remember. The EBITDA on the business unit was EUR 129 million, an increase of 6% on the Q1 '25. In electricity network, EBITDA took advantage from higher allowed revenues driven by the new ROSS tariff methodology and the continued growth in the RAB driven by CapEx development. In gas network, we saw a negative contribution mainly due to the perimeter effect following the asset disposal completed in July 2025.

Now, give a look at the profit and loss, starting from adjusted EBITDA, EUR 647 million. We recorded EUR 250 million of D&A, EUR 12 million-plus compared to the same period of 2025. The increase is mainly due to the higher CapEx deployed. Provision and net financial expenses were equivalent to EUR 25 million and EUR 41 million, respectively, in line with the same period. Adjusted taxes amounted to EUR 98 million, a decrease of EUR 10 million compared to 2025, driven by lower taxable base. The tax rate stood at 29.5%, excluding the impact of the IRAP increase introduced by the Energy Decree accounting for as a special item, as we said already. Adjusted group net profit was EUR 221 million, a decrease of 11% compared to 2025 at EUR 249 million.

And finally, in Q1, we achieved a solid ROI and ROE above 9% and 10%, respectively, well aligned with our target. So let me conclude my comments, giving you an overview on the net free cash flows. Cash flows of Q1 '26 showed a negative change in net financial position of EUR 154 million as a result of business seasonality. As of March 31, the group reported a net financial position of EUR 5.628 billion, with a leverage ratio of 2.5x, ensuring the full stability of the leverage position.

During the period, the operating cash flow generated EUR 149 million. Let me give you an explanation in which way. Net working capital variation was minus EUR 460 million, primarily driven by the increase of trade receivable due to the business seasonality and the energy prices increase starting from March 2026, following the escalation of the conflict in Iran. Payment of net financial expense is EUR 38 million. Operating cash flow stand at EUR 149 million. Accounting CapEx, EUR 315 million. The net free cash flow amounts at EUR 166 million negative. The change in the consolidation perimeter during the period was positive and amounted to EUR 22 million, mainly due to the price adjustment, EUR 25 million, related to the sale of the part of the gas asset to Ascopiave in 2025, partially offset by EUR 3 million in other transactions.

Overall, considering EUR 10 million spent on the share buyback, the total change in the net financial position amounts to EUR 154 million. So to conclude my comments, our businesses are not separate stories, but rather one integrated system that assure our financial results, results that show how by leveraging the resilience and diversification of business, we were able to navigate the challenges of geopolitical effects, including the ones that nobody saw coming, and to deliver an EBITDA of EUR 647 million. Let me now hand back to Renato for the final part of the presentation.

Okay. Thank you, Luca. So to close guys, Slide #12, we confirm our '26 guidance. Slide #13, on the same concept about our robust industrial execution. So let me now briefly really focus on the key highlights supporting our performance and outlook. Starting with execution year-to-date, we have seen solid operational trends across our core businesses. In renewable, hydro production benefited from the geographical diversification across Italy. It's interesting, the fact that this year, is Calabria, the first class of our hydro production. And more and more, it's difficult to have all the plants from the south to the north and northeast, northwest at the same level of production. So to have diversification like A2A in Lombardy including Calabria is super nice because it's easier to maintain our target.

On the commercial side, electricity volumes recorded double-digit growth, and in particular, three mass market customer base continuing to expand. And starting from Q2, we are seeing early signs of improving churn rate dynamics. You can imagine, it's, of course, also linked to the exceptional growth of PUN, and the typical situation in this case is that the churn fall down. And our visibility in June is a reduction of the churn super strong. But what is important for us is that you remember our strategy is to increase the market share of electricity customer and our strategy is on track. Our power grid activities delivered a sound performance supported by ongoing CapEx deployment. And as I said in our last call, in particular, Duereti, the company that we bought from Enel, is working very well in terms of CapEx deployment and also EBITDA.

At the same time, we continue to deliver on our strategic projects. In power generation, we are progressing in Monfalcone, the new class H thermal plant. Corteolona is a new waste-to-energy plant. A2A remains the only company in the last years that is working to build new waste-to-energy plant and further, renewable deploy -- development. And we have also identified the brownfield sites for our data center platform. In data center, we are working quickly. If you remember, we have three projects on track, and we are working to be able to start with some site next year, and all suitable for behind-the-meter connection, enabling so faster grid access and competitive energy cost, as you know. Finally, our electricity distribution business is well on track to reach 2028 RAB target that is high.

Overall, this confirms our ability to execute consistently across all businesses while continuing to invest where it matters most in order to generate sustainable value. In the last slide, #14, only to say that -- let's see the architecture that support our strategy over time. First, the diversified and integrated portfolio of activities, enabling us to optimize our risk profile. All our natural hedging in generation, in collection and treatment in regulated market, regulated business and business on the market. Second, exactly the exposure to regulated businesses, providing stability and clear visibility on cash generation. And third, our discipline in capital allocation to unlock new growth opportunities.

So I began today by underpinning our commitment to preserve the delicate balance between order and change. And to do so, our takeaway today is we will continue to invest where it matters most, while maintaining financial resilience and control, turning the mega trend that are reshaping the energy landscape into sustainable result over time and are reshaping the role of the multiutility company in this new landscape. Thank you very much. And I'm sure that there is space and the interest for Q&A. So the floor is yours. Thanks.

[Operator Instructions] And the first question comes from the line of Emanuele Oggioni of Kepler Cheuvreux.

The first one is on the '26 guidance. To what extent is the visibility, considering that, if I remember well, in your guidance, it's not included, the change of the scenario for the short term at least. So past Q1, but starting from Q2, indeed, starting from March, the wholesale price will be higher year-on-year, at least for Q2 than we see in H1 -- in H2. And for this 30% roughly merchant exposure for the expected volume from hydro and waste-to-energy in '26, we should expect a benefit from this situation, which is not included in the guidance.

So my question is about the outlook for the next three quarters, with an update of the guidance compared with the updated macro scenario. This is the first question. The second one is still on the generation business and the market design, but in this case, more, in '27 onwards. We know that the Italian government is under discussion with the European Commission to define a new market design and the capping of the power price from gas and all this, all the renewables from gas will be through ETS change or will be through other component or the price of the gas, et cetera, we'll see. But in any case, it's under study. So what is your update and your opinion on this situation?

And finally, in the market supply, I saw a good resiliency in the profitability in spite of a slightly down number in customer, but indeed, it was related only to STG and the protect market, not the free market, which experienced a slight increase. So the commercial policy seems to be effective in, at least, in Q1. So what is the update about the competitive pressure and your commercial strategy in this respect? Also considering that you think that there are also portfolio, at least according to the Italian press, there are also a portfolio of customers to be sold in the market you're interested in.

Okay. Thank you, Emanuele. Well, on question #1, I say we are hedged for '26. So it's clear that -- and consider that in this moment, our hedge, as I said, is more or less 70%. That means that, yes, if they will remain until the end of '26, and I think that all of us hope that in Iran, something can change over the next weeks. I don't know, but we have to see. But we can have an upside that is limited due to our hedging. And so this is for the first question. For the second, talking about ETS. Talking about ETS, I can answer using the communication from the commission about the Temporary Iran Crisis Energy Framework, 23 of April, okay?

Let's say that the member states can also consider transitory measures to mitigate the impact of high gas prices on electricity generation, but, let's say, not only limited only to '26. And you consider that the formula linked to the ETS proposed by our government, we start from '27, and this is enough to say that it's impossible to -- okay. But it's also interesting that European Commission understood perfectly the risk and say that there are some conditions. The first is the transitory measures. They are clearly defined and time limited, so not structural. The second, they are designed to prevent internal market distortion, ensuring no impact on the merit order and no restrictions to cross-border trade and electricity flow. The third, they preserve long-term investment signals for clean energy. The fourth, they only compensate certain gas cost increase and do not cover ETS cost. Therefore, maintaining the obligation and incentives of the ETS.

Okay. So without reading more, I can say that we imagine that it is impossible to have structural changes and also, due to the road map '26 to '27. We don't think that basically, the Italian decree can have effect and that can change the position of EU that is very clear. Also because, frankly speaking, Italy is the only industrial country in which ETS is really attacked because it's the only country in which 2.9 billion or 3.5 billion is really used to serve a public debt. In all the other countries, starting from Germany or France, 100% of ETS is a cap-and-trade system.

And so there are companies, corporate, that receive money from ETS. So this is the easy reason for why this country says, no thanks. We don't want to change ETS. Talking about the mass market, your analysis is correct. For us, in this moment, it's clear that the good news is that we have a 1% of increasing of the free mass market electrical in a phase in which the churn in the first quarter was high in all the markets and in a situation in which our visibility of the churn in the second half of the year is much, much lower. And so we imagine to be able to reach our budget that is a budget in which a customer base electricity free market will grow. The pressure -- the competitiveness, the pressure is the reality. And this is the reason for why since the first industrial plant, every year, we imagine to have a reduction of marginality of 3%.

If you remember, it's a discussion that we did a lot of times. Until now, frankly speaking, a reduction of marginality is not on the table, but in our industrial plan, including '26 and '27, we forecast a reduction and we see, let's say, in this moment, we are happy to have, in particular, some interesting products, for example, the PPA mass market for our customer. And the customer base for PPA mass market in this moment is more than 100,000, so 110,000, 120,000. But to understand how it's important in this moment, the total energy sold in PPA mass market is slightly higher than the PPA B2B. So it's a proof that working in the customer base, also out of the box, with instruments like PPA mass market 10 years long, is a good idea and works well.

Just a follow-up on the first question. The question was not only on generation and achieved power price compared with the -- embedded in the guidance, but also the other moving parts in H2, for Q2 onwards, compared with the expectation of business, as you remember, when you provided the guidance for the first time.

Yes, Emanuele, I will take the lead to answer to your question. So we see generation more or less in line with the previous year result, taking into consideration maybe some opportunities we can get in the market. As you correctly pointed out, the spot price could give us some opportunities. So let's say, around 700 is more or less in the area we are targeting market. Supply business is slightly behind in our projection by now compared last year. But slightly, I mean, a few millions. That means that there is still a good visibility, high resilience on the marginality, which stay there.

But also on the volumes, we are able to sell, which are growing and giving us opportunity to expand also the market share. Circular economy is pretty stable due to the fact that we have incorporated some maintenance works already in the first quarter, they were planned. So the target incorporated this maintenance, you have to consider that these plants are working with full capacity. So from time to time, they need to have maintenance activities.

And finally, smart infrastructure, again, more or less in line with last year, considering that in the EUR 518 million of the last year, we had EUR 22 million related to Ascopiave deal on the gas network and some one-offs that are not recurring, but we have -- we decided last year to consider this non-recurring industrial -- non-recurring item embedded in our results. So all in all, we are in line with the guidance we gave at the beginning of the year, and we have nice visibility by now. Let's see what happened in the next quarter, and we can have an update at the half year.

Maybe just to give you also a flavor on the fees asked by the region Lombardy. We have an impact in the area of EUR 40 million, EUR 50 million, half of those are related to previous years, meaning '21, '24 years. So these are, as I said, non-recurring, even though we consider that amount in the guide, in our expectation. And on the remaining part, the half, again, has been already provided in the previous year. So it has not an impact on the net profit, but only on the EBITDA, but already considered in what I already said.

The next question comes from the line of Javier Suarez from Mediobanca.

Three questions. The first one is on the generation business and electricity prices. If you can share with us the level, the pricing level for your hedging in 2026 and eventually, 2027 as well. I’m interested in the absolute level of electricity pricing hedging. And also, your latest expectations for electricity prices towards the end of the decade and beyond, or in a context on which there is a high level of concern on hydroelectricity prices impacting competitiveness of Europe, which are your latest thought on potential impact of electricity prices in Italy? That would be the first question. The second question is on the comment that you make on electricity demand increase during the first quarter. That is quite remarkable.

So if you can help us to understand in your area, in your region, in the regions in which you operate, which are the key dynamics that are underpinning this increase in electricity demand, and maybe splitting that increase in electricity demand by different -- by the different segments. In this context, when the company thinks that we’ll be able to update the market with latest update on potential development of new data centers in Northern Italy. The final question is more of a general one. That has been press articles mentioning the potential interest of the company in an M&A activity, being involved in M&A activity without entering names and second names, just as a general concept. The question for you is which would be the entity of a potential M&A target that could the company management press a button on that deal?

Talking about generation price, your question is the level of price of our hedging, '26 and '27, correct?

Correct.

Okay. Okay. Okay, yes. For '26, in this moment, we have, as I said, 70%, 70%, 72%, and the level is 111. So it's absolutely a nice, slightly higher than our budget. And talking about '26, '27, it's around 60% and is a little bit higher than 100. So also in this case, we are in pace in which we are online with our industrial plan. In this moment, there is few liquidity to cover more '27, but let's say, 60% in May '26 is a good level of hedging. The demand is interesting because it's clear that in this moment, for the sites, data centers surely are the key elements to increase the demand because if you consider that full cities like, let's say, Cremona as a peak power of 100-megawatt and is not base load like consumption, it's clear that it's enough to have a new data center of 30-megawatt to have an increasing of demand more or less similar to full cities like Cremona.

So in this moment, what is happening is that the data center are growing. There are new data center, not really super big until now in Lombardy, but are growing. And so surely, the increasing of demand is mainly linked to artificial intelligence and all the digitalization. Also talking about e-mobility, something is happening, in particular, due to the high reduction of prices of the electrical vehicle due to the competition with, in particular, BYD, Leapmotor, and others because the price was down. A good example is the price of the segment city car of Renault, for example, starting from the Renault Zoe to the new R5 electric car set the price 30% lower. And so what is happening is that really also the e-mobility is growing.

The last but not least is that looking at the gas distribution year-by-year, there are 1% -- between 1% and 2%, depending where of reduction of [ DDR ] and of course, are people that decided to electrify something. That means cooking, heat pumps, or the others. And so it's normally to see this increasing of demand. Why so concentrated in Lombardy? I think because Lombardy is every time, the local of Italy. And so all the new trend start typically from Lombardy, talking about the economy growth. That's all. To close with M&A, let's say, that -- we can say nothing about these topics. We do full disclosure through -- exactly through the media of what is correct to say to the shareholders.

So for example, the last news about our non-binding for the plans of biogas is correct, is true. Of course, we are a player in this sector, and we are interested to see the number, to have more information about the business because it's useful also for us to define our strategy, let's say. But I have not more information, Javier, to share.

Okay. And on the question on the timing for -- latest views on timing for a final -- or the announcement of an agreement with data center development?

Yes, this is correct. In this moment, if you remember that during our presentation, we put on the slides three projects. In this moment, we can say that one project is in Brescia, one project is in Cassano d’Adda, so near our super big thermal plant, and the third is under definition. So it is ongoing, let's say. We are working for authorization, of course. But consider that it's also interesting that both the national law and the regional law put some conditions to have acceleration in authorization. And the conditions are easy for us to face because it is a greenfield -- sorry, brownfield and not greenfield, is to reduce the impact on the power grid, so perfect behind-the-meter connection, connection with the district heating, and we are the sole operator able to do this. And with a good mix of renewable and -- sorry, a mix of the carbonized electricity and water cycle efficiency.

And the reason why A2A is a good player in data center is exactly because we are able to move all these parts, and so to move quickly in the authorization, because we are exactly full committed in these elements. So we are working for authorization, and our goal can be to start the first plant, the construction of the first plant next year to be able to see the first EBITDA at the end of '28.

The next question comes from the line of Francesco Sala of Banca Akros.

The first one is if you can give us an update on the concession renewals, especially in Lombardy. The second one, if you can give us -- quantify the impact of the new Acerra service contract for both -- for the full year, because there was an impact in Q1. So if we can have an estimate for the full year. And then on the retail business, I wonder what is -- what your commercial strategy is now in terms of fixed price versus variable price contracts and whether there has been a change in the market or, at least, in your approach in the last few months. And secondly, finally, as we got thermal generation and more in general, your electricity volumes that went up a lot in Q1, whether this is related to strong demand in Lombardy or whether there are other drivers behind this increase?

Okay. For the hydro concession, the situation is more or less the same as you know. So we are waiting to open the discussion for the fourth, third way, the Lombardy model, let's say. And frankly speaking, I imagine that it's much easier to open the discussion in the second part of this year after the closing of the PNRR. You can understand that without the vincula from the PNRR is much easier. Also because, frankly speaking, every time -- so we say that the fourth way is a way to accelerate the CapEx. And so it's completely online with the target of the PNRR because of the fact that the hydro concession was introduced in the competition law was, in the original idea, a way to accelerate the CapEx.

But at the end of the day, it’s the opposite because until the tender, no one invest EUR 1 in the concession. So in this moment, all the public authorities understood that, that's the only way to, really, to accelerate the CapEx, is to reassign to the actual players, the concession, with an investment plan linked to the new 20 years long concession. Talking about Acerra, the impact full year is EUR 15 million. Consider, guys, that Acerra is the only plant not owned by A2A. So we are talking about the plant in which the return on investment is super high, probably the higher in the group, simply because there are no CapEx allocation from A2A. And talking about the -- our strategy, in this moment, surely, for our customer, it's interesting, the fixed price, because, as you know, the calendar 2027 maintain still a good price for energy.

And so when you sign, for example, a 2 years contract, the price is the average between all the quarter until now -- from now until 2028. And so the price is interesting and, of course, stable. This is the reason for why 50% of our customer ask for fixed price. Our strategy is really to push more as possible, the 10 years contract. And exactly yesterday we sign the first PPA for a small business. That is interesting because in this moment, we have a PPA for a corporate, for large business, steel product, so on and so on. We had the product for mass market, but we haven’t a product for small business. And this is the reason for why we decided to build a PPA also for small business. And exactly yesterday started this new product, and immediately, we signed the first contract.

It's really important in my idea because for small business, it’s very difficult to be -- to deal without PPA profile and so on. They need exactly like mass market standard products. And the idea to give the opportunity also to small business, to understand that with renewable, you can fix the price for a really long term, in my opinion, is the real change of paradigm of renewable. And so it’s very important that every categories of customers can have a possibility to sign a contract linked to renewable for long term. And we are doing it, and I think that we are the only company that is working in this strategy.

The next question comes from the line of Roberto Letizia of Equita.

I only have one remaining question, which is still on the retail commercial approach. Just wondering if you can share with us how much of the current fixed sales price are expiring within the end of the year for which you will go into price negotiation? And if you can tell us, what kind of approach will you prefer now? So will you be more aggressive on the price even because you can by serving those contracts through renewable, trying, as you said, push the PPA at very low price from a higher starting point because prices in the next six months will be high, so maybe you will have a chance to be aggressive, but not decreasing the offer price that much in order to bring a quote market share and then build up on the strategy of the long-term contract. So can you elaborate a bit how much this is a window of opportunity by having the pool price that is pushed by the end of the year with a mix of expiring fixed contract that can be renewed at those conditions?

Consider that -- starting from the fact that today, the customer are divided half and half between mix and variable. Starting from the fact that, in my idea, in the -- looking in 2030, let’s say, I imagine a world with a lot of PPA mass market, so fixed price, but not 2 years, but longer, linked to renewable and the rest, variable. In this moment, surely, the fact that we are able to build a PPA mass market and small business give us the opportunity to sign PPA to a higher price than the PPA that we are able to sign with steel product or also with data centers and so on. Because, you know, the marginality in mass market and small business is higher. So to give a numbers, for example, the PPA, the PPA mass market is EUR 105 per MWh. The typical PPA in this moment, B2B for a typical profile for a steel product is EUR 85. So the differences is huge, 20%. And the price of a small business is in the middle.

So the capacity to put on the market products enable to face the needs of mass market small business, in my opinion, is an incredible opportunity to sell our green energy to a good price. Remaining on the one year or two years fixed price, it is surely not the company with the lowest price because our strategy remain to give a good services. And are recognized like a company, both for mass market and then for B2B, able to give value in our ancillary services, starting from the fact that there is someone that is able to respond clearly to our call center when you have a problem. So our strategy is this one, and it seems to work well because if you look exactly at the free market, the fact that in this quarter, with the huge churn that we saw, and with the result also looking our traditional competitors, I am absolutely happy to see our numbers.

The next question comes from the line of Davide Candela of Intesa Sanpaolo.

I have three. The first one is regards to what you said on the power demand evolution in first quarter. I was wondering if you can share some flavor about your ability of capturing this demand increase in the region. And maybe if this will be served through your own plants you have in the region, like the new renewable developments you expect or your CCGT spare capacity. That is the first one. Second one, with regards to the disruption in energy markets. First one, with the increase in energy prices. I was wondering if you can share some data regarding April and May consumption, if actually the high price level is pushing the clients to reduce the consumption in order to contain the expenses related to that.

And basically, if you see a trend according to that? And the last point with regards to this topic. We have seen that some rumors about other countries in Europe that are thinking about putting some windfall taxes with regard to the high energy prices. Maybe it will be much more related to the whole sector, but electricity seems not to be excluded at all, or at least at the basic level. So what is your position on that? Do you think that this risk is still there also for Italy? And given also the fact that this could be temporary, as you mentioned in your speech before.

Davide, I will take the lead to answer your question. For the power demand evolution and the prices on the market, you know very well that we are managing different technologies. We are on the market with a constructive approach of our energy management department. So if you consider that January and February has been months in which the prices went down because of the Decreto Bollette, the energy decree. And there has been a lot of pressure and also some speculation regarding a possible conclusion on the Ukraine war with Russia. So we take the opportunity to work with the market to hedge part of our exposure for '27, for example. Immediately after, the war with Iran.

And again, we were in the market, and we got, again, another opportunity. And in particular, with our way to sell the market, we optimized our position in the market, taking -- creating value for the company by roughly EUR 15 million to EUR 20 million. So this is the way we continue to see the future quarters. Of course, volatility in a certain way create opportunities, but it creates also some stress. The visibility on April and mid-May was quite good for the production levels in terms of quantities, like it has been in the first quarter, with good prices, but we need to keep taking into consideration the hedging share we have available, so to offset some peak with the hedging average.

Regarding the windfall taxes, well, let me say, apart from having 2 percentage point increase on Europe, I hope that this is the end of the story. Nevertheless, we will see and we will follow closely what happened also in Europe, but we don't see and we haven't heard any rumors for a potential new tax or cap for the energy prices, also take into consideration the fact that we are not in the same situation of 2022.

Also because the discussion on the Decreto Bollette was super tough, and the result was a couple of points of IRAP for a couple of years. So imagine that today, the government, the situation in which there are only few months of the actual government, will reopen the dossier of the windfall. In my personal opinion, it's impossible.

And we do have a follow-up question from the line of Emanuele Oggioni of Kepler Cheuvreux.

Just a quick question about the electricity networks. I saw that in Q1, the electricity networks benefited from allowed -- higher allowed revenue from the ROSS mechanism. The question is to what extent that is already included in the guidance, and what will be the benefit for the full year?

Yes, it has been included in the guidance in our target. It comes from part of the new regulation, considering the fast money. And it is related to the fact that we are deploying CapEx maybe to -- and I understand, also considering the fact that, as Renato said in the presentation, we are able to move CapEx in the electrification of the grid whenever it is the case, there is the chance because other business maybe are behind the target. So we have this kind of flexibility, and it is a very positive aspect of the regulation because it gives us some flexibility.

At this point, there are no more questions. I will hand it over back to the speakers for any closing remarks.

Thank you, everyone, for taking your attention to our results. If you need any follow-up, please contact the IR department, and we will be available shortly. Thank you.

Bye.

Bye-bye.

Hello, and welcome to the A2A Full Year 2025 Results Presentation. Please note, this conference is being recorded. [Operator Instructions] I will now turn you over to your host, Marco Porro, Head of Investor Relations, to begin today's conference. Please go ahead.

Good afternoon, everyone, and thank you for joining us for full year 2025 performance presentation. Today, as speakers, we have Renato Mazzoncini, our CEO; and Luca Moroni, our CFO. So I'll leave immediately the floor to Renato for the first part of the presentation, and then he will pass to Luca. Thank you.

Okay. Thank you, Marco, and good afternoon, everyone. Thank you for joining us. We report another year of strong performance and value creation. The key message that we wish to share today is that we are on track, on trend and on target for shareholder returns.

So let's start from the slides that you can see, Slide #2. Highlights. Full year '25 results once again demonstrate our strong execution across all our strategic priorities, reinforcing A2A's positioning for sustainable growth and shareholder remuneration. From an industrial standpoint in '25, we delivered on a series of key new milestone fully aligned with our long-term infrastructure investment plan. Our electricity RAB reached EUR 1.7 billion, marking a plus 52% annual increase gross of perimeter effect and double-digit organic growth, our CapEx, our investment. This result was driven by disciplined CapEx deployment and the successful integration of newly acquired assets [indiscernible]. We sold 76 megawatts of new renewable capacity, including the first phase of Santo Stefano in the Northern part of Italy near Trieste.

At the same time, the group is well positioned to exploit the accelerating electrification trend. We completed a major asset rotation from gas electricity networks focusing on the backbone of the energy transition. Our supply business unit increased electricity volumes sold by 12%, confirming our ability to capture demand and to serve customers across different segments. We have positioned ourselves as an early mover along the data center megatrends in Italy. You remember, we presented in our industrial plan in November. We launched our data center platform to deliver a fully integrated offering, complementing power supply with land availability, fast grid connection that is a very [indiscernible] application, energy-efficient buildings, heat recovery and water management, heat recovery with district heating. Through this platform, it really positions itself as a one-stop shop for data centers energy-related needs.

Lastly, our cash conversion rate reached 65%, allowing us to fully fund our investments and dividends and to improve our leverage ratio at 2.4. Adjusted earnings per share reached EUR 0.22, fully aligned with our guidance, allowing us to safely fulfill the commitment to a 4% year-on-year dividend per share growth.

So Slide #3 in which you can see all our numbers. The consolidation of the new company Duereti and the increase in volumes sold in the electricity sector, you remember 12% more led to an increase in adjusted revenues of more or less 9%, EUR 14 billion. The adjusted EBITDA EUR 2,243 million decreased by 4% in '25, but only for the hydro production. If normalized by previous hydroelectric production, which was 1.2 terawatt hours above the 5 years average. The EBITDA grew by 4%, confirming the resilience of our business model. And the same consideration about adjusted group net profit that was EUR 686 million, net of hydroelectric production normalization is compared to '24 the same level. Our net financial position was below EUR 5.5 billion, thanks to an operating cash flow that guaranteed coverage, as I said of CapEx and dividends as well as cash in from asset disposal. And the leverage ratio was equal to 2.4x with a decrease compared to '24.

Slide 4, you can see our CapEx. The capital deployment is the clearest evidence of our sound execution and our long-term strategic vision with almost EUR 1.7 billion in CapEx, 11% higher than '24, of which EUR 1 billion related to development project. This project have enabled us to improve the efficiency of power distribution network, accelerate our development path towards renewable energy, the [indiscernible] flexibility of generation plants and strengthen our circular economy business. Consider that in particular, in circular economy, in the waste-energy plant authorization are not easy to be received and in this moment is the only company that year-by-year have new plants under construction.

More than 30% of our development investments were allocated to electricity grid. We are fully committed in distribution, a stable regulated business, which allow us to capture the accelerating electrification trend across Italy. We are expanding our renewable plant portfolio in a consistent and balanced approach. Our diversified generation mix combining renewable with flex technologies allow us to support the stability of the system. Key projects such as Corteolona waste-to-energy plant in province of Pavia, for example, which will treat 240,000 tons of waste per year as well on track. And it is very important that we are growing -- maintaining hedging between collection and treatment.

For example, we're growing collection in Piedmont with a new very important contract in province of Cuneo, in Valle d'Aosta and Liguria. And from the other side, we are growing in treatment with the new plants, the new waste-to-energy plant in Parona, in Corteolona, in Trezzo sull'Adda, Crotone and so on. To wrap up our disciplined approach to CapEx underpins a resilient growth today and tangible returns tomorrow.

Speaking of results, let me now hand over to our CFO, Luca, who will illustrate our financial performance in '25 more in detail. Please, Luca.

Thank you, Renato, and good afternoon to everybody. Let's start to examine our EBITDA performance into detail. We can start from Slide 5. You can appreciate from the graph that all the businesses performed very well, but generation and trading need to be considered in the view of the normalization of the hydro. Indeed, hydro normalization, the exit from the safeguard segment and the lower hedging prices were largely offset by very positive events such as the growing of the performance of electricity network, thanks to the consolidation of Duereti, which proved even more profitable than expected, a greater contribution from the capacity market, solid retail margins and higher revenues from waste-to-energy plants.

Generation and Trading. Generation and Trading as usual, is characterized by a well-diversified technology mix, which is the cornerstone of the business. EBITDA was EUR 728 million with a decrease of 26% compared last year. But of course, we need to take into consideration the hydro effect. So the normalization of the hydro effect and some fewer opportunities from the energy commodity hedging and trading has been partially offset by higher contribution of thermoelectric production and an increase of the premium awarded in the capacity market.

Renewable production decreased by 23% as a consequence of the lower volume in hydro and thermal production increased by 11%. Supply business. '25 saw another year of sound performance in supplies business. EBITDA stood at EUR 464 million with an increase of EUR 2 million compared last year. Here, the exit from safeguard business was offset by the commercial development of the free electricity market, both in the mass market and in business segments. The free electricity market customer base grew by 3% compared to 2024 despite the competitive market, the competitive environment. Along with this growth in the electricity customer base, we have achieved a remarkable 12% increase in electricity volumes sold up to 27.5 terawatt per hour, as Renato already said.

Let's move to Page 8, circular economy. I would particularly like to highlight the strong performance of our circular economy business. Adjusted EBITDA was EUR 595 million with a growth of 2%, EUR 13 million. We delivered a robust result in 3 key areas: treatment, integrated water cycle and district heating. Higher treatment prices fully offset lower margin from the Acerra plant new contract after the tender, while water cycle benefited from a higher allowed return. District heating showed sound results, supported by higher energy prices, volumes sold and white certificates margins.

The new Milan collection tender saw reduced margins due to our highly competitive bid against that of one international player, Urbaser. We maintained strong EBITDA, confirming the resilience of the business, even considering the newly awarded tenders in some territories in the north of Italy. All key industrial indicators are positive, such as electricity sold, waste-to-energy and other plant plus 4%, waste disposal for energy recovery, plus 6% and heat sold, plus 2%.

Smart Infrastructure, which marked a step change in scale and profitability. The adjusted EBITDA of the business unit was EUR 518 million with an increase of outstanding 37%, thanks to the sound performance of fully regulated activities. Our electricity network delivered outstanding growth, EUR 137 million, driven by the consolidation of Duereti for EUR 93 million. The organic growth in RAB with an increase in electricity alone revenues of the historical perimeter, EUR 25 million, higher revenues for connection and other services for EUR 10 million. The increase in electricity pods, the point of deliveries up 65% year-on-year demonstrate how our grids are becoming an enabling platform for electrification and new consumption patterns. Electricity distribution RAB increased by 52% and the power network capacity by 71%. In gas network, we completed the asset rotation, strengthening our strategic focus on electricity distribution. Gas distribution RAB decreased by 23%.

Now analyzing the profit and loss, starting from adjusted EBITDA equal to EUR 2,243 million we recorded EUR 964 million D&A, plus EUR 66 million compared to '25 with an increase mainly due to CapEx deployed and completion of Duereti purchase price allocation process for EUR 17 million. Net financial expenses at EUR 169 million, of which those relating to pure financial management were EUR 157 million, the remaining part being financial accounting effects compared to the EUR 116 million of the last year. Adjusted taxes amounted to EUR 306 million, a decrease of EUR 46 million compared to last year with a tax rate of 29.8% last year, 29.4%. Adjusted net profit at EUR 686 million with a decrease of 16% compared to 2024, normalized by other effects, the decrease was only 1%. This is the adjusted group net profit. The reported group net profit is EUR 750 million. In 2025, we achieved a robust double-digit return on investment, 10% and return on equity, 12%.

Cash flow, Page 11. So we accounted a net positive change in net financial position of EUR 361 million. So the net financial position at the end of the year was EUR 5,474 million, reflecting an improved leverage ratio to 2.4x compared 2.5x at the end of last year. Operating cash flow, EUR 2 billion fully financed CapEx for EUR 1 billion and dividends, EUR 1.7 billion and dividend distribution, EUR 300 million. We achieved a robust cash conversion rate at 65%, reflecting the ability of the company to optimize financial resources to support the growth.

Some details. Net working capital of EUR 311 million was primarily driven by the reduction of trade receivable and say, a partial settlement of the safeguard portfolio. Payment of taxes for EUR 400 million and net financial expenses, EUR 116 million. As a result, the operating cash flow stands at EUR 2 billion after the EUR 1.7 billion of CapEx and dividend for EUR 300 million and the hybrid bond coupon payment of EUR 48 million. So the net free cash flow was EUR 4 million. Then we have the change in perimeter, which is due mainly to the disposal of part of the gas network to Ascopiave for EUR 430 million, partially offset by EUR 58 million related to some deals in M&A. Finally, the EUR 15 million spent to our share buyback to the total change of EUR 361 million.

So thank you very much. Now I will hand back to Renato for the final part of the presentation.

Okay. Thank you, Luca. Page 12 to look our sustainable dividend growth. The dividend growth is confirmed. We are going to propose to our assembly an increase of dividend per share by 4% year-on-year, so arriving to EUR 0.104 on line with our dividend policy. This dividend growth is supported by strong cash flow visibility and disciplined capital allocation. 45% of payout ratio is proof, let's say.

Page 13, our guidance is absolutely confirmed. We confirm our '26 guidance with adjusted EBITDA between EUR 2.21 billion and EUR 2.25 billion and the adjusted net profit between EUR 630 million and EUR 660 million, reflecting our robustness and visibility on our business mix.

And to close at Slide #14, our well-diversified business model is really unique and delivers sustainable growth and attractive returns over the long term, allowing us to transform challenges into opportunities. We operate at the intersection of the energy transition and the circular economy, our 2 pillars, benefiting from both natural hedge activities and fully regulated business supported by a consistent CapEx plan year-by-year, our CapEx plan [indiscernible]. Our generation portfolio is diversified, allowing us to leverage different technology. Really, I think A2A in Italy is the only company that has all the generation from thermal, hydro, wind, sun and waste-to-energy plant. So this integration is a super opportunity to optimize energy management to capture market opportunities in different scenarios.

Integration across generation plants and different customer segments enable natural hedging and reduce our risk profile and support cash flow generation. And in particular, our fully regulated businesses remain a core strategic pillar backed by a stable long-term regulatory framework. As the early movers in electrification and data center, and we are working a lot, we can leverage our energy assets to unlock value from these megatrends, enhancing growth and resilience. And together, these elements guide a balanced capital allocation that sustains cash flow generation, growth and shareholder remuneration.

So really close -- and as I close -- I said in my introduction, our '25 results confirm that we are on track with our long-term strategic plan on trend with our leadership in electrification, renewables and circular economy and on target for the returns that we ensure for our shareholders.

So thanks a lot for your attention. And now we'll be happy to open the Q&A session.

[Operator Instructions] The first question comes from the line of Roberto Letizia of Equita.

I hope you can hear me well. My first question is about the current market situation with regards to energy prices and power price change. Just wondering, first of all, if you can highlight any risk, if any, or not, of course, on the gas procurement for your deliveries through this year, meaning if you have any direct LNG imports, which is subject to curtailment in the coming months. And eventually, if you are, in any case, exposed to any possible force majeure events from your reseller, naming ENI or other majors or Edison or [indiscernible] or the other providers that currently gives you gas for your internal unrest. So if you can address these topics, if any risk currently or in the short term that you envisage for your procurement and deliveries.

As a -- say, subsequent question, if you can highlight to us what is the current level of open position through 2026 and '27 in order for you to get any benefit from the most recent decrease in the power price, what is the current situation for the hydro productions in the first month of the year and in terms of reservoir for the rest of the year? And a comment, if you can, on your view about the potential regulatory risk so far, and I mean potential EU interventions in the market, whether it's going to be taxation or ETS revisions or price caps or whatever we will see in the coming years, if you have any view on what could be the potential regulatory risks.

Okay, Roberto, thanks for your question. I start talking about the general situation of the market that, of course, is critical and is also -- some years in which every couple of years, there is something of incredible in this world, let's say. Talking about the risk to remain without gas, in my opinion, is impossible in this moment. So the only problem is the price. But considering the storage that we have in this moment in Italy that is, as you know, 47% and considering the temperature that we have in Milano in this moment. And that gave us certification that we are [ illegal ] in this moment from all the sources [indiscernible], Libya, Azerbaijan and so on. Risk of [indiscernible] in '26 and '27, in my opinion is absolutely out of our view.

The problem in this moment can be exactly working on the storage because as you know, we need to maintain a price summer, winter aligned should start immediately to fill the storage. And in this moment, there is still some [indiscernible] of spread. You remember last year, the government closed the spread with rules in which companies that started early to fill was paid exactly to close the spread. And so I think that we need to wait for 2, 3 weeks to have more visibility of what can happen in Iran because it's difficult in this moment to understand if this conflict can move for months or weeks or days. And then I imagine that our government will use the same instruments that was used in '22 and in '25.

Talking about gas, considered but for '26, our edging is 72%, 73% so our normal situation in [indiscernible] in which the only flexibility is not to risk [indiscernible] due to risk of [indiscernible] production. But also [indiscernible] is better. [indiscernible] '26 to a price around 110 it's so over our budget to understand. And those '27 -- also in '27, we have a 50% of energy covered with a good price because it's around 100. So once again aligned with our industrial plan.

Of course, the hydro production in this moment, I can say that for this -- so January, February and March, we are absolutely aligned with the budget and we started the year with a good level of storage in our dam, in our basin. And so in this moment, our forecast is to stay at the average level of A2A, so more or less 4 terawatt hours of hydro production.

And to close about ETS, probably 2 years ago, there was a declaration of the Ministry of Environment in Germany that said that absolutely Germany don't want to move ETS because ETS is a fundamental instrument for decarbonization, consider that our government as to Europe to cancel because it is a tax, but it's very simple to demonstrate that ETS is not a tax that is emission trading system and the tax is something that a company pay and the public administration receive. The problem is that only in our country, considering the large countries -- industrial country effectively is a tax today because as you know, there are more or less EUR 3.5 billion of ETS paid and only EUR 600 million come back to companies, in particular to energy companies. So there are EUR 2.9 billion that remain to serve our public debt and this is the reason for why Italy is an infraction with Europe.

So what the other countries in Europe, in particular, Germany and France and Spain says is, okay, guys from Italy. Before discussing about ETS, it's better that you replace the normal situation of ETS. So a system of trading of exchange. So my personal opinion is that it is absolutely impossible that ETS can be canceled in the future because it's really nonsense, consider all that companies for 20 years invested in green economy, exactly to be a more competitive as the company that didn't invest. So -- and price cap for gas is out of every kind of discussion, but also our government don't put the price cap on the table. Luca, I don't know if you want to integrate something.

No, I think that everybody has been said. As you know, we have the chance also to buy some LNG from British Petroleum with a contract signed will start in '27. So we start also to get some opportunities into the market. And as Renato said, the hedging ratio are pretty comfortable both for '26 and '27. So I think that, of course, we need to monitor what happened on the market with the prices. But by now, everything is under control, also taking into consideration the financial point of view.

Another element that is important to consider is that if we see a reduction of the [indiscernible] produce an effect in which the renewables are less competitive and the thermal production more competitive. So consider that today, the total energy production with them is 115 terawatt hours in Italy on 311 of total demand. And our forecast is that with a reduction of [indiscernible] due to ETS that is once again, a hypothesis, in my opinion, impossible. But in this case, the production of gas jump to 150, 160, this is the reason why the effect in the tariff in the [indiscernible] for our customers is approximately 0, because the total ETS amount that -- arrive on the bill is more or less the same EUR 5 billion under discussion in reduction of raw material.

But A2A is a company super strong also in terms of production. Imagine the new plant in Monfalcone. So in this case, that is a case that I don't consider once again, we have a natural hedging due to the fact that reduction of production renewable from one side is compensated from the other side from a strong increase of gas production because gas production win against import, this is the message, not because there is a reduction in the renewable, but of course, with the marginal price [indiscernible] every time. But because the import is more expensive than thermal production without ETS.

And the next question comes from the line of Javier Suarez of Mediobanca.

Two questions on the context and business plan and recently presented business plan and one on your guidance. So on the context is if you can make any comment on recent detailed reports on the local press, [ arguing ] a potential interest of A2A on ESG. If you can make any comment on that? And in general, in case of an extraordinary operation, what kind of assets fits better with your current corporate structure? Any comment on that would be appreciated.

Second question is on the data center opportunity that was widely elaborated during -- back in November. So when do you think that A2A would be in the position to provide with granularity and a whole business plan on the data center opportunity and with financial detailed targets and more granularity versus your statement back in November. So any further guidance on the timing for that higher granularity would be appreciated as well.

And then the third question is on the energy decree that has increased regional taxation by 200 additional basis points in 2026 and '27. So the fact that you are maintaining your guidance unchanged, is that including any compensation factor that is offsetting this increase in taxation? Is that related to a different pricing for your forward selling? Is that related to higher assumption? So any light on reason for maintaining the guidance would be appreciated as well.

Okay. Thank you, Javier. Okay. For the first question, you know the answer because we used a press communicator. A2A regularly conducts a review on its strategic option consistent with our industrial plan. And in this context, discussions with many potential partners are absolutely normal. I think that is a mission -- my mission, the mission of our management to create value for shareholders. And I also think that in Italy, there are too many companies working in the energy business, in particular in generation. The strong liberalization that we had 20 years ago produced a situation that probably is not completely efficient today. But to date, many strategic options are being considered as preliminary and explorative thoughts and no decision has been taken. So this is our answer.

A2A will keep, of course, the public informed of any possible development in the correct way. For data center, data center is absolutely incredible what happened. You remember, we presented our industrial plan on November 12. San Donato. And after a couple of weeks, you can't imagine how many players and actors in data center knock at our door to understand what we are able to do for them. In particular, as I said during the presentation, a killer application in this moment is to have a connection in high voltage because today, if you ask to Terna, not only in Italy, but in all the other part of the world to have a connection for, let's say, 200 megawatts is impossible. It takes 5 years. And we are, in particular, in Lombardy in a super position in which we have generation, we have land in some -- we have some opportunities, and we have a connection in high voltage.

So you remember during our presentation, we underlined 3 projects without giving a name and also today, I can't say exactly which are the project, but I can say that for the first 2 projects in terms of road map, we are absolutely on track. So you remember that we imagine to arrive to have first EBITDA from data center in '28 to '29, we are on track. And so we are working. The business model can be colocation or we are also open to -- in some case in which we have the opportunity to build a large data center, we can also consider direct relation with the top companies. And please wait for next our communication to have more visibility on a part of a strategic plan that is working well.

Yes. I would like to start saying that in the decree, in the energy decree, some aspect has been discussed, one being the taxation, the Europe taxation. But you know reading also from the newspaper, how the discussion is tough regarding the chance to increase taxes in Italy for corporates and citizens. So first of all, we need to wait the translation into law of the decree aspect. And in any case, if and when there will be any increase in taxation we can consider temporarily because by the discussion, it seems it will be affecting '26 and '27 and not further. So for that reason, we can consider if it will come as a nonrecurring item so into the so-called special items. This is the reason why we maintain unchanged the guidance we communicate also and in particular, because the guidance on the net profit is on the adjusted net profit.

The next question comes from the line of Francesco Sala of Banca Akros.

Just a couple. The first one is on the recent spike in electricity prices. I wonder whether you can give us a sensitivity or at least an ordered look on the potential impact on net working capital and provision if there is something you have already tried to estimate. The second question is on hydroelectric generation. I wonder whether you can give us an update on the concession renewal? And secondly, whether, let's say, the recent events have changed your attitude towards revamping and investments in this segment of your business? And finally, if I may, what are the latest trends you have seen in the supply business?

Okay.

I start with the effects on the net working capital. Actually, we don't have -- we will not suffer for any increase or deterioration of the net working capital. We have experienced coming from 2022, where we manage properly the net working capital with different opportunities. which are the same in the case because by now, we are experiencing only temporary situation. But in the case, it will last more than this period of time we have in front of us of 1, 2 months.

Of course, we have the chance to move on different opportunities, as I said. These are, of course, temporary effects. Also, as I said and I mentioned before, in terms of liquidity, we are currently managing in a very appropriate way with backup lines. After 2022, we increased the backup lines to be well prepared in the case of higher volatility in the market regarding in particular the marginal cost. So at the moment, we are really in a very good situation.

Okay. About the hydro concession, the situation is this one. Starting from the procedures concerning our super little concession of Resio and Codera Ratti launched by Regional Lombardia at the end of '23, so 2.5 years ago are still pending. Temporary adjudication of the renewed concession is expected at the end of the first half '26, but I imagine that it is difficult for the region to arrive to assign this concession because we put some question in the court about the procedures. And frankly speaking, I think that we are in the right position.

From the other side, you know that in this moment, talking about the parliament, 360 all thinks that is not correct to do tenders without reciprocity in Europe. And talking also in [indiscernible] people that can be interlocutor for us in this topic. So talking about the said Quarta Via, also said fourth way to assign. The idea is that we have to wait to close the PNRR that means August '26. And after it possible to open a quick deal with Europe to be able to extract from the competition Law of the hydro concession and to move in a way that is more or less a project finance in which surely an equilibrium between concession fee CapEx and current remuneration of our asset will be the final solution.

Included probably you read about this 15% of hydro release that is a way, let's say, to have on board also all the lobby of Confindustria that in this moment is strong with our government. And consider that in the project finance the reduction of revenue is more produce an effect for the concession fee, not for us because for us, the idea is to have a remuneration of all the CapEx fixed by ARERA. So the total amount of revenue that drives in our company don't change if there is hydro release or not. But surely to have all the lobby that works together, so our energy company, [indiscernible], so Confindustria and the regions will bring to the result.

Talking about the supply business, what I can say is that from one side, is super interesting the B2B business because the B2B in this moment have a churn lower than B2C that is strange. In the past it was every time the opposite, and that way is super strong in this business. That is also super interesting because B2B means contract with companies with industry that can produce space to build PPA that is the way to hedge our renewable production. From the other side, it is also interesting our growth of 3% in the mass market this year, so '25 on '24. In the free market -- electrical free market, so in this moment, we have a reduction in gas.

Reduction in gas, let's say, is natural because if we look the PDR so the number of contract in our distribution asset in Milano year by year in this moment, we have a reduction of 2%. So a reduction of the PDR normal reduction in consumption, number of customers and so on. So there is space to grow in the electric free market in our opinion. In our business plan, we have a reduction of marginality of 3% every year. But also this year, we haven't seen this reduction. So it's strange situation because probably 5 years in which every year we imagine in our industrial plan, there is a reduction per year of 3%. But till now, this reduction of marginality don't arrive.

So the next question comes from the line of Sarah Lester of MS. I think Sarah got disconnected. So we're going to move on to our next question from Emanuele Oggioni of Kepler Cheuvreux.

My first question is on the cash conversion. It was quite good 65%. And basically, you fully financed the CapEx and the dividend. So my question is on '26 outlook on the same, if this could be improved? And what could be the guidance for net debt and EBITDA, obviously still considering as you retain -- you confirmed the guidance for EBITDA and net profit before the energy crisis and before the drafted law, the Italian energy drafted law in this case would be a consistent guidance before this temporary or not one-off intervention. This is the first question.

The second is on gas procurement. You mentioned before your contract with BP, but this contract LNG could -- would cover only around 20% of the group's needs. So if you can remind the other sources by geography, basically the breakdown of the sources by geography. The third question is on the price cap. If I remember well, you applied litigation like other companies in the sector against the [indiscernible] of the older price cap put in place 2, 3 years ago basically. So this -- considering that this litigation is still ongoing, what is your opinion? Probably the government will not adopt another similar measure considering there is still litigation ongoing or at least would be the price cap aligned to the European level, which was more than twice -- 3x basically compared with the Italian level.

And finally, you mentioned the hedging, 70% to 73% of the volumes. I missed if you have said or not the price EUR per megawatt hour for '26. And indeed, last final question on the market supply -- on the market supply, still focusing on the potential new gas and energy crisis in the next few months. To what extent you are now more protected compared -- so could you protect more your profitability in the market supply business unit compared with previous crisis. Probably you have already changed the contract, the shipping costs in order to minimize the shipping costs, et cetera. So if you could provide more color on that.

Okay. I will start, Emanuele, with the first and the fourth, your questions. Cash conversion, we presented the business plan, as you remember, with a cash conversion rate in area of 50%. The year '25 was quite positive. We managed very well, as I said, net working capital, also taking into consideration the opportunities we had to lower the trade receivable coming from safeguard market and the reimbursement of the safeguard market of the client, so-called not disconnectible. So after the report we submitted, we got some EUR 60 million from the authority. Forecast for '26, we are used to manage in the same way with the same productivity, our net working capital, and we maintain the target to achieve a cash conversion rate in line with 50%.

As I said, we have different opportunities to manage the net working capital also in trade receivable -- in trade receivable, but also in the payments and the contract, in particular, we have for trading purposes. In '22, we move some of those to OTC market to take the opportunity to manage also the terms of payments and so on. So I don't have any, let's say, clue to say now that it could be deteriorated by the current situation. On the other side, we are really hands-on to fulfill the target and to achieve it. In terms of leverage, again, in the plan was 2.7, not to exceed 2.8 and this remains our target. So if we are able to make it better, of course, we can work for it, but 2.7 is pretty in line with the credit metrics target we have also discussed with the rating agencies.

It's interesting your question about the supply because lesson learned in '22 was that you can't maintain fixed price with open quantity. The problem that we had in '22 was exactly that with people, companies with fixed price and without limit on the demand, increased the demand a lot and for us was super critical. You remember that we lost a lot of money in that situation. Today, frankly speaking, in this situation for us, there are only opportunities simply because every time in which price increase, for example, there is a strong reduction of the churn. And the churn in this moment is bigger problem that our company are facing.

So we imagine to be able to grow in the supply market in this moment without absolutely any negative effect exactly because we changed all the contract since '22 till now avoiding any risk of quantity that we had in '22. And talking about price cap, frankly speaking, I can see when -- if you remember in '22 when there was a discussion and some output in Europe about price cap, the price cap was fixed so high that was impossible to imagine to arrive. So in this moment, we are very far from what happened in '22. And so the price cap in this moment is not under discussion. And about the possibility to gas procurement in this moment, we signed, as Luca said, an agreement to buy 1 billion cubic meter of GNL from U.S. starting from the last quarter '27. It was a good idea considering that our total needs of gas is 5 billion. That means that 20% for us arrives directly from this new contract.

And the rest of 4 billion in this moment, it's difficult to see a situation in which in Italy there is a risk of disruption of to remain without gas. So I think that we are in a situation in which we are in a better position against others. It's enough to see the situation of the storage in this moment in Germany, in the north of Europe, there are 18% of storage in Italy, but also in other southern countries, we are more or less 50%. That is also linked to the fact that we need less gas to climatize the buildings during winter, of course.

Yes. Sorry, I missed to answer your fourth question about the hedging. I repeat it for 2026, we are hedged by 72%, 73% with an average price of EUR 110 which is quite remarkable. And for 2027, we already complete almost 50% with an average near to EUR 100. And this is quite satisfactory for us, taking into consideration the situation in which we were at the beginning of the year and considering the current situation. So we are pretty in a good shape to face '27 also in terms of budget when we approach the time to do it.

Consider that in this moment, the calendar '27 is higher than EUR 100. This morning was EUR 102, EUR 103. So if the situation remain this one, we are able in the next weeks to arrive to cover our normal 70% to a price fully aligned with our plan. If we see a reduction, consider the side effect on the thermal production. So we face '27 with 50% covered at EUR 100 and the other 50% open. But if we see a PUN reduction, that means that there is more space for thermal production against import. So in every case, our natural hedging is strong and able to face the situation.

And the next question comes from the line of Sarah Lester of MS.

Can you hear me this time?

Yes, we can.

Perfect. Sorry, I do apologize. Not sure what happened. I've just got 2 very quick questions, please. The first one is on the electricity distribution concession extension. Just given there is this really quite strong political spotlight on customer bills at the moment. I'm wondering if you see that there's potentially a risk that either the time line gets pushed to the right or delayed or that the fee may not actually end up going on the RAB and remunerated that way? And then just a second clarification, please, on the data center platform and the earlier question. Did I hear correctly that you would also consider partnerships where you would not actually necessarily be building the data center shell yourself?

No. For the second, the answer is not. Our strategy is exactly what we explained during the presentation of our industrial plan. In particular, consider that I talked before about the first project under design and are both direct investment that we want to do. Consider that for the interesting partnership also with large players more than us to find the customer to locate the data center. And this is interesting for us because there are companies that already has lot of customer in different data center.

Our goal is to be able to build data center in good position, for example, in Milano, to be clear with a low cost of energy for connection behind the meter and low [indiscernible] for connection with [indiscernible] heating and good water management. So more attractive for the same customer that some players already have. So it can be a commercial partnership, let's say, but we want to consolidate in our EBITDA all the CapEx that we put on the table. And for the concession, sorry, you are talking about the grid concession? Okay. The grid concession, the only problem is that it takes some months more than normal the exchange of our authority ARERA because you remember probably that it takes 4 months of prorogation on the new Board of ARERA.

The new Board of ARERA was appointed a couple of months ago. And immediately with some problems linked to the [indiscernible] for the energy and now for the war and so on, the concentration to find -- to support the government in the grid concession has to arrive. But from our point of view, frankly speaking, is not a problem because we have a concession and consider that the new concession will be 20 years long. And so if the starting point is a delay, is not, frankly speaking, a problem. What is interesting talking about power grid is that if you look Duereti, so the piece of the grid that we bought from Enel last year performance in terms of EBITDA 25% and total CapEx amount is higher than our business plan.

So we are super happy because we was able immediately to face a network that we didn't know in a very efficient way. And so in looking this opportunity once again, we did a super good deal increasing our CapEx, of course, linked to the [indiscernible] '24 that says that we will have the concession extended. I don't know Lester if it's clear for you.

Okay. So we will take our next question from the line of Alberto de Antonio of BNP Exane.

I have a couple of follow-ups. The first one is regarding the energy decree and the potential revision of the ETS mechanism. Could you help us to quantify what could be the potential impact in terms of power prices in Italy and also how this will translate to your generation EBITDA? I guess that more in 2028 once like the effects from hedging are lower. This will be the first one. And then the second one will be related to the Monfalcone plant. Could you give us an update on the current state and when do you expect to commission the new plant? And that's it for me.

Talking about ETS, I can say simply that you can't -- starting from the fact that I imagine that it is absolutely impossible to have a [indiscernible] without ETS. So I don't think that the government will arrive to have an [indiscernible] from EU, but you can't simply reduce the cost of ETS that in this moment is more or less EUR 30 megawatt hours from the PUN because it's linked to the number of hours in which the PUN price is fixed by the gas production. That is super variable linked to what happened, for example, with hydro production and is linked to the fact that we will be able or not to increase total capacity of renewable aligned with PNIEC, our national plan.

So in this moment, surely is much lower than [indiscernible] it's early to say if it is 50% of this value or more or less. But surely, by impact, I can say that you have seen during the presentation in '23 of February of Enel. Enel says EUR 85 per megawatt hours. That is their estimation. Frankly speaking, we didn't do an estimation because we don't believe that it is possible to have this impact. But a hypothesis can be that one. Talking about Monfalcone, Monfalcone is under construction. Under construction means that the delivery is probably in the first quarter of '27. So more or less 1 year to arrive in commercial operation because the construction will end this year. Then there are pre-operation, operation and so on. And so we expect to have EBITDA starting from '27.

And we'll take our next question from the line of Davide Candela of Intesa Sanpaolo.

I have 3 actually. The first one that is on the broader context. You already shared your view about the ETS. And since that gas is fixing the prices in Italy, for example, most of the times, do you see in future if the ETS mechanism won't be canceled from the formation of the final power prices, a scenario where do you see a potential decoupling also of the gas component, so the renewable fixing price and on the other hand, gas. Just wondering because at the end of the day, the gas is, as you said, 1/3 of the entire demand in Italy, but actually is fixing the price for most of the production? Just a question and if it is viable for you even in the longer term?

Second question on your guidance. You said that your hedging for '26 is quite good, actually a little bit higher than your projection for 2026. And looking at what the dynamics in the first quarter, notably during January for [indiscernible] and actually, the higher production as from Terna on the thermal side, there are some positives that are contributing actually to your figures for 2026. I was wondering, confirming the guidance today is just because you see that there could be some potential competitive factors to these positives or it just too early at this time of the year to revise the guidance?

And finally, last question on the batteries. You spoke a little about this technology. You mentioned some upside in your business plan. I was wondering if -- given the fact that the technology looks in a good momentum, I was wondering if you can provide your view and if you are thinking about investing in this technology in order to let your portfolio generation more flexible and so on.

Okay. Coming back to ETS, we consider that we did a simulation to understand what can happen in the bill of the citizen due to the Energy Decree because the idea is to be able to reduce, let's say, around EUR 20 in all the energy on the market. The energy on the market is today 275 terawatt hours. Consider that the total consumption is 311, but there is auto consumption, so you have to consider on the market 275. So for 20 or less EUR 5 billion. So the idea of the government is to reduce EUR 5 billion of raw material -- cost of raw material.

From the other side, the idea is to put on the bill -- the cost of ETS, considering ETS EUR 30 for megawatt hour in the total terawatt hour of 115, which is the problem. In this moment, the demand is 148 from renewable, including the hydro, 52 from import and 115 from thermal production. If there is a reduction of PUN of more or less 20%, total production in renewable remain the same and there is no hours in which the price is fixed with renewable, but we see a reduction of import from 52 to 10, more or less with an increase of thermal production from 115 to 155, 116 and in this case if you multiply 160 for 30, you can see that there are once again EUR 5 billion of cost of ETS on the bill of our customers.

So the sum between reduction of raw material increase of tax is exactly 0. This is the reason why if you read the last version of the decree, it is written that is possible to reduce the ETS only if there is proof not to have impact on the import. That means that if it's possible, more difficult to calculate the real impact of ETS because you have to imagine an authority or others that every hour of a day to calculate if the reduction of ETS on the PUN produce a reduction of import or not. So a nightmare, a complete nightmare. So we imagine that it is super difficult to move this part.

So to close, I think that in this moment, it's really critical to imagine an ETS effect. I imagine that in EU will find a solution not to accept our Article 6 of our Energy Decree. And this is the answer. Talking about batteries only to close, the business battery is interesting. The reduction of price is huge. During the last tender max, the price arrived to a super low level, but this is due to the fact that the supply like [indiscernible] or rather from China reduced the price, put on the table 20 years of guarantee. That means business plan of 20 years. The problem is that the payback period of this business is very long. And so our evaluation is if it's interesting or not to invest a lot in a business that is, let's say, like an infrastructure, but the infrastructure is a battery. So I confirm that our commitment in battery in this moment is lower than, for example, in power grid.

Okay. Regarding the guidance, Davide, I think that -- it is too early to say something you can appreciate. Yes, it is true what you said. We have some opportunities, but also we have some other aspects that we need to take care about. First of all, the price of the energy is lower than last year. We already incorporated it into the business plan. But if you want to make a change compared to last year, you have a difference. But sticking on the guidance, we are pretty comfortable to stay on that. Let's see how the scenario is going to move. If we have the chance to getting some more opportunity, of course, we are here and also to lower the risk for the aspect that are not in the right direction. So for the time being, I think that we feel comfortable with the current guidance.

Thank you very much. So we don't have any further questions. I will hand you back to Mr. Porro for any closing remarks.

Thank you. Thank you, everyone, for taking the time to participate for the Q&A. And if you need any additional follow-up or deep dive, please contact the IR department. Thank you, everyone.

Good morning. Thank you, everyone, for attending our Capital Market Day. We have a couple of busy hours in front of us. First, our CFO, Luca Moroni, will comment the 9 months results. Then our CEO, Renato Mazzoncini, will drive you through the update of our capital and the strategic plan at 2035. So without spending any more time, we are ready to start, and I leave the floor to Luca.

Thank you very much, Marco. I will go through the presentation of our 9 months results. So starting from the highlights as usual. Perfect. So we show a good resilience in economic and financial results despite the exceptional hydroelectric production of the previous year. The contribution of margin deriving from the growing performance of electricity network, the higher premium on the capacity market and the increase in the urban waste treatment prices absorbed the negative effect arising from lower hydrolytic production returning to historical average levels and the exit from safeguard market.

Sound economic and financial performance confirmed. Reported EBITDA recorded a limited decrease, reaching EUR 1,729 million. Net of the impact deriving from Hydroelectric production, which is one of the few exceptional effects recorded in 2024, EBITDA grew by 3%. Ordinary net income, excluding special items recorded on both '24 and '25 showed a decrease of 16% compared 9 months '24, standing at EUR 559 million.

Adjusting '24 results for the effect of last year Hydroelectric production, [indiscernible] net income decreased by 3%. We confirm the solidity of our financial ratios. Our net financial position land at EUR 5.3 billion with a net financial position to EBITDA ratio equal to 2.4x, with a decrease compared last year's 2.5x. Resilient EBITDA despite normalization in Hydro volumes. Despite a normalization in Hydro volumes, EBITDA remained resilient. Generation & Trading ordinary EBITDA amounted to EUR 623 million with a decrease of 20%, EUR 160 million less compared to the first 9 months '24. The change is mainly attributable to the normalization of our Hydro production, minus 26%, minus 1 terawatt hour, resulting in a margin reduction of around EUR 130 million. The lower opportunity from energy commodity hedging, the higher contribution of thermoelectric production and the increase in the premium awarded, on the capacity market.

Supply ordinary EBITDA amounted at EUR 328 million with a decrease of 9%, minus EUR 34 million compared to the 9 months '24. We confirm the level of the marginality recorded in the same period of last year, net of the effect from the safeguard market, which is -- which account EUR 33 million. So the outcome is the positive effect of the commercial development of free market electricity segment, 109,000 customers more, compared last year, plus 7%, lower retention costs and the increase in operating costs arising from sales channel mix.

Circular economy ordinary EBITDA amounted to EUR 423 million with a growth of EUR 20 million, plus 5%, compared to first 9 months '24. Here also the increase is mainly attributable to the positive contribution of waste-to-energy treatment prices, being partially offset by lower margin from the new contract with the [indiscernible] region for the management of [indiscernible] plant. The positive contribution of district heating, thanks to higher volumes sold, plus 96 gigawatt per hour, plus 5% and higher volumes from sales of [ white certificates ].

The decrease in the Collection segment, mainly following the new contract signed with Milan after the tender slightly affected the marginality. Regulated network ordinary EBITDA amounted to EUR 359 million with a decrease of EUR 29 million year-on-year. Decrease in the margin is mainly attributable to the performance of the new perimeter in the electricity network at plus EUR 68 million as well as the increase in a low revenues of historical perimeter, plus EUR 23 million and the lower marginality deriving from the disposal of gas distribution assets.

Let's see our income statement, starting from EBITDA of EUR 1,729 million. We recorded EUR 704 million depreciation, amortization and write-off, up to compared last year, EUR 45 million, EUR 23 million for the delta perimeter of the new electricity company, Duereti, and the new CapEx plan carried out during the period. Net provision of EUR 69 million. Net financial expenses of EUR 128 million due to the new debt volume effect. I just recall the new issuance we had in January of the EU Green Bond in the new format and the bridge loan for the acquisition of the new asset from Enel Distribuzione.

Taxes of EUR 244 million with a reduction of EUR 42 million compared to the first 9 months '24 with a tax rate of 29%, in line with the previous year. Minor interest of EUR 28 million for a net income of EUR 559 million, including EUR 22 million of special item, mainly due to the plus value coming from the asset deal of the gas network. The group net income is EUR 581 million.

We continue to invest to growth and to support ecological transition. CapEx in the first 9 months amounted to EUR 1,037 million, up 15% compared to 9 months of the previous year, supporting the ecological transition. Development CapEx amounted to EUR 618 million, mainly focused on upgrading the efficiency of the grid, the increasing of flexibility of generation plants and the development of photovoltaic and wind power plants. 70% of the CapEx are eligible for taxonomy and 51% are aligned.

Net free cash flow during the period, the change in our net financial position was positive and amounted to EUR 518 million. Operating cash flow fully financed CapEx plan and dividend payments, which is a very good news.

As of September 30, the company reported a net financial position of EUR 5,317 million, consistent with the first half, reflecting an improvement of net financial position to EBITDA ratio to 2.4x compared to 2.5x as of the end of December '24.

So in light of the solid results, we have just commented, our guidance for EBITDA is confirmed in the upper end of the range. EUR 2.17 billion, EUR 2.20 billion, and the group net profit net of nonrecurring items between the range of EUR 680 million, EUR 700 million. Thank you very much.

Okay. Thank you, Luca, and good morning, everyone. Thank you for being here or connected at our Capital Market Day. Since Luca's presentation of the last quarter, you have seen the name of the plan presented last year, [indiscernible], which told the story of a company that is committed to building the future every day by investing in infrastructure, renewable energy and smart grids. We need more power today, more efficiency and more sustainability. And data is the heart of this revolution and data centers are spreading across our territory and are growing very quickly.

And today, we are ready to seize our momentum, to drive the digital and ecological transition with competencies and responsibility. Just a moment guys, because I started without move the slide. And -- No company is future-proof, but some company are future-ready. And A2A is one such company, ready to face future and ready to power. Today, we will illustrate how A2A is writing one of the most compelling success stories in Europe energy landscape, a story built on financial discipline, industrial excellences and strategical foresight with a long-term vision that focuses on the twofold opportunities of energy transition and circular economy, further accelerated by artificial intelligence development.

I'll begin by giving you a brief overview. So we start with a brief overview of the energy landscape that I think can be very interesting for you and we will then run through the key highlights of our strategy. And then I'll hand over to Luca, who will illustrate you, our key financials and our long-term financial stability underpins our growth and ensure the platform for our acceleration into the future. So start with the landscape.

Electrification is driven by a rapid growth of data center, which we will talk about at length during the presentation, but not only because also e-mobility and heat pumps are constantly decreasing in cost and entering the market, creating totally additional electrical demand. In this graph, you can see the growth of electrical demand in the next year. And in this graph clearly shows that the demand for electricity is growing, while at the same time, the demand for fossil energy is decreasing. Overall, the total final consumption is decreasing because the efficiency of electrical equipment as well -- is much higher than fossil fuel equivalents and so there is a total reduction. And therefore, electrification is also the only route to decarbonization.

Decarbonization where also more niche but fundamental technologies in complex urban context such as waste-to-energy or district heating also helps. And so let's have a closer look of data center trend in Italy. In this map, you can see the total capacity of 55 gigawatt of connection already requested to Terna. The geographical distribution not only rewards Lombardy, which is not a surprise, but also two regions in the South, in particular, [indiscernible] in Sicily, which are located on some of the most important underwater data networks in the world and will, therefore, be able to seize opportunities. So let's think of our plants in the North, but also of sites such as [indiscernible] in Sicily or [indiscernible] Pula.

Our estimated, which we presented, you remember in September in [indiscernible] is one of the most conservative on the market in this moment. The base scenario, 2.3 gigawatt, full potential 4.6 gigawatt, and the potential of heat recovery for district heating is interesting because it can double the thermal energy available. That is a particularly interesting opportunity in Milano, which sees 50% of Italian data centers on its territory and the district heating network that currently covers only less 20% of buildings. So from one side, great opportunity to grow district heating from the other it's recovery from data center.

Investment needs in electricity distribution grid in Italy are over EUR 10 billion per year only over the horizon of our industrial plan '35, mainly driven by new demand, but also by the need to connect new renewable generation and renewable grid. And it's also interesting to see that the [indiscernible] that is our National Integrated Plan Energy and Climate updated by the Milan government in '24 has pushed the renewable energy target to a level never seen before, 63% by 2030, which, in my opinion, is the obvious reaction after rewards of a country that is the third in Europe for renewable potential after Norway and France. But Italy as neither Norway's fossil fuel nor France's nuclear power.

And with renewables, also storage is growing. It's interesting the result of the first [indiscernible] tender -- and the result is due to very low battery prices, the result of competition between Chinese players and consequently, a very low price of time shift. We have calculated about EUR 30, EUR 35 per megawatt hours of the cost of time shift, which make renewable even more competitive during the day.

Finally, I would like to point out that the capacity market programs launched by Terna in recent years to avoid the risk of blackouts such as [indiscernible] in Spain are leading to the construction of a powerful fleet of new high-efficiency gas-fired GGT plants. The efficiency is 62%, 63% compared with 40%, 50% of efficiency for the older plants, less CO2, lower energy price, which replaces Italian generation fleet with a power of 5 gigawatt, but more or less is equal to all the Spanish nuclear power. And what is key is that the load factor of GGTs now is around 20% and also in the horizon of the plan without data center. That means that is therefore more than able to cope with the increase in demand from data center.

It is enough to look at the following graph to understand how our strategic decision in recent years have permitted A2A to pave the way toward electrification in Italy. We invested EUR 10 billion over the last 10 years, EUR 10 billion, 60% of which focused on electrification. And our investment in electrification include the swap between part of network with Power Grid in province of Milan. The result is the swap in the value of RAB in our asset gas and power grid, focused investment in renewable with a good mix of wind and solar to build increasing competitive PPAs for our B2B customer and an electricity customer base that has grown by 61% between 2020 and today, 61% the customer base electrical.

A2A has currently 3 unique features. The first, the presence in both energy transition and circular economy space. The second being established in Lombardy, which is the center of the development area and the third being ready, thanks to the previous investment choices. The first of them, which really distinguishes A2A in the Italian scenario is that is the sole player not only vertically integrated in energy transition networks generation and customer base, but also vertically integrated in circular economy with strong crossover elements such as waste to energy and district heating. And it is an issue that we have been supporting for some time. But today, a phenomenon has arrived that is focusing everyone's attention that is data center.

A key tool of competition and enabler of the digital revolution, which, however, requires a systemic approach to sustainability issues. So connection to electricity grid, supply of baseload energy, but with low CO2 impact, efficient cooling system and heat recovery and efficient water management. And Lombardy once again is the heart of action. We are ready. We are ready. A2A is clearly a single development partner capable of addressing all this issue in an integrated and efficient way. This is our momentum driven by growth, new businesses and new geographies, increasing our productivity. And these are our numbers, which Luca will tell you about in more detail later.

We are following the path placed in January '21, you remember, when we presented the first 10 years plan. At that time, the target seemed very challenging. But today, we are surpassing most of them despite the delays generated by COVID and worse. And today is the time of our momentum. EUR 23 billion of investment still growing in comparison with the Life Plan, of which EUR 16 billion in the energy transition. And what is important, however, is the graph -- this graph in which you can see the status of our investment.

Of the EUR 23 billion of CapEx that will bring its way to EUR 3.6 billion of EBITDA, 35% are already completed or under construction, 35% already approved and ready to start. This is what is needed in Europe as Mr. [indiscernible] also reminds us in his famous report to build infrastructure that make Italy and Europe competitive and sustainable over time. Today, the 12th of November, we have over 250 large scale construction site in all our sector in this moment. And I ask if it's possible to send a video. A very short video.

[Video Presentation]

And so let's start with the highlights of the strategy. Electricity grid are still growing reaching EUR 4.9 billion, which will bring electricity RAB to EUR 4 billion by 2035.

And the acceleration, as we will see, derives mainly from the efficient integration of the former Enel network. I would like to underline two aspects. The first is the EBITDA per [indiscernible] strong growth, thanks to both growing investment, of course, and the economy of scale generating by the doubling of the number of ports managed by A2A. Today, we arrive to 2 million of ports managed. The second aspect is the deployment of electricity network projected to triple our current rate in kilometers of electricity grid lead, reinforcing our commitment to electrification. And you can imagine.

I am really happy that the Duereti deal was finally understood properly. The good news for all is that compared to the Duereti acquisition plan in the first year because you remember, we started to manage January '25, this network, we have developed 23% more CapEx than expected. And you know that the value of this network is the quantity of CapEx that you are able to invest on, which was not all obvious in a network that we didn't know and with an absolute value, more than double the investment made at the same pre-acquisition network in '24.

And the EBITDA produced is 7% more than the estimated we had in the plan, in the acquisition plan. So we are very satisfied, both from a strategic point of view with the performance that we are achieving on the new network. The strategic value is clearly represented by the 280 megawatts of connection requested for data centers received only from January to date alone. Main connection for data centers up to 10 megawatt. So if the data center arise to 10 megawatt, is the main connection. Backup connection for larger ones because even the larger data center start with a 10-megawatt medium voltage connection because Duereti is faster than Terna in delivery and guarantees a faster time to market for developers. So the topic for them is this one.

Today, everybody is talking about data centers, but let's not neglect mobility as car costs have fallen in the last years. This is interesting. 24% less city car, 12% less small car. You know in the same period, the cost of endothermic vehicle grew. So in line with the normal market dynamics, it will react according, reaching 20% of share of electrical vehicles by 2035. So we estimated that at national level, electricity consumption for electric transportation will reach 40 terawatt hour. But there is no doubt that Lombardy and Milano will be front runners also in E-mobility. So we continue to invest selectively in charging infrastructure, specializing in the two segments that we believe will be successful that are only low charging city [indiscernible], so low CapEx for urban widespread mobility or high-power charging apps in traffic extra urban areas.

Regarding our investment in renewable energy, we confirm our commitment of reaching 3.7 gigawatt with a balanced development between wind and solar. But it's interesting that we estimate of the increase in production per megawatt installed, due to the effect of repowering and the increased productivity of new plants. We grew by 54% in wind and 28% in solar. And our pipeline has also grown now totaling over 2 gigawatt of wind and solar capacity. Of particular importance is the issue of the derisking of the generation portfolio, that is an issue for you, super important. The first level of derisking remains the diversification of generation sources, both in terms of technology and geography. Compared to the commonly used description, we have added an important distinction, so a new distinction between traditional GGTs and high-efficiency GGTs -- is the blue color.

The latter, obviously, will have more market space. You remember 62%, 63% of efficiency and constitute one of the strategic elements of derisking. [indiscernible] incentivize renewable, a capacity market, but also by growing market for PPAs that is growing that we estimated will cover 65% of our renewable production and 70% of our energy mix will be renewable. Lastly, and importantly, the natural hedging between generation and customer base remain crucial.

As can be seen from this graph, A2A remains long on sales with generation well covered by final customers' consumption along the whole plan. Regarding customer, so we talk a little bit about customer. The retail sector has been increased competition. These are the data according to ARERA data, the churn rates have risen by 1.8x in recent years. What is happening in '25 that is the curve is changing. But today, this is the data from ARERA.

The electricity customer base will continue to grow compared to the gas. So you have seen our mix between customer gas and customer electricity customer is changing completely. And the acquisition strategy aims to carefully select geographies and sales channels focusing on the acquisition on the high-value customers. The target of 5 million customers remain confirmed as per previous plan and also this year despite the loss of customers under safeguard. Margins remain very healthy.

In the B2B segment is interesting, the dynamics is the opposite. So the churn is declining with a rate that is now even lower than retail, probably is the first time in the history of our country. And of course, it's interesting because the B2B is a segment in which A2A is very active with over 10% of market share, precisely because of the strategy of vertical integration with generation that allow us to propose corporate PPAs. Corporate PPAs remains key and B2B customers are key, to close agreement in PPAs.

Moving in the circular economy, let's start with the waste cycle. Italy is not a bad place on the European scene with respect to the 2035 goals. You remember 10%, no more than 10% in landfill, but there is still a lot to do. Frankly speaking, in the Lombardy region where the incumbent operator is in urban waste is today, the use of landfill is close to zero. The plan provides for growth in both the volume of waste treated and thermal and electrical energy recovered. It is worth mentioning that in '24, the third waste-to-energy line in [indiscernible] started up with a treatment capacity of more or less 250,000 tons. And another plant with another 250,000 tons is already under construction in Crotone, you have seen in the video. And today, A2A is the sole company in Italy that is building waste-to-energy plant in a situation in which the gap that we have to fill with the European target remain 4 million [indiscernible] tons.

One of the new elements of this plan is the integration of waste management, water cycle, district heating and data center businesses into the new circular economy business unit. So we have built a new business unit named the Circular Economy with altogether this business. The Circular Economy business unit with EUR 6.5 billion of CapEx plan will reach EUR 1.3 billion of EBITDA. One of the lever will be a higher integration in the B2B supply chain. The Circular Economy business unit will be strongly impacted by the data center development. For example, the issue of water management becomes crucial with data center. So let's take a closer look on how A2A plans to approach the data center business.

Let's start with the most easily predictable activity. A2A as an energy partner is normal of a data center in operation or under construction. We have estimated that growth in electricity demand from data center could reach 42 terawatt hours at the full potential of the scenario presented in [indiscernible]. Interesting that our scenario is significantly more conservative than the one published a few days ago by Terna [indiscernible]. The Terna scenario estimated electricity demand of almost 600 terawatt hours, 58 by 2050 with a significant contribution from data center. And also, Mr. [indiscernible] says that we will reach 600 terawatt hours of energy consumption. Again, based on our most conservative scenario, we have estimated that the demand for electricity connection to the medium voltage grid in province of Milano will reach 1,400 megawatts, and likewise, according to our assumption, we have estimated the energy that could be recovered from data centers for district heating with a full potential of 3 thermal terawatt hours capable of hitting about 300,000 apartments in Milano.

The impact in terms of CapEx and EBITDA of A2A Energy Partner activity is included within the individual businesses. So in generation, market networks, district heating with potential upside to be captured. But if there is a party, we don't want to go just to [indiscernible] -- and therefore, since we have a very attractive value proposition, we have allocated EUR 1.6 billion of CapEx to develop a part of a great national data center plan. So let's take a closer look to our value proposition.

One of the most important needs for data centers is evident related to low-cost high resilience baseload energy supply. The best configuration that guarantees these two elements at the same time is the direct connection of the generation plants to the data center, which requires simply that the data center to be located in close proximity to the generation plants. And it is interesting to see on the map how many generation plants A2A has in Lombardy and how concentrated they are around Milano. The baseload production, baseload production guaranteed by both our waste-to-energy plant and thermoelectrical plants combined with a growing mix of renewable is attracting a lot of interest from operators in terms of final energy supply cost and time to market. It's difficult in this moment to say what is better, cost of energy or time to market because it's the moment really very particular.

The EBITDA we expected in 2035 supplementary through the activities of energy partners is EUR 0.4 billion by 2035. And the first projects have already been carefully identified and the first analysis are underway. I can't say the name today, but you can easily understand from the graph. It is very interesting to see in the graph what impact a partner like can have on the economics of the data center development. As you can see, 65% of the OpEx is related to energy consumption. The other is personnel and maintenance. And this 65% once again is 65% for server room, 25% for cooling system and 10% for other components.

Thanks to a competitive advantage, we can work on the 65% of energy-related consumption and reduce the overall cost down to less than 50%. And believe me, this is super conservative. By direct connection between data center and generation plants in Italy, is named SSPC. So it's a direct connection, a cable that goes from generation to final user to reduce the network charges because in this case, you have not to pay TSO and DSO and the relative tax recovery.

The second is heat recovery for district heating and efficient cooling supply. I keep energy and they reduce the cost for data center. Furthermore, PPAs and energy management could also reduce volatility risk of the business. Consider that data center is the perfect customer for PPAs because it's super predictive, the consumption of baseload of energy for all the life of the data center.

I would like to close this section by talking about our geographical footprint, our backyard. I think it is important to recall that when we presented the first 10-year plan in January '21, some of you surely will remember, we had planned to develop A2A in Europe as well with some of the company's most core businesses, in particular, waste-to-energy and renewable energy. In '22, following the Russia-Ukraine award, we updated the business plan by bringing all CapEx back to Italy to contribute more quickly to our country's energy autonomy. But today, we believe that it is necessary to return to a more European footprint. The geographical diversification that lets us identify opportunities with higher returns and faster execution.

So the tender, let's say, between [indiscernible] countries is to be more attractive for investment. Therefore, a part of the CapEx envisaged in the plan and not yet definitely allocated, there is a part of the CapEx that is not definitely located. That means not additional to be clear, can be used as an opportunity of international expansion, which will take place gradually and typically with the first inorganic moves. The focus remain on the core businesses, particularly in the waste value chain starting from waste to energy with potential integration with collection. There is a natural hedging between connection and treatment that we have to maintain and district heating and in the area of power value chain by integrating renewable generation, energy management and customer base.

Our development strategy will lay on country commitment, identifying potential targets for an initial external growth as an anchor platform model for further development. The work is already underway, and we have identified priorities in different countries according to the targets. You can see the picture in the graph. For example, the Iberian Peninsula and U.K. are most interesting for waste-to-energy, while Germany and Poland are of interest in the power supply chain. Okay. I close this part. And now I leave the floor to Luca, so I can drink some water. Please, Luca.

Thank you. Thank you, Renato. I will now walk you through the planned financials. As an infrastructure company, we are presenting EUR 23 billion investments, a further increase on what we presented last year. This will generate profitable growth over the plan horizon and will enable the company to capture new opportunities arising from the evolving needs in the utility sector.

CapEx deployment is going to fuel structural industrial EBITDA, substituting the temporary effect from better hydro condition and good hedging opportunity we seized during the last period. The EUR 23 billion of investment are driven by our two well-known pillars, energy transition and circular economy. But what it is new for you is the EUR 1.6 billion direct investment in data center, the data center platform, which I will elaborate later on. The expectation regarding electrification and the potential for fast and strong demand dynamics driven also by data center lead us to be more selective in our project pipeline. We have decided to increase investment in electricity grid by almost EUR 800 million and to refocus our treatment investment primarily on energy recovery. This plan will result in a robust EBITDA CAGR of plus 5% from 2025 to 2035 and plus 6% of CAGR if we switch our base to 2028 when the development of data center will start playing its role.

The data center platform is our initial structural approach to embed this opportunity in our targets, driving a growing contribution up to EUR 300 million, EUR 400 million EBITDA in 2035. Finally, the EBITDA breakdown between merchant and low volatility activities highlights the adequate balance of risk and stability, which underscore our confidence in future growth, sustainability and long-term value creation. The value creation effort is also highlighted in the following slide. Our disciplined capital allocation across the three areas of expertise, generation and supply, circular economy and smart infrastructure is confirmed. CapEx are balanced among each segment and reflect the group strong growth orientation. Specifically, development CapEx is nearly 80% in generation and supply and circular economy and about 50% in the almost fully regulated smart infrastructure business.

Overall, our investment target highly attractive return of more than 200 basis points above weighted average cost of capital. A2A focus on value creation is not new to you. So let's address what I'm sure is one of your curiosities, quantifying the opportunity arising from data center. As we have seen in other countries and considering our CEO's earlier remarks, this segment's potential could be incredibly strong. However, it is also true that it is something new in Italy. So we want to take on this new business, providing a quick response along with careful analysis and selective investment decisions. We aim to immediately position ourselves in the segment as a leading energy player. The direct investment in data center, our data center platform will serve as a perfect showcase for our energy management expertise.

At the same time, the investment presents a risk return profile aligned with our financial discipline. Data center opportunity is already addressed in this plan with an early but clear target, double-digit return on invested capital with a potential scale-up of investment and become a growth engine within the company's portfolio. Ambitious and timely decision cannot be sustained without solid foundation. We foresee cash generation of EUR 14 billion after maintenance CapEx with a cash conversion rate above 50%, allowing us to maintain a solid financial leverage. The expected increase in our net debt by EUR 3 billion will be fully sustainable from a financial point of view with a 2.7x net financial position to EBITDA ratio in 2030 and 2.4 in 2035. Thanks to a well-managed cost of debt, we estimate a maximum of 3.3% in 2035. The impact of financial expenses in our plan is limited.

We have planned for EUR 10 billion funding needs over the planned time period, of which EUR 7 billion is refinancing of existing debt. To ensure a proper risk management, we have adopted a proactive approach to the capital structure, strategically setting the proper mix of floating and fixed rates. We are leveraging sustainability and innovation, targeting 100% ESG debt by 2035 and remaining open to new solutions, as demonstrated by our recent successful deal, the first ever European Green Bond in the market and the first Blue Bond in the Italian market. Our financial policy ensure liquidity and credit strength. We have built a well-balanced debt maturity profile with an average duration above 5 years, thus managing refinancing risk.

Our liquidity position is strong with cash and undrawn committed lines comfortably covering our needs. Lastly, we confirm our commitment to maintaining our current rating with FFO to net debt ratio above 24% throughout the period of plan. Infrastructure growth investments and effective capital allocation will lead to a solid earnings profile, strong revenue and shareholder value creation. Earnings per share are expected to grow at a compound annual rate of plus 6% from 2025 to 2035 with a robust 8% of growth in the period of '28 to '35. The growth doesn't include the full potential coming from data center. namely increasing electricity supply, medium voltage connection, district heating network expansion.

Our commitment at least 4% year-over-year dividend growth is confirmed, reinforcing the company focus on rewarding shareholders while maintaining financial discipline. We believe that the fruit of our financial management will continue to make A2A a very attractive proposition for our shareholders with a forecast return on investment of plus 9%, a 12% of return on equity and a payout ratio between 45% and 55%. Our guidance is expected EBITDA between EUR 2.21 billion to EUR 2.25 billion and ordinary net income ranging from EUR 630 million to EUR 660 million. These figures reflect the company confidence in achieving a steady operational performance and short-term profitability while laying the foundation for a stronger future growth through a remarkable CapEx plan. Thank you. I will now leave the floor again to Renato.

Thank you, Luca. And a few minutes for closing remarks, and then we will start with questions.

Also because it has been a long, but I hope it's interesting presentation. The opportunities are many. And as in the presentation of life years plan, let me leave you with this thought. A2A growth today no longer has the bottleneck of industrial machine. On the contrary, it is full of human capital that wants to do -- want to grow and to create long-lasting value. If any, the bottleneck is our solid and rigorous approach to financial policies, which could also open up to partnership to seize further opportunities in the future.

In this slide, you can see another EUR 300 million of potential EBITDA that can be generated by other projects that we already have in the pipeline. Talking about new [ GGTs, ] battery, reinforcement of electricity, the grid district heating growth and so on. We have many things in the toolbox, but not everything. And this is why we have decided to set up the new life venture company to increase our commitment to innovation, venture capital and collaboration with start-ups, universities and research centers. And today, A2A is the largest Italian corporate venture capital in climate tech. And we have just launched the Life To Fund which already raised EUR 150 million out of the EUR 200 million final target. So we are very happy. There are many activities already underway with start-ups and many investments made in the past, [indiscernible], I think that is a super good example. And all are proving to be a great vision and foresight.

A2A has already implemented several use cases with the start-up, including, for example, digital twin for predictive maintenance on electricity network, artificial intelligence powered plastic sorting. Really, believe me, digital twins on the networks, a lot of application, in this moment, we have more than 100 projects with artificial intelligence ongoing in the company. And finally, our commitment to a competitive but sustainable transition, our Net Zero commitment to 2050 and the decarbonization curve that you know to 2030 remains solid and remains solid because our decarbonization path will cope sustainability targets with improvement in our performance along our business lines, only some example in water cycle, district heating supply and so on.

In this last slide, we summarize the main data, which need, I think, no further comment before we open the floor to your questions. Let me recap some of today's key points. To be in the right place at the right time is always a good thing, but it's not enough unless you are also future fit and ready to seize the short- and long-term opportunities. Today, A2A is ready, ready to power and in particular, ready to grasp the opportunities arising from the growth of data centers in Italy and in Europe. And our integrated industrial backbone powered by EUR 23 billion in strategic investment, expanding regulated assets and growing footprint in electrification, renewable and circular economy give us the scale and solidity to thrive through change.

Our clear vision aligned with the Europe energy transition has enabled us to anticipate structural changes and to cover them into opportunities. And our economic stability has provided the platform for acceleration. And this is what makes us the company that is now driving renewed confidence and recognition in the market. Thank you very much, and the floor is open for your questions.

Thank you, Renato. Thank you, Luca. Now we -- first of all, we will open the questions to the floor, then we will also move to the collection lines. So let's start with the floor. First one Javier Suarez from Medibanca.

Thank you, Marco. So two questions that are the first group related to the short term and then to the medium term. Asking for the short-term assumptions that the company has changed in 2026, '27 and '28, can you share with us the underlying assumption for 2026, the changes that you have implemented because I have noticed that the previous net income target was EUR 700 million. If I'm not mistaken, now, the company is targeting EUR 650 million of net income in 2026.

So the question is, what is -- which are the moving pieces for that? And then I have also noticed that the target for 2027 has been -- is the same one for 2028. So in that period, that goes from 2026 to 2028, what the company see through different lenses that makes that the profitability of the company and the net income is going to be lower?

And then on the medium term, it is fair to say that the company has, for the first time, included into its business plan the data center opportunity from 2028 to 2035. And if that is the case, why the EUR 400 million of increase that you are forecasting is not fully translated into your previous target? Because previous target has been increased by EUR 300 million. Data center opportunity is quantified at EUR 400 million, which is the moving piece the EBITDA target.

And a related question is a philosophical on the data center opportunity. How A2A see itself. It's going to be a builder of data center or is to be a company serving data center? And the last question to leave space to other colleagues is how A2A see this business? Because I have noticed that the business hasn't been included into the generation business, has been included into the [indiscernible] circular economy unit. This means that the companies [ see ] are different pricing, different dynamics, a different opportunity for this business that is going to be [ correlated ] from the generation activity. So the thing that I'm trying to capture is that the pricing of this electricity directly sold to data center are going to follow a completely different logic?

Okay. I tried to answer up to the medium term and then I leave Luca for '26, '27. Starting from the exactly from your last question, Javier.

Yes, I think that the difference is [indiscernible] differences between this plan and the previous plan is the fact that we decided to invest directly in the development of data center. So to be energy partner, also energy partner able to bring a lot of opportunities from PPAs, grade and [indiscernible] it's normal for a company like us. We are happy to be fully integrated and so to give a lot of opportunities to our customer.

What is not obvious is to invest directly EUR 1.6 billion to develop to build the data center. Because the business of data center is different compared to the size of data center. So there are the super big data center 200 megawatts or more probably will be built directly by the over the top Amazon, Google and so on. But the typical size that we expected to see in Italy in the next year is between, let's say, [ 5 and 100 ] probably. So in colocation business model.

So the topic of the issue is to have a house for data center that is super efficient. To be able to host the rank of the customer that will arrive. And so our business model decide we should put EUR 1.6 billion on the table exactly to be able to be the owner of the data center. And this is the reason for [indiscernible] EUR 400 million of EBITDA on top on our previous guideline. Because our EUR 400 million completely linked to the CapEx to EUR 1.6 billion of CapEx.

We [indiscernible] to have in 2030 already more than EUR 100 million of EBITDA and the [indiscernible] that grow till [ 400 ] with this CapEx. And so I think that is very interesting to understand that the opportunities is linked to the graph in which we have seen how many generation plants that we have in Lombardy. So the opportunities for data centers to be built near close through our generation plant is not easy, but it's absolutely not impossible because there are really a lot of opportunities. And the direct connection is the [indiscernible] application because the [indiscernible] application is to be able to reduce the charges for distribution and transmission.

And we have a lot of waste to energy plant in Lombardy. Not only the [indiscernible], like [ Bassi ], [ Milano ], but also [indiscernible]. We have a lot of other plants in Bergamo and a lot of thermal plant. The big thermal plant can be able to attract super big data centers because if you have a thermal plant with 700 to 800-megawatt of power, you can source surely also data center with [indiscernible] or more.

A waste-to-energy plant can be the super partner for a data center of medium size 20, 30 megawatts, for example. But big because in this moment, I remember that in Lombardy the biggest data center is the data center of a team in [ Rozzano ], near Milano, 30 megawatt. This is the situation in this moment in Italian. So talking about short term?

Yes. Let me start from EBITDA. Last year, when we presented the plan here, we clearly stated that we came from results that was blown by some exceptional situation like as the hydro volumes and the prices effect. We have calculated those effects into EUR 300 million. So you need to consider 2024 with this normalization.

Having said that, 2025, has a queue of price effects because the normalization of prices is going to be to lead us at a level between 100 and 110, which is the normalization of the scenario we ever considered. And if you make the calculation, we are still [ EUR 80 million, EUR 90 million ] in '26 as a queue of the scenario effect. But we did a quite a good job in recovery and being at the same level in terms of EBITDA as in the previous plan.

Going forward, we start to have the impact of the data center opportunities, again, which we have considered -- as I say it is very usual for A2A in a very prudent approach. You have seen it. The chance could be really huge. We keep the food underground -- in the ground step-by-step considering only few opportunities on which leverage our growth in the midterm.

In terms of EBITDA, we have a couple of things which lowered a little bit the level compared to the previous one, which is the calculation of the allocation of the prices for the acquisition of the network from [ NL ]. As you know, it is an accounting procedure we need to follow for the purchase price allocation. This will account EUR 20 million in terms of depreciation and amortization, starting from the end of this year and '26 onwards. And we have changed a little bit the mix of our CapEx. You have seen we have increased the CapEx plan in electrical distribution with almost EUR 800 million of higher CapEx. And this leaves us from the calculation with higher depreciation compared to last year. So these are the three aspects, energy -- the queue of the energy scenario and the depreciation and amortization.

Talking about bigger construction site, what will [indiscernible] the differences in the next year is Monfalcone. Monfalcone, the first parallel so the first connection with the grid will arrive in October '26. And we estimated to have the operational activities of EBITDA that is EUR 10 million every month since January '27.

The second is in more or less in the middle of '28, the new [ West Energy ] plant in [ Corteolona ]. Of course, there are a lot of other CapEx investment, but these 2 elements altogether are about EUR 200 million. So this is the reason for why from '28, you see the full potential of these 2 plants and EBITDA but come back to grow quickly. I think that what is key to understand, but I'm sure that it's clear for you, is that the scenario effect was crucial in the last year, and we was able to offset most of scenario effect due to the CapEx that we did in the last year.

Okay. Let's start. Emanuele Oggioni from Kepler.

Emanuele Oggioni from Kepler. The first question is on the revenue model on data centers. On -- you mentioned before is more than EUR 100 million of EBITDA contribution in 2030, and EUR 400 million in 2035. So what could be the revenue model and the breakdown between generation [indiscernible] networks and also other fee services related to the that recognition to your plans? This is the first question.

The second is on the RAB. You increased the -- sorry, the first -- the second question is on renewables. Basically, you cut by EUR 1 billion, the CapEx plan compared with the previous one. At 3.7 billion from EUR 4.7 billion for an additional capacity of 1 gigawatt additional capacity in 2030. So I think this could be one of the reason also the some postponement, or as I said before, the delay of the EBITDA from '27 to '28? And what is the visibility on this -- due to the favorable track record in Italy, not up to [indiscernible] but up to the system overall is quite -- is not excel and in Italy every year, we experienced delay with severe delays in the permitting process, et cetera.

And the third question is on RAB. In -- sorry, for the generation business, the CapEx related to the CapEx, the additional question was also the if you have considered, or to what extent you are considered not -- probably not basing on your slides, the possible expansion of renewal of hydrated concession? So what this issue or driver could be further upside probably on the plan?

And back to the RAB. The RAB was increased, if I am correct, from EUR 3.4 billion to EUR 4 billion in 2035. So in this case, to what extent the electricity distribution concession renewal extension from 10 up to 20 years, et cetera, will -- has been already considered or not [indiscernible] would be an additional incremental CapEx and development?

Okay, Emanuele. Starting from generation because it's easier to consider that in this presentation, we decided not to recall all what we have in the plan. So the hydro is not in the presentation, but is in the plan. That means that the EUR 4.7 billion of CapEx presented in Life Yards plan included EUR 1 billion for hydro. So the total CapEx for solar and wind remain the same, [ 3.7 ].

EUR 1 billion is inside the plan exactly for the extension of the concession. And we are absolutely confident on the extension of the concession. And this is the reason for why we decided not to focus during the presentation, topic, but exactly [indiscernible] is particularly dedicated. So we want to close the number, are inside the plan, and we imagine to be able to go absolutely in continuity.

The revenue model. As we said, the revenue model included our natural activities in supply, distribution [indiscernible] inside our businesses. Probably, there are some upside because in this moment, we imagine that due to the increasing electrical demand. The price of energy will remain more or less at an extra level. But probably being a lombard and due, for example, to the opportunity to development of this heating, or activity with water management. But can be very [indiscernible] with data center. However historical activity can grow. But the EUR 400 million are location of data center. So the business model, this EUR 400 million are completely out of our business -- classical business line. So CapEx and location of space in data center.

On the grid, Luca, [indiscernible] do you want to?

I didn't get the question on the RAB, if you can repeat it for one?

It was about [indiscernible] extension to the grid distribution.

Yes, we are waiting for the decree.

We are waiting for [indiscernible] No, no. [indiscernible] The CapEx are absolutely included because in this moment, our investment in the grid is more or less [indiscernible] than the average national level. So surely, A2A is not to put [ other ] on the table. But to know when we start, the problem is that there is an activity from ARERA, and in this moment, we are waiting for the new board of ARERA will arrive, I think that quickly the situation will be closed. [indiscernible] is what we expected like extension 30/50.

And we haven't included any installed payments upfront for the new or the new or the concession, also taking into consideration that there is a discussion in place if this amount of money should be paid or not, considering the bill of the customer. But anyway, doesn't change the picture.

Roberto Letizia from Equita.

Of course, I need to remain on the data center because it's the most interesting part. So just wondering, you're including the EUR 400 million as the return on the investment. But is there the whole upside of serving the energy providing the heating? Or is that included within the EUR 400 million? And if so, how much of that EUR 400 million would be purely the return on direct investment rather than service. So maybe 30% is direct investment, 70% is servicing, forward heating and so on?

Just a clarification. Is it -- is that referring to the baseline scenario and not to the full upside potential just to clarify that. And wondering if in that EUR 400 million , there is any inclusion of connection fees? Or the connection fees would potentially come on top of that because that changes the overall return assumption.

I would like to recover Javier's question on the 2035 because actually, the old target was EUR 3.3 billion. So if I add up the EUR 400 million, I would be on EUR 3.7 billion, but the target EUR 3.6 billion. So basically, there's a difference of EUR 100 million. Is that because part of the data center was already included in the old plan for the renewables contribution, for example. So just wondering if part of that was already in the old target?

Then if you can share a little bit -- one piece of your assumption, which has to do with the [ CCGT ]. As a lot of energy is going to probably provide it by CCGTs. I guess you're assuming an improvement of the underlying spot spread, which are today negative. Can you share us just how much improvement in spark spread sets into the assumption of the data center contribution?

And yet, one final one. If you can highlight it back again, the source of the significant client addition through the plan. So as the market conditions are changing significantly and you several times reported higher competition shrinking margins and so on. But you are still sticking to the significant growth in market share on the clients. So maybe we can touch base a little bit on that topic?

Okay. That [indiscernible] starting once again from data center. The EUR 4 million as of EBITDA is totally linked to the direct investment in data center. So it's completely out every EBITDA that arrives from connection, distributing, generation, supply and so on, that are included inside the other businesses. The EUR 1.6 billion is included in the [ 23 ], and this is the main reason for why we shift from [ EUR 22 million to EUR 23 million ] of CapEx. So there are EUR 1.6 billion of CapEx more than the last plan, EUR 400 million of EBITDA in 2035 more. It's correct. The sum is EUR 3.7 billion. There is a problem of approximation because the last was a little bit less than EUR 3.3 billion [indiscernible] little bit more than EUR 3.6 billion. But overall, this is the target.

What is interesting, and I understand your question, your doubt is that [indiscernible] we have not changed our target in -- for example, grid connection, totally energy supply B2B -- yes, there is a growth, but not so huge. Or margin in generation, it is fast spread, for example, Also, if you imagine that the load factor of [ GGTs ] will change totally because to be able to source the data center, probably we need to go from 20% to 50% more or less.

Well -- so it's clear that there are some upside inside this business. But we believe in this moment, but it's not bad that to remain conservative in the valuation of our structural plan business, considering that we are facing the new business of location -- development, allocation of data center in which our target is material, EUR 400 million is material. So we want to face this plan approaching the data center [indiscernible] from all perspective. When joking, I said I don't want to go to do DJ to the party is because if I arrive simply plug the energy and all the business will be done by the developer. I think that I am not doing my work so well.

So I think that there are opportunities, in particular opportunities because there are place near our plans that can be super interesting for the development of this data center. Imaging to do some example to stay near [ Sila ] in [ Milan ], near [ WestEnergy ] plant in Brescia, near [ Cassano ], [indiscernible] 40 kilometers from Milano. All situations in which you can have a huge direct generation with redundancy.

In Cassano, for example, in this moment, we have 2 plants because we have [indiscernible] and the new [indiscernible], 108-megawatt installed 2 years ago that are able to give 2 direct source of energy, redundancy completely deconnected from the net of grid. So without [indiscernible] charges. So I think that this activity can be really effective. And surely, I think that there are upside inside our historical businesses for the development.

For example, one single example there is not upside in development of the [indiscernible] Milano linked to [indiscernible] but can arrive from the [indiscernible]. Only this example, you can understand. And this is the reason for why in the closing remarks, I said, okay, there are other EUR 300 million of EBITDA linked to potential upside in which our bottleneck can be the financial discipline, and which is possible also to find partners to be able to develop more [indiscernible].

On spark spread?

Yes, the spark spread. As Renato said, the assumption are very current with the previous scenario. So we haven't considered an upside in the spark spread coming from the development of the new opportunities of the data center platform. And maybe in a conservative way, because it is too early to understand the concrete effect of this kind of opportunity on the prices and the level of the demand. We are quite sure that they could potentially increase both the volumes and the prices if the situation is -- it seems to be considering the request to turn for the connection seems to lead to a really potential new opportunity.

We have considered in the plan only what we are doing with our projects. Also, the direct investment are based on few opportunities we have already identified. We are already under discussion with the developer. In the lens, we can have available for the connection to the grid -- or not to grid, to directly to our plants. And to have the opportunity to exploit directly -- extracting the most of the marginality we can. But again, it is let's say, few projects very concrete as we presented last year, a concrete approach with the [indiscernible] Nowadays, our approach is ready to power in a concrete way.

Talking about the customer base, you have to consider 2 elements, is sure that there is a high competitive market. But you have seen our growing in electricity customers, 61% between 2020 and today. So we are very focused in premium acquisition. So we are working to avoid [indiscernible] to do, let's say, the washing machine with the customer with that value. So the problem is to decide clearly, which are the channel and the typology of customers that are interesting. And in this case, also due to the fact that you have a customer base also in this region with a market share [indiscernible] and very strong with very low churn, we imagine to be able to grow, reaching a target that is big, but it's not monster because in this moment.

We have to -- we are at 3.6 million of customer. We imagine to arrive in 10 years in -- to 5 million. So you can understand that the growth that we imagine in the next year is not the same, but we have seen in 60%, 12% year-by-year in the last 5 years, exactly, because there is more competition and because the market is this one. It's not a market that grows. And there are some players surely aggressive.

But we optimize our acquisition strategy covering all segments and with super concentration in electricity market that is growing very well. Also because I think that customer can understand the differences between the companies that at really produce energy and bet only trade energy. For example, our PPAs mass market, we do offer is growing is more than 100,000 customers. 10 years contract, but it's very interesting for us also because he's able to hedge with this customer base retail our renewable production. But it's interesting because the price that we reduced in -- exactly in the last weeks because there is a scenario which is possible to reduce this price arrive to EUR 105 for megawatt hours is super interesting fixed for 10 years. So it's super competitive. And it's very difficult for a company that trade energy to be able to propose on the market these kind of products.

So I think that our capacity to compete is huge on the market -- electrical market, less in the gas. And this is very on for why our strategy is working to change completely the market share between the 2 customers.

Let's take one more question from the floor, then we move to the line and then back to the floor, okay? Francesco Sala from Banca Akros.

The first one is on the hedging activity for 2026. If you can share with us an update on quantity and prices? The second one is if you can give us a sense of the efficiency of new CCGT plant compared to the so-called traditional ones? And finally, what are your assumptions on electricity prices during the [ plan horizon ] and [indiscernible] for the regulated businesses and CPI?.

The hedging level, now we have reached -- we are not at the end of the year yet. So 60% of the fixed price at [ 111 ]. This is in line with our expectation. And in line with the price of our scenario. As I said, the scenario consider a price of the energy in between [ 105, 108 ]. So this is absolutely current. Last year, it was above [ 120 ].

About the efficiency of [indiscernible] I tell you a story. When we decided to revamp Monfalcone. Monfalcone was a [indiscernible] plan. [indiscernible] could plan as an efficiency of 30%. But consider that an older CGD plant, for example, our plant on the [indiscernible] is less than 50%. When we did a beauty contest to buy the machine for Monfalcone, there was a tender between the 3 typical players. Siemens, GE [ Ansaldo Energia ]. And one of the most Important elements during the tender was efficiency. And the differences was our plant in -- we closed the agreement with Siemens at the end. 63% of efficiency. The other player was [ 62 point ] But the difference is of 0.1, 0.2 is the differences to be called by Terna or not to be called. Because when Terna ask for energy, the elements to call the plants, the generation plants is linked to CO2 production, let's say.

So it's super important to be efficient, not only because you are more sustainable, the price of energy is lower but because the plant works more. And in this moment, the differences is incredible. So the old fleet that we have in Italy has an efficiency less than 50%, between 40% and 50%, depends from the plant. The new fleet that is under construction from A2A is on [ NLP ] as more or less an efficiency between 62% and 63% [indiscernible] situation.

That is a super good news for Italy because the 2 models that you can have in this moment to close the gap between renewable and consumption are nuclear or CGTs. in this moment, difficult to have another way. I think that it's difficult to see nuclear in Italy in the next years that you can imagine. But in Italy, we have a fleet of [ CGTs ] super performance, in particular, for the CapEx that we did in the last year, and was done this investment to avoid the risk of blackout. So to make our grid and our network resilience. And now is able to source [indiscernible] data center because the data center should grow with the demand, but not double the demand. So there is a growth that is completely -- is absolutely possible to be managed with actual fleet that we have.

Also because during this year, the renewable will grow because the target of 63% in 2030, I think that is key to be reached. And so the mix between renewable battery storage, you have seen 30, 35 [indiscernible] for time shift. It's super low guys because when we have seen the base price for the tenders of [indiscernible] that was EUR 37 for megawatt and was assigned to [indiscernible] the differences in time sheet is between [ EUR 60 ] per megawatt hours and [ 30 ]. And these differences between to have renewable but can be competitive all the day or not?

So I think that the situation in which in Italy, we have renewable but works well. Battery storage, low price entities high efficiency can work. Then in the future, will arrive carbon capture and storage, we see another good news maybe. But now it's absolutely enough to face the situation today.

To be more precise, Francesco, I was referring, of course, to 2026 with the hedging of [indiscernible]. '25 is nowadays more than [ 18 ]. And regarding the CPI index, it is [ 1.8 ].

And the price of energy we imagine that we remain stable around EUR 110 per megawatt hour, EUR 100, EUR 110, but the situation in [indiscernible] a little bit of [indiscernible], but now the [indiscernible] is very low, very low compared with other period or in the store is very high, but compared with the last year, it's very low. And so all the scenario says that due to the demand and to effect in Italy, there is no elasticity -- sorry, there is a lot of elasticity because we are short of generation. The situation is that the price on price will remain more or less what is today.

So now let's move to those guys connected to the line please.

So the next question is from Sarah Lester, Morgan Stanley.

I hope you can hear me okay. Sorry to focus on the data center angle, but I do just want to unpack this a little bit more pleased to be totally clear. So firstly, basically, if we look at the 2028 to 2035 EBITDA guidance given today, that does include some data center uplift. I just think it will be very helpful to understand just how resilient that guidance is to a negative change in the pace of the data center build out. Of course, A2A's business mix is very robust. And you mentioned many tools in the toolbox, I presume, therefore, that it does offer very good optionality for other growth opportunities. So just wanted to really clarify the resilience of your guide, please put downside data center case.

And then on the upside case, you mentioned the full potential of data centers is not included in the plan, that the opportunity could be much larger. And I think this is a really critical point. So to clarify, please. Is it fair to conclude from everything you've said so far that there could be meaningful upside in a variety of your classical businesses like generation grid [indiscernible] water that goes above and beyond today's plan?

Okay. Yes, if you look at '28 to '35 there is a growth that is included in our historical plan. It's the same of [ Life Yard plants ] because there are some few moving parts. For example, a [indiscernible] reduction in e-mobility, [indiscernible] reduction in biogas, or in some other business. But all the CapEx was recovered in the growth of power grid.

Consider that we are in a situation in which power grid is able to absorb let's say, an infinite quantity of CapEx, all the CapEx that we can put on the table are able to be absorbed by the power grid. So to understand what happened in our company, when we arrived in June, we do a [indiscernible] review of the CapEx. I call all my guys and say, okay, are you able to do all the CapEx? [indiscernible] CapEx, not sure to the power grid because power grid? [indiscernible] permitting works in its assets and is able to deliver every quantity of -- so despite the EUR 400 million and EUR 1.6 billion of the data center, I think that our plan is super solid because there is a mix of business that is surely able to deliver the numbers that we are seeing.

Coming back to the data center. First of all, I think that surely in Italy will have a data center. The situation in this moment of a data center is better 10,000 data center in the world, 5,000 in U.S., only 2,000 in Europe, only 168 in Italy. And Italy is 13 countries in the world for data center installed. And we need surely a lot of data center simply to arrive to the benchmark and consider that there is an issue of strategical autonomy of Europe on some topics like intelligence -- artificial intelligence. And we need to have, in some countries, surely data centers.

Milano in this moment is considered with [ Madrid Dorigo ], the three places cities in Europe, but in the next years, we grow more in data center. Also because in this moment, compared with the target with the benchmark Milano is much lower. I said that in Milano, in this moment, the only data center of medium side is from telecom and this 30-megawatt near Milano. So surely, we have to work a lot. So I think that it's impossible that in next year, we don't see new data centers. The topic is a way we'll be able to attract and to develop data center or not.

The [indiscernible] application is a fact better data center with inside is able to connect it to our generation plant is able to be super competitive against the other on the cost of energy, that is 65% of the total OpEx of data center. So I think that is possible. The business model is EUR 1.6 billion of CapEx allocated on -- to build data center, of course, with a partner able to do. And EUR 400 million of location, so of EBITDA that arrives from revenues from locations.

So I imagine that the plan can be can be solid. Of course, if no one data center will [indiscernible], I mean, Italy compared with this [indiscernible] can be outside. From the other side, I think that there are a lot of upside exactly because the effect of a way like energy partner, surely will arrive because in a world in which the electrical consumption will grow. The national low and the regional low in the next month, we say that it's key to do good water management to recover it in the distributing, to be able to be well connected to the network, to use brownfield areas and so on, I think that open the door to opportunities, incredible opportunities for a company like A2A in Lombardy. And so the upside are surely inside our historical business plan, in which, frankly speaking, we didn't change the our historical target. So there is space to grow in the other business.

Yes, if I can add, you have seen the list of potential projects we have and we have not considered in the CapEx plan. It is clearly listed. Of course, this help us in the case, we could have a downsize in any situation to readjust the CapEx plan with the lease we have aside on which we are continuing to work internally. So it is not a list of dreams. It is a real list of project on which we are going to work every day. So it is easy to switch one project with another in the case, one project is not going at the end, or could be finalized in the way we want.

We was able in the last 5 years to do [ EUR 10 billion ] of CapEx between organic and inorganic, and to move EBITDA from EUR 1.2 billion to EUR 2.2 billion. So I think that the proof that we are able to fix targets real targets and also to surpass it in our history.

And from a financial point of view, if I can add. It is very clear how strong is the situation, considering your cash generation coming from our projects. And this is the answer to be able to maintain a certain speed without slowing down, and to have the opportunity to continue to grow organically, and to look at opportunities because we have the solidity of a leverage ratio very affordable, a nice FFO to net debt. So really in the position to look at the upside potential in a very positive way.

So now back to the floor, Davide Candela from Intesa.

First one, again, I want to be redundant on data centers a clarification. Just thinking how you want to feed [indiscernible] to the data center because I was reading through your numbers and did look like the [ CGT ] by 2025, they have load factors that are below 20%. So it is about that you see the change in mix, and so the CGTs would be just for bigger solutions or not? Or because you are not including, as you said, those potential to be just a supplier because this is key to me to see the value of the [indiscernible] fleet you have and how this would be this value maintained in future or not?

Second question also on energy supply. This is a high-level question. Just a share of your view about the competition. My question is, do you see a scenario in which we see a further increase in competition when you are required to have -- to put retention costs as we did in the past to maintain those high-value customers you are saying today because everybody are focusing on the value-added customer base. And so I was wondering if you see a [indiscernible] like that or not?

And final question about your sites and opportunities in Europe. How much you are included in the plan in terms of CapEx or if you are not? And if you can deepen more on your strategic approach in that?

Okay. I think -- thanks for your question. I think that coming back to CGTs and data center, probably, I can use an example that can be interesting for you. We received this year, or last year, I don't remember, the authorization for the new CGTs high efficiency in [ Castano ]. So in this moment, we have authorization to build a new CGT plant [indiscernible] of efficiency in [ Castaneda ].

And if you look on web, you can find a lot of discussion about the opportunity to build a pipeline to bring not only electricity, but also heat recovery from [ bad plant ] and [indiscernible] To build the CGTs, we are waiting for the tenders for capacity market probably in February we see. But if will arrive and will arrive probably we are almost sure that will arrive the tenders for capacity market. And we will do that application, of course, to be able to build [indiscernible] The demand will be okay, but we'll build also infrastructure to bring 1 terawatt hours of [indiscernible] recovery to Milano for discrediting or not. And this depends simply from hypothesis, that a part of the plant will work baseload or not? Because, of course, if the work is only like [indiscernible] is impossible to imagine that is able to source a [indiscernible].

But imaging now to build [indiscernible] data center, a big data center 200-megawatt, that means CGT that works baseload for a part of the capacity, probably enable the opportunity to recover it from the data center and from the plant. But can be a super opportunity for [indiscernible] because we have to face the decarbonization of Milano and it's not easy to face the decarbonization with heat pumps in the single building. So it's interesting to understand how data center in CGT can have a mutualistic symbiosis because data center needs baseload energy and CGTs is perfect toward base load.

So I think that the opportunity in this moment to have space in CGTs generation is a super news to be able to develop really data center in Lombardy and in Italy. So talking about Europe, the CapEx are included. So consider that we have, in this moment, [ 30 -- EUR 23 billion ] [indiscernible] because it's the plan [ 2435 ]. For under construction, more or less, to assign. So we have authorization, we can start, but we can also change. And [indiscernible] to find. So in this moment, the opportunity from Europe is that if there are opportunities in which we see time to market better and a better return, we can decided to change some projects that we have in Italy with projects in other countries.

The goal is from one side to become an European company. And frankly speaking, I think that is very important for all the big companies in Europe to have the mind of an European company. From the other side to reduce risk to derisk because if you are able to do cherrypicking in other countries in business that we know very well, in which our leadership is known, in which there are opportunities of return better, why not? This is the strategy.

Of course, probably it's easier to arrive with the first move in organic, but it's typical, but also if you go in [ Calabria ], typically, we start from an organic move. And then you can consider this strategy, once again, like a way to the risk of the plan, the risk intends to be able surely to do. To put on the table, really, the [ EUR 23 billion ] of CapEx.

And on the supplier retention, we paid the retention because during the [ foolish ] situation that we have during the [ war ], you remember we had some customers totally out of position with price EUR 300 per megawatt hour, and we decided to put on the table how many money, EUR 100 million, EUR 100 million. The last 20 in this year, exactly, not to penalize our customers because we believe a lot in the strong relation between A2A and our customer. I think that is also customer B2B. And so in this moment, there are no needs of cost of retention. The need is to be able to be -- to find customer of quality.

I understand that you say, okay, but all the players want quality customer, of course. Probably the difference is that, once again, our position even although Italy is not [indiscernible] to -- and the other element that I think is very important is that our awareness in this moment is 60%, 65%. Our market share is less than 10%, is 7%, 8%. So the huge differences between market share and awareness is the funnel that helps us to grow. Not [indiscernible] up to [ 20 million ] of customer, but to [ 5 years ].

So thank you, everyone. We are out of time. If you have a need for any type of follow-up, please contact the IR department. Thank you, Renato. Thank you Luca.

Thank you all.

And thank you, everyone.

Hello, and welcome to A2A H1 2025 Results Call. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded. [Operator Instructions]. I will now hand you over to your host, Marco Porro, Head of Investor Relations, to begin today's conference. Thank you.

Good afternoon, everyone. Thank you for taking the time to participate to our first half 2025 results. The conference will be led by our CEO, Renato Mazzoncini; and the CFO, Luca Moroni. I leave immediately the floor to Renato for the first part of the presentation, and then Luca will jump in.

Okay. Thank you, guys. Thank you to be with us. So starting from Slide #2, H1 results demonstrate the execution of our strategic plan. You remember, we presented it in November, laying a strong foundation for the continuous growth of our company. And looking at the main achievements, we can start from some industrial in electricity. You know our strategy in energy transition is very clear. And some achievements for this semester are the fact that we completed the asset rotation towards electricity grids. As you know, since January, the assets we acquired from Enel, in particular in the province of Milan and the part in the province of Brescia have been successfully integrated into our asset portfolio. And at the end of this semester, with, let's say, a very clear, we finalized the sale of a part of our gas network to the company Ascopiave for a consideration of EUR 430 million, which we already cash in exactly in the third of June.

Regarding our grid development, as presented in the plan, we recently inaugurated a primary substation in Brescia is only one example because the primary substation are the king of power grid. In our industrial plan, we have EUR 3.4 billion of CapEx in the next years in Power Grid. And what is very important is that we was able to push strong CapEx also in that is exactly the part of the network that we bought from Enel in the first month of our new management of the network. That is not so normal, let's say, because to be able to invest strongly in networks, you need to know very well how the network is built and so on. And so our engineering was able really to start very, very quickly in the CapEx plan also in this network.

Once again, discussing about the strategy in electricity, we reached 1.6 million electricity customers on free market -- mass market, consider that our strategy also considering our trajectory of net zero is to shift -- to switch more and more from gas customer to electricity customer. And also in this semester, the growth of mass market electricity customers was 11%. So very, very important.

The second achievement is business risk profile optimization. And in our generation business unit, we secured a 17-year LNG supply agreement with British Petroleum for more or less EUR 1 billion of cubic meter for every year of GNL, ensuring greater security of supply and price stability. So we are very happy and this contract will start from the next year. We further improved the visibility of the result stream in our district heating network, in particular, by winning the tender for 20-year concession in Sesto San Giovanni that is in the north of Milan, is a large part of the metropolitan areas of Milan, more or less 100,000 inhabitants. So very important.

And we remind you that we now reached a regulated EBITDA that arrives more or less 31%, 32%, thanks in particular to the increasing exposure of our asset portfolio to regulated and quasi regulated activities. Of course, the acquisition from Mel was very important for this target.

As you already know, we are also enthusiastic about the new opportunity quickly materializing in our sector which we look forward to illustrating surely in the next Capital Market Day. But in the meantime, probably some of you have seen that we announced the inauguration of the first liquid cooled data center connected to the district heating. You remember in November, we talked during the presentation of industrial plan about the opportunity to exchange heat from the data center to the district heating. You remember that there is a potential target in Milan, in particular, to reach 150,000 equivalent apartments with its recovery coming from district heating. And we did it with a first pilot started in Brescia and the next one will arrive in the next few months in Milan.

And we continue to invest in our industrial development, having already reached more or less EUR 400 million in development CapEx in the semester. So the total CapEx in the semester is -- I don't remember, is more or less EUR 700 million. But once again, 60% are in development. And this is the reason for why our growth is exactly stable and continuous.

It's very important also, of course, our relationship with our stakeholders, a dividend payment of more than EUR 300 million, in particular, EUR 313 million to our shareholders in line with the promised annual increase, 4% every year. You remember along with consistent industrial growth. And from the other side, the launch of our company's employee stock ownership plan with an impressive subscription of 86% of our colleagues was a target for us really very important to engage our employees and to increase the commitment to the future target of the company.

Looking Slide -- sorry, in the right part of Slide #2, you can also look, of course, our Moody's upgrade of rating outlook to positive, that is once again the proof that also from a financial point, we are working well. Looking at Slide #3, the consolidation of the new company Duereti from Enel and the increase in the price of energy commodities led to increase in revenues, more or less 13%, so to arrive to EUR 7 billion in the period. The reported EBITDA recorded a limited decrease, but reaching EUR 1.22 billion. But as you remember, surely from our call in the first quarter, the big difference is there are main differences against '24, but the biggest one is the extraordinary effect deriving from hydroelectric production during '24. You remember, we closed the year with 5.2 terawatt hours. And if we offset this extraordinary effect, the EBITDA grew in '25 against '24 in the first half by 2%.

The net profit for the same reason, decreased by 11%. But once again, compared adjusting, let's say, by effect of the hydrolytic production is increased by 1%. The ordinary net profit, excluding special items, for example, in there are EUR 8 million referring to the price adjustment relating to the acquisition of a stake in [indiscernible]. [indiscernible] Was the waste-to-energy plant -- industrial wast-to-energy plant in Kroton in [indiscernible] in the south of Italy. And showed a decrease of 11% compared with the H1 '24 standing at EUR 426 million. And once again, adjusting '24 with the hydrolytic production, there is an increase by 2%.

Focus on financial disciplines continues, allowing us to improve the solidity of the financial ratios. And as you can see, we arrive to the net financial position on EBITDA ratio in 2.3%, that is a decrease compared to the 2.5% of '24 and is a very good result also because, let's say, is the flexibility that can allow us to face new opportunity in the future.

Slide #4, the CapEx. The CapEx is our key elements in our strategy. And also this year, the increasing is strong, 23% compared with '24. You remember last year, we did also on top on the CapEx, the industrial CapEx, the acquisition in Enel. So the total investment last year was EUR 2.9 billion. This year, the target to arrive to proxy to EUR 1.7 billion, EUR 1.8 billion, and we are working to reach this target. EUR 403 million are development. The rest is maintenance more or less and something peanuts mandatory.

The large part of the CapEx are smart infrastructure. This is the reason for why our RAB continue to increase, but also circular economy and generation are a fundamental part of the CapEx plan. And once again, the division between energy transition and circular economy, so our two pillars of industrial plan are 72-28. It's very important to look at the breakdown by SDGs is 85% aligned with SDGs against 15% not aligned. And also the alignment with the EU taxonomy is very high. So we are 51% aligned and eligible 72%. And this is very important because it's the reason for why our capacity to increase the green part of our debt is possible to reach. So I leave the floor to Luca for a detail in the EBITDA.

Thank you, Renato. Thank you, everybody, for being with us today. Page #5, I would like to underline the growth of some businesses, in particular, Smart Infrastructure, which contributed the best to the result of the first half '25, EUR 62 million, followed by EUR 19 million by circular economy business unit, which compensate partially the decrease in Generation and Trading and market business unit. Of course, we come back several times during the presentation with referral to the hydro effect of '24 which to have a better comparison, we need to take into consideration, keeping in mind that we are talking about EUR 100 million in terms of EBITDA.

The result of the first half, EUR 1.2 billion has been quite in line with our target for the year and consistent with the industrial growth we are achieving. Let's go into the detail of each business unit. Generation and Trading again and again, demonstrating the fact that managing different technologies is a way to hedging the risk profile of the business unit. In fact, as you can see, considering a less production coming from hydro for 750 gigawatt per hour for this semester compared to last year, we have produced 1.2 terawatt more in terms of thermal production, 62% increase. This is -- this has been an opportunity for the company to offset partially the negative impact. We have had also the effect coming from the energy scenario affecting the result for first half '25.

At Page 7, we pass to the market result where we can underline and pointing out the very positive performance of the power market in retail business, which offset completely the investment, so some higher cost compared to last year, which could consider -- we can consider as an investment in marketing and commercial future performance. So EUR 16 million towards the minus 14 end-to-end, the EUR 25 million of decreasing in the result could be linked entirely to the safeguarded market.

As you remember, we decided to bid in that tender at the end of last year with a decent marginality. And as the market expressed a marginality very, very low, we remain without that customer in our portfolio. It is very important to underline what also Renato said in the presentation at the beginning, which is the increase of our free market customer base in electricity segment, which increased by 11% compared last year. Whilst we have a slightly decrease in the gas customer during the rolling period. The electricity sold has been quite good in electricity, plus 8%, whilst the gas sales decreased by 6%.

In the circular economy business unit at Page 8, we continue to experience a very nice and positive industrial results. In terms of KPIs, you can appreciate at the right part of the slide, how the KPI, the industrial KPI are very positive in terms of electricity sales, energy recovery and heat volumes. And this lead the positivity of the result, both in treatment and district heating by EUR 14 million and EUR 10 million, respectively, which compensate entirely the minus EUR 5 million related to the result of the tender of the collection auction for Milan area, which has been -- which started at the end of last year and will give the effect for the entire '25.

At Page 9, the very good news related to our business of the market Infrastructure, in particular, electricity distribution with the perimeter of Duereti, which come from the acquisition from [indiscernible] distribuzione, accounting for EUR 44 million in terms of EBITDA, but also the positivity related to the regulated revenues, which give us the opportunity to increase by 33% in this business unit. It is very important to underline what we have considered in the nonrecurring item, EUR 27 million out of those EUR 23 million are related to gas adjustment for previous years. So we -- in such a way, we need to consider it in terms of marginality for the gas business.

The RAB increased both because of the acquisition and for the CapEx plan, which is pretty good, also taking into consideration Duereti new company, which started very fast in the implementation of the new CapEx plan and also the previous perimeter. In terms of RAB, we reached EUR 1.6 billion for electricity, and we are at EUR 1.8 billion for the gas business.

Page 10, we can give a look at our profit and loss, starting from the EUR 1.2 billion EBITDA, EUR 469 million depreciation and amortization, EUR 28 million increase compared to last year, EUR 15 million of those related to the delta perimeter related to Duereti. A decrease in the risk provision related to the debt for the funds or the debt related to the landfill post operating activities. The net financial position -- sorry, the net financial expenses, EUR 85 million related to -- with an increase of EUR 24 million compared last year related to the issuance of the new European green bond of last January and the green loan, the bridge green loan issued last year for the acquisition of Duereti. The operating profit, EUR 635 million. Then we have the taxes with a tax rate of 29%, minorities for EUR 23 million and the net ordinary income of EUR 426 the special item already mentioned by EUR 8 million to reach the net result and the net income of EUR 434 million.

Page 11. We are very satisfied about our financial performance. Cash flows are quite positive and let us funding all the investment and the dividends with our net operative cash flows, a very nice and positive result in terms of management of net working capital, which gave us EUR 200 million in terms of positive cash flows. We have EUR 300 million of cash out related to taxes and financial expenses. And as you can see, EUR 1.1 billion of net operating cash flows, which gave us the opportunity to fully fund investment and dividends, resulting then with EUR 126 million of net cash flow. Then we have the cash in coming from the asset rotation to Ascopiave of our gas asset we sold to them. So the decreasing of the net financial position by [ EUR 510 million ], giving us the opportunity to decrease the leverage from 2.5x to 2.3x, which is very nice result, giving us the opportunity to look at the market in terms of financial stability and sustainability in a very good position.

Last but not least, the cash conversion rate, plus 65%, which gave us the opportunity to have this kind of items in the cash flows.

Okay. So guys, to conclude, despite, frankly speaking, a super positive semester, we decided to be prudent and so to confirm the upper end of our guidance. number are the number that you know so EUR 2.2 billion of EBITDA and EUR 0.7 billion of net ordinary income.

And to conclude in Slide #13 only to recap our strategy, our strategy is completely CapEx driven. So also this year, '25, double-digit CapEx increase, you remember 23% on track with targets. So looking our industrial plan also in '25, we did exactly the ordinary net income and the EBITDA that we announced in the 10 years industrial plan like usually.

As Luca said, very strong cash flow generation, more than 65% of cash conversion only in the first half. That means solid year-end net financial position that means able to invest more and more. So our strategy is on track. Thanks, and we are open to Q&A.

[Operator Instructions] We will now take our first question from Sarah Lester of Morgan Stanley.

I just have one question, please, but multiple parts and all related to the electricity distribution concession extension process. Wondering what the latest is on that? When is the next document expected? And what can we expect to see in that document? I just want to be really clear, please, what we can expect and when, given I believe today was one of the dates that had been previously discussed? And then just further to that, could you please remind us what fee, if any, is already included in your CapEx plan from last November?

Look in the distribution electricity concession, the law is inside our balance law -- national balance law last December. the topic is that we need ARERA, our authority to define some proposal to our ministry for the ecological transition to fix the elements of the evaluation of the CapEx that we need to have the new concession. And in this moment, the actual Board of ARERA expired the 8th of August. And we are waiting from the parliament the appointment of the new Board probably during August. And so we expect it to have some news in September because it's clear that the new Board will take some weeks to close busier.

But what is key for us is that the law is very clear. The period is very clear, 20 years. And so the only elements that we have to wait is exactly to understand which are the elements of evaluation of the CapEx plan that we have to present it to submit to have -- to open the discussion for the new concession. So there are not other topics. You know that also the topic of eventually concession fee is out of the RAB because the idea is to have a part of the concession fee one shot but inside the RAB. So it's not a cost for our companies. And this is coherent in my personal opinion with the fact that we had to invest a lot in and very quickly in electrical distribution to face the electrification. And we have -- it's impossible to wait 2030, that is the natural expiration time for the old concession. So no news. The only news is that we have to wait the new Board of ARERA to close the dossier.

And just quickly to follow up, do you assume some element of fee in your CapEx plan last November?

Well, the fee are not included yet in the CapEx plan, of course, also taking into consideration the fact that we don't have any rule for the estimation. So the number -- it would have been a tumble number. with the new plan, of course, we will adjust it accordingly. And if and when the rule of the game will be issued by ARERA and the Ministry of Economy.

Yes. But of course, also taking into consideration the financial sustainability we have demonstrated to have, I think that the amount of money we are talking about don't have any kind of impact which afraid us in any way.

Yes. But because you have to consider other elements in -- the total CapEx in the last 20 years, not only in Italy, but also in other countries in Europe in electrical grids was very low, in particular, because there was a lot of CapEx in gas network. In Italy, the total -- the investment in power grid arrived to 1980, let's say, and then for 30 years, only CapEx in gas network because the idea was to face the new energy needs with gas.

Now with the decarbonization, we have to come back to invest in power grid. But our industrial plan in January '21 increased a lot the CapEx for power grid. And if you look our historical power grid, we arrived already to triple the CapEx compared with the old period. And also in this moment in the new network bought from Enel immediately in January, February, March, we doubled the CapEx that Enel did in '24. And this is inside our CapEx plan. So frankly speaking, I imagine that our volumes of CapEx in the power grid is absolutely enough to open the discussion with the authority for the new concession because stand-alone, we decided to increase the CapEx.

We now take our next question from Francesco Sala of Banca Akros.

Three, if I may. The first one is hydroelectric generation. I wonder what you expect in terms of volumes for the second part of the year and what is embedded in your 2025 target?

The second one is on treatment. The performance here, both in Q1 and Q2 was particularly strong. I wonder whether you can shed some light on the trends. And secondly, if we will see in H2 the same growth as the one we saw in H1.

And finally, on, let's say, flexible generation, I wonder what you expect in terms of spark spreads in the next few months or at least as long as you have some visibility on this segment of the market?

Okay. For the first question about the volumes, looking at the hydro production, we are exactly in, let's say, in the average level of the last 10 years, so 4 terawatt hours. In winter, the snow was not so exciting, but it's raining. So there is a compensation. And until now, the production is absolutely on line with our expectation. So 4 terawatt hours. If you look at the thermal production, the reason for why we did more than last year are double. The first one is that there was exactly less hydro production. The second is that looking in Europe, there was a reduction of wind of more or less 15%, 20% depending on the areas. And so we saw less import from France probably because France exported in Germany to compensate the reduction of [ holic ] production in the north of Germany.

Of course, I don't know what can happen in the last month. So in our budget, let's say, there is a normal production for thermal for the next semester. Of course, it's possible to see some upside also in this case. We know that, let's say, if you have like A2A all the form of generation, every time you can go to goal because the total consumption in Italy is more or less the same. And so if you have thermo, hydraulic, sun and waste-to-energy plant, there is a natural hedging between the different sources of production.

Talking about the treatment, the price, you have seen in the first semester was 9% more better than in '24. And we absolutely expect it to maintain the same performance. The reason probably is that the ratio between demand and offer is completely unbalanced to the offer because there are 4 million of tons of waste that go to landfill in Italy.

And 2035 is coming in the EU community, we need to arrive to not more than 10% in landfill. And so our plants when have capacity are able to produce, let's say, a good price. The third one, Luca? Flex generation spark spread?

Yes. Actually, it has been partially answered because the fact that we can play with different technologies gave us the flexibility to stay in the market in a very good position. So taking advantage if other technology don't work in line with the previous year or the previous month. And what has been the result in the month of January, February with the production of thermal plants in which we produce much more volumes than expected. In terms of spark spread, we can stay on the market and see with the flexibility we have in the plan we manage when it would be the case to take advantage from the prices as well.

So this is the situation. The market is going to express still some spread low double digit, which is not bad. I remember to all of you that we are hedged by 70% of our production for the fixed production at 120, which give us a certain comfort also for the second part of the year. Having said that, we are quite comfortable about the generation performance for the second half.

And we'll now move on to our next question from Javier Suarez of Mediobanca.

Three questions from me as well. The first one is on the guidance. So if I'm not mistaken, the net income that of first half 2025 represents something like more than 60% of the full year target at the upper end of the range. So the question is, what is preventing the company from increasing that guidance that we have for 2025, i.e., which are the dynamics that you see in the second half 2025 that we should consider and that makes you to confirm guidance and not increasing that guidance? That would be the first question.

Then the second question is on the generation business. I think that you have said that the output that you're expecting for 2025 is 4 terawatt hour. I think in the previous conference call, you mentioned 4.1 terawatt hours. Just to confirm if you are reducing that hydro output guidance for the year or simply you are rounding that figure.

Also, I would like to know the level of contribution from the MSD market that you're expecting this year and the level of hedging that you have for 2025 and '26 as we speak.

And then the third and final question has to do with the hydroelectric concession renewal process. So the question is, if you can update us on that process? And if as part of that agreement, A2A and I guess the rest of the sector could allocate part of the capacity to the energy-intensive industry. What is -- if that is a possibility? And what is that discussion with the different administration? Any update on that would be very helpful.

Okay, Javier. For the first question, I was honest. I said that we prudently decided to maintain the guidance. So this is the answer. For the second, you are -- it's correct, 4.1, you remember very well. Yes, because 4.1 is exactly the average level from the last 10 years, and we imagine to maintain exactly this level. Then consider that our storage and you know very well, our storage of water in our basin is 0.5 terawatt hour. So you can understand that the regulation 0.1 more or less is very easy to do. So we want to arrive to the end of '25 with 4.1 and our full basin, and we imagine to be able to do. For the MSD contribution.

Yes. MSD contribution, we are expecting to stay in line with the previous year. Even though we are a couple of million above the previous year result in the first half, we are talking about a total amount in between EUR 95 million to EUR 100 million as it has been several times said by us, which is the target of the plan by now.

In terms of hedging, as I said, we are completely hedged for the second part of this year. 70% is exactly the target we want to have to stay in a comfortable situation. We also reached 40% for '26 at a price of EUR 113, which is, again, a very good position in which we are very comfortable.

Okay. For question number 4, is a little more complicated. You remember that we arrived to deal the so said fourth way because the regions can reassign the hydro concession through tenders, direct assignment, mixed society and now there is the discussion about the fourth way. The fourth way needs an agreement with Europe because you remember that inside the PNRR agreement, there is a topic of a tender for the hydro concession. It's very clear that no one want to do hydro tenders. And in the last month, there was an open discussion with -- inside in particular with the steel product, so Antonio [ Gzi ] and the other guys about the fact to have some hydro release able to reduce a little bit the cost of energy for this sector.

After some months of discussion, there is, in effect, an agreement consider that our company is -- for us, the impact is a proxy to 0 because the discussion is between the price of energy and the concession fee. So our discussion is if there is a hydro release, for example, the discussion is that 15% of energy sold with more or less EUR 70 per megawatt hours. It's clear that it is impossible to pay in this part of energy more or less EUR 24, EUR 25 per megawatt hours of concession fee. But in an agreement that seems to be able to go to target, region Lombardy decided that is possible, is possible to accept this hypothesis. And exactly last week, there was a meeting in regional Lombardy to find an agreement between regional producer of energy and consumers.

And the idea is to have this hypothesis of hydro release on top of the different solution to reassign the concession. So it's the same, let's say, if the region decided to do a tender or to assign through the fourth way. This is key and super important because the idea is not to produce an agreement that produce like effect, the fact that the fourth way is not the best way for the region. So it's very important that both tender or Fourth way for the region is the same. So the idea is to change an article of the [indiscernible], on top of the Fourth way in which every solution has embedded the hydro leasing. And so the effect is that the decision to do tender or to do direct assignment to the actual incumbent don't change anything with the money of the region, so to be clear. And also for us, the impact is really peanuts because for us, let's say, means to present a path, so a business plan with the current remuneration of our CapEx of our operation and maintenance. And so in this business plan, there are from one side, the price of selling energy from the other price, the cost of the concession fee and so, let's say, the sum is 100.

And we'll now take our next question from Roberto Letizia of Equita.

The first one is very quick. On the net income guidance, you actually specified that the guidance is net of the nonrecurring. But so far, we saw only positive actually one-off elements. So can you please just very briefly clarify what do you mean for the EUR 700 million, so the up of the range without considering the nonrecurring? Then...

If you can speak a little bit far from the mic because otherwise, we can...

Yes, I'll repeat it. I'll repeat it. So yes, you specified that the net income guidance in the top end of the range provided is actually excluding the one-off or the nonrecurring Yes, can you just please clarify what are we considering here because we saw the nonrecurring on EBITDA. So can you just very briefly clarify what does that mean?

Then the data center -- or actually, which elements are you actually referring to basically? The second question is on the data center. Very quickly, we were seeing the first project, which are actually pilot projects for that. Wondering if you can update on how fast this market is actually moving and beyond only pilot projects, when you actually think there may be something coming into your business, which is more consistent from a commercial point of view. So actually, how fast is actually this market moving?

Then if you can please highlight us which kind of additional offer, and I mean inorganic possible options that are materializing for you in the market, both in terms of clients, networks or eventually companies that may come in jump in to help the organic growth.

And very briefly, the last one, if you can start designing for us how 2026 is actually starting to look like beyond the forward sale that you mentioned before. So maybe the moving parts that you are seeing are materializing for next year as probably you'll update your strategy plan maybe you have, at least from a qualitative perspective, an idea of what 2026 is going to look like.

Okay. Again, the first question, yes, I confirm that we are talking about ordinary net income. Looking at the first half, the difference between ordinary and net income, including a special item. This is the situation in which we explained EUR 8 million related to adjustment we can consider not recurring, specifically, EUR 7 million related to the adjustment of the price for the acquisition of [ Technoa ], the plant in Croton we bought 3, 4 years ago. And there was a finalization of the open points, which gave us EUR 7 million of a plus and another EUR 1 million related to a minor transaction. So that has been the difference between net income and ordinary net income. Related to data center, maybe I switch to Renato, which can give you.

Probably to give an idea of the incredible acceleration in the data center business is enough to say that starting from the fact that seems that in Italy, all the data centers want to live near Milan. That means that in this moment, 60%, 70% of the demand for new data center are around Milan in Italy, let's say. Only in the power grid that we bought from Enel last year and only since January, we received a demand for new connection for 220 megawatts of new connection. That means to understand all what they need a city like Bergamo, so it's huge. And why they ask connection to the DSO and not to the DSO because in some cases, there are also data center bigger than 10 megawatt that is the sides typically in which there is a switch between DSO and TSO.

Because they ask to Terna to have a connection, let's say, 30 megawatts. Terna say, okay, it's possible, but you have to wait for 3, 4 years. For us is -- for them is impossible to wait because the market is now. And so they arrive to our DSO to do and say, okay, but it's possible to have 10 megawatt so I can start and then when we will arrive the higher connection with Terna, I can grow, let's say. And because the DSO, in particular, now that is inside 2A is absolutely quicker.

So my idea is that the market for the data center also in Italy will arrive in the next 2, 4 years, no longer also because if you look at other countries like Ireland and so on, the idea is that this is the moment for Milan, for Madrid, for other metropolitan areas that have to recover capacity against countries that for many reasons are more strong than us in data center. And it is an incredible opportunity for A2A because we have the grid, we have the generation. They need absolutely baseload. And the only way also in U.S., in every part of the world to have baseload power generation is gas generation. And you know our power gas generation, how strong is and how is able to give baseload connection. We have district heating and so we have possibility to increase the POE, so the sustainability of this machine and maybe also the capacity to help a path for permitting and so on. So I think that can become a business for us quickly.

About M&A, I'm sorry, but the answer is as usual. So we have a strong CapEx plan, and we are able to arrive more than EUR 3 billion of EBITDA with organic growth, but it's clear that with our flexibility, if some opportunity will arrive on our path, surely, we are able to look at it.

2026, please? That was my last question.

Well, I think that the only answer you can have now it is that it is in line with the business plan. So we already discussed several times and until we prepare the new budget and the new business plan, nothing changed.

We'll now take our next question from Alberto De Antonio of BNP Paribas.

I have two or three remaining questions. The first one will be regarding a report that published recently suggesting that you could have been involved in some kind of market manipulation and there could be a final decision of potential sanctions to arrive by March '26 at the latest. Maybe if you could elaborate what are the implications of this report? If you could quantify what will be your base case and worst-case scenario in terms of sanctions, if any? And also if this could trigger any potential revision on your [ Gaspark ] spread target that you have in your business plan.

And the second one will be regarding your balance sheet on the trade receivables past due. I've noticed that in the last few quarters, the amount has increased substantially, although in the last quarter has decreased. But could you explain us what has driven this increase? And what should we expect for future quarters? And if these trade receivables are specific of one business unit or are coming from all business units.

And finally, one final question regarding district heating. If I'm not wrong, a new regulation is expected for 2026. Could you elaborate where we are in terms of the discussions with ARERA. And what's the time line that we can expect for it and your expectations in terms of returns?

Okay. I think that we can talk about ARERA altogether. So question #1 and #3. About the first question, I think that it can be useful to divide the two elements arriving from ARERA in the last weeks. From one side, the new interpretation of the remit. The remit probably is a regulated framework defined in Europe in 2011 for the functioning of the energy market, in particular, of marginal price in the free market of energy. And every company that I know in Italy dispatch energy since 2011 in the same way. And this actual Board of ARERA was appointed 7 years ago for 7 years, never discussion about the way to dispatch energy was open.

So first of all, it's very strange that in the last 2 weeks of this Board, they open a discussion very complicated, let's say, because the discussion is an interpretation of a remit. And in particular, the discussion is if in the merger price is possible to introduce an opportunity cost that is the cost to have a little marginality in your thermal production. But for us, of course, is absolutely normal because if the interpretation correct was that you have to put your energy on the after the market without marginality for me, it's much better to maintain close the plant, of course.

So from one side, there is a discussion that is open to all the companies, the dispatch energy in Italy inside Electrica Futura-industria. Also because in this survey, ARERA individuated 25 companies that dispatch energy. And for example, there are not 25 companies that dispatch thermo energy in Italy that dispatch thermo energy, there are four or five, let's say. So is a survey open also to solar production, o production to all. So very high-level discussion. And I think that in the next month, with the new Board, Electrica Futura will face this topic to find a solution. And if you ask to me, I absolutely don't expect it to have effect in the way to dispatch energy for the next years.

In particular, the decision of ARERA to open not a sanction, let's say, but I don't know how it's possible to say, is a process to evaluate its sanction is related to March '22. And surely, you remember that Putin decided to attack Ukraine, the 24th of February of '22. And you remember what happened in March '22 with the highest volatility in energy in all the history of the world, the highest price that arrives to EUR 600, EUR 700, EUR 800 per megawatt hour. The newspaper that says to all the citizen don't use gas because I don't know if in October, we'll have gas or not. And our marginal call account arrived to a couple of billion of to be able to trade energy in the long period. So a situation in which, let's say, surely no one company stayed in this situation to try to gain EUR 1, EUR 2, EUR 3 per megawatt hours in the dispatch of money. So I don't know, frankly speaking, why ARERA decided to open this. There are 250 days, 250 days to conclude this process.

If you -- if your question is, is material or not the eventual sanction, the answer is not. is not material. So it's more a topic of principle to understand. And this is very important because it is a pilot, let's say, that is useful also to face the more general interpretation of ARERA for all the energy market. So I imagine that we and with Enel, with Edison, with all the friends in Futura will be able to face this discussion with the new authority because this authority expired the 8th of August. This is the reason for why also for district heating new regulation, we have to wait because this authority decided not to move forward in the discussion of district heating regulation because of course, and is correct to leave to the new authority the decision of what to do.

Regarding trade receivable and the performance we are going to expect until the end of the year. The trend, generally speaking, is that trade receivable will increase at the end of the year accordingly to the seasonality of the market. These are more related to the supply business unit, which is the business unit on which we have the most important part of the total receivable in the balance sheet.

But as we have lost safeguarded the market for the reason I explained before, the positive effect on the other side is that we will have a decrease in trade receivable related to the part of this segment, but also the fact that some of those customers are reassured by a mechanism with the regulator, which guarantees us to receive a certain amount of money for those customers are not disconnectable. And according to that, we will receive something like EUR 60 million cash, which contribute to give us a better cash inflows for the future for the end year.

Maybe a follow-up on this last answer. This mean that the EUR 60 million is like a recurring impact? Or it's just like compensation one-off?

It is a one-off. It is related to the fact that we -- let's say, for this -- it would have been recurring in the case we gained the safeguard market again and again. But in our case, as we lost the tender for the reason I explained that the marginality was pretty low, should be considered as a one-off.

And therefore, and apologies for following up, of those EUR 700 million of trade receivables past due, how much are related to this springboard of the safeguard that have to be compensated by just EUR 60 million?

More or less EUR 300 million, but we can be more precise later on, if you want. But this is the magnitude, more or less the 50% of the total amount of the trade receivable you see in the balance sheet. The other ones affected by the seasonality, of course. So you have this amount, which at the end of the year is a picture in which you are at the peak at the seasonality. And during the year, you have the cash in accordingly.

We'll now move on to our next question from Davide Candela of Intesa Sanpaolo.

I also have three, if I may. The first one is still on data centers more related to ways commercial purchases. So I was wondering if your strategy will be participating in the connection for electricity networks and maybe proposing yourselves as a supplier or if you are thinking about potentially involving and putting some equity in some projects in order to accelerate the execution and maybe the commissioning and also have some, I don't know, some kind of a framework agreement that is benefiting you. Just wondering if you can update on that.

Secondly, on the energy supply, looking at the customer base, it seems that among the biggest one -- the biggest operators in the market, at least looking at the utility side, you are one of the few that did not lost some customers in the first half of the year. And so just wondering if you can update us on the competition, how you see the churn rates and if there are some newcomers that are really treating in the market? Or is this just a temporary thing?

And last on a clarification on the guidance with regards to the net debt. If I take the upper end of the EBITDA, 2.5x, that is the ratio you are seeing for debt to EBITDA, I come to kind of a close EUR 5.5 billion. The consensus is like more than EUR 200 million higher currently. So I was wondering what is the consensus not seeing or if it is just some roundings or if it is some structural working capital that is fully recovered and will not represent by the year end?

Okay. For the first question about data center, we are discussing exactly in this week, the new strategy. but we want to introduce it inside the update of the industrial plan. Surely, the idea is to be a partner because we know that we can be completely key for a data center developer because we are able to give the connection, but it is also to be clear, an incredible opportunity for the manager power grid because are not activities on RAB on tariff, but are commercial activities, of course. And the cost of the connection for 10 megawatts or 200 megawatt is absolutely relevant.

From the other side, without power -- baseload power supply is impossible to -- with redundancy is impossible to imagine to have a data center. And from the other side, the data center compete one each other and the sustainability, so the KPI, PE of the data center is key to be -- to face the appetite of the final customer. So in a situation like this, you can imagine easily how many developer of data center are knocking to our door to open discussion. We are able to put also equity and can be an interesting opportunity because seems super interesting like return of capital. And for us it's also interesting the fact that the area in which is probable to see really development of data center is exactly our areas. That means more or less the triangle with Milan Berg. Remember that data center needs also backup from big problem that is floody, earthquake and so on. And so there is a need of backup with plants that maintain, let's say, 50 kilometers one from the other.

And this is the reason for why we are analyzing also a triangle between different cities in Lombardy, near Milan, but also cities like Bergamo or Brescia or [indiscernible] and others, so all in our territories are surely eligible to be back up from Milan. In this moment, the huge development is near Milan. Milan needs back up out of the province of Milan. And this is the other reason for why you can understand how it's interesting to have a -- to like a partner. If you consider, for example, that our waste-to-energy plant, for example, the waste-to-energy plant in Brescia is able to source 60, 70 megawatts of power, continuous power, baseload 50% of energy green because it's a part of the waste that is in carbon neutrality, wood and so on.

Also from this kind of plant, it's very interesting to be able to be sourced if you have data center. So we'll define clearly our strategy in the next month, but absolutely is possible also to see a way like investors in this sector. customer base is clear our capacity to compete. Ever in the last year, our churn was much better than the average churn declarated from ARERA for all the other competitors. And when the competition is higher, the level of quality that you give to your customers is directly linked to the churn and the result is the possibility to grow or not with your customer base. So in this moment, we are very happy because our strategy is working well. The cost to acquire increased a little bit because we decided to also, let's say, so not only digital of our direct channel, but also store very developed in the Peninsula.

In this moment, we have customers in 99% of the municipality in Italy. And so the other reason for why we are growing is that our brand, our awareness is very high. And when -- probably in another call, I said that our awareness in this moment is 67%. Our market share is 6%, 7%. And the differences between market share and awareness is the reason for why there is a funnel that helps the growth of our customer base. Related to the ratio of net financial position EBITDA yes, I can say that it will improve compared to the, let's say, level to be below 2.7, 2.6. And we are going to project 2.4, 2.5 at the end of the year. This is due to the nice cash flow we are going to experience, as you have seen, but also for the rest of the year.

So thank you, everyone, for participating to the conference call. Thank you for your question. If you have any additional deep dive requests, please contact the IR department. And in the meantime, I wish you a very pleasant and relaxing summer break. Thank you, everyone.

Thanks. Bye.

Bye-bye.