A2A Spa Ord

Good afternoon, ladies and gentlemen. Welcome to A2A's first half 2026 Consolidated Results. At this time, all participants are in a listen-only mode. However, if you wish to ask a question, please dial pound key then five on your telephone keypad to enter the queue. Please be advised that today's conference is being recorded. Now, I would like to hand the conference over to our host, Marco Porro, Head of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us. Today, our CEO, Renato Mazzoncini, and our CEO, CFO, Luca Moroni, will present our first of 2026 results, which confirm the group's operational and financial strength and the progress of our strategic investment. We will be happy to take your question at the end of the presentation. Let me leave the floor to Renato.

Okay, thank you Marco and good afternoon everyone and thank you also from my side for you for joining us. So reacting effectively to change delivers a result today, challenging change over time is what builds sustainable results tomorrow. It is what distinguishes short-term responses from long-term value creation. and I think this perfectly encapsulates the first half of 26482A continuing to deliver today while building the foundations for tomorrow's growth and to illustrate this let me start with some of the key achievements delivered during the first half of 26 across both our two pillars of energy transition and the circular economy. On renewables, we further scaled our REST platform, adding 35 megawatts of wind capacity and bringing its total capacity in wind from resources to over 300 megawatts. We also continued to develop our PPA platform. This is really key for me. with agreements signed with Sosteneo and Politecnico of Milano, so large customers, as well as the launch of our first A2A Open PPA designed to support the small business enterprises through long-term contracts. Through these initiatives, A2A promotes the development of renewables by making green energy more widespread, more accessible, and less exposed to market dynamics. This is also a concrete example of how PTAs enable the integration of renewable sources into industrial consumption, promoting long-term procurement models that provide greater stability and sustainability. And today, really, H2A is the only energy company that try to change this paradigm of renewable with products for every kind of customers long term. So the PPA mass market, 120,000 contracts signed, more or less 260 gigawatt hours sold with this kind of PPAs. Of course, PPA classical B2B. and now also this small business enterprise that is a kind of customer super-interesting but without standard PPAs can't really arrive to a change of paradigm of renewables. also in this case the duration of the contract is 10 years or 20 years depending on the negotiation and so we are really very happy to have in our market let's say a product PPA for every kind of customers At the same time, we increased our role as a strategic infrastructure operator. Some examples of the 250 construction sites that we have in this moment active. For example, Montfalcone construction site is running, you know, is a CGT super large 870 megawatt of thermal capacity. is running at full capacity supported by extended shift partner with commercial operation confirmed for next year. Our network capacity increased by 5% reaching 9,300 megavolt ampere and two new wastewater treatment plants had the treatment capacity for the equivalent of 30,000 inhabitants. In this context, grid capacity is not just a technical metric, you know, it is what makes the transition executable. By reinforcing our networks, we create the condition to connect more renewable energy, support new electric uses, so the demand, and ensure continuity and quality services for the community that we serve. As water resources, come under increasing pressure also in this month in Italy, wastewater treatment plays a key role in protecting water quality and increase the resilience of integrated water cycles. But delivering today's results is only a part of the story. At the same time, we are advancing a number of strategic initiatives that underpin long-term value creation. So let's start at slide number three, talking about our data center platform. So let me now turn in this, in one of the areas where our industrial approach can unlock a significant future potential, exactly the data center. Today the sector is benefiting, you know, very well from a number of favorable structural trends. Growing attention to data sovereignty and digital infrastructure resilience is driving demand for domestic and European data center capacity, making digital infrastructure an increasingly strategic asset. At the same time, Lombardy, our Korea area, an area which A2A is incumbent for both generation and network, offers a particularly supportive environment for deployment and development, promoting brownfield redevelopment and heat recovery solutions to areas that are fully aligned with A2A's industrial footprint and long-term strategy. Against this backdrop, we believe A2A is a unique position to capture this opportunity. and our approach is based on energy efficient power shell solution developed on 8-way owned sites near our electrical production generation. We will connect them behind the meter leveraging our generation assets. This enables us to offer faster time to market, lower energy cost, and reduce environmental footprint. And so let's say also looking the NIMBY syndrome, this is a key point. On our data center platform, we are well on track with our strategic roadmap. You remember the 12th of November with the update of industrial plan we launched our platform. Where we are now? Two sides, La Marmora in Brescia is designed for around 20 megawatts of IT capacity, so 30 megawatts, electrical megawatt, serving IE workloads and co-location services with a behind-the-meter connection to our waste-to-energy plants. Our waste-to-energy plant in Brescia is around 70-80 MW, so it is ready to feed this new data center. And proximity to our DCTT network, that means to have a data center with a PUE super low and a WE approximately to zero. Cassano, Cassano d'Adda, province of Milano. is also moving forward with preliminary design already completed beside our site once again a site in our property for at least 80 megawatt IAT at least is designed to support the AE workloads with potential for modular densification. It will benefit from a behind the meter connection to the Alicent CGT plant, once again more or less 800 megawatt of CGT plant and from the availability of existing gas picker as backup power, 110 megawatt of picker that can work as backup power, providing potential advantages in term of permitting timelines that means no environment impact assessment required. So in this case the time to market for this plant is really incredible because we have a connection in high voltage, we have a generation to feed the base load the plant and we have a backup and we don't need the environment impact assessment. Okay, in slide four we underline our strategic partnership with Equinix. Because as our data center platform continues to progress, we are of course also advancing our role as an energy partner. And our partnership with Equinix is a clear example of this. We are near Milano, once again, Settimo Milanese, and we will transform the heat produced by servers hosted at Equinix campus in Settimo Milanese into the energy resources for local communities. The model is straightforward and effective. It generates as a byproduct of data center workloads is captured by Equinix and transported to 8-way energy center where 8-way upgrades with 72 megawatts of large-scale heat pumps, because the temperature coming out from the data center is not enough, backed by water storage, 6000 cubic meters of thermal storage. The heat is then delivered into the Milan district heating networks. To understand the dimension of only one data center like this, the expected contribution is incredible, up to 225 GWh of recovered thermal energy per year. enabling further network expansion and increasing decarbonized heat distributed in Milano around 20%, so more 20% of distributed heating in Milano. That is also, let's say, the only way really to decarbonize Milano because it's not easy with the typology of building that we have in Milano to substitute the thermal plant with heat pumps in every kind of building. It is a pioneering partnership with Equinix that illustrates how strategical collaboration can pave the way for future opportunity. Looking at slide number five, let me now turn off our first half results. These results, despite the different trends across our businesses, highlight the value of A2A's diversified industrial platform, enabling us to mitigate external pressure while capturing opportunities across our portfolio. The BDA remained broadly stable at 1.2 billion, despite higher concession fees for Hydro. and less favorable energy price environment. Excluding this effect, group BDA would have a growth by around 2% year-on-year. This was supported by the natural edge in hydro generation, in particular in this case between Northern and Southern Italy, and by continued BDA growing electricity distribution driven by ongoing investment, because in this alpha, the production The relative production in the southern Italy hydro was much much higher than the average level of the last year. In the north we had a reduction due to less snow in the winter in the mountain. So strong financial discipline with net financial position to a BDA ratio at 2.6 in line with our target supported the resilience results and continuous strategic evolution. So look at slide number six. So to our investment program in the first half, we continue to execute on our strategic roadmap with CAPEX reaching in this alpha 718 million up to 5% year-on-year. This was mainly driven by the ramp up of investment at the Monfalcone CET expected to be completed next year with an EBDA contribution of 120 million once fully operational. So imagine the second alpha of 27. The development of New Cortelona Waste to Energy Plant, province of Pavia, Lombardy, expected to be commissioned in 2028 with a full run rate BDA of 40 million and a continued investment in electricity distribution and regulated assets and I want to underline that we reach 4 billion of RAB, considering the RAB coming from power grid, the most important, gas grid, and water cycles. Development capex increased by 17%, confirming the progress of the projects that will drive our future growth. Importantly, 59% of our future FIT investment are aligned with the EU taxonomy, confirming the strong sustainability profile of our growth plan. With that, let me turn to Luca for a more detailed analysis of our results. Please, Luca.

Thanks, Renato. Good afternoon, everyone. As Renato just highlighted, our first half results once again demonstrate the value of A2A diversified and integrated business model. The slide shows how the strength of our portfolio allows us to balance different market dynamics, to seize opportunities and mitigate headwinds. As a result, we delivered an EBITDA of $1,181,000,000, broadly in line with the last year. This reflects three main factors. Higher solar and wind energy production, the ability to capture trading opportunities and strong energy management performances, solid contribution from our regulated business. mainly electricity distribution and resilience in the market business despite the challenge competitive scenarios albeit mitigated by the impact from higher hydroelectric concession fees and lower our production the lower waste contribution and the non-organic reduction in gas distribution now i will unpack our result in more detail starting

with Generation and Trading, where I walk you through the main driver and our performance.

In slide eight, Generation and Trading, increased wind and solar production and a strong performance in energy management helped offset the impact of our concession fees. EBITDA EBITDA was 394 million, a decrease of 26 million compared to the first half of 25. Starting with renewables, we delivered high wind and solar production. However, it was partly offset by two factors, higher underrated concession fees, which had a 37 million impact, including around 25 million related to prior years, and lower hydroelectric production. On hydro production, there is also a positive point worth highlighting. Lower water availability in the northern Italy, particularly in May and June, was partially offset by better hydrological conditions in Calabria. This once again shows the value of our diversified generation portfolio and its ability to reduce local volatility. Moving to flexibility, a good performance in trading and energy management confirmed our ability to capture market opportunities. To sum up, our operational performance remains solid with our production volumes and effective trading execution. while higher concession fees and weaker either condition represented the headwind during the semester. Let me now move to market. Looking at the market segment, the first semester confirmed the persistence of our commercial performance. EBITDA was 232 million. with an increase of 3 million compared to the first half of 2025. Performance was primarily driven by our electricity volumes, particularly in the free market segment. At the same time, unit margins were lower than last year, reflecting a more competitive market environment. While competition remained high, we have seen progressive reduction in churn rates

over the last few months, in particular in June-July.

Overall, the business delivered an hour-solid set of results, with volume growth offsetting margin pressures. Let me now turn to performance of the circular economy. Adjusted EBITDA was 293 million, a decrease of 29 million compared with the first half of 2025. The decline was mainly driven by temporary factor in waste, lower availability of Parona waste to energy and other treatment plants due to maintenance activities. New ACERA service contract signed in February 2025 Higher fuel cost in collection. On the positive side, treatment prices showed a slight increase, while the integrated water cycle benefited from higher allowed revenues. In district heating, performances were lower year-on-year, mainly due to the lower volumes and reduced contribution from wide certificates. Overall, the software results reflect temporary operational factors, primarily related to plant maintenance in waste. Excluding these effects, the underlying performance of the business remains broadly robust, with a support from an integrated water cycle partially offsetting the pressure on waste.

Then let me turn to

Smart Infrastructure. In Smart Infrastructure, the overall performance reflects growth in unload revenues that more than offset the negative perimeter affecting gas distribution. EBITDA of this business unit was 285 million, an increase of 3% compared to the first half of 2025. In Electricity Network, EBITDA benefited from higher unload revenues driven by the new ROF tariff methodology, the regulatory lag alignment, and the continued growth of RAB driven by CAPEX deployment. In gas network, we saw a negative year-on-year contribution, mainly due to the disposal of gas distribution assets completed in July 2025 and the absence of non-recurring OPEX recognition that have benefited the first alpha Okay, we have unpacked the results for each business unit. I'd like to conclude by illustrating the combined contribution to our EBITDA mix, group net profit, and cash flow. So, slide 12, starting from EBITDA of 1,181 million, DNA amounted to almost 500 million up 21 million versus last year mainly reflecting the continued deployed deployment of carpets provisions were 41 million slightly higher than last year mainly due to our result in the market business and financial expenses stood at 87 million broadly in line with last year despite Ongoing market volatility, the cost of debt remains stable at 2.7%. Adjusted taxes amount to 165 million, 18 million lower year-on-year. The tax rate stood at 29.5%, excluding the impact of the ERAP increase introduced by energy decree, which has been accounted for as a special item. As a result, adjusted group net profit came in at 374 million compared with 419 million in the first half of 25. In the first half, we continue to deliver solid returns with a return on investment and return on equity around 9% and 11% respectively, well aligned with our targets. Let me move to cash flows. In the first half of 2025, the group recorded negative change in net financial position of 312 million euro. As of June 30, our net financial position stood at 5 billion.8 with a leverage duration of 2.6 times, which confirmed the overall stability of our financial profile. and remain fully aligned with our capital structure target. Looking at the cash generation, we deliver an operating cash flows of 749 million euro, fully supporting the financing of organic growth during the period. So let me briefly walk through the main drivers, starting with the networking capital, the variation, of minus 287 million euro was mainly driven by two one-off events. The first was the reduction in payment terms to XEA following the 2026 energy decree, the decreto bollette. And the second was the payment of the past use state concession fees for hydroelectric concessions. Moving below operating cash flows, we paid 145 million euro of taxes, 76, and net financial expenses, 69. After accounting for 718 million of capex, the operating cash flow before dividends amounted to 31 million euro. Following the dividend payments, net free cash flows stood at 295 minus 295. The change in the consolidation perimeter had a negative impact of 2 million, mainly driven by 27 million related to M&A, partially offset by the 25 million price adjustment related to the partial disposal of our gas asset to Ascopiave completed in 2025. Finally, after Also, having taken into account the 15 million spent on our share buyback program, the overall change in net financial position for the period amounted to minus 312. Looking ahead, we remain confident that the strength and the diversification of our integrated business will continue to be a key competitive advantage. It provides the flexibility needed to navigate changing market conditions. It reduces our exposure to market volatility. It bolsters the stability of our cash flows and net financial position. So now I hand back to Renato for the final part of the presentation.

OK, thank you. Thank you, Luca. And our guidance is confirmed. I am really confident to confirm our guidance for 26 with an adjusted VDA between $2,210 and $2,250 billion and adjusted net profit between $0.63 and $0.66 billion reflecting the robustness and visibility of our business mix. The resilience of our diversified business portfolio and our ability to capture opportunities leave us really fully confident in achieving these targets. And so let me conclude by bringing together all these elements that we have discussed. Our strategy aims to deliver today while continually building tomorrow's growth. It is a strategy built on discipline execution, industrial excellence, and future fit growth. So, discipline execution underpins our ability to deliver our commitments with clear priorities and rigorous capital allocation. and we are on target. Industrial excellence is rooted in the strength of our integrated portfolio across energy, environment and infrastructure and we are on track. And future feed growth comes from investing in platforms that respond to long-term structural trends from decarbonization and electrification to digitalization and we are on trend. In short, this is an architecture built to last, resilient, integrated, and designed to convert opportunities into sustainable growth. So thank you very much for your attention, and now let's open the Q&A session.

If you wish to ask a question, please dial pound key, then five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key, then six on your telephone keypad. The first question comes from the line of Javier Suarez Hernandez of Mediobanca. Please go ahead.

Hi, everyone, and thank you for the presentation. I have several. The first one is on the generation business. There are probably two different dynamics. One is higher electricity prices and probably higher contribution from ancillary service activity positively impacting your activity. So I just wanted to have latest data on forward selling for electricity in 2026 and 2027. and with this upward pressure on electricity prices may be impacting your business. On the contrary, probably hydro conditions during the second quarter has been lower than versus previous year. So which is your expectation on the company production with hydroelectric facilities by the year end? and how that assumptions compare with your assumption in the recently presented business plan. That would be the first question. The second question is more strategically. It's on the interest on renewable energy. So can you help us to understand your latest views on developing new renewable energies in Italy, the value for the group, and the relative preference for brown-filled assets versus green-filled assets, and also latest views on new battery systems? and the third question is if you have any comment on the consultation document open by ARERA on ROS implementation for gas distribution in Italy from 2028.

Thank you. Okay Xavier, good afternoon.

Talking about generation, consider and you know very well that We edge our production. So for 26 more or less is all edged. Not all because you know with a flexibility exactly in the hydro production we maintain a margin to be able to not to arrive in a situation of over edging But the prices were fixed months ago. And also for 2027, considering that the scenario in this moment seems high, but you know, the volatility is super high, so it's enough that as probably all we hope tomorrow between Trump and Iran may try to find A solution and the scenario prices come back normal, let's say. And so we have 70% of the production, 27, all covered with a price higher than 100 euros per megawatt. So it's fine, but it's on budget, let's say. and talking about the hydro condition in this moment 488 in this first half worked super well the south consider that in mars as probably where i said in the last in the last call we did all the production of 25 and for this reason in this moment our forecast is around 3.9 terawatt hours compared with an average of 4.1 so yes it is a little reduction but absolutely not really material. Talking about renewable I think that absolutely we need in Italy and in Europe to increase the renewable production because it's the only way to come out from this incredible situation of external dependencies, in particular from gas, petrol, and so on. And for a company like A2A, let's say, works well both brownfield and greenfield. Overall in Italy, of course, we need new renewable because that means also repowering. For example, for wind, repowering is surely the key element to increase the total production. And so we are absolutely committed in our plan. You know, there are 3.7 and a billion of investment for another three gigawatts of renewable production in the next year. And our pipeline is solid, is interesting, and is well balanced between the sun and wind. Talking about battery is a good question. I think that the business of battery can work inside Max Tender. because merchant is really too difficult to imagine to develop this business. The next tender is in November, as you know. We are working to participate in that. You'll see in which way, in which configuration. But A2A, like other large energy company, has some plans, some sites, already connected with high-voltage power grid that is key to develop large-scale storage plant, battery plant. And so we think to be able to participate to the next standard with interesting proposition.

Okay.

Yeah, maybe the last question was on the ARERA document of consultation, the gas distribution. I think you are referring to the introduction of the Roth mechanism also on gas, which, frankly speaking, we think not affecting so much our network. I remember that we manage Today only Milan network and we already did the tender. So it is something that will affect player, bigger player than us with point of delivery higher than 300,000. So it would not have any impact really on us.

The next question comes from the line of Emanuele Occhioni of Kepler. Please go ahead and ask your question.

Hello, can you hear me? Yeah.

Good. Thank you for taking my questions. The first one is on the guidance, about the numbers, the figures, what are the moving parts expected in H2. We know that, for example, apart from the usual flexibility in the aging volumes, depending on the weather, depending on the water availability and the next weather, you are not including the potential positive effect for power prices. So what are the moving parts in general by business unit in waste that is in a recovering waste expected or higher pressure in energy supply in other business units. This is the first more qualitative question on H2 outlook. The second is on the ETS reform, the EU ETS reform. which came out better than expected or not so bad than feared by investors so what is your comment and opinion on these and the third one is on the market supply in Q1 you were able to increase the by one percent but in any case was still an increase a small increase but an increase in the free market customer base while according to the H1 data there is a minus so you lost free customer base in Q2 so what are the current dynamics for you and this turn down compared with VQ1 in Q2.

Thank you.

Okay, Luca start, you will be part of the guidance.

Well, I will give you an answer on guidance and maybe some about market supply. So on guidance, we are pretty comfortable about the guidance, so we confirm it with some positive expectation on generation and trading business unit. Having also considered the negative impact related to hydro concession fees with an impact for the total year of more than 50 million euro. So we are able to offset it and to stay in line with the result of the last year. Market, have you seen that it has been performing very well with strong resiliency on the marginality even though they are slightly below last year but with an increase on the volume sold. The churn rate is going to improve in the next month with an expectation to stay below the end of the last year at the end of 2026 and with as a consequence with the opportunity to revert somehow the number of acquisition and the total customer in particular in electricity market in the free market. So we have positive expectation also in term of marginality to stay slightly below or near the level of 2025. Smart infrastructure, very good, very positive. The fact that the ROS mechanism of the tariff have given us quite good results and opportunities for the first semester and also for the second one. The negative effect on the gas distribution, so all in all we have an opportunity to end the year higher than the last one. Circular economy, it is the business which is more suffering for the maintenance activities of the first part of the year. with a shape of recovery in the second half and ending in line with 2025. So all in all, this is what let us comfortable on the ending of 2026 results.

Talking about ETS, the reform in this moment presented by the Commission is better than our expectation for a couple of things. The first is that talking about the proposal of change, the merit order of the plants working on ETS, the answer from the Commission was absolutely clear, so not touched. ETS and what we need to really give to renewable the strong to win against the other sources. The second on the opposite side is because one of the discussion was about the application of ETS on the waste to energy plant. was under discussion and in this moment the decision was to shift this hypothesis from 28 to 31 or later because frankly speaking in this moment there are no technology worldwide to better than the waste to energy plant to face the part of waste not recovered the new material. And so what we see is NETS that try to be more useful for Europe, but that don't change the strategic or rational that brought ATS to be invented some years ago. Talking about supply, you know, our strong commitment is on free market electricity. and also in the second quarter, so in the second, in this first half, A2A Energy, pay attention, A2A Energy growth 0.2, 0.3%. The little differences in this number is linked to our second brand, in particular, Mutti Utility, IB in Brianza, 5A Cinque in the Northern of Lombardy. But as some brands that are not really able to stay with the stronger competition in terms of marketing, advertising, and so on. And we don't want to push second brand because it is absolutely inefficient. So frankly speaking, we are happy that with the situation of a churn rate so high like in the first half, the capacity of acquisition of 2A energy remains high. In June and July and August, the churn rate falls down. and so we expected to be able in this year to grow also with our electrical customer base.

Thank you.

The next question comes from the line of Roberto Letizia of Equita. Please go ahead and ask your question.

Yes, thank you for taking my questions. I would like to go back briefly to a couple of questions already answered, but if you can tell us exactly how much is the coverage on your production in 27 and eventually in 28, if you did any, for even the following year. An additional clarification, because I had the same question, but partially, You skip it, so you want to recover it. So I got the sense of you being interested in the rest, the amount of gigawatts you want to do and the pipeline which supports both solar and wind. Just wondering how much of that can be looked into brownfield deals rather than greenfield, considering that the market is very open this morning and I'll announce Another acquisition of 85 megawatts in the country. We saw additional M&A deed for power generator trying to increase as rapid as possible their rest present. So wondering if any change in the strategy may occur from you by leading you in having a higher exposure of the growth through brownfield acquisition as there is a market and an opportunity. If you can give us the most recent trend in retail long-term PPA just wondering if you keep going to growth on those kind of contracts and then just wondering if there is any potential impact from the heat waves that we saw one month ago and also in this day there was a fire in Distribution Connection Center in Milan just this morning and a lot of accidents during the heatwaves. Just wondering if we have to consider any potential negative impact from extraordinary maintenance to the distribution plants that follow the heatwaves. Thanks a lot.

Okay, starting from the edging, the coverage is 27. and 70% the price is higher than 100. So it's good, it's online with our budget, with our scenario. And for 28, no, it's peanuts in this moment, but it's difficult to look forward 18 months, let's say. Talking about renewable, consider that our strategy since the first moment was a mix between brownfield, if for you brownfield is M&A, let's say, and greenfield. You remember very well that we bought the pipeline from Octopus Solar, from Ardian Wind, We are working on the powering of some of the portfolio wind from Ardian. And from the other side, pipeline and new greenfield project, for example, in Friuli Venezia Giulia in the north, 160 Megawatt of solar plant, super interesting for the position and the strong demand that we have in the north of Italy. So if you look our 700 megawatt today is a mix of a strategy and I think that this is a good solution also for the future probably. will maintain a solution like this because if our opportunity is correct to look and if there is the opportunity also to buy something but from the other side it's fundamental to have a pipeline and in this moment we have a strong pipeline because to be able to deliver our industrial plan of course We don't include into account the M&A. So our pipeline must be enough to deliver our industrial plan. Then M&A can be an opportunity to increase the return of investment if there are opportunity against Our pipeline, our greenfield development. So I think that this is the situation. Looking Italy, once again, we need to increase the number of solar panels and wind capacity. So it's clear that there's not enough M&A in which you pass an asset from one end to the other. Talking about retail, yes, we are absolutely on track with the PPA mass market. Consider that it is interesting because the price, I remember that in this moment the price of a PPA, let's say with a normal profile, B2B can be around 80, 85 euros for megawatt hours. Mass market is around 105 and is typical to have more marginality from B2C than from B2B. The number of contracts in this moment is more than 120,000 and the number of gigawatt hours that we are located with PPA's mass market is likely higher than the number of gigawatt hours allocated with B2B. In particular, if I remember, is 263 gigawatt hours of total allocation for energy for PPAs mass market. The reason why we decided to put on the market also PPA for small businesses is that they think absolutely that the change of paradigm of renewable is exactly the capacity to fix the price for long term and we absolutely we must build products for every kind of customers. and we absolutely know that for a large company, imagine still plant and so on, is normal to deal with our energy management to find the correct PPA, the correct profile, the correct price. But for a retailer and householder, also for a company A small business without expertise, know-how in energy management or you are able to put on the market a standard PPAs or is impossible to sign a contract for 10 years, 20 years, 15 years and so on. And so I think that really we'll arrive to have one million of customers with PPAs and MassMarket or small business. And talking about the heat, yes, in this moment the heat is crucial, but if you look at the performance of our power grid in Milano compared with the last year is much better. The number of Blackout is absolutely minimum and all the indicators for KPI that underline the performance are good. And absolutely, there are no extraordinary maintenance that we have to do. Simply, we have to continue to invest in new secondary cabin, new primary substation. New cable and so on, but online with our planned plan. And we are absolutely happy to say that also in situation in which there are 40,000 degrees, that is incredible, we are able to face the situation with A good level of satisfaction for customers. The only problem that we had, frankly speaking, was in 280, so in the company that we built last year, you know, from which company, and in 280 we have not the track records of CAPEX that we did in 180 in the last years.

Thanks a lot.

The next question comes from the line of Francesco Sala of Banca Acros. Please go ahead and ask your question.

Good afternoon. Thank you for taking my questions. The first one is on the treatment business. When should we expect the treatment business to go back to normal, whether it's going to be something already in a full quarter or, let's say, towards the end of the 2026. The second one is on the single national prize.

Francesco, sorry, can you come back because I didn't understand the question, you know, the quality of your audio is not good.

Sorry, the first question is on the treatment business. There have been some issues in the first half. I was just wondering when should we expect the business to be back to normal, whether it's a third quarter thing or more towards the end of the year. The second question is on the single national price. There have been discussions for a while about the end of the single national price on the demand side. if you can share with us your initial thoughts on the consequences you think there are going to be for you and the market and the third one if there are updates if any on the extension of hydro concession and also electricity distribution concessions thank you okay coming from starting from

Electricity and Hydro. For electricity, the last activity is in charge of the minister to produce the final decree. And I talked with the manager in the ministry some weeks ago. is on production, let's say the decree. You know, the tender, the historical date for the tender was 2030. And simply the law says that five years in advance the government to start working for the tender. This is the reason why in December 25, 24, 25 in the balance law included the law to change the needs of tender. Only to say, Francesco, that probably is not the priority number one in this moment talking about 2030. But we are confident to see in September the text of the decree coming in discussion to be closed this year. Talking about the hydro concession is interesting because the reason why we didn't Solving the problem of hydrocontraction till now is mainly due to the PNRR. Because you remember that inside the PNRR agreement there was in the competition law the commitment for the government to put a tender on hydro. So my personal position is that we see something different after August simply because in August we land finally and totally the PNRR with the tenth part of the money arriving from Europe. If the question is, there is a discussion about tender, frankly speaking, in this moment, no. The only super little, super peanuts, homeopathic tender in Lombardy, in one of our plants, in Vallecamonica, was stopped by the Court, the Civil Court of Prussia, because Region Lombardy didn't do correctly the procedure to put on the market this concession. So I think that also this dossier after August can come back on the correct table. Your question is about the single national price. The question is if we think that it's possible for a customer to have a different price, which is your question. Yes, exactly. Because, you know, in this moment, the price is zone by zone for the producer. If you ask if I think that it's possible to have a different national price for final customers I think that is impossible because really if in a country like Italy in which the discussion about the price of electricity you divided in seven different parts of the country the price and The different price is mainly linked to the power grid, the national power grid by Terna. So let's say that is not enough strong to produce a unique market, you can imagine what can happen because, no? It is not a structural problem because it's normal to produce more sun in the south or wind in Sicily only in southern even and more hydro production in Lombardy, Piedmont or Zolomites. But we are a country in which these different energy capacity of a single region can absolutely remain inside the unique market if the power grid is enough stronger to connect completely the country, exactly like in the plan, CAPEX plan of TERNA. So I think really that is impossible to, politically impossible to have something of different from the single pool. In the treatment business, the question is the performance. In the first half, in particular, we had a problem with a plant, a waste-to-energy plant in Pavia, Parona. It's not an economical problem because it's well covered with an insurance. but surely in the first half we had some problem of production of some plants that we forecast to recover in the second half so in particular consider that one of the reason why we confirmed with confidence the guidance is because we are looking also in the treatment business a situation normalized in the second half.

Thank you.

The next question comes from the line of Davide Candela of Intesa San Paolo. Please go ahead and ask your question.

Hi, good afternoon, gentlemen. Thank you for taking my question and for the presentation. I have a few regarding the current energy scenario and so the curves and the dynamics of energy prices. You spoke briefly about generation, but I was wondering if you can provide a bit broader view also on other businesses, like, for example, energy supply. If this current scenario is changing your approach commercially and there are some emergencies with regards to your potential sourcing costs from next year and so on, if you can provide a picture on that. And secondly, on waste, I was wondering if you can or maybe incur in some higher costs mostly related to oil prices increasing and that could be bad. by your numbers and recovery in a second time so just a bit on that and the last one still on renewables was wondering if you can provide more visibility about your pipeline and which is the breakdown in terms of how many projects are ready to build or closer to final investment decision and on that on the return environment if apart from the higher prices we are seeing in power, if the high interest rates or the equipment costs are challenging in a way the return environment also for you or this is not an issue at all.

Thank you. Okay.

Well, for the energy scenario, the situation, In the last month is a little bit incredible because from one side, all of us see price for gas and of course electricity super high. From the other side, if you look forward 27, 28, the price falls down. Why? Because The story telling is that the war in the Persian Gulf must finish. The effect of the decrees for Volet will reduce a little bit the price, not with ETS, but with the gas distribution costs, so some meters per megawatt hours and so on. And so we continue to be in a film with real price super high and with forecast more quiet. Consider that for a company like H2A that works with a strong edging, What I can say Davide is that we are able every time to remain on budget. So you know our industrial plan and the target that we introduced in the industrial plan is absolutely confirmed. One year ago the discussion was if The scenario embedded in our industrial plans for more or less 100 euros per MWh was correct or too high? And do you remember what I said? For me it's correct simply because we are linked to GNL. GNL in this moment has OPEX, so liquefaction, transport, gasification, that brings The base cost of GNL to 30 EUR for MWh, that means 60 considering 50% of efficiency of a thermoplant, more ETS, more or less you arrive to 100. In this moment the price remains higher for probably for speculation, for the situation that you know in the Persian Gulf. And so I can say simply that if I look at the next two, three years, surely our budget is correct and we are able to edge the pump price at the level that we have in our industrial plan. For the waste, I imagine you talk about collection considering the cost of oil. So gasoline, I think, consider that Compared, for example, with the public transport, our fleet drew a number of kilometer super peanuts. If you look at a truck or a collection is every time stopped and the number of kilometer is really not material so also the total consumption of oil compared with the other cost is not enough to change the result of our economics much more for example the cost of labor and what is interesting is that the last negotiation of on the cost of labor brings a total cost that is slightly lower than our expectation. We are not alone because there is a national negotiation. Probably we are the biggest company and so the average cost for the other players remain and this is a benefit also for us so more or less also on waste collection we are absolutely on budget and about the pipeline consider that our goal is to be able to build every year 300 megawatt of new solar and wind renewable and the pipeline is 10 times more and of course like every pipeline is a part of ready-to-build, a part of advanced and part of let's say ongoing. And in this moment what is important is to select well what really can be merchant and what is too I like LCOE to be merchant because it's clear that the pressure on the electricity price brings all of us to build plants with low LCOE. to be able to stay well on the market, to be able to contribute really to reduce the pool price without reduction of our marginality, and then the best way is to be able to build well, to build a plant with low LCOE. That means to reduce the cost of land, of authorization, permitting, APS and so on. So all the supply chains that reduce the final cost of energy because the solar plant or also the competition in the eolic pool between some China's players and the historical EU is working to reduce the inflection also in this case. So to close, surely we are absolutely able to deliver our 300 megawatts every year, starting from a regime, I think, from 28 to 29. In this moment, for example, we have under construction 100 megawatts of solar plants in the north of Trili Veneta Giulia. As we have seen, we delivered 35 new megawatts of wind capacity. So also in this Alfa 26, the new quantity of renewable is more than 100 megawatts.

Yeah, I will answer to your last question regarding the cost of debt. We closed the first half with the same cost of debt as we closed the fiscal year 25. That is 2.7%. And we are expecting to maintain it for all the year 26. Considering the fact that we are funding ourselves with an average cost in line with our quantities, as you've seen as the result of the cash flows analysis, but with a slightly lower or the same cost we already experienced in the first half of the year. We are also proactively managing the cost of debt, taking some position on the market with some swap activities. And this also helps us to lower the impact of the cost. So we are comfortable about the future resiliency of the cost. I have to say also that generally speaking the weighted average cost of capital has been lowered in such a way and this gives us the opportunity to stay coherently to the spread of 200 basis points between the work with the return the average return of our Thank you.

At this time we will not be taking any further questions. I will therefore hand the conference back to the speakers for any closing comments.

Thank you everyone for participating to the first half results. If you need any additional follow-up, please contact the IR department and happy summer break to everyone. Bye-bye, thank you.

Bye, thank you very much.