Iberdrola Sa S/Adr

Buenos dias, señoras y señores. Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2024 first half results presentation. As usual, we will follow the traditional format given in our events. We are going to begin with an overview of the results and the main developments during the period. Thank you very much. We know that today is a complex day for all of you and with several presentations of results still to come. This is why our event will last about 45 minutes. Hoping that this presentation will be useful and informative for all of you, now, without further ado, I would like to give the floor to Mr. Ignacio Galán. Thank you very much again. Please, Mr. Galán.

For joining today's conference call, In the first six months of 2024, our reported net profit is up by 64% to €4,134 million. And our reported EBITDA reached €9,714 million, a 27% increase versus the same period of 2023. As we are informed, in the first quarter, reported results are affected by extraordinary items both in 2024 and 2023. In 2024, we have included the capital gains from the Mexico transaction with a positive impact in 1.7 billion euros on EBITDA. At the net profit level, the impact is 1,117 million due to taxes and the provision already released last year. Half of the 2022 results also reflected the non-recurrent recovery of the previous year's retail deficit in the UK, with a positive impact of €337 million on EBITDA. Scrolling all these items, recurring EBITDA grows 9% to €7,897 million, driven by strong operating performance in all businesses. In renewables, production has already all-time highs thanks to the increasing offshore wind generation and record output in Iberia. And in networks, business maintains its positive performance thanks to the tariff increase in the U.S., the U.K., or Brazil, and a further 7% increase in our asset rate base year-on-year. We have continued delivering on our plan with record investment of $5,276 million, 16% more than the first half of 2023. And we are already looking beyond 2026 to capture additional growth opportunities for electrification. We will drive huge increase in investment needs in the transmission and distribution networks. making storage even more relevant to integrate the highest share of renewables in the system and increasing electricity demand very significantly in all industries, especially in data centers. We continue combining growth, financial solidity, and shareholder remuneration, with FFO digesting net debt at 25% and dividend up 11.4% year-on-year. As mentioned, the consolidation of the positive trends seen in the first quarter plus additional investment have driven a percent increase in our recurring EBITDA. In net worth, results reflect positive target adjustment in the UK, the US, Brazil, as well as a 7% year-on-year increase in our regularity base to 43.3 billion euros. In renewables, global energy production has reached a new record due to the additional installed capacity, including the full commissioning of our Sandbrick offshore wind farm in France. And more than half of the capacity of Altigigel in Germany, which will be fully commissioned between the third and the fourth quarters of this year. Iberia maintained its good performance with pumping storage assets, increasing its utilization rate to balance demand and production in the system, benefiting from price spread due to higher volatility. Retail market conditions continue to normalize gradually in Iberia and the United Kingdom, and we keep increasing our long-term PPI portfolio with industrial customers and environmental and increasing forward price as we see later. with a breakdown fully in line with the strategic priorities set in 2024-2026 plan. 56% of the investment were made in the United States, with an increase of 53%, and the United Kingdom, with an increase of 29%, driven by offshore wind and new transmission infrastructure. Iberia represents 90% of the total first half investment, followed by Latin America with 50% and France, Germany and Australia with only 10% together. By businesses, networks is already the first investment destination with 51% of the total. reaching 2.7 billion euros after 23% increase year-on-year driven by the new rate cases in distribution, and 63% rise in transmission investment milling the U.S. and U.K. to reach more than 1 billion euros in the last six months. As a result, 13% of our total network investment in the first half were made in transmission. All in all, network asset base grew by 7% year-on-year, with a significant diversification across our core geographies. Asset base in US reached 13.3 billion euros, followed by United Kingdom with 10.8, Brazil with 10.1, and finally Spain with 9.1 billion. Transmission already accounts for 23% of this total asset base. In renewables, investment grew by 10% to reach 2,167 million euros after adding 3,100 megawatts of new renewable capacity in the last 12 months. Offshore wind already represents 41% of the total renewable investment, driven by the construction of Vingert Wind 1 in the United States, Saint-Brick in France, Balti-Liget in Germany. with the remaining 59% focusing on shore renewables and storage in the U.S., continental Europe, U.K., and Australia. The construction of all our offshore wind projects included in the 2024-2023 plan remains on track, with 2,300 megawatts in operation after the full commission of St. Brick. Total capacity is expected to reach 4,100 in 2026. Baltic Kingdom in Germany, Benjarwin U.S. will be fully contributing to 2025 result, and Isangler III in the U.K. and Windacker in Germany will fill operation in 2026. This will drive a total EBITDA of 1.8 billion by that year, more than doubling the contribution we expect for full year 2024. On top of that, We continue working in growth opportunities beyond 2026 with 3.6 gigawatts of projects participating in ongoing auctions. It's Anglia 1 North and it's Anglia 2 taking part of DRCs in the UK with a total combined capacity of 1.7 gigawatts. And New England winning 1 and 2 in the multi-state auction in the United States winning 1.9 gigawatts in total. The permits already received for this project and the progress in securing the supply chains play us in a very competitive position in both actions. We are also securing future growth through CBET rights obtained at zero or close to zero cost. Today, we have more than 10 gigawatts of rights in countries like the United States, UK, Australia, or Japan, all obtained under our strict, prudent approach. with an average deployment cost of 50 to 100 kW, 5 to 10 times lower than the prices paid in recent auctions in Germany or the United States. Manable renewables continue showing strong performance for the total increase of 49% in hydro production in Liberia, reaching 12,500 GWh. Out of the total, more than 3,000 of them came from production from our pumping storage facilities, which continue to rise year after year, independently of the rainfall conditions, playing an increasingly relevant role to provide stability to the system and generating positive margins between pumping during peak periods and production at peak demand hours. In our commercial activity, we have continued reinforcing our PPL sales, with 3 TWh signed in the last 12 months, for a total multi-annual contract portfolio of 35 TWh per annum for the next years, with tier 1 customers from sectors with increased demand like technology, food, retail or automotive. After several years of market instability, we are now facing a more normalized environment with forward markets showing an increase in prices and in demand as well for 2025 and 2026, above the expectation included in our capital market day of last March. Electrification is driving demand increases we have not seen for the last 15 years. the international agency is expecting global demand to increase by more than 4% in 2024 and 2025, as I mentioned before. As a result, the need of more reliable grids than we anticipate is now materializing. Today, There is full consensus on the massive need of network investment. The international network investment will double globally already by 2030. And in Europe, the European Scientific Board, which, as you know, is an advisory body of the European Commission, has stated that the EU needs to double investment as well. In the UK, National Grid estimates the country must build by 2030 five times more transmission infrastructures than in the last 30 years. The initial conditions for the Rio T3 framework published last week by OVGEN shows that the regulator is aware of this need. As you know, we will send our plan by December with the final decision expected by the end of 2025. In the U.S., transmission and distribution investments are already increasing by almost 50% in the last five years. Avant-garde, in our particular case, investments have increased even more, almost doubling during this period. This institute expects a further 20% increase in the last two years, and the Department of Energy has recognized that the transmission grid must grow by at least 65% by 2035. All this is creating good growth opportunities for Everdola in all our core geographies. In Brazil, the Brazil Renewable Distribution Consent for the next 30 years with a very reasonable term has signed by the President Lula da Silva, and we expect the signature of the new contract in the first quarter of 2025. Finally, in Spain, a consultation is ongoing to modify and eliminate the current cap on distribution investment. Electrification together with a huge increase in clean energies to substitute fossil fuel plants is making power systems more volatile in terms of energy flows due to renewable intermittency. This is creating a recurring need for storage infrastructure to balance the system. If we look at the Iberian market, in the last five years, supply and demand dynamics have changed very significantly, resulting in increased intraday spread between central hours with high renewable factors and low demand, and morning and evening when there is no solar production and demand increases. We anticipated the recurring need for additional storage decades ago. As a result, today we have now pumped storage facilities in operation with more than 100 million kilowatt hours of storage capacity that provide from 300 to 150 million euros of recurring demand per annum. We have also 20 million kilowatt hours additional under construction in Iberia. There will be an operation between 2026 and 2030 and more than 150 million kilowatt hours of additional project. One of these projects, Alcantara 2, which has 16 million kilowatt hours of capacity, recently obtained 45 million euros EU funds. We are also making investment in batteries in the US and UK or Australia with plans to install at least 3,000 megawatts by 2030. Finally, we see growing demand prospect in sectors like data centers and electric mobility. Today, we have signed PPAs for more than eight terabyte hours per annum with major technology companies like Meta, Apple, Microsoft, Google, or Amazon to cover the demand of its data center in United Kingdom, Spain, Germany, United States, where demand from this industry is expected to multiply by three by 2030. This new opportunity has led us to create a company to facilitate the construction of new data centers for our customers. The prospects for electricity mobility are also very positive. The International Agency estimates that by 2030, one of every five cars will be electric, driving a very significant growth in electric demand of 1,100 terawatt hours. As you know, we are progressing in deployment of charging infrastructure, for instance, in Spain with a joint venture with BP. In the first six months, our cash flow reached 11,362 million euros, almost doubling last year's figures. Excluding the cash received as part of the Mexico transaction in 2024, cash flow was 5,125 million, 8% up in recurring terms. In our FAO, the debt ratio reached 25%. Last 17th of May, we held our annual general meeting in Bilbao with a quarter of 75%, an average favorable vote of 98%. Let me take this opportunity to thank again all of our shareholders for their involvement and support. BEM approved an increase of 11.4% in shareholder remuneration to €0.558 per share. Next July 29, we will pay a dividend complementary of €0.351. On top, the dividend already paid of €0.202 to complete this €0.558 I mentioned before. And against Mandibin, additional of €0.05 paid in June. I now hand over to the CFO, who will present the group financially in more detail. Pepe.

Thank you very much, Chairman. Good morning to everybody. As the Chairman has said, in June 24 versus June 23, EBITDA reached 9.6 billion versus 7.6 billion euros, and net profit 4,134 million versus 2,521 million euros, growing 27 and 64 percent respectively. FX evolution has had a minor effect on results. Pound rose against the euro by an average of 2.8 percent, the real 0.9 percent, and the dollar slightly depreciated. First half of 2024 EBITDA is affected positively by the sale of the Mexican assets for 1.7 billion euros, registered as a lower net operating expenses. And the impact is post-tax is 1,165 million euros. And negatively by the recovery of the retail tariff deficit, for $337 million in the first half of 2023. At the net profit, the impact is minus $558 million. In addition, in the second quarter of 2023, Iberdrola provisioned 140 million euros of deferred taxes originated by the Mexican sale. This is obviously below the EBITDA level. As a consequence, on a recurrent basis, EBITDA grows 9% and net profit 24% versus 2023, although net profit growth compared to the first half of 2023 reported net profit is 18%. Following the trend of the first quarter, a 28% improvement in procurement costs, mainly energy production and client business, versus a much lower decrease in revenues, 14%, thanks to our fixed price sales, has driven a 3% increase in gross margin to $12.5 billion, which is 4% if the $337 million UK tariff deficit recovery and reconciliation revenues in the US are excluded. As you can see in the slide, excluding Mexican capital gain, net operating expenses increased 7.7%, and 2.8% excluding not only the Mexican capital gain, but also reconciliation impacts in the U.S. due to storm costs that are recognized at the gross margin level. 34 million of positive pension adjustment accounted for in Q2 and other minor impacts. Net personal expenses increased 1.8%, but excluding... The second quarter pension went off in the UK and reconciliation impacts net personal expenses grew 3.5%. External services increased 11.4%, excluding expenses related to the Mexican transaction. Excluding also reconciliation impacts in the US and other minor impacts, external services grew 1.7%. Other operating income included the 1.7 billion Mexican capital gain. Excluding it, other operating income increased 3.7%. Levies reached 1,466 million in the first half of 2024 versus 1,658 million in the first half of 2023, positively affected by sentences in Spain, 79 million of the hydro-canon accounted for in Q1, and 183 million from the social bonus accounted for in Q2. As you can see in the slide, excluding court rulings, levies grew 4%. The recovery of levies cannot be considered as an extraordinary item, as it is a recovery of past expenses recorded as recurrent in our P&L. Iberdola has more co-ruling spending that can impact positively in the levies amount in the future. Analyzing the results of the different businesses and starting by networks, EBITDA grew 5% to 3,269 million euros, driven by a higher regulated asset base and tariffs. In Spain, EBITDA fell 3.7% at June to 814.5 million euros due to the 27 million positive regularization of the investments recognized in the first quarter of 2023. In the UK EBITDA increased 18% to £606 million with higher contribution in transmission thanks to higher tariffs and higher asset base and in distribution thanks to the new ED2 framework. In Brazil, EBITDA grew 3% to 6,161 million reais, with higher demand more than offsetting lower inflation and lower contribution of transmissions due to the consolidation of the assets as part of GIC agreement signed in the third quarter of 23. In the U.S., U.S. GAAP EBITDA increased 14% to $1,023 million, driven by the contribution of the new rate cases, mainly New York, thanks to higher tariffs. IFRS EBITDA was 1% up to $673 million, improving the 15% fall in March, with higher contribution from the rate cases more than compensated Negative timing effects due to IFRS accounting of costs, mainly commodities, that will be recovered in the next months and lower transmission revenues. Twenty-four first half results, or EBITDA, of energy production and customer business reached 6.3 billion euros compared to 4.5 billion last year, boosted by the already mentioned 1.7 billion Mexican capital gain. Better performance and also better performance, but partially compensated by a higher comparison base due to the 337 million UK tariff deficit recovered last year. As you can see in the slide, the first half of 2024 has had a better recurring operating performance than last year, 3% excluding the Mexican capital gain and 12% excluding also the impact of the UK tariff deficit. After the Mexican transaction, I want to point out that the business reached close to 90% emission-free generation in the first half, advancing in our decarbonization targets. In Iberia, EBITDA was 2,486 million euros, 20.7% up, after a good second quarter with lower procurement costs and higher manageable renewable production, more than compensating lower prices and lower nuclear output, and also held by the already mentioned core rulings. In Iberia, our non-emitting production reached 92%. In the UK, EBITDA fell 23% to 847 million pounds, affected by the already mentioned first half 23 positive one-off related to tariff deficit recovery, 297 million pounds or 337 million euros, and another negative one-off issues at our offshore wind farm east of Anglia 1. from 69 million euros accounted for mainly in Q2, offsetting the recurrent positive evolution of the business with higher contribution in wind onshore and better prices. In the U.S., EBITDA increased 22.6% to $482 million, thanks to the positive performance of our flexible generation fleet and better prices that improved results despite the 1% lower production. In the rest of the world, EBITDA grew 48.5% to 314 million euros, with a 34% higher production due to the gradual entry in operation of some offshore wind farm of around 500 megawatts and more onshore capacity installed in Poland and Australia. In Brazil, EBITDA decreased 1.7% to 825 million reais as a contribution of 261 megawatt hydro assets following the swap with Electrobras last year mostly offset the lower wind and thermal contribution. Finally, in Mexico, EBITDA reached 2.1 billion US dollars. Excluding the capital gain, EBITDA reached 239 million dollars affected by the deconsolidation of of the assets sold in February 26 that still contribute around half of what they did before the sale. EBIT grew 40% to 6.9 billion euros, including 1.7 billion Mexican capital gain, and 4.7% excluding it, compared to 4.9 billion reported in the first half of 23, and a 12.4% increase excluding the U.K. tariff deficit recovery in first half of 23. Depreciation and amortization grew 4% driven by higher asset base in networks and growth in renewables, partially compensated by an 11% lower provisions driven by a 16% lower bad debt provisions. Net financial expenses improved 25% to 848 million euros. Non-debt related results got better by 271 million. including 29 million related to the social bonus code ruling accrued interest, 115 million capitalized interest linked to work in progress that reaches 14 billion euros, and 118 million linked to FX derivatives compared to last year. And debt-related costs also improved 8 million euros as a consequence of 49 million reduction due to the lower cost of debt, minus 16 basis points to 4.89% despite the higher interest rates in the first half of 2024, partially offset by a 36 million increase due to the 1 billion high average net debt versus 23. During these first six months, Iberdola has done very successful operations in the capital markets in euros and Swiss francs, which allow us to diversify the investor base as well as maintain the duration of debt. Our reported credit metrics improved mainly thanks to a 2.7 billion decrease in our adjusted net debt to 45.2 billion compared to December 23. In the first half, strong capex, 5.6 billion, and dividend payments, 1.6 billion, have been more than offset by a strong FFO generation, 4.2 billion, and Mexican cash proceeds, 5.4 billion. As a consequence, FFO over adjusted net debt reached 25%. Our adjusted net debt to EBITDA improved to 3.06 times versus 3.32 times at December 23, and our adjusted leverage ratio decreased to 41.4% versus 44% at December 23. Net profit, excluding capital gain from Mexico, increased 18% versus reported first half of 23 net profit, and 24% on a recurrent basis. And now the chairman will conclude the presentation. Thank you very much.

Thank you, Pepe. Today's result confirms a positive trend that we expect to continue during the rest of the year, driven by the impact of the tariff adjustment in the U.S. and U.K. and the higher asset base. the record renewable production with a strong contribution from pumping storage generation in Iberia, and capacity addition mainly offshore wind with Ambrick in France already fully operational. In the second half, we also see the impact of new investment in networks and renewables, as well the positive contribution of our commercial activities, including new PPAs, and increasing market prices and higher demand. All this is leading us to increase our guidance on reporting net profit for the full year to double-digit growth, excluding capital gains from asset rotation. And also, we expect these trends will allow us to continue beating our target in the coming years. So now we'll be ready to answer any questions you may have for us. Thank you.

Thank you very much. Fernando Lafuente, Alantra, Manuel Palomo, BNP Paribas, Pedro Alves, CaixaBank, Gonzalo Sánchez Bordona, UBS, Jorge Guimarães, JB Capital Markets, Javier Garrido, JP Morgan, Jorge Alonso, Bernstein, José Javier Ruiz, Barclays, Jadmet Farman and Arturo Murúa from Jefferies, and finally, Marc Ip Tatkuen from Berenberg. We would like also to point you out that we have concentrated the questions received so far by topic so that we can much more be efficient and keep to the schedule. If any of the questions you have asked remain unanswered, this pending question will be done for you by the IR team. Now we can start with the Q&A session. Thank you. First question is related to the guidance 2024. We have received several questions about the guidance for 2024 on issues like the drivers for the upgrade, the baseline use on the expected evolution of the second half of the year.

So, as I explained, our guidance for full year 2024 is now double-digit growth, as I mentioned, in net profit, excluding our capital gains for NASA rotation. And the base of comparison is the reported net profit of $4,103 million that we have in 2023. And when we say double digit, all really we expect growth will be intense. That means that the second half is going to be as well, as good as it was already the first one. And why is this upgrade? First, because we have a first good half, which is above initial expectation. The second is the consolidation in the second half, the trends already observed in the first half, plus the new investment we are planning to make this year, which altogether is going to be close to $12 billion in 12 months. Also, in networks, we have the new rate cases. Last year, we already started in May. Now it's going to be applied during the second half completely. In production and customers, it's a new capacity. The power hydro, I mentioned that this is something which is becoming structural, positive structural for us, which is a recurring business. And so I think that for the second half, and I think these strengths, we expect to continue in 2025. I think the additional investment we are making in networks and renewables are going to generate new returns, higher prices and demand as well increases, as I was mentioning before, and a better interest rate environment. I hope that the rate of interest, as is expected, will continue to slow down as well.

So on ENW, as you know, that is a competitive process.

Of course, the company is interested. This company is interested in for us. But as we had always done, we will maintain our prudent approach and profitability requirement. I think we are going to bid for it, but in a very, very reasonable terms. The process is now currently ongoing. And I think it's a good idea as soon as there is any new information. Related to avant-garde, the things are moving forward on track. So we have already – the board has already approved the offer. It was already a very transparent process on this one. Now we are going through the regulation approval process. As you know, the FERC, the regulatory commissions of the different states where we have presence. We have a continued dialogue with the SEC. I think the questions for the past are very reasonable, very similar of those which is not special. And same thing with regulators. All are giving us the indication that we, that will be closed before the year end.

Next is related to elections. There have been different questions on recent and future elections in the UK and the US with the potential Trump comeback. What is your view on how do you think it will affect Iberdrola's renewable development plan?

We are already closely working with the new Labour government. I think yesterday we attended a meeting with the Prime Minister. We have been attending meetings with the Russian Reef, which is the Treasury Secretary, with the Minister of Trade and Business. And I think the engagement with the government since the election has been, and the message we receive from them are very consistent. So they are already very much focused in industrial strategy as a key pillar of this government. They are very focused on more investment in renewables and networks infrastructure to promote growth. So I think they are insisting on that. Yesterday, the prime minister even mentioned Scottish Power as a pioneer, a leader in decarbonization and energy transition. They are planning to acceleration of permitting to make already that happen. They announced that they are going to make changes in tax policies. And more than all, I think, is my perception and what they said is they would like to be very much business friendly. So we will continue meeting with them in the next few weeks. And that is what I can say for the moment about our relation with them. In the case of the United States, I think the relation is going to be November. But I think we have a record of working with administration from both parties. So for us, we've been with either Democrats or Republicans on this one. You have to be aware that 80% of our business in the United States is net worth. And the net worth, the regulation depends on the states. So it means I think we have already in this case is the election probably is going to affect at all to our business. And in renewables, our investments are already benefiting those ones which are renewables. In this moment, in construction or completed, it's benefiting our RA credits. But I think these RA credits have been either approved, in most cases, even cash. And I think it's 10 years we've been utilizing those ones. It's not new for us, that one. For the new investment, we will be depending on the policies of the new government. Our expectation is positive, but I think we will see. So we have always invested heavily under different administrations, and I think we hope that we will continue in the same track as well in the future, independently who will be the winner.

Next is regarding the production in Spain. We have seen that solar production in Spain has decreased, even though we have more installed capacity. Are you having curtailments or other technical issues? Additionally, nuclear production has decreased 17%, versus 1H1-2023. Are they scheduled shutdowns?

So the first thing is technically we have not had curtailments. I think curtailments happen when the system operator forces generators to stop production. That has not already happened to us and that is very unusual in Spain. So first thing. The second one is our plans produce of a stop depending on the market condition. And I think even the nuclear power plant, traditionally we are not stopping. Now as well, we stop complying, of course, with the regulation or we diminish the power depending on the market condition. I think in the moments of low prices, what we have already done is to increase the contribution of our pumping hydropath facilities, which I think they are needed for balancing the system for supply and demand. And also, we have already obtained a good spread between peak and off-peak. That's why our pumping storage has become a recurring business, independently of the high or low rainfall. I think that is something which I would like to insist on that one. Traditionally, pumping is already used when there are already situations of low rainfall, and we've been already using the existing water up and down. Now we see that independently of that one, I think we can use our facilities on that one. The fact, this year, in 2024, as you have already seen, we have already produced more than three Hiawa towers, which is 7% more than previous year, where it was dry. This year, we have not much rainfall. And I think it's... And also we are already, that's why we have new storage and construction. But I think the fact is that the existing one, the expectation is that it will contribute on the range of €350 million per annum EBITDA, which I think that is a very solid and growing business. And I think our expectation is this trend continue during the next year. But I would like to be clear. We have not curtailments, technically talking about. And when this happens, it's very unusual in Spain. We have not had any of those ones. We stop our plans or we reduce the power of our plan when the market conditions are not already as good as needed for the proper return of those power plants.

Next is regarding the competition in Spain. How is the increasing competition in retail affecting your customer numbers and retail margins? And how worried are you about losing customers?

So I think I'm repeating for the last 24 years the welcome competition. I strongly believe in competition. I think competition is something which is welcome. It forces the people to use their brain for having good ideas and for trying to do the best for achieving the target. So it's clear, no countries in Spain send in the rest of the country's new entrants. They are gradually increasing the number of customers they get. I think that is obvious. But as well, they are losing as well. I think they are gaining, but they are losing. The fact, the record we have already, the chance they have are huge. So in some cases, more than 100%. That is public information. So which I think that is the rules of the market. Nevertheless, I can already let you remember that we had in the last year, we have increased our number of customers. So since 2022, we are increasing the number of customers. We continue being leader in Spain since this moment. We have more than 10 million power contracts in this moment in the country. And now we can tell you is thanks to this competition, we are using our, let's say, talent for designing new products and services. in taking their market in action, which are resulting very successful. So our trend is very low, and our loyalty of our customers are increasing.

Next is regarding the regulatory frameworks in the UK and Spain, especially in the UK and Spain, which will review the regulatory frameworks in the following one month. How do you see the evolution of both regulatory discussions?

So in the case of UK, we are now in the process of the renegotiation of the new regulatory period of transmission, the Rio T3, from 26 to 31. It's a process which starts now and will end by the end of 2025, so it's a long period of that one. It's true that Ofgem has already published recently the range of returns for our investment of our regulatory asset base for this period, 26 to 31, which is higher than the existing T2. And that shows that the regulator is aware of the huge investment requirements is needed to attract the capital for making this investment, which I advance to you, which is going to be much, much bigger than those ones we are making at present. But I think, I insist on that one, still that is in the process. There are a lot of things, issues to improve. But I think, as many analysts are commenting, the returns, which even if they are better than those that we have at present, I think should be higher for already promote the investment and to raise the money which is required for this huge investment we need to make. We are going to present our business plan in December 2024. And this is going to contain, as I mentioned, to contain a huge investment investment. for the period 26 to 2031, which is much, much bigger than the present one. But as I said, the final decision is going to be by the end of 2025. In Spain, the current cap for investment in the distribution is in discussion. Also, as well, we are in a process of talking about the rate of return for the next period. As you know, the investment levels in this moment in Spain is insufficient, so it's needed more than that one. It would like to reach the target of the energy climate plan. The investment has to multiply by three. And I think removing the cap is crucial on that one. As well, I think remuneration, as I mentioned for Britain, has to be in line with other comparable countries who would like to attract the massive capital requirement needed on this period as well. But we are seeing positive signals. So the Spanish government is recognizing this need of network investment, which I think is positive.

Next question is number eight. It's regarding Banjar Wing 1. There has been an issue with starving. How will this affect the production of the wind farms? Does Iberdola have any liability? Will GE provide any guarantee?

So I think this project, as you mentioned, is under construction. I think now, in the case of the blade, it's under GE control. They are the suppliers. It's their control. I think according with the information we got from GE and the analysis they make, the root cause of this incident is not related to design. But it's a very specific issue in one particular blade, in the manufacturing of this particular blade, which I think that makes that we are quite satisfied. Of course, we have guarantees from our grid. Nevertheless, the construction continues in the rest of the installation. So I think we are not to stop the installation of cables, of foundation, or whatever other thing which is needed for this process.

Next, regarding financial topics, first is the guidance net debt for the year 2024. Where should we expect net debt for 2024 to be? And financial expense and clarification, could you explain more in detail which are the main currencies affecting the FX derivative results? Moreover, could you give more color on what is included in other category in the same slide?

In terms of net debt, as we have been commenting in previous results presentation, we are expecting to end the year with a net debt of around 47 billion euros. what we expect. Regarding the impact of FX derivatives, there is an important part that has to do with some hedges that we did with the Mexican transaction that are fully compensated and I see that there is also a question about the tax rate, that are compensated at the tax rate. We have to recognize the positive at the net financial expenses and the negative in the tax rate due to accounting considerations. What I can tell you is that at the net profit level, the impact of FX is negative for the group in 40 million euros. So the FX impact... The net profit compensated at the tax levels compared with the effects derivative positive side in the net financial expenses is a minus 40 million euros that also, you know, is part of the increase in the tax rate that you are seeing in the first six months. The FX in the first six months of the year for the group is negative 40 million euros. And regarding other, as I have mentioned, as I have explained, basically it's two parts. 29 million that has to do... with the accrued interest of the court rulings that have to be recognized at the level of the net financial expenses, and around $115 million that has to do with the capitalized interest, taking into account that at this moment the group has a record investment in process of 14 billion euros. Obviously, as all these investments start to be in operation, obviously these interest rates will be part of the traditional cost of debt.

And the final question is related to today's hot topic, to the market, data centers. What would be your business model to monetize this new trend?

So I think demand, as you know, of data center is booming, and that is going to accelerate with artificial intelligence. So in the case of United States, data centers will account close to 10% of the total electricity demand by 2030, even is going to be more, which is more than tripling the actual levels. And globally, demand as well in another country will more than double by 2026. So I think that is a real, real driver for demand increases. But as well, for the need of new investment in grid infrastructure, it's not only a question of power, it's a question of power, it's a question of access. So I think it's good for us in both sense, in the sense of having new demand sources and having already the opportunity of expanding our grid for those which require to be connected. So which I think that is one of the reasons why in some countries the investment in grid and grid infrastructure is already being more and more promoted as we've been mentioned in the UK or United States and probably in Spain as well in the future. But I think that is not new for us. We anticipate this trend. In this moment, we have more than eight Terabatau Esperandum signed with Amazon, Meta, Microsoft in different countries. So I think probably Amazon in this moment is our large customer in the group. And that is going to increase in the coming years. Because of our relation is so close with these companies, is why we would like to facilitate the installation of the new data centers using our skills in different countries. That's why we started that in Spain. We have already created a new company, which is well advanced, and I think in the next few weeks, probably, you will know more details about that one. But the thing is, we are already just promoting, developing, and preparing with all kinds of means for facilitating that these companies have the means for installing their own data centers in the places they will require. That we start with Spain, but I think there are other opportunities as well in the United States, in the East Coast, mainly Oregon, we have a big presence, and in the West Coast, in the East Coast as well, and UK, and probably in other countries as well. But I think now for us that is not new. We are already selling a lot of energy to these ones, especially in the state and in other European countries as well. But I think we are trying to facilitate, and we have already created a company in Spain for facilitating the installation of those ones, providing all the service they require for putting their equipment inside of the proper centers. But we are preparing for them.

Just a reminder, we are going to host a webinar on September the 16th about the data center topic. Now, please let me now give the floor to Mr. Gallant to conclude this event.

So, thank you very much for taking part of this conference. As Ignacio mentioned before, our investor relations team will be available for any additional information you may require. Let me wish you a very nice holiday. Thank you very much and see you soon. Thank you.