Solaria Energia Y Mdo Amb

head of IR of Solaria. I am joined today by Arturo Díaz-Tejero Larrañaga, our chief executive officer. During this call, we'll discuss our business outlook and make forward-looking statements. These comments are based on our prediction and expectation as of today. During this presentation, we'll begin with an overview of the result and main highlights and main development during this period given by our CEO, Arturo. Following this, we will move on to the Q&A session. I would also like to highlight that you have to submit all your questions via the web. So thank you very much again, and I will now hand over the word to Arturo.

Thank you, David, and thank you to everyone joining this conference call. Like always, I will move extremely fast around the slides and the presentation, and we will go to the Q&A session. In the first half of 2025 we have increased significantly exponentially our net profits. We have grown close to 100%. That is a record in the history of the company. And we have installed, this is something significant because you know that during the last two years we have done enormous efforts in order to connect new installations. We have connected during this quarter 300 MW. That is one of our key targets for this year, and we have connected during this quarter 300 MW. From an operational point of view, our business is running great, because we closed, as you know, during this first half, a great deal with Stompik for generia. And our infrastructure business is running great and we have included numbers in this quarter that come from our infrastructure division and generation is going in a good situation even with a low prices situation that we are living in Spain. But we maintain the same level. If you compare first half with last year we maintain the same level of generation. That is good because we haven't included new assets during the first half. The good point is that finally we have connected 300 MW and hopefully during this quarter and next quarter we are going to complete 3 GW of capacity constructed and connected to the grid that it will be a great success for the company. Points or key points of this presentation. all the market is talking about batteries and new business that is growing in Europe especially in Spain around batteries Solaria absolutely will be there and during our investor day we will give a great we will give our business update about battery business and my comment about batteries is we are the key player today in Spain with batteries under construction that will be connected to the grid during October for our investor day we will have batteries connected to the grid this is a great success for the company because we will be able to play the game of battery in Spain with high volume of batteries connected to the grid And we will talk about our new division of data center during the investor day. And it's something that we are extremely excited around data center business and the growth of this business. Today, first half presentation numbers in order to go directly to the numbers. Growth, 3 gigawatts installed that we will finish for the end of this year. We are going to finish this year with 3 gigawatts of capacity connected to the grid. It's a great success. Probably from volume point of view, Solaria will be the leader from volume point of view in the Iberian region of solar photovoltaic technology connected to the grid. 3 gigawatts, 3000 megawatts connected to the grid. Under construction, today we have around 4.4 gigawatts of capacity connected to the grid or under construction, we have added new developments to our under construction pipeline, Oliva, Mantia, Villaviciosa, large installations that will be constructed during 2025, 2026 and 2027, and that will add 1.4 GW of additional capacity during 2026 and third half of 2027. It's significant because it's an enormous volume of megawatts that includes not only solar, include PES, include batteries, that jointly is a great combination from business point of view. Solar with batteries that will optimize price of electricity. Batteries, as I have mentioned, Three important points around battery business. I could say, like in solar technology, that Solaria probably is the best in class from CAPEX perspective. 75,000 euros per MWh, all connected. That is a record from CAPEX perspective view. And as I have mentioned, during October we are going to connect our first battery to the grid. And for the investors, they will have batteries functioning connected to the grid. And it's a great success for us. It's something that changed completely our history because we are going to optimize the price of electricity. We could enter at night or in the afternoon with, you know, the situation especially in Spain, high price of electricity in the afternoon, at night, and we could obtain enormous profits associated to these batteries. We are going to install more, absolutely. We are going to invest more in batteries. We are developing an enormous volume of batteries globally in Spain, not only in Spain. We have included in this presentation slides associated with Italy, Germany, with the United Kingdom, but obviously focused in Spain. We have an enormous volume of megawatts per hour of batteries that we will introduce in 2025-2026. And we will be the leader in the short term in batteries in Spain. And this is extremely important. Short term. Batteries are great business today. We need to use this opportunity and timing is critical. You need to be the first and you need to be the most efficient. Not only batteries. Wind, data center. The global business plan of Solaria, the global idea of Solaria is a global energy player that supply solar electricity, wind electricity. that has demand that comes from data centers and that has demand that comes from batteries. And it's a global solution for customers that includes technology of generation and technologies of demand. And globally in Europe, not only in Spain, focused in several countries of Europe, Spain, Italy, Portugal, Germany, United Kingdom. Generia. Generia. You know that two years ago sounds like a dream. Generia Land Company. Today it's a real company that is functioning and that will give to all of our shareholders strong success. Because, as you know, we have got a great agreement with Stone Peak. It's functioning. We are developing the pipeline of Generia. We are executing and we are closing acquisition of land. It's the beginning. Obviously, the plan is extremely ambitious. And during 2025, 2026, 2027, you will see a lot of deals associated with Generia. Obviously, if you want to construct all of these assets, if you want to construct new batteries, new data centers or whatever you need financing, good financing terms, this is a good example like all the quarters we show to the market that we have a strong capacity to raise money, to raise project finance debt with our banks and partners. Recently we have closed a new deal with Sabadal Bank, 175 MW of solar PV capacity. The key points of this deal is probably 22 years, close to 100 millions of euros of debt, that is a global capex of 0.50 something, and a link with a 70 MW PPA data center project. We will extend and we will give more information during the investor day. But in our case this is something signed, real and that is functioning now and we have under construction today the project associated with this deal. Europe. We have included several slides because usually people say Solari is extremely focused in Spain. You are not out of Spain. It is not the truth. Spain today is obviously our key market in Europe, but we don't forget other countries that are critical for us, that are going to grow around batteries, data center, solar and wind. Italy. In Italy, we have made a strong effort during the last years, and I think that today we have a really good pipeline. Hopefully before the end of this year, we will receive final authorization for close to 1 gigawatt. That is a great success, because to start with 1 gigawatt will be great for us. It's a diversification of our business. In my mind, the perfect photo for the company should be to stay in Spain with global volume, but to maintain good volume in Italy, in Portugal, in Germany, and to install generation in these three countries, in Italy, Portugal, and Germany. And the Italian business is in a good situation today. As I have explained for the full year's presentation, we will give an update with one gigawatt ready to start with the construction. And it's great. At the same time we are developing batteries, we are developing data centers. Germany, Germany is the same. In Germany we are more focused in generation, especially in solar and some applications of wind, but especially solar is the beginning. We have a good amount of megawatts. In my mind, it's easier than Italy or Spain. It's a different market, really professional, really mature market. And I think that in the past we had a strong successful market. in solar in Germany and we are going to replicate. Today we have more than 500 MW in a good situation, fully authorised, and we will start construction soon, probably in 2026. Portugal. Portugal, this is a real global project. As you know we have assets functioning today in Portugal. We have done several projects in the last years in Portugal with great success. In Portugal we have fully authorized a global project with close to 500 MW of solar and close to 200 MW of wind. We are waiting for the final substation that should be done or that depends on the government, national agency and depends on government hopefully we could start with the construction in 2027 from permitting process point of view is fully complete the key point here is that we depend on the connection infrastructure that should be constructed by REN. I think that 2027 is a conservative schedule for starting with the construction. UK. In UK we are not going to be involved in generation. We are going to be involved in other activities. Today we are only talking about batteries and we are only talking about data centers. But I talk about other activities and I'm not including here all the activities that we are working on in United Kingdom. Not in generation, we are not going to stay involved in generation. We are interested in other activities that we will explain to the market. Numbers I have mentioned and I will move extremely fast. EBITDA, record of EBITDA 140. In order to give additional information to the market, as you remember, we gave a guideline for the year of 245, 255 millions of euros for the end of this year of EBITDA. I can say that we are extremely comfortable with this number. What does it mean? We have strong visibility that we are going to accomplish with the guideline of EBITDA for 2025. During the investor day, the 17th of November, we will give guideline for next years and global business plan for next years. Production, we maintain levels of production as I have explained at the beginning. We have maintained similar numbers from generation point of view. A small reduction on production associated with less sun radiation, especially in the first half of this year. I can say that the third quarter was good from radiation point of view and price. It's good. And especially second quarter of this year was not good from radiation point of view. small decrease associated with this solar radiation. Average selling price, even I can say that it's better if you compare first half 2024, first half 2025. Contracted merchant, 75 today is contracted, 25 is merchant. As we have explained, and it's not a surprise, we are going to maintain this mix and we are going to sign additional PPA contracts and we are going to maintain this proportion of 75 contracted, 25 merchant. EBITDA continues growing and is affected by three different activities, by infra-business, by generation, and by area. I can say that, as I have explained at the beginning, it's around one-third productivity and all the activities are functioning great. Why I'm saying this? Because I have visibility of third quarter and I think numbers are functioning great. As I have said previously, we have extremely high level of comfort of our guideline of EBITDA. Cash, we maintain the same level of cash like always. As you know, we are not rich, but we continue... making strong investments and we maintain our discipline around CAPEX. That is one of the key points of our strategy. We have a global CAPEX of less than 0.38 euros per watt. That is probably best in class. And in my mind we are going to improve in the next quarters. I think that probably for the first quarter of 2026 we will achieve a record in CAPEX When I talk about record I think that number is going to surprise to the market but we are going to improve a lot even our capex and this is critical for us because as you know we are covering all of our capex with project finance and it's critical for us to be effective not only in the construction of solar installation, in batteries, in wind, in all of our applications. And of course a bit of evolution is great if you compare the last five years. It's impressive. It's not as we want to get because we want more, much more. We want to grow more. We want to be the leader. And unfortunately during the last two years we had delays in the construction. The good point today is that we are in the good moment connecting megawatts, and we are going to finish with all the megawatts under construction connected to the grid. And it's great. And it's part of our guideline of last year, and we are going to accomplish it. Solaria transformation plan sounds ambitious, but we are ambitious as always. And on November 17th, We will present to the market our view about data center, batteries, where we are, where we will be, and what we are going to do for financing all, and it will be extremely interesting. You know, Solaria today is a key player in Europe, focused on solar, wind, data center, and batteries, and we will try to explain Our global view of the market and where we are going to stay the next three years. And where will be the company in the next three years. And before to enter in the Q&A session, in order to give more information, we will be focused in the remuneration of the shareholders. We think that is something that we need to improve and we need to stay focused there. we will continue acquiring shares and as you know in the first quarter we have announced a shares buyback program and we have today 2% of the shares of the company and we are going to continue with the acquisition of shares at least until 10% and we are going to maintain this discipline and we are going to execute and at the same time and in order to be fair with the market understand this comment but probably company in the next days could sign contracts impressive contracts that will give visibility to our business plan and to all the activities of the company and we will explain during the investor day of the 17th of November Q&A if you want

So thank you, Arturo. I will now open for Q&A session. And once again, thank you for your time. Just let us have one minute. So the first question comes from Fernando Garcia from RBC. Could we elaborate on the sentence evaluating additional options to boost shareholder returns?

I have explained that we want to stay focused on the remuneration of shareholders and as I have mentioned in the first quarter we approved a shares buyback program that we are executing and I have given the details and we are executing and we have 2% of shares of the company actually. About new remuneration on new options, we will discuss during the investor day, the 17th of November in London.

Next question from Fernando. You have many value creation avenues in solar, PV, batteries, DC, international expansion and real estate, but you have less than 50 million soldiers of cash position. What are your plans such as partnerships to avoid your publishing these gross optionalities?

I think that we have demonstrated during last years that even with not too much cash, that sometimes I recommend in the companies to maintain not too much cash because when you have too much cash you spend a lot of money. but this is my view that is not probably you are not agree with my view but in order to explain we have demonstrated that the key point from managing perspective in my view is to be efficient on CAPEX, not to spend too much money and to be able to maintain a good CAPEX that should be covered with project finance. This is my obligation and we have demonstrated to the market during the last years that we are able to construct 3 GW, that we are able to develop a pipeline globally in all Europe not only in Spain, that we are able to construct and to acquire batteries, that we are able to acquire land, that we are able to acquire connection points for data centers and to acquire land for data centers. And we haven't sold nothing and not increasing capital. And this is a really good discipline that we have established inside the company. Our discipline will be maintained, because it's the generation of value. You need to generate value to the shareholders, and it's my obligation. But you have seen with the Generia deal, for example, that we are able to generate value and to generate cash, cash position with joint ventures. And I'm extremely satisfied with the joint venture close with Stonepeak, that is a key player in the market. and it's a great joint venture that will give enormous profits to the shareholders of Solari in the future and we have raised 125 millions of euros for the acquisition of land. And the valuation of the platform and the valuation of our pipeline and our capacity was good. I think that this kind of partnership, this kind of joint ventures are really good for Solaria that gives cash, gives support in the growth and recognizes the value of the platform and the value of our pipeline. It's something that We could repeat in data center, we could repeat in batteries, and we could repeat in other activities. But in order to answer correctly the question, yes, we are open to sign and to close joint ventures for batteries, for data centers, and we are talking with players and we are working on it.

Next question comes from Philippe Aubation from Odo looking the slide 6 related to our operating and under-construction asset. Is the timeframe of 6.2 gigawatts dedicated to 2026 or later?

and operating and under construction. 3 GW will be connected to the grid for the end of this year. 1.4 gigawatts, it's under construction. We will announce, probably during October, November, but it's something that in my mind is completely solved. We will announce a project finance associated with Villaviciosa and other developments that we have included, that we have under construction, and we will cover with project finance, no problem. It's a deal closed, but we will announce during October, November. And It's under construction, probably will be constructed during 2026 and 2027 connection. We will add, especially in the third quarter and in the last quarter of this year, additional capacity to our construction pipeline that will be executed during 2026, first half of 2027. And now the innovation, if you want, or something new, is that we are going to include at the same time batteries construction. and batteries construction schedule. Today we are seeing here an extension of our business. We are not going to talk only about gigawatts of solar capacity. We are going to talk about gigawatts of solar capacity, gigawatts per hour of batteries, and wind. It´s like Solaria will be transformed in a global player constructing batteries, solar and wind. And as I have explained, from batteries point of view, for the investor day we will have connected to the grid a number of batteries.

Next question is coming from Beatrice Gianola from Mediabanca. Do we expect to sign new PPAs? Which is the outlook in terms of price for PPA in the Iberian market? And can we elaborate on returns expected for investment in battery storage in Spain?

New PPAs, absolutely yes. We will sign new PPAs and we will announce to the market. And let me keep some information in my pocket. Let me surprise yourself. Let me surprise yourself and all the market people. in the next days in the next days in the next weeks and and we will talk about batteries uh i think that the return today in batteries in spain is like it's it's unbelievable unbelievable why because if you see price at night and you see price of electricity especially at 12 o'clock in the evening or 11 o'clock in the evening 10 o'clock in the evening it's like it's crazy because Today we are suffering price of electricity of 140, 150. If you see these numbers, that in my mind it's crazy, the return of the battery is less than one year or one year and a half with the correct capex. It's always the same. It depends on your capex. And in capex we announced a deal a few months ago with a price that we have renegotiated. We are improving prices of batteries. I think that we will see, like in module, strong improvements in price of batteries. And from CAPEX perspective, I'm extremely quiet. I'm not nervous because we will be the key player from CAPEX perspective on batteries. And the return, I think it will be great. But reasonable return, double digit. We always are looking for double digits. If we don't have double digits, we don't invest. If we don't see high level of double digits, when I talk about high level, you know, in solar assets is 12, 13 project IRR, in batteries we are obligated to obtain more than this number.

Next question comes from Alexandre Roncier from Bank of America. Any update on the capacity market for Spain and timing?

It's true that the Spanish government is going to approve a capacity market. With the actual situation of prices, it's not necessary, but of course, welcome if they approve. Finally, it will be welcome. And it's something that will improve the numbers around batteries. And it's not only battery. Government is touching several points of the law. And if they modify, I think that it's going to improve generation business. It's going to improve batteries business. Probably will improve globally to all the renewable energy market. But, you know, market... Government, if you depend on the government, require time. I know that they are working on it, but who knows if they are going to approve now or in October, November, whenever. I think that we need to move without any new law that could be approved. For our numbers, we are not including this capacity market.

The next question is coming from Arthur from Morgan Stanley regarding storage revenue. What will be the price strategy for the first battery connected? Would we sell the electricity merchant, secondary market? And Arthur is also asking, can we break down some revenue source of the first batteries that we can connect to the grid this year?

We are studying all the proposals for batteries. We have some proposals of people that want to acquire our business, other people that want to make a joint venture with us and to participate, to give money, equity for the acquisition of the batteries and to recognize value in our platform. That is probably... the largest platform in Europe for batteries or the second one I think because from a private player had a great successful in United Kingdom but I think that probably Solaria in the stock markets is a global player in Europe for batteries and we are studying all the options. Today for the batteries that we have under construction that will be connected to the grid in October And that for the investor they will be connected to the grid. Our strategy is to go to the merchant market and to obtain strong profits in the next month. I think that it's an easy job today. In the future will be more sophisticated. Today it's extremely simple business with the situation of price of electricity. But I'm not saying that these will be our long-term strategy. I'm saying that we are going to use the exceptional situation of merchant price in the short term. But we could sign a joint venture associated with batteries.

Next question is coming from Alberto Gondolfi from Goldman Sachs. Is the 1 gigawatts of solar via Viciosa, Oliva, Mantia... All permitted? If not, which permit do we have and when do we plan to receive all the authorization?

All permitted and under construction. We have explained the deal. The deal is associated with Sabadell that covers a small part and is associated with solar PV asset. of Oliva and it includes a data center of 75 megawatts and you will see the evolution of this but it's under construction fully permitted Villaviciosa it's in the same situation fully permitted under construction and we will announce the project finance deal in the short term probably October November Probably October because it's done. And we will announce the bank that is going to stay with us in this project that includes Villaviciosa and other small projects that you have mentioned in your question.

Next question is coming from Tammy from Barclays. There were an article recently on the grids in Spain being 83% saturated. Can we please confirm our latest secure grid connection on the generation side?

I think that we have a lot of grid connections secured on the generation side, we have a lot of grid connections secured for data centers, we have a lot of grid connections secured for batteries, we have a lot of grid connection permits for wind. It's like, from grid connection permitting point of view, we have get a great great successful you know because we have given all the information to the market during the last two years but from generation for wind and solar we have a lot of connection points for data centers we have close to 1.5 gigawatts and growing it's like probably we are the key player in Iberia region but I'm talking about Iberia all the time but I think that we should start to talk about Europe, because it's not only associated with Spain, but Spain today sounds good, and I think that at the end of this year we will give more visibility in other countries. But we are a global platform in Europe, and Spain, obviously, I think we are probably the king from connection point of view.

Last question comes from Jorge Alonso from Bernstein. What is our view on the Spanish market if BES are massively adopted? How the power price will look like?

Projection of power price is difficult and projection of the situation of BES in the long term is difficult. Because we have lived a lot of bubbles around all the different business associated with renewables in Spain. But we will see the evolution. In batteries, in my mind, you need to be the first. You need to connect. Not to talk. You need to connect. And to the key point here, the key point today over the table is that we are going to stay in London the 17th of November with batteries connected to the grid. I will talk about the numbers and the EBITDA that we are receiving in real time. And this is something that is valued. And our effort is focused today on this. connection, construction of new batteries. In the long term, if we suffer a massive volume of new installation of batteries, we will see, no? But battery is something that should have a strong return, because if you don't have a strong return, you could have troubles in the long term, no? Our view is focus on capex, efficiency, and to be the first. And this is our view, to be the first to construct with the best capacity and to be extremely efficient in order to maximize value. And we will see evolution. Power price and power prices of electricity, it depends on demand. It depends on demand. This is a question associated especially with demand. Data center, vehicles, electrical vehicles, industrial demand is growing. During this year we have seen that the demand is growing. The electrical demand is growing. It is not in a bad situation. It is better than a few years ago. It is growing but probably could grow a lot if Europe enters the data center business, for example. not only focus on data center in the industrial part, we need to develop industry. And you received the message from my colleagues from the utilities, from Endesa, Iberdrola and Naturgi. They received massive questions of industrial players that want to get connection points on the grid because they want to receive electricity, renewable energy. electricity. And Spain has a strong advantage from a price point of view. We have a cheap price of electricity and it's an enormous advantage for the industry. And I'm completely sure that the situation will improve in the next years. And it's not only the demand come. When I talk about industry, I talk about hydrogen technology. Hydrogen is going to make enormous consumption of electricity I'm talking about new industries but I think that we are optimistic about the future price of electricity in Europe Spain, Portugal, Italy in all the countries of Europe it's like demand is going to answer it's answering and we will see a strong demand in the future thank you very much for being part of this conference called And our investor relations team, David, will be available for any additional information that you may require. And hopefully, I hope to see all of you in London the 17th of November with a lot of surprises and news and business plans for the future and a lot of renewable energies. And we will see you in London. Thank you very much. Thank you.