Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Acciona SA (ACXIF, Financial) has a strong commitment to climate action and is advancing towards a net-zero economy.
- The company has a substantial portfolio of 14 gigawatts of highly liquid renewable assets, providing P&L predictability.
- Acciona SA (ACXIF) is on track to deliver another record year in capacity additions, with significant growth in its pipeline.
- The company has received formal offers for approximately 6 gigawatts of its asset base, providing flexibility in optimizing outcomes.
- Acciona SA (ACXIF) has a strong infrastructure business, with excellent performance in construction and new project awards, particularly in Australia and Latin America.
Negative Points
- The first half of 2024 was characterized by exogenous factors leading to an atypically negative period for the renewable energy sector.
- Weak electricity demand in Spain due to mild winter temperatures and high LNG reserves resulted in some of the lowest pool prices in history.
- The company had to significantly reduce production as it was often not economically viable.
- International operations also faced adverse conditions, including weak volumes and grid output limitations.
- EBITDA fell by 39% to EUR419 million due to lower prices not being offset by higher production.
Q & A Highlights
Q: Can you provide an update on asset rotation for the rest of the year, including geographies, portfolio size, and valuation?
A: We have to be very limited in the information we share on this topic due to the competitive nature of the transactions. We have a significant amount of capacity in discussions with various buyers globally. There is a strong appetite for high-quality assets, and we expect to close transactions within the next semester to meet our targets. (Jose Manuel Entrecanales Domecq, CEO)
Q: Are you seeing a pickup in demand for PPAs and supply?
A: The appetite for clean energy from corporates remains very strong globally. This demand is particularly high for wind assets due to their ability to deliver clean energy immediately and reliably. We believe this strong demand, along with healthier wholesale power prices and resilient renewable energy certificate prices, provides a positive environment going forward. (Javier Montes, Head of Commercial)
Q: Can you explain the effect of the regulatory banding mechanism in the second half?
A: The CNMV requires us to account for the banding mechanism of our assets based on their profitability. This year, with the normalization of prices, two vintages came back into the regulatory system, resulting in a EUR60 million regulatory payable recorded in H1. This will unwind throughout the rest of the year, and we expect a net positive effect by year-end, with an average regulated price of around EUR85 per megawatt hour. (Jose Entrecanales Carrion, CFO)
Q: Could you provide details on the installation timing for new assets in 2024? Will most capacity be operational in the fourth quarter?
A: Capacity additions for 2024 will be mainly back-end loaded, with approximately 1.2 gigawatts to be installed in the second half of the year. Projects like [inaudible] and Forty Mile will start contributing more towards the end of the year. (Arantza Ezpeleta, COO)
Q: With Nordex reentering the US market, do you expect to shift more investments there?
A: Nordex's presence is not a major variable in our investment strategy. We are focused on the US and Australia for capacity additions in the next few years. Nordex's reentry may help, but it is not a significant factor in our strategy. (Jose Manuel Entrecanales Domecq, CEO)
Q: What is the impact of EUR1 per megawatt hour lower average price or one terawatt hour lower output on revenues?
A: A EUR1 per megawatt hour change in power prices impacts revenues by EUR2.5 million in Spain and EUR4 million internationally. A one terawatt hour change in output impacts revenues by approximately EUR65 million. (Santiago GĂłmez, Head of Energy Management)
Q: Is the one gigawatt installation objective for 2025 conditional on certain levels of asset rotation proceeds?
A: The one gigawatt planned for 2025 is almost committed and not dependent on asset rotation proceeds. The CapEx involved is half of what we used in 2024, contributing to improved ratios in 2025. (Rafael Mateo, CEO, Acciona EnergĂas Renovables)
Q: What are the EV to EBITDA multiples for the hydro divestment?
A: The implied multiple for the hydro divestment is around nine times EBITDA, with an EV per megawatt multiple of around EUR1.6 million per megawatt. We consider this a fair price for high-quality assets. (Jose Entrecanales Carrion, CFO)
Q: What are the implications of a potential Republican administration in the US?
A: We do not expect significant changes with a potential change in the US administration. The fundamentals of the market remain strong, with growing demand driven by data centers and high-tech industries. (Rafael Mateo, CEO, Acciona EnergĂas Renovables)
Q: Do you see risks on the growth of AI on your ESG or reputational impact? Can you vet the activities of your potential data center customers?
A: The ethics standards in the AI ecosystem are still under scrutiny and remain to be defined. As a supplier of electricity, we consider this a far-fetched risk for now. (Jose Manuel Entrecanales Domecq, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
