Good evening, ladies and gentlemen. Welcome to our first half 2022 results presentation, which will be hosted by our CEO, Francesco Starace, and our CFO, Alberto De Paoli. In the presentation, Francesco will provide some highlights of the period, while Alberto will walk you through the operational and financial performance for the group. Following the presentation, we will have the usual Q&A session. We ask those connected to the webcast to send questions only via email at investor.relations@enel.com. Before we start, let me remind you that media is listening to both the presentation and the Q&A session. Thank you, and now let me over to our CEO, Francesco.
Thank you, Monica, and good evening, everybody. Let's start with the highlights of this period. During the first half of 2022, the extreme scenarios in which we performed our activities did not stop the operating and underlying evolution of the business. Our renewable development continued to be robust, performing in line with expectations and moving towards the full year target. Our growing CapEx were largely deployed in inflation-protected activities. Our successful commercial season accelerates the medium to long-term strategic targets of the groups. Our business in Latin America proved not only resilient, but benefited from adequate and protective regulatory frameworks, particularly in Brazil. The energy crisis that has hit Europe created a challenging market context, translating into a short-term and temporary squeeze in our integrated margin, offset only partially by portfolio optimization activities.
Our strong liquidity position built in the past years and limited refinancing needs, thanks to the active debt management that we have carried out in 2021, position us optimally to navigate the current financial markets. In addition, the temporary working capital items are on the way to reabsorption, as we have anticipated in the first quarter results call. We kicked off the final streamlining of our group structure, announcing the exit from Russia, the sales of Fortaleza and the Chilean transmission assets. In quarters to come, we will accelerate further on this strategic target. We have now excellent visibility on the second part of the year. On the back of the evolution of operating dynamics, we confirm our full year guidance. In the next slide, I show you how the renewable development machine performed during this past semester.
Renewable capacity reached 60% of the total generating capacity that we have installed, thanks to more than 5,000 MW developed in the last 12 months, out of which 1.3 GW in the period in line with forecasts. We target to reach more than 60,000 MW of renewable energy capacity by year-end, developing around 6,000 MW in 2022. More than 60% of the plan objective is, at this point, already addressed. Our future ambitions are backed by a pipeline that is today in excess of 400,000 MW, whose mature part ensures a coverage of the residual targets of more than 4 x. Our development effort combines with a CapEx spent protected from inflationary dynamics. We are in slide number four . Our investment in the semester totaled EUR 5.9 billion.
85% of this amount has been allocated to networks and renewables, two businesses that are greatly geared into inflation. Our networks, we spent more than EUR 2.5 billion, a 9% increase year-on-year. In almost all the region where we are, this CapEx is remunerated by regulatory frameworks that recognize an automatic adjustment for CPI within the following twelve months. On renewables, we have allocated more than EUR 2.5 billion, a 33% increase year-on-year. On the capacity currently in execution, we secured already more than 60% of our equipment at prices that do not impact the CapEx per megawatt ratio. Additionally, PPA prices reflects inflation and energy dynamics, creating a natural hedge.
In our global retail operation, we launched commercial campaigns that proved to be extremely successful and accelerated our strategic positioning, as we can see in slide number five. In the last 12 months, we have added 2.5 million customers to our free customer base. Customer acquisition ran well above what was in our plans and pushed sales in the liberalized market up 10% versus previous year. Worth to mention that this dynamic was particularly evident in Italy, where the churn rate declined sharply to 10% versus 13% that was expected and where the regulated tariffs were set for the first time at higher prices than the ones offered in the liberalized market. These dynamics are resulting in an acceleration of our strategic targets well visible in the future years.
Our new future projection will take full advantage of this commercial success, even if, as I will explain later, it created a short-term impact in this first half. I end this part of business performance with Latin America, where results are showing the quality that we have in our assets. The performance of our Latin America operation has been robust. This is thanks to a recovery of business dynamics post COVID-19, positive regulatory adjustment, and currency's revaluation against the euro. Worth to highlight the 37% increase in Latin America network EBITDA, which is mainly driven by Brazilian operation, which are up 47%, where remuneration schemes are supportive and continue to be adequate and predictable.
In particular, regulatory adjustment resulted in a 25% tariff adjustment in Ceará since at the end of April, and we will also benefit starting from July from a 12% increase in the tariffs that are applicable to the São Paulo distribution. This good evolution of our business globally came together with an unprecedented energy crisis in Europe, which hit our economics in the period, in particular, our integrated margin. I will explain why in the next set of slides, starting from a well-known market context. This is page seven. Commodity prices have increased remarkably and suddenly in the first semester of the year. Gas prices reached an all-time high, increasing four times versus 2021. We are talking about Europe.
This growth has been driven by the uncertainties that are associated with flows from Russia, the biggest supplier of the European Union, and coupled with an exceptionally low level of gas storage in the old continent. CO₂ prices doubled on the back of various reforms on the carbon allowances market currently under discussions. Tensions on commodities transferred to electricity market in Europe, driving electricity prices to unprecedented levels. The combination of all these effects resulted into a temporary squeeze into our integrated margins, particularly in Italy. We are now on slide number eight. The group EBITDA was affected by around EUR 1 billion of integrated margin contraction, partially compensated by trading opportunities that unprecedented energy market dynamics have opened up and that will continue to be deployed over the next few months.
The country that suffered from energy tensions and contributed the most to this impact on integrated margin was Italy, as you can see from the slide. The hit in this country is related to the different velocities with which the pricing dynamics on wholesale and retail prices have developed over the semester, combined with poor hydro conditions over the same six-month time. If we look at slide number nine, you see the impact of these factors. Contracts we signed before the energy tensions have protected our clients throughout the turbulence that ensued. Our pricing mechanism is based, as said before, according to fully hedged sourcing costs to lock in a stable margin at expected level of churn rate. The appeal of our offering resulted in a significantly lower than expected churn rate.
As a consequence, the volumes to deliver that fixed prices were 3 TWh higher than what forecasted. In addition, dynamics moved also the sourcing cost, as you can see in page 10. Hydro production declined significantly year-on-year, coming in 4 TWh lower. Together with higher sales, this created an open position of more than 7 TWh vis-à-vis what was planned. We closed this open position with a combination of additional thermal production and purchases from the market uncovered, and this resulted into EUR 1 billion higher costs, which caused the drop in the Italian integrated margins. The volatility of this semester and its evolution has, however, allowed our integrated position along the value chain to function, rebalancing this abrupt transient, as the following chart shows.
In the first six months, more than half of the integrated margin hit was reabsorbed by trading on portfolio optimization activities, thanks to the extreme volatility of the same energy markets. We see this mitigation effect to continue. We project our guidance according to the following visible and highly predictable business dynamics. We have completed the repricing of customer contracts, maintaining highly affordable prices while restoring a normalized level of profitability of our portfolio, taking into account the higher volumes. We assume a level of hydro sources which are to remain still below the historical second half standard production, and we have hedged forward the additional terawatt-hours we will have to cover, locking also sourcing costs at this point.
We are enjoying an acceleration of renewable energy growth worth around EUR 800 million based on full contribution of the capacity added in the last 10 months and the development in the U.S. in the second half of the year. In summary, the actions that we have already undertaken are supporting our confidence in the evolution of the group financials. In this extreme scenario, the one we are navigating, our integrated positions prove to be the right stabilization mechanism, as it allows our results to absorb extremely rapid transients as the one we have seen and react promptly within the same 12 months budget year. I want also to add that the exogenous factors, which proved to be a headwind in the past, will also prove a massive tailwind in the year to come.
The future positive evolution of the integrated margin will come together with an acceleration of our strategic target of simplifying, refocusing, and streamlining the group. This is page 12. I kick off with what we have announced so far, the sale of our stake in Enel Russia for a total equity value of around EUR 140 million, which will impact positive our net debt for around EUR 600 million. Pending the final approval of the Russian Special Commission, we expect the closing in the third quarter of this year. We disposed of a thermal generating power plant in Brazil for around EUR 100 million. Today, we also made public the sale of the transmission activities in Chile as part of an ongoing effort to optimize and concentrate our portfolio on assets that fit highly with our strategic positioning.
The sale of this transmission asset, which is expected to be closed by the end of the year, will generate a cash in of around $1.3 billion. This effort will continue and will accelerate in the next quarters, aiming at creating a much simpler group, exiting from some non-core countries and leveraging on the stewardship model in those tier two countries that we are present. On the back of what we have observed and managed, let us turn to full-year guidance one year at a time at the end of the year. Here we are at slide number 13. The first half of the year, as we have seen, has been turbulent, but the very clear response of company's dynamics allow us to confirm the targets we have for the full year.
Alberto will detail that with some granularity, but let me say that the targets we are confirming today are based on, first, a high visibility of the evolution of the second half and the assumptions that are also quite conservative. I am referring in particular to the rebalancing of the retail wholesale pricing and balance and the contribution of portfolio optimization that is actually taking place. Second, the evolution of the stewardship business in line with what we have already guided, that is a contribution to the EBITDA of around EUR 500 million. We can also confirm that our fixed DPS payment is fully covered, not at risk, and we can reiterate our commitment to grant the simple, attractive, and visible dividend policy we have announced last November when we had our Capital Market Day.
To make it clear, we confirm that EBITDA will land at the EUR 19 billion-EUR 19.6 billion range. Net income will land in the EUR 5.6 billion-EUR 5.8 billion range, and the dividend per share will be at EUR 0.4 per share. Alberto, I hand over now to you to walk us through the economic and financial performance of the group. Thanks.
Thank you, Francesco. Good evening, everybody. Let me quickly summarize how the main drivers of the period have translated into the economic and financial results. Renewables continue to prove a driver of growth, adding EUR 450 million in the period due to a combination of new capacity developed and higher prices. LATAM resiliency is evident with EBITDA up by EUR 500 million versus previous year, mainly driven by stable and reliable regulatory frameworks. Worth to highlight that our platform-based business management recorded efficiencies across all businesses and geographies for around EUR 270 million in the period. As Francesco explained before, the turbulences in the energy sector, together with the growth in Europe, higher sourcing costs and temporarily impacted our integrated margins, as I will detail later in the presentation.
Our strong financial position is visible and leverages on EUR 26 billion of liquidity available and limited refinancing needs. Thanks to our active debt management, cost of debt continues to decline, reaching 3.4% in the first half, in line with plan expectation. On slide 16, now I show you the EBITDA evolution for the quarter. Despite a strong volatility, our business performance offset the energy crisis impact and ordinary EBITDA came in almost flat year-on-year. In the first semester of 2022, the main dynamics observed can be summarized as follow. Networks increased EUR 100 million as LATAM benefited from tariff indexation and efficiencies that more than offset the WACC reset in Italy and the government's measures implemented in Romania.
The group's integrated margin dropped EUR 1 billion on the back of the dynamics already anticipated by Francesco, and that I will detail more later, in which hide the growth coming from renewables. This negative hit was only partially compensated by a portfolio optimization contributing more than EUR 500 million. Stewardship business model added EUR 270 million, mainly through Ufinet disposal. Finally, it's worth to highlight that the EBITDA evolution has been negatively impacted by delta non-recurring for around EUR 100 million. Currency devaluation against euro had a positive impact overall in the semester for more than EUR 200 million. I will now dive into the EBITDA evolution for networks on slide 17. Networks EBITDA is EUR 3.7 billion, increasing 3% versus previous year.
Going into details by country, Italy decreased by around EUR 70 million due to the negative effect associated with the last year regulatory review, partially offset by efficiencies recorded in the period. Iberia decreased by around EUR 70 million, mainly due to the negative effect deriving from previous year settlements. Romania weak performance is related to a delay in the recognition of the higher cost due to price spike and needed to cover network losses. Discussion on this point is ongoing, and remedy actions will be agreed by the end of the year. Latin America countries perform extremely well, contributing for around EUR 300 million, mainly thanks to 190 tariff indexation, almost entirely in Brazil, and currency revaluation movement contributing for around EUR 100 million. Finally, we recorded EUR 60 million of efficiencies.
Now moving into the EBIT evolution of Global Power Generation and Enel X Global Retail, we are on slide number 18. Where we have already commented in Q1 results release, we present the financial performance of Global Power Generation and Enel X Global Retail altogether, as we believe it is the best way to represent how this works protecting marginality. In first half, EBITDA for Global Power Generation and Enel X Global Retail amounts to EUR 4.7 billion, down 4% year-on-year on the back of the dynamics already commented. I will now dive into the dynamics observed in each geography. As you can see from the chart, Italy suffered the most from energy tensions, with EBITDA decreasing year-on-year more than EUR 750 million on the back of EUR 1 billion integrated margin contraction, partially offset by commodities portfolio optimization for EUR 250 million.
The EUR 1 billion impact on the integrated margin is originated by the following dynamics. As Francesco said, in the first semester of the year, we had to manage 7 TWh of unexpected on open position, composed by 3 TWh additional volume sold at fixed price and 4 TWh or less hydro production. The drop into hydro production was covered by more expensive sources, resulting in EUR 600 million of higher cost. The additional volume sold to customers translated into EUR 400 million negative margin impact, an impact that will be neutralized in forthcoming quarters, as repricing comes through, volumes increases stabilize, and sourcing costs are fully hedged. In Iberia, the integrated margin management contributed positively for EUR 240 million.
The net effect of increasing generation margin and lower marginality on the retail business impacted by increasing sourcing cost has been positive at around EUR 140 million overall. We had an additional short position management that added around EUR 100 million. Rest of Europe contributed negatively for around EUR 80 million, mainly associated with the price cap introduced in Romania. In North and Latin America, the development of renewables added around EUR 160 million, of which EUR 90 million in the U.S. and the rest in Brazil. This growth has been compensated by the dynamics related to tax equity partnership in the U.S. this year more skewed towards the second half of 2022. Finally, Ufinet deal under the stewardship business model contributed positively for EUR 220 million to our results.
I will now dive into earnings evolution on slide number 19. Before, let me add that on our efficiency effort, and I'm now on page 19. Thanks to a digitized and performant asset base, we continue to deliver efficiencies across all businesses, and over the period we recorded savings for EUR 300 million, which offset almost in full the impact of FX and CPI. Around 50% of efficiency have been recorded in infrastructure and network, almost 30% on customer activities, while the rest coming from conventional generation and holding cost reduction. Now into earnings evolution on slide 20. Ordinary Group net income came in at EUR 2.1 billion on the back of dynamics commented at EBITDA level and higher D&A recorded in the period, only partially offset by lower taxes.
D&A are up 500 million year-on-year on higher investments deployed, FX impact, and higher bad debt accruals in Italy associated with the increased volumes built in the period. Net financial charges mark an overall improvement of around 9% year-on-year, around 100 million, thanks to the accelerated debt refinancing carried out during the last twelve months of the last year, and that brought down cost of debt of around 20 basis points. Income taxes decreased by around EUR 300 million , driven by the lower economic results, the adjustment recorded last year on the IRES that more than offset the negative one-off accounted in Italy for the decree on the windfall profit tax worth roughly EUR 50 million. Minorities are in line with previous year.
We confirm our full year guidance on EBITDA, as Francesco said, now we are on page 21. Building it starting from the first semester of the year. We build our guidance starting from results of the first semester, net of the non-recurring items recorded in the first six months. This turned out to be EUR 8 billion, so reaching EUR 16.3 billion as a basic inertial level of EBITDA. On top of this, we see the following moving parts: networks that will grow further EUR 500 million, thanks to further tariff adjustment in Brazil and the regulatory agreement we expect to reach soon with the regulator in Romania.
On the integrated margin, we expect EUR 2.2 billion of additional EBITDA, driven by the already said contracts repricing for EUR 1.3 billion, renewable growth for EUR 600 million, and hydro recovery in Chile and Brazil for EUR 200 million. Worth mentioning, we are not assuming any recovery in the hydro production in Europe, nor a decline in power prices. The evolution of the second half integrated margin is secured. At 100% of contracts have been repriced already, 100% of sourcing costs hedged, 100% of renewable capacity contributing to growth already commissioned and under construction. Finally, our stewardship business model will contribute for additional EUR 200 million-EUR 300 million, in line with the expected contribution of EUR 500 million in 2022 indicated in the last November Capital Market Day.
All these elements are under our managerial control and highly visible at this time of the year, and allow us to confirm our guidance for 2022, despite the extremely volatile environment we are operating in. Now, moving to the cash flow on page 22. Group FFO evolution in the first half came in EUR 800 million positive, improving by EUR 1.4 billion versus the first quarter. Net working capital was equal to EUR -5.2 billion, with EUR 0.9 billion of government measures that reached the peak level in the semester and accounted for EUR 2.6 billion overall in our net debt figure. EUR 1.4 billion impact from energy markets context that remained flat versus Q1 due to the still high level prices. EUR 1.1 billion CapEx seasonality, improving EUR 600 million versus the first quarter.
The remaining EUR 1.8 billion is in line with the historical evolution of the business throughout the quarters and versus previous year. In the second half, we will maintain our focus on working capital optimization, and in the following slides, I will show you the expected evolution of all these dynamics by the end of the year. Finally, income taxes and financial charges paid accounted for EUR 2.3 billion in line with our past trends. Let's now take a look at FFO expected for full year 2022, and I'm on page 23. As you can see, in the second part of the year, we expect FFO pre-working capital movements to reach EUR 7.2 billion, embedding a 65% EBITDA conversion in line with the past and bringing our FFO pre-working capital management to around EUR 8 billion.
Going in detail on working capital movements compared to the EUR 5.2 billion negative in first half, we expect the following dynamics. Seasonality associated with CapEx development will be fully reabsorbed by year-end, in line with historical trend. The disequilibrium between vendors payment and client bill collection will start to rebalance and reabsorb for around EUR 400 million. 1.4 billion of working capital management improvement is associated with the standard path of business dynamic. We therefore see EUR 3 billion delta working capital improvement in the second half of the year, which coupled with the 8 billion commented before, will bring our FFO to around EUR 11 billion at the end of the year. Worth to highlight that in our assumption, government's measures are still considered as a negative item in our cash flow dynamics.
Let's now take a look at net debt on slide 24. Net debt amounted to EUR 62.2 billion at June. Main moving parts described in the chart are the following: positive FFO, EUR 800 million, as already commented. Investment deployed for EUR 5.9 billion, increasing 22% versus last year. Dividends paid for EUR 2.4 billion, EUR 0.4 billion associated with active portfolio management activities, mainly related to the consolidation of our renewables assets and debt, the consolidation of Enel Russia, which will be closed within the third quarter with recognition of total consideration. Around EUR 2.1 billion from currency revaluation and EUR 100 million of new leasing. I want to remind you that our net debt figure includes impacts related to the accounting difference between the net debt at FX hedge and net debt reported, as well as leasing.
Net of this item that are pure accounting items, our operating net debt would have been equal to EUR 58 billion. Furthermore, it is worth to highlight that it includes already EUR 2.6 billion of government measures to be collected in the next months or so in the next year. Now, I'm guiding you on the figures related to the full year on the net debt guidance. We see this moving part. The positive cash generation of EUR 11 billion, with the dynamics already commented. CapEx will stay at around EUR 15 billion, up 15% versus previous year. Dividends paid for EUR 5 billion, out of which EUR 4 billion to Enel and the others for other minorities.
We foresee an acceleration of our active portfolio management, particularly on the disposal side, as our focus on simplification, streamlining, and portfolio improvements continues, as you can already have seen by the presentation and the last announcement on the Chilean transmission. As of today, we are projecting more than EUR 4 billion of disposal to be executed in the next six months, partially compensated by acquisition already done, minimal equity injections in our joint ventures. The strengthening of currencies against euro will continue to weigh in at more than EUR 2 billion. I want to remind you this is purely accounting effect because we use hedges to offset the effects of volatility. Net debt is expected to land at around EUR 61 billion for 2022, prudently assuming government measures will not be cashed in line with what anticipated on the evolution of the FFO.
Net of accounting effects and government measures, the full-year adjusted net debt would stand at around EUR 54 billion. Before the closing remarks, I would like to highlight the soundness of our liquidity profile that as of the end of June stood at EUR 26 billion, so which almost EUR 7 billion in cash on hands and remaining EUR 19 billion in readily available committed credit lines, reducing refinancing risk. This level of liquidity covers 1.6 x the debt maturing throughout 2022-2024 plan period, amounting to EUR 16 billion, net of short-term debt that is routinely rolled over. We consider the group's liquidity position as more than satisfactory to face the turbulences we are living, and we don't see any short-term risk that might impact the solidity of our balance sheet. Now some closing remarks. Francesco, hand over to you.
Thank you. We can basically wrap it up as follows, that in face of this abrupt transition, the underlying operations of our businesses were extremely reactive and very strong in the first part of the year, and the resilience is presenting us well positioned for achievement of medium- and long-term objectives. Vis-à-vis the short-term pain caused by the turbulent transition of these six months, the integrated business model reacted swiftly to offset extreme circumstances and is instrumental in dampening possible medium-term turbulences and pushing us to our targets on a faster track. This offset is possible thanks to the contribution of our renewable development that contributed over the years, despite increasingly challenging conditions, and we expect it will contribute as much as EUR 1 billion additional EBITDA due to growth to the full year EBITDA number at the end of 2022.
Decision of re- and pre-funding taken last year, a bigger liquidity position in hand, and an uninterrupted and focused activity on asset portfolio simplification are supporting our strong financial position, which we think is more than appropriate to navigate the current credit context. We can confirm our guidance and our dividend policies according to the commitment we had with the market and the principles of being simple and transparent. I think we can now open the M&A questions. Monica, I hand over to you.
Thank you, Francesco. You said M&A instead of Q&A, which I think that today is particularly appropriate. I'll start with a few hot topics, I would say. I thank all of the analysts that sent questions through. A set of questions for you, Francesco, on the long customer position and integrated margin management. Are you reconsidering the strategy or do you believe that these results are simply the consequence of an extreme environment while protecting long term?
I think this is, as I said, a very good test of, the soundness of this strategy. We were able to absorb this incredible transient. Let me just reflect on the fact that prices trebled basically in over a few months react to it in a way that not only we will basically meet our goals through the year, but we lock in a much larger margin for the future years going forward. The answer is, the swiftness with which we reacted and the capability to even offset the short position on the hydro is a testimony of the strength of this business case, and we think we are going to monitor closely the evolution of it. There is a mismatch between the demand of customers and production that you don't want to exceed.
We think that we are, at this point, in the right range. We don't think this should change in a big direction, one direction or the other.
Okay. I think, Cyril, talking about the integrated margin and dynamics underneath, what are your expectation for 2023? How do you expect the current context to evolve, and how are you adjusting your strategy?
We expect 2023 markets to remain tight. We don't see a likelihood for gas prices to ease unless, and I say unless, there is an agreement at European level for caps to be added to the gas prices. Henceforth, I think that electricity prices will remain tense and high. Based on that, we think that the system we have put in place at this point protects us, and actually it allows us to increase our margins in a reliable way and in a sustainable way. Let's not forget, this is going to be a transient, although maybe longer than people think, so we don't want this to remain as a sore point between us and our customers or between us and our governments.
There is a measure into what we do and I think that is very important to us. This must be a sustainable transient and not a crazy one.
A technical question around contracts. Do you think it makes sense to fix prices for two years or more?
At this point in time, it is maybe a question that has to be asked to customers. I think at this point in time, for us, it does make sense to go longer than two years because it will allow prices to go a little lower in the early part of the curve. We're trying to find the right match between our wish and the wish of customers. So far I think the average is a three years contract sweet spot. That is a moving target. I think it will probably stabilize during the end of 2022.
I move to you, Alberto. There are a few questions around the guidance for 2022. If you can walk through the moving parts again, and if you can compare to full year results, so bridging full year 2022 against 2021.
Okay. I can repeat what I said for the second half guidance. First of all, we are replicating without the one-off the results of the first year. We are gonna add this EUR 8 billion to the EUR 8.3 billion we had in the first half. We are adding good, but more importantly we are adding better underlying trends. We reached the EUR 16.3 billion that is the initial base to look at the further growth. As said, repricing is something that has been completed and also the corresponding cost of sourcing have been fully hedged. This is something that is gonna add EUR 1.3 billion to results.
I will stress that we are not assuming any kind of compensation, so we are not assuming better hydro production in the second half. We can hope that something may. It's possible that it would be an upside versus what we are assuming. We only see a better hydro production mainly in Chile because it's almost certain the level of snow is on top of the historical trends. It's almost certain that the hydro production will increase in Chile and in Brazil. Brazil because, you know, we have a compensation mechanism, and in Brazil you have heavy rains, but the compensation mechanism is bringing the level at historical trends. Our renewable development is under
100% underway. We also completed our supply chain, supply and demand, and all the projects are under construction and on time. On the other side, as said, we are paying extreme attention to the working capital management. Whereas we are working on our numbers, we are taking no big impacts on reducing prices because we have a huge amount of impact on working capital if prices go down, but it's something we are not assuming in the second half. Why? We are discussing and working with governments and regulators. That is one of the main actions that we are gonna take in the second half.
Okay. Alberto, stay with you. In line with the guidance, what would you consider the main risks in achieving your targets?
We have a good confidence in the numbers we gave because of things we said. We have some negotiations to be closed, but not so big in all the numbers we gave. I think that also some scenarios of high prices are already embedded in our assumptions. Clearly, there is a six-month notice period in terms of gas availability and other stuff. I think the main relevant aspect is how the government regulators will act in this period. This is the main concern or main question mark on these numbers. At present, the regulation that already has big intervention, we think that we have full clarity to reach our numbers.
Alberto, stay with you. We've got a couple of questions around the debt. The net debt has grown over a short period of time. The first question is this change the result of a weaker cash flow generation that cannot cope with investment levels and dividend payments?
Well, stock of net debt is. So if you deduct what we said is around EUR 3 billion coming from government intervention and also the impact on working capital based on this temporary impact on the energy markets, our net debt is fully in line with the expectation, with the trend we had in the plan. For this, and also our net debt/EBITDA is in line with, and so is still the lowest level of net debt/EBITDA in the sector.
Clearly, scenarios are changing and, because of this change of scenario, we will see, and we will, in the future, in the plan we are gonna present, if the trend we choose, and we are still on this trend, is still available or if some corrections and, well, it's useful to be done in a certain period to stay at a level that are more in line with the scenarios that we are living.
Still on the sustainability of the debt, what level of net debt on EBITDA can trigger a revision of investments or dividend policy?
Well, I think I have already answered. We don't think that there is a net debt level that will trigger something. We think that every period has a specific answer and specific managerial actions. I do think that, as said, having the lowest ratio in the sector is not something that we are in a hurry to do things or to trigger a different level of trajectory of development. Clearly also scenario may suggest us to change a little bit the speed of development, and to take also with some delays or some different business development, we can take also in this period the best opportunities that will arise.
Francesco, still on investments and dividends, it's a little bit of a slight same question in a different shape. What would you prioritize, investments or dividends?
Well, they are both inputs of the same equation, so what is important for us is the total return to our shareholders. I think we were clear when we spoke about dividends in the past times that we don't see risk to our policy in the short or in the medium term, and we intend to keep it clear and visible and simple. On investments, on growth in particular, we have every year a CMD, a Capital Market Day in which we give our outputs. Let me remind you that we are pretty possibly a unique company in this space that have time to EBITDA our investments in a cycle that is within two years, two years and a half.
It's very actionable lever if we want to modulate our growth, and it is something we always do in vis-à-vis the situations we're facing. This could be one of the cases. We will have to wait until the Capital Market Day to have the final precise figures.
Yeah. You probably already answered this question around the dividend policy and the confirmation of the DPS for 2023 and 2024, as well as the potential upside leading up for November CMD, so I would skip it. A set of questions around government intervention.
Mm-hmm.
Alberto, the first one is for you. Can you quantify the impact of existing measures in Italy and Spain, and how they are projected to be for year-end?
The total impact that we have piled up right now is EUR 2.6 billion, and EUR 200 million are related to Romania. Italy and Spain is 2.4. In Italy we have the cancellation of the system charges that impacted this cash flow, this net working capital and this half for EUR 900 million, bringing the overall impact at EUR 2.2 billion. In addition, we had this 25% clawback levy that overall is EUR 70 million. We accounted in the first half 50, we are gonna account in the second the residual 20. In Spain, we have still EUR 200 million to be cashed in from measures adopted by government last year. This is all.
Most of the impact are already in the first half results. That's why I said this is the peak. Taking into account all the measures adopted, they are the peak of the impact on our cash flow. Now we have to see when, so we will start to get back, and you will see this at the time in which new decrees will start to reintroducing into tariff in Italy, the system cost, and in Spain, so allowing the last p-tranche of cash in of the previous measures.
Okay, Francesco, couple of questions around regulation and government actions for you. The first one is on the likelihood for further government intervention in Italy. The second one is on the back of what has been leaked today around a registered draft law to clawback extra profits in Spain. If you can just share with the market your thoughts.
I think as far as Italy is concerned, what we can expect is probably the government to repeat again for the next quarter, so the one starting on September, the measures that were implemented in order to not put regulated proportions of the tariff on top of the already expensive energy costs. In a way, a repeat of what we have seen for the first and the second quarter in terms of that portion of regulated tariff. There are already discussions around that. There is maybe some nuances that this could be done in a less drastic way, so limited only for families that are effectively in distress or have limited buying power. That is something we will see probably in September.
On Spain, insofar as the announced draft law to clawback extra profits, it's very difficult for me to comment because we have not yet seen the full text. It is something that has to do with revenues. When you start talking about taxes and revenues, it's a very, I would say, difficult territory for even fiscal authorities that have some experience. We don't think we can have enough evidence now to comment. It's clear that governments need to become more creative in order to walk the fine line between what cash they need to sustain the efforts to reduce the impact on vulnerable customers and what limits the EU has given them.
In that case, I think a tax like the one that Spain has indicated is way beyond this kind of border. It remains to be seen in the drafts whether there is some corrective measures that make it possible. At this point, for us, it's difficult to comment.
Francesco, stay with you with a package of questions around the gas situation. So the analysts are asking if the current distress situation on the gas market is impacting our, if the measures that will be taken by the Italian government will be enough, what are these measures, and if they are enough to face the winter? Lastly, what's your view around the likelihood that the gas price cap is finally introduced on TTF?
Well, I think as far as Enel is concerned, we have no impact on the Russian companies and on Gazprom cutting gas to Europe because we don't have supplies coming from Russia. Our gas is supplied from Algeria, from the U.S. via LNG, and from Azerbaijan, so we're not directly impacted. Obviously, there is an impact if, and this I go to the second question, if the measures that Italy will have to implement in order to survive a winter, which could theoretically be a winter with no Russian gas.
Now, in that case, all studies and also some statements from our energy minister as recent as yesterday indicate that given the storage filling season progressing, and given the studies made, Italy should be able to withstand a winter without Russian gas, provided that some corrective measures are taken on heating time and heating temperatures in houses and offices, and also, some additional production of energy by coal, which governments will have to push into the system. That would make Italy probably make it through the winter. When the question on the likelihood for Europe to put cap on gas, I think is today not on the radar screen. Europe seems to not have an agreement on the likelihood for these prices to be capped.
We remain of the opinion that this is a mistake. It is possible that single countries apply what Spain has applied and therefore, there would be a proliferation of different caps, which would be difficult to understand and also complex to manage. At this point in time, our estimation is that there are no caps on gas in the foreseeable future for 2022 at least. That is, I think, the most conservative scenario you can have.
CFO, we stay attuned to government intervention. What's the current status of the discussion with the regulator in Romania?
Well, in Romania, we have a couple of impacts to be regained in the second half. On the price cap, that is on retail side, we have to regain so the difference between the cap and the cost of sourcing cost of energy. This is something that is already set. Now is the time to start to cash in back the money because all the procedures and also agreement with the government have been made. Now we will see, starting from now, flows of money that will repay the gap that we are financing right now.
In the distribution business, the situation, as I remember, the problem here is that we have to buy the energy to cover the network losses at a cost that is higher than what is recognized in the same year from the regulator. We are at a good point, I say, I think after a long discussion, to have and some agreed parts are related to the fact that this difference can be put in the RAB. Also what we had in the first quarter, there is the new agreement we reached.
In this case, after the final definition, we can define this as an investment because they would put into a separate portion of the RAB remunerated at half of the WACC of the normal distribution. This will solve the economic impact, and may solve also the financial one, because with a state guarantee, this part of the RAB can be easily sellable to banks.
Circo about the banks. CEO, a set of questions for you to end the hot topic by. Capacity build over the quarter is equal to 1.3 GW, in line with the first half of 2022, 2021, sorry. Are you on track with your target for 2022?
Yeah. We built 1.3 GW installed and connected. They were basically connected in Spain, Chile, Brazil, and India. We are aligned with the path that would bring us to target 6.1 GW of new renewable capacity in 2022. We have all these projects in execution phase. As always, there will be a question mark on the U.S. deliveries at the end of the year, so you might have one project or two move back and forth between December or January, but that's the ballpark and that's where we think we will end at around 6,000 MW.
On Asset Portfolio Management, can you update us on the plan for the stewardship business model? What's going to be your expectation for 2022, between Gridspertise and e-mobility? How these processes are going?
I say that we have the Stewardship model contributing in line with the expectation that we had outlined at the Capital Market Day. The idea is to reach a figure of around EUR 500 million for the Stewardship business. Out of them, EUR 200 million have been already secured because of the deal with Ufinet in the first half. We are going to go ahead and close the Gridspertise transaction within year-end. The e-mobility business is going to slip to 2023, given the IPO climate that is not the one that we expected. We think, by the way, that this will help us create more value with this business, which proves to be much more interesting than originally expected. Confirming the value, yes.
As far as Gridspertise is concerned, yes, 22. e-mobility, not 22.
Okay. Lots of interest around the LATAM, particularly on the back of the high multiples we closed our disposal in Chile. Analysts are asking if you can provide more color on disposals, and what's your view on the repositioning of the group in LATAM? I think it's for you, Francesco.
Yes, we have disposed of the only thermal power plant we had in Brazil, which is Fortaleza. It's a combined cycle. We have today announced the sale of the transmission assets in Chile with a very good result in terms of value creation. We are moving ahead with various other processes that are underway at the moment. I can tell you and confirm that there is a good level of interest from investors around assets in Latin America, and we want, as we anticipated this before, we want to take advantage of this good interest while it lasts. I think 2023 is basically going to be the pivot year in terms of finally wrapping up what we want to have in LATAM.
By the Capital Market Day, we will have a very crisp and clear picture of where is it that we're gonna land. There are processes underway in various parts of the presence we have in Latin America that I will not be able to disclose now, but they will come up very quickly to your attention in the next weeks and months.
I'll stick with this question as lots of analysts are asking, and I think it's for you, Alberto. The capital gain we are achieving with these disposals of the transmission asset in Chile and if this capital gain is or not included into our ordinary figures?
Capital gain is around EUR 700 million, and this capital gain is not included in our ordinary result.
Okay. Francesco, I think the last one on APM. Any update on the Russian assets? When do you expect to close the transaction?
We have no relevant updates. As you know, this is a process that is now underway in Russia. The committee that should approve the buyer has received the material and is progressing its evaluation. We did not have any negative or positive indication, so it's basically in a waiting mode at this point. We expect this to be cleared in the next month. Therefore, the transaction to be finalized within the third quarter of 2022. Let me remind you, this is a very simple transaction. It's just a question of handing the shares and being paid. There is not a complex process after the approval of the committee.
Alberto, a few questions around the hydro situation. Hydro situation is complex. Can you provide a breakdown of hydro conditions across countries of presence and the outlook for the year?
Overall, the hydro availability is lower than historical trend. We are on average 20% less than the historical trend. The situation is extremely dry in Europe, where Italy and Spain are roughly 40% below historical trend. Chile is still a very low situation right now. Chile is working in the first semester 50% below historical trends. While other countries like Brazil is on average, and Colombia is better than expected, better than historical trends. As said before, we don't see, so we are not assuming any big differences in Europe, while we are assuming, so in Latin America, better condition in second half for Chile that we are almost sure because of the El Niño that we have seen in these last months.
Net generation in the first quarter, in first half have been roughly 60 TWh less than previous year.
How much of either recovery is assuming the guidance numbers? I think you said that in the presentation, but analysts are asking, so maybe it was a lost number.
Well, as I said, in terms of EBITDA, it's only related to some recovery we're gonna see in Latin America for around EUR 200 million. That is Brazil and Chile conditions. No other recoveries are assumed in our forecast for Europe conditions.
Another popular question around inflation and inflation impact, associated with supply chain. What's the impact of inflation and supply chain bottlenecks on your projects in execution and under development?
On projects in execution, we see limited impact from inflation and bottlenecks. When it comes to other projects in pipeline, projects that we will see in the next plan, we see some impact related to inflation that will have different degrees in terms of technology, geography, and availability of specific materials. Clearly, what we're gonna see in the next plan is this impact together with the impact that inflation may have on prices. Because having the whole development on renewables, clearly inflation impact is impacting only the unitary cost at the development, but not along the life of the plant, because the plant has no cost.
We have to see carefully how inflation will impact on the price curve. What to say to highlight that our development cost over time have been running on a stable CapEx per megawatt ratio at around EUR 1.1 million per megawatt. This is over the 2019-2022 period. This has been despite the significant increase in yearly commissioning of new renewables capacity and the volatile context.
On customers, Alberto, can you quantify the increase in bad debt associated with the higher customer base and retail revenues?
In the first half, we have an increase in the bad debt of roughly EUR 140 million. This has been driven only by higher billing levels. As of today, in fact, we are not experiencing any impact in our collection performance.
Sorry, I'm just scrolling down to see. Okay, I think there is a question around the movement in capitalized cost, as in the semester we're up. If you can just provide a little bit of details on the movement of this item.
We work under a constant ratio of capitalized cost on total operating cost that is in the range of 25%. That is the same ratio that we had and we are having on the capitalized cost on CapEx. This is 25%. The increase mirrors the growth trend that you can observe in CapEx. This is why you see a nominal increase. We work under a 25% rule ever.
We received a question around the working capital movement that I think was addressed during the presentation. Francesco, maybe a question for you. What do you think. Your full year net debt guidance includes the EUR 2.6 billion of government measures, as you don't expect-
Yeah.
To recollect, to collect back, by the end of the year. What need to happen for you to recover this imbalance?
I think the. Let's see what this money is. This is today part in the fiscal budget of the country. Italy is taking the burden in on its fiscal budget. Clearly, this would be over the years mounting to an unsustainable level. We see this going back into the tariff, so being now paid by the rate payers, not by the taxpayers, as soon as prices will rebalance or return to normality. This could happen in two ways, abruptly, so from one quarter to the other, or gradually, with only some customer clusters being charged and the more distressed families being left out. In both ways, I think this would probably take place during 2023, insofar as we are concerned, and it would be an upside if it would happen partially or fully in 2022.
I actually forgot to ask something associated with the Chilean transmission transaction. Analysts are asking if we can share with them, and I think Alberto it's for you, the implied multiple on 2021 numbers, I think, which are the only public.
Implied multiple.
EBIT on EBITDA.
EBIT on EBITDA is around 22x.
Okay. Let me just go through the list to see what has been taken and what is still left. A question around gas inventories, if we expect to have to book losses on gas inventories. Alberto.
No, we don't have losses in gas inventories.
Okay. Another one, around what we said during the presentation, when we say that hundred percent of contract already repriced. Does it mean that you have already raised tariffs for customers to cover sourcing costs for full 2022, and you don't need to raise tariffs again?
Maybe I can tell you. The repricing of contracts under delivery in 2022 is completed. We have now noticed customers for contract that expire within the first quarter of 2023, that we are going to change their price, and they have six months to stay with us or switch to another supplier. Insofar deliveries of 2022 are concerned, they are repriced. We are now in the process of repricing the first quarter of 2023. This is a six-month rolling horizon, so it's this is the way it goes.
Okay. I think it was super clear. The CapEx, Alberto, EUR 15 billion looks above long-term guidance. Can you elaborate on this? Why CapEx is accelerating?
Well, this above guidance is related to two main impacts. One is on FX that is impacting the previous guidance of EUR 700 million roughly. The second is this unexpected one in the capacity market of Italy for the BESS that got an impact on CapEx because of the early payment for storage that we are gonna develop in 2023.
As far as it looks to me, I'm going to ask the last one, which is around a detail on value adjustment of the non-current asset of companies available for sale and an increase in write-downs of receivables primarily in Italy, Brazil, and Spain.
Okay. Complex question.
Yeah. It was complex for me to read as well.
The total value adjustments for the asset, I think, I guess it's the assets held for sale, is equal to roughly EUR 600 million. Which EUR 530 related to Enel Russia, and roughly EUR 70 for the Fortaleza thermal plant. The value adjustments is due to the book value alignment for the selling price. This has no impact on net ordinary income. The increase in impairment on receivable is around EUR 170 million. That is what I have already said before.
Okay. Just one small confirmation around the sale, I think, of the transmission asset in Chile, if this is included into the net guidance, net debt guidance. Alberto.
It's a part of the EUR 4 billion of asset disposal that we have announced, and now we have Enel Russia is the first, and also Fortaleza is the first three steps of this EUR 4 billion asset disposal.
Okay. I think this was the last question of the call. I want to thank all of the people that participated to this first half results release. We wish you a lovely summer, and we'll catch up after the summer break. Thank you.
Bye everybody. Bye-bye.
Bye-bye.