Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the ERG first quarter 2026 results conference call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Paolo Merli, CEO of ERG. Please go ahead, sir.
Good afternoon, everybody, and welcome to our first quarter results webcast. Here with me as usual, Michele, our CFO. Let me start with our economic results. EBITDA in Q1 closed at EUR 167 million, + 16% year-on-year, benefiting from the contribution of new installed capacity and, let me say like this, from an easy comparison, in terms of wind production in light of the very weak conditions over Q1 2025. To this extent, we can talk about the better wind conditions, but let me say still below the historical average. That trend was already captured in our full year guidance at the time of our previous webcast in mid-March. These positives were partially offset by lower clearing prices.
I mean, the higher productions, following these better wind conditions were partly compensated by lower capture price, in particular, clearing price linked to short-term hedging transactions. As these contracts, as you know, are typically executed three years in advance of the delivery date. In Q1 last year, value of hedging still benefited from the very high prices recorded in 2022 and 2023. It's worth noting the strong performance in U.K. U.K. contributed to the EBITDA with EUR 25 million, basically three times more than last year. This thanks to the higher installed capacity that was partly organic.
I'm referring to the 47 MW greenfield we executed in Northern Ireland in the second part of last year, and partly through M&A, the 73 MW wind portfolio that was acquired at the beginning of 2026, and contributing or consolidated as of the beginning of the year. Conversely, we had a fairly weak performance in the U.S. impacted by exceptional weather events, translating to lower wind availability and then lower productions. There were a lot of grid congestions in the grid, and these are for the price mechanism that is in the market. The U.S. had a negative impact on capture prices.
We tend to see those events one-off as one-off, but nevertheless, they had a negative impact that we estimated at about EUR 6- million , EUR -6 million in the quarterly quarter EBITDA. Quite substantial. In Q1, we invested, talking about CapEx, EUR 148 million, mainly related to the acquisition of the U.K. portfolio I've already mentioned, coupled, say, with the expenditures associated to our asset under construction, Italy, France, Germany. Adjusted net profit in Q1 was EUR 61 million, up 24% year-on-year, reflecting the greater operating, the better operating results I just commented, partly offset by higher depreciation, higher financial charges, and taxes.
Net financial position at the end of March was EUR 1.8 billion or less, down 4%. Slightly down compared to the end of last year, thanks to, let me say, solid, a very solid cash generation over the period. I am moving now to page five. Over the period, we also kept delivering on our strategy. We are progressing very well on our project pipeline, let me say, on top of the already announced assets under construction, namely the 130 MW I have already had the chance to explain during the last webcast. We made just yesterday, not just this morning in our Board of Directors, we made final investment decisions on a couple of projects that have now entered into the construction phase.
I'm referring to a 25 MW greenfield wind farm in France, and the revamping of a 41 MW PV farm in Italy. Farms, because there are more than one. Farms that are still under the Conto Energia scheme. We also obtain a final authorization, or so-called Autorizzazione Unica for our largest wind repowering project in Italy. The 121 MW in Sardinia will be plugged. Probably I already said that during the last webcast, now in the meantime, we received properly the piece of paper from the region that is the last word to this long, very long process of obtaining this authorization. Okay. On finance, let me say discipline continues to be one of our key strengths.
Yesterday, Fitch the rating agency reconfirmed our investment grade status with a stable outlook. We are quite proud of this achievement, which reflects say the appreciation for the work we have done so far. In this regard, I would like also to mention that during the period, we further optimized our financial structure through liability management amounting to almost EUR 500 million , EUR 500 million , that was refinanced by extending maturity and improving cost of debt. And part of this refinance debt was subscribed, as you can see the logo in the chart, by CDP, which is, you know, a state-owned key financial institution. Something we are again very proud of.
On ESG, ERG was included in the top five of the electric utilities sector in the 2026 Standard and Poor's Global Sustainability Yearbook. We are also proud to have completed together with Greenpeace installation of solar panels in a kindergarten in Ukraine as part of our social purpose. As regards shareholder remuneration, you already know, the AGM approved the EUR 1 per share dividend that is gonna be paid next week, with a yield of over 4%, which is, I may say, a rarity within our peer group. I now hand you over to Michele for his review of first quarter results.
Thank you, Paolo, good afternoon, everyone. Let me walk you through the quarter, highlighting the key drivers of our financial performance and underlying trends across our portfolio. Looking at power markets, prices were lower year-on-year in almost all countries where we operate. This trend, coupled with short-term margin fixed at lower prices compared to last year's, leads to reduction in the unitary revenues in most countries. However, as expected, the impact on our revenues was only partial, reflecting the quasi-regulated nature of our portfolio, where a large share of volume is already secured through PPAs or CFDs. I would like to highlight the higher capture price in U.K., driven by our newly acquired asset in England, which benefits of Renewable Obligation Certificates consents .
On the other hand, the trend of U.S. within the unitary revenues reflects an extra extraordinary increase of the basis cost due to temporary congestions, outages, and grid constraints in the period. Moving to production, in the first quarter, ERG reached 2.2 TWh of generation, 15% more than previous year. This trend is influenced by higher windiness compared to 2025, characterized by exceptionally weak wind condition across all Europe, but also thanks to the contribution from new capacity. This was made possible by the continued expansion of our portfolio with roughly 90 MW of additional capacity contributing during the quarter. In the first quarter, we doubled the production in U.K., mainly thanks to the new acquisition in England and the production of new greenfield plant entering into operation in Northern Ireland at the end of the year.
On the negative side, U.S. was influenced by extraordinary weather events impacting the availability of the plant. It compares with the first quarter of 2025, influenced by very high windiness. In conclusion, we have a quarter with a substantial increase in the European production. That remains, in any case, below the long-term average of our assets. In this sense, not representing the full potential of our portfolio. Now let's look at the EBITDA. In the first quarter, the EBITDA reached EUR 167 million. A very good result if we compare it with the first quarter, 2025. Remember that, as already commented, the first quarter, 2025 was affected by windiness well below historical average in Europe.
The main driver was the windiness, coupled with the perimeter effect from new capacity in a more challenging price environment. After the new acquisition in England and the greenfield plant entering into operation in Northern Ireland, U.K. reached 3x the EBITDA of previous year. On the other hand, United States suffered the decrease in prices and the low availability of the plant. Overall, the group recorded the results higher than last year by EUR 23 million. A comment now on the investment. In the first quarter, we invested EUR 148 million, mainly for the acquisition in England for EUR 115 million and for the ongoing activities on repowering and greenfield projects in France, Germany, and the [Italy].
These investments are fully aligned with our strategy, combining selective M&A deals and organic growth, particularly in repowering and greenfield projects across all geographies. Let's take a look at the cash flow statement and the net financial position. The net financial debt at the end of the quarter is EUR 1.8 billion, EUR -70 million versus the end of the year, also thanks to the disposal of the Swedish assets in January. This reflects a well-balanced combination of solid cash generation from EBITDA and continued investments to support growth. Finally, here you have a snapshot of our debt structure, which has not changed in its component, as it remains largely made up of green bonds, EUR 1.6 billion, but whose corporate loans component, for EUR 500 million, has been materially improved.
In April, we finished the liability management of our 2028 corporate loans maturities and the prepayment of the project financing of our latest U.K. acquisition. By way of repayment of the previous loans and drawdown of new loans, including the one from the European Investment Bank for EUR 240 million, at a significant lower margin and for longer maturities, we shifted all corporate loans beyond 2030, increasing their tenor and securing a significant saving in yearly financial charges. We leverage on existing hedges and exploit the credit rally before the Iran war to get the most out of this exercise, which will contribute to secure ERG competitive financial charges, expected at 1.8% in 2026.
Cost of gross debt will remain highly competitive until 2030, having only one maturity in 2027. Based on such financial strength, alongside our solid business profile, we got the confirmation of the investment-grade rating with a stable outlook by Fitch, which remain a cornerstone of our strategy. Indeed, high-value opportunity will be processed consistently with our rating by leveraging on the option available to investment-grade company, corporate like ERG. Thank you for your time. Now I leave the floor to Paolo for his final comments.
Thank you, Michele. Let me now conclude by looking at the guidance for 2026. In reality, it's a very simple and quick exercise since all our indications are confirmed. We still confirm EBITDA within a range of EUR 520 million-EUR 590 million. For sure, some upside could come from the current energy price environment, but please also consider our exposure to merchant power is limited as regard 2026 because we have already our short-term hedging in place. We still have roughly 1 TWh of energy exposed to merchant. CapEx is expected within the range of EUR 330 million-EUR 380 million, and this includes also the acquisition of the U.K. portfolio.
Let me say the investments we approved that were been approved by the Board of Director this morning will have just a marginal effect in 2026, as most of the payments are expected in 2027, so next year. Finally, at year-end, we forecast a net financial position within a range of EUR 1.95 billion-EUR 2.05 billion, including the above CapEx and, of course, the cash out for the dividend. I concluded, and we are now ready to take your questions.
Thank you. This is the Chorus Call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. We will pause momentarily. The first question is from Beatrice Gianola of Mediobanca. Please go ahead.
Yes, good afternoon, thank you for taking my questions. I have three. My first question is on the operational performance. The first quarter was good, as you commented, and representing almost 30% of your midpoint guidance. Was wondering what prevented you from upgrading it, and which elements do you see as critical to eventually reach the upper bound of such range? My second question is on the energy decree adopted by the government in mid-February. We know there are ongoing discussions between the Italian government and the European Union, wanted to have your thoughts and expectations in this regard. My last question is on M&A. Recall during the latest conference call, you mentioned that the company is working on an asset rotation strategy, on defining an asset rotation strategy, so w as wondering whether you could provide an update on this, which assets and geographies could eventually be targeted, in your view?
Okay, Beatrice, let me start from the first questions. The operational performance in the quarter, I confirm was good. Say the first quarter, as you know, it's one of the most important throughout the year, along with the fourth quarter. A good start for sure. We are satisfied. It could have been even better if U.S. had performed in line with our expectations, because in the end, the contribution of U.S. was short of roughly EUR 6 million-EUR 7 million compared to our expectations. In the end, say the good performance in U.K. and the better wind in January and February, in particular in Italy, so allow us to post a quite good performance in the quarter.
We decided to stick on our guidance ranger because in the end, honestly, April was not particularly good in terms of wind, even though over the last few days, wind seems to be back very strongly. We are quickly recovering. So the question, if I understood well, you ask for what should happen to reach the upper part of the guidance. As we like to define ourself internally, we are a company, [P per Q], so price multiply by volumes. What I can do to help you analysts to make your best estimate is to provide you with a very simple sensitivity.
The sensitivity is EUR 10 per megawatt hour in prices higher of our internal estimates, are worth basically EUR 10 million, EUR 9 million-EUR 10 million of EBITDA. We just have roughly 1 TWh of production still exposed to merchant. Why? In terms, as regards production, say 100 GWh of more productions, means, of course it works also the other way, the sensitivities, but 100 GWh is worth more or less EUR 10 million. Very simple. EUR 10 per megawatt hour in price, EUR 10 million EBITDA, 100 GW in production equal to EUR 10 million.
To reach the upper part of the guidance, we would need, say, from EUR 10-EUR 20 per megawatt hour higher in the selling price as regards the merchant volumes and from 100 GWh-200 GWh of higher production. Is it that possible? Of course, yes, because in terms of forward prices for Q2, Q3, and Q4, in particular in some countries such as Italy or U.K., that's our, by the way, our two main countries right now, we have already forward prices higher than from EUR 10-EUR 20 compared to our budget. In terms of production, who knows? I would need a crystal ball.
Difficult to, you know, predict how wind is going to blow, especially in the fourth quarter, because, honestly, the fourth quarter usually is going to be the swing quarter. If you want, I can, because we are becoming experts more and more on climate and meteorological matters, experts, and in particular, the World Meteorological Association is expecting at least with a 40%, 50% probability that Niño or Super Niño will come during the fourth quarter of the year, actually in September after the summer, and this usually is associated to good wind. In the past, was like this.
Let's see, I repeat, I haven't got the crystal ball, we have elements internally to be a little bit optimistic. I hope to have answered your question. About the guidance, please, don't keep asking me because the only thing I can say, make your best estimates. I provide you with the parameters to calibrate it as best as possible. energy decree, you open a subject that make me very angry because we are basically very, very negative on this decree.
Fortunately, let me say the European Commission just last week on the 5th of May, published on the official journal of the European Union a communication, which is the I can read you because I want to be more precise because I got the document just in front of me. The Middle East Crisis Temporary State Aid Framework. You can find it on the website, for sure, Googling it. This document, which is an official document, I repeat, loaded on the official journal of the European Union at article 45 states that the member states can I quote because I'm reading by the official document.
Member states can consider measures to mitigate the impact of high gas prices, but at certain conditions. Those conditions are six, seven. The first one is they have to be time-limited, I mean, these measures. The second condition, they are designed to prevent internal market distortions. The third condition is they preserve long-term investment signals for clean energy. The fourth condition is do not cover the compliance cost of ETS, nor use ETS prices as a proxy to determine compensation. That's in total in contrast with the Italian decree. The fifth condition, they include safeguards to ensure full pass-through of benefits to final consumers. The last, if the member state decides to charge the cost of the measure on consumers, only consumers that benefit from the measure should contribute to its financing.
I can tell you very sure of what I'm saying, that none of these conditions are met by the Italian law. I think I can stop here. I'm quite confident that in the end, this law will be, you know, reduced in power because the European Commission is working on it. I think the fact that this article, I repeat, published last week, was so detailed, it's to me, an implicit answer to the Italian law. The third question, it was about M&A. In this respect, we are working, we are mapping all our options.
I repeat, I can't say much more than what I've already said in March, because this is one of the main reason we decided to postpone the presentation of the business plan to the end of the year, or more likely at the beginning of next year, because we are working on this, and this takes time, as you can imagine. I hope to have answered all your questions.
Yes, very clear. Thank you so much.
Thank you to you.
The next question comes from Roberto Letizia with Equita. Please go ahead.
Yes, good evening. Thanks for taking my questions. The first one is on the U.K. I just wondering if the very good results of the U.K. are simply because of the external and internal growth, so the new plants and the acquisitions, under normal conditions that we can eventually project for the remaining of the part of the year, or if the good results of the U.K. includes any, say, one-off benefit in the sense that the condition has been above forecasted or budgeted pre-expectation for the country. Just wondering if it's a normal very good contribution of the U.K. or if that includes a special condition, which anyway compensating of course the special negative in the U.S., but was just wondering how to calibrate the performance of the U.K.
You mentioned the Sardinia plant on the 121 MW. Can you tell us when eventually you expect this potentially to contribute to numbers? A question on the guidance, but I'm sorry for that as you said not to ask that much on the guidance.
Please ask.
Just want to calibrate the indication that you provided as last time on the guidance, the expected lower production, the fact that you reduced the guidance on the current EUR 590 million. At the time you provided that guidance, the trend in the power price was not so strong. Basically, you already had some months ago a condition in which you were able to reach the EUR 590 million of EBITDA. Then we are adding something more on top, which is the sensitivity on the power price that you just provided us, which actually was not forecasted at the time you provided the guidance.
I'm trying to compose the puzzle if actually the sensitivity you provided us may also target anything above the EUR 590 million, because you have the old condition under which you can arrive at the EUR 590 million, and on top of that, you have the prolonged situation on the power price, which added the sensitivity you provided. I'm not sure if I have been clear, but just to compose this picture. Sorry, I have another question on the green certificate. Can you tell us how many green certificate you have this year and how many you will have next year? Because unfortunately, we have this very crazy regulation in which next year, unfortunately, the green certificate price will suffer from the very high price that we have today.
If you can tell us on what could be the potential impact on that side? Thanks a lot.
Let me go in the order you pose the questions. The first one is U.K. U.K. number doesn't include any special item. It's a correct number reflecting the very good performance of the portfolio. We are very satisfied because I think it's quite clear that with the recent acquisition, we now have, and we can now rely on a very well spread portfolio across U.K. because we are in England, we are in Scotland, and we are in Northern Ireland. It happened to be a good locations for the wind, especially in this first quarter. Let me say, behind this good performance, because last year we posted, if I remember well, EUR 8 million EBITDA, and now EUR 26 million, almost EUR 25 million, EUR 26 million. It's less, let's say EUR 18 million EBITDA more than last year.
Two-third are associated with the new assets. I mean, the 47 MW Corlacky wind f arm in Northern Ireland that we started up in the second part of last year, plus the 73 MW of portfolio in England that don't forget is entitled to ROC, I mean, kind of green certificates. That was one of the reason we explained at the announcement of this acquisition when, you know, we made this asset swap between Sweden and England. This is a part of the result. The 1/3, the other EUR 6 million came from, let me say, higher availability of plants.
Don't forget that our plants in U.K. are all branded new. They were started up, especially the ones in Scotland and the one in Northern Ireland, just two years ago. They suffered the ramp-up phase at the very beginning, and they got progressively recovering their better performance in terms of availability. Maybe we are not completely at the full potential, but we are approaching it. We are getting better and better from this point of view. The third point, which is a double point, I would say I summarize in just one single point, is the service market and the curtailments.
Curtailments were lower finally in Northern Ireland, where they are not refunded, so any megawatt hour that are cut from your production is lost in your P&L. We are having a strong connection with the TSO there, in order to prevent these congestions from happening, and some achievements have been reached from this point of view. The other, which I, you know, put in the same point, is the fact that the Scottish assets are participating to the balancing market, that is a premium compared the day ahead market. I mean, the grid operator can ask plants, to stop, to reduce production.
This production, given that you are helping the system to be balanced, is paid the day ahead price plus a premium than, translating to higher EBITDA. In the end, we expect these flows to remain in the picture. I would say nothing, no recurring in those numbers. The Nulvi-Ploaghe project, again, we are very, very, very. I repeat three times because we submitted the first documents for authorization in 2018. 2018, I repeat it. We received the formal authorization, Autorizzazione Unica, from the Sardinian region, just over the last few weeks, after a long, tragic path, through Court of Justice and blah.
In order to make the final investment decision on the investments, we need, compliant with our business model, to secure the route to market. Our energy management is working to find a potential PPA, or we can wait for the next FER X Auction that is expected to be by year-end, but still uncertain because in Italy there is no clear calendar for these kind of auctions, while in other countries such like Germany, there are every three months there is an auction. We are waiting, but still we are not doing nothing. Nowadays, we are working to find a PPA, a long-term PPA, which can guarantee, say, the LCOE of the plant. You said about the guide.
I knew you couldn't resist to ask something about the guidance. We decided not to change the range as we did last year. In the end last year, we finished at the bottom part of the guidance because, you know, numbers can change very, very rapidly depending on the wind presence. And the fourth quarter, as I said, is this wind producer. I don't want to correct you, but let me say that forward prices were not that different compared to mid-March because the year-end situation was already broken up. There was no very big difference from this point of view.
Even though in the meantime, you are right, we made some hedging, short-term hedging at prices and values that were higher than we could expect, for sure, the beginning of the year, but was already included, in our, in our guidance. About production, I repeat, the first months of the year were good compared to last year and but below historical average. To be frank, and very transparent, we lost roughly 300 GWh in the first three months of the year. That item was already fully included in our guidance because in mid-March, when we presented the guidance, we already knew the production over the first two weeks, and we had in our hands forecast for the next weeks.
This was already fully captured by our guide. This is just to say that, 300 GWh , less or more, can happen, very, very quickly. Based on our, intelligence, say, there is a good probability that in the fourth quarter, maybe instead of a minus, a plus, could be there. We are not taking this, as an estimate right now. Let's leave the range, as it is, and, I provided you with all the elements and the rule of thumbs to make, your own estimates. Green certificates, Michele.
We have 1.1 TWh in 2026, and 0.6 TWh in 2027. These are the figures that we still have in our for our Italian asset that benefit from this kind of incentive.
The next question comes from Francesco Sala with Banca Akros. Please go ahead.
Yes, good afternoon, and thank you for taking my question. The first one, I wonder whether you can split this 1 TWh of merchant exposure by country, and if you can give us an indication of your merchant exposure also for 2027. Secondly, you made the final investment decision on revamping of some solar assets in Italy. I wonder what the impact will be in terms of stoppages and after the revamping, new generation potential. Those are the two questions. Thank you.
Okay. I start with the last one, and I leave Michele to answer in more details, the first one. [Massi], this morning, the Board of Director approved a couple of investments, one in France. It's a greenfield, 25 MW, wind that has already got a CFD for the next 20 years. I mean, for the 20 years starting from the commercial operation date, which is expected to be in Q1 2028. This long time is just based on the connection time because we need to have the connection. In fact, the CapEx and the expenditure in 2026 will be very, very limited. The CapEx, the cash out for CapEx will be especially in the second part of 2027.
As regards the PV investments, as you ask, this is 36 MW. Basically, we are revamping. Revamping, we mean changing the panels, changing the inverters, and most of the time also adding the, it's called the tracker, to help the plants to, you know, to track, to follow the direction of sun. Given this kind of intervention, we can increase production of the order of 40%, 45%. It's a very big amount. A big increase when you change everything, including the tracker. Where tracker, old trackers are maintained, anyway, we are talking about an increase in production of 20%, 25% because the new panels are much more efficient.
Consider that the panels that are mounted in this kind of installations are Were there since 2010. A lot of steps from technological steps have been made over this window of time. These investments is particularly interesting, I mean, the return is double-digit because according to the norms and the law, the operating rules by GSE, [Gestore letriko] , the stoppage of the plants is permitted to be recovered with incentives, I mean with Conto Energia incentives, in the end of the period. During the next years, all of the production benefiting from the upgrade of the quality of the plants can enjoy the Conto Energia. There is a big jump in EBITDA, a big jump in net profit.
That's why these investments has got a return which is above 15%. It's normal. The regulator wants to support the rejuvenation of the fleet in the country. If not, at the end of the useful life, you know, you shut the plants and blah. This is the nature. In term of stoppage, I think you asked this, the impact is quite limited.
It's less than EUR 1 million in 2026 because we want to stop, shut down the plants, say in the last part of 2026, and then implement the revamping in the next few months of 2027 in order to have the plants under the new industrial layout, for next summer when the sun heat more, let's say, in order to maximize the return of the investments.
Yeah. On the second question, we still have on 2026 1 TWh of merchant exposure. We do not expect to have a material hedging before the delivery because we need to maintain a merchant component to in order to take in account the volatility of the production of our wind farms mainly. Of this 1 TWh of production that is merchant as of today, so for the remaining months of the year, 0.4 TWh is in Italy.
0.1 TWh between France and Spain. 0.3 TWh in Eastern Europe. 0.2 TWh in U.K., Scotland, mainly. On 2027, total merchant exposure is around 2.5 TWh, 1 Th in Italy, 0.4 TWH in France, 0.5 TWh Eastern Europe, with 0.3 TWh in U.K., and the remaining Spain and Germany. Take in consideration that this 2027 exposure will be hedged during this year because you know that we have a policy of rolling edge.
We start 2027 with a merchant exposure that will be much more limited than today, essentially, because in the next months, we will continue to hedge the production 2027, mainly 2028, and by minor extent, also 2029.
Thank you so much.
The next question comes from Emanuele Oggioni with Kepler Cheuvreux. Please go ahead.
Good afternoon. Thank you for the presentation and for taking my question as well. The first one is an update on the wind availability in April and in May so far. What is the visibility? What is the comparison year-on-year? This first question. The second one is s till on 2027 as regards to the hedged part. You can provide an update on the level of pricing of the hedging, at least in qualitative terms, compared with the average of the hedging in 2026. What is higher, to what extent, et cetera. A third question is on the U.S.
I suppose that the disruption affected, the weather condition affected Q1 operation, were only temporarily due to weather conditions. We should expect a normal contribution in Q2 and in the remaining part of the year. Still on the U.S., a final question on the M&A side, acquisition side, the opportunities. There is an update. I think you are still exploring further opportunities to increase your capacity in the country. There is an update on this. Thank you.
Okay. About the wind availability, I more or less already said. April was not particularly good. As well at the very beginning of May, there was an anticyclonic situation over Europe, continental Europe. Over the last few days, wind is back and it's very strong now. We are recovering and the guidance we are saying today is fully including already the performance in April and the first day of May. We are very confident about what I've already said. Also because I repeat, the fourth quarter will be the game changer.
I mean, if the wind will be strong, and we have some signs that it's going to be like this, at least according to institutions that are making this kind of long-term forecast. We can be positive on the full year results in 2026. I repeat, we would need the crystal ball to know exactly how wind is going to blow in the fourth quarter or in the third quarter. About the U.S., I'm going to answering the three questions, and then leaving Michele the hedging. The U.S. performance, yes, you are right. There were multiple events, not strictly correlated each other. In January, there was a blaze.
There was a storm, was a snowstorm, and also a transformer failed in a nearby substation where our wind farm is connected. This has got impact on the availability of the plants in February, but now the availability is back to normal, let's say. At the end of not at the end of March, in March, in particular in March, but also in February, there was a particular tough market conditions in terms of grid constraints, congestions, that basically influenced, had a quite huge impact on the nodal price. The PPA we have on the wind farm, there is a financial settlement between the real-time price in the nodal market versus the day ahead price in the hub market.
Let's say the two points got the same price based on supply and demand. I mean, like our day ahead market, there is just one price, so the two prices are aligned. In the American market, the local price is affected by the congestions and the constraints. If a certain node got congestions, blah, something hurting, say the transmissions, et cetera, the TSO is gonna charge this cost on the node, and then we are paying for that. The PPA is not providing a hedging or covering this risk. This is exactly what happened during the first quarter. We had a light queue in April, the first weeks of April, but now it seems everything is back to normal.
We are confident that results going forward should be in line at least with our, with our budget. The third, again, as regards U.S. M&A, we keep working with Apex. You know, we have this preferential right agreement. So far hasn't dealed many deals because there was still a gap between what we were prepared to pay and what they wanted to achieve from the sale. I can say the gap is narrowing. We are working on it, at least that's what we hope. We will see. For sure it remains a point of a big attention for us. I hope to have answered all the three questions. Now I leave Michele for the fourth one.
Yeah.
Regarding the hedging level, we currently have an hedging level on the term components or short-term hedging on 2027, lower than 2026. As I explained before, the level of the hedging that we have in place for 2027 is the result of, you know, of an hedging policy that is the result of a build-up over three years. Today, the current level of the hedging are lower than in 2027, are lower than 2026. Take in consideration that a large part of the hedging of 2027 will be executed during 2026.
The final number of for 2027 is also the result of what we are doing in these months. Just to give you a figure, for example, in 2026, we have hedged on a short-term hedging 1.4 TWh, while the amount already hedged in 2027, 0.5 TWh. This means that we still have to build up roughly 0.9 TWh of hedging during 2026 to cover 2027. The final figures that we will have in 2027 will be the result also of the hedging that we are doing today in an environment that is for sure more positive than a few months ago.
Just, I would like to clarify previous question regarding the number of green certificate, because I need to be more specific maybe just to be sure that everything is clear. The figure that I've given to you is the total number of incentive in Italy, wind and solar, so green certificate on Energia, so 1.1 TWh in 2026. Just the wind green certificate, if it was the question, and I'm not sure, is just 0.8 TWh.
Total solar
While in 2027, total incentive in Italy is 0.6 TWh, of which 0.3 TWh solar, 0.8 TWh wind.
Thank you.
I hope that the explanation about hedging is clear.
Everything is clear. Thank you. Thank you.
The next question comes from Davide Candela with Intesa Sanpaolo. Please go ahead.
Hi. Good afternoon, gentlemen. Thank you for the presentation and for taking my question as well. I have three. You explained very clearly about the EC guidelines with regards to the energy market disruption. I was wondering if you can share your view about the long-term perspective, saying related to the so-called acceleration you plan. What are your wishes or the elements that could really change or at least change in positive the game for the renewables and for you as well over the next months and years? Second question related to the pipeline is just a clarification. If you can update us on the, I would say, ready-to-build and execution projects you have on your hand with an eye to this year and the next couple of years.
Final question, very broad, about the leverage. We used to see leverage in the threshold level in the region of 4x, 4.5x d ebt to EBITDA. That seems in the recent period changed a bit in the way that some peers have been deleveraging even maybe related to the fact there are less opportunities. Related to that, do you see this like kind of level still in place as good for you for rating agencies? This is of course related to the potential you have on the balance sheet for further growth maybe coming for opportunities we can have in future. Thank you.
Let me start with the pipeline because it's something we are working very hard on right now. We have already 230 MW right now under construction, at which you have to add the more or less 60 MW, 36 MW + 25 MW we have approved this morning, which bring the total above 300 MW basically under construction right now. On top of this, as we said in mid-March, we are working on a pipeline of projects that is wide, but we are very now focused on roughly 700 MW, half of which are repowering projects, mainly wind, mainly in Italy. Part of them are roughly 200 MW or even more are already fully authorized.
I repeat it, we have to wait for the final investment decision, I mean the startup of the site work, to secure the production, to secure the revenues, to secure the P&L for the next 20 years or 15 years with either through a PPA or through a CFD awarded through a public auction. We are not still there, but we are working for that. It's not all our fault because we were expecting a FER X Auction in Italy to take place in the first part of the year. According to rumors, according to news coming from the ministry, the energy transition ministry, this auction should be held at the end of the year.
We have to move accordingly to the market, the route to market auction available. On top of the wind, we received just few weeks ago or few days ago maybe, a full authorization also for 80 MW of battery storage system, which is quite a very nice project because it's close to our wind farms and it's close to a connection point that we know very well. On top of this, we already had another 12 MW project already fully authorized. Better, always better.
Now we are working on the procurement side and on the route to market side in order to define the business plan of these two plans with the aim of approving those investments again by the end of the year. In fact, that was the real reason we decided to postpone the business plan presentation because we want to gain a better idea of the potential of our pipeline in the very short, medium term. Connecting to the first part of your question, yes, something is changing. This geopolitical situation basically is bringing to the table the fact that Europe, in particular Italy, didn't do what was suggested to do when the Ukraine or Russia case broke out a few years ago.
You should remember that we were all committed to renewable, we were all committed to investing in wind, BESS, et cetera, but that was not enough, especially in Italy. Renewable has not grown as they should be. Now something is changing because I think this situation is bringing back on the table, on the agenda the importance of developing and pushing on renewable because they are competitive in terms of cost of energy. I mean, the LCOE is well below the current prices on the wholesale market that are set by gas technology. They provide for independence because we don't need to import wind and irradiation or water because those natural resources are available, while gas is mostly imported by U.S., by Middle East, and still a bit from Russia.
We need to have a clear calendar for auctions in order to proceed as we should in deploying megawatts. You know, now some headwinds are moving into tailwinds that make us more positive, let's say. [audio distortion]?
Regarding leverage, you for sure you have noticed that yesterday Fitch has confirmed our rating and the financial policy that we are following is essentially to maintain this investment grade rating. This translate in a FFO net leverage that should stay below 4.5x . This translate in a roughly, in a ratio net debt to EBITDA in the region of 4x. We consider this as an appropriate level for our business. This is a business that has a strong component of quasi-regulated revenue, so a good visibility, a very good visibility on our cash flow.
We do not see this moment as a strong constraints to our growth because we have flexible opportunities also to increase, to invest more. We have other instruments are available on the financial market, like hybrid bond that can allow us to exploit even better our our our capital structure. Also asset rotation, as explained by Paolo before, could be a way to create to have a better portfolio, more concentrated in area where we can get a better, a better synergy. This is something that we have already commented three months ago. Again, we do not consider this leverage as excessive, but consistent with our quasi-regulated business profile.
If I may add, we are very satisfied about the confirmation of rating by Fitch in a time where there is more pressure on renewable players because the increasing interest rates, inflation expectations, et cetera. Some companies, I can mention them, but in order to maintain their targets, their rating, have been forced to suspend the dividends or to transform it into a scrip dividend. It's not our case. Next week we are gonna pay EUR 1 per share dividend. That has been approved by the our AGM. I think it's a quite important achievement that is based on the quality of our portfolio and on our track record and credibility. It was not to be taken for granted, I mean, this result.
Thank you.
Thank you to you.
The last question comes from Andrea Scauri with Lemanik. Please go ahead.
Hi. Good afternoon. I have a couple of question. The first one is on the postponement of the business plan. Could you please elaborate a little bit more the reasons behind the postponement of the presentation of the business plan? I struggle to understand why a definition of the pipeline could be a valid argument to for the postponement of a business plan. This is the first question.
Second question, considering that, basically from what I understood from this call, the glass is half full rather than half empty, looking at your guidance, could you please give us an update on potential buyback, in addition to the dividend that you are paying next week? Thank you.
I say probably, Andrea, you hadn't had the chance to follow in our last webcast, when I explained in more details the reason why we decided to just present to the market. Because it's not true that we didn't present anything. We present the guidance and we confirmed the objective to keep growing our renewable portfolio in accordance, in line with the 2024, 2026 business plan, which was the last plan basically we presented. Apart from the work we were doing on the pipeline, which is a quite, I don't see like to eye to eye with you about this because it's make all the difference of the world.
If we have 700 MW fully permitted by the end of the year, we need to invest more than EUR 1 billion, we need to, you know, calibrate the business plan. On top of that, as said more in details in mid-March webcast, we are working on mapping all the options we have in our pocket to, you know, generate value, including asset rotation and build to sell assets, et cetera. These are elements that will be part of the business plan, but we have not used to, you know, proclaiming targets without having a clear picture of them. This is part of our story.
The third reason, which is very important, is the fact that the Board of Director is gonna terminate its mandate next April. It will be then renewed in one year. It is quite custom of the house to present a business plan approaching this date. That's as simple as that.
Okay.
I open the floor to.
Thank you. Thank you for the clarification.
You're welcome. You're welcome. The buyback, yeah, buyback is an option. Sorry, I forgot to say. Buyback is always an option. You said buyback instead of dividends. It's an option. As said, even recently, every year when we close the P&L for the year, we decide what best for us, dividend, buyback, mix of the two. This kind of decision will be taken early next year when we have a clear picture, understanding of the balance sheet and the economics of the company. For the time being, we decided this year to pay EUR 1 dividend, which is pretty in line with our policy declared to the financial community.
Thank you.
Thank you to you. I think we have It's over? Okay. Thank you very much for the attention, and see you in August.
August.
August or end of July. I remember that.
Okay.
Thank you very much, and I wish you.
Thank you.
very pleasant weekend.
Thank you for your attention. Thank you.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.