Good morning, and welcome to our Q1 2022 earnings results presentation. I am Daniel Lozano, Chief Strategy and Capital Markets Officer. I'm here with David Ruiz, CEO and Chairman of Grenergy, and María Rodríguez-Gimeno, our Sustainability Director. As always, at the end of the presentation, there will be the Q&A session for sell-side analysts. I will let you know at the end how you can ask your question. Now, I'll hand you over to David.
Thank you, Daniel, and good morning, everyone, and thanks once again for attending our presentation. I'm going to start looking at the key highlights and main figures of the period, and after that, well, Daniel will be presenting the financial results in more detail. I will then be back again to walk you through the status of our platforms and pipeline, and with a strong focus on the opportunity with which the European market is now offering our company, which we believe is very relevant. Then María, our Sustainability Director, will wrap up, providing an update on the progress of the second phase of our ESG action plan and presenting very interesting news concerning ESG. Let's get started with the key highlights of the period.
You know, we are on slide three of the presentation. Q1 traditionally is a bit more quiet than other quarters for us. Still, this year, we can see a remarkable, sharp increase in all metrics compared to the Q1 last year. While we reached an EBITDA of EUR 7.4 million, this is nearly three times compared to the same period last year. Net profit of EUR 4.2 million, and the total revenues were up to EUR 47 million. Looking at the split of this figure, EUR 36 million came from our construction activities, both in our build-to-own or build-to-sell divisions. More than EUR 10 million came from energy sales. This is up from only EUR 3 million in the same period last year.
EUR 1 million came from our services division, operational maintenance and asset management. Going to the composition of the EBITDA, well, I believe for the first time, we generated a larger EBITDA from our energy energy sales. This is EUR 6.3 million compared to the EBITDA coming from our build-to-sell activity. This is considering we just transfer one single PMGD plant in Chile this period for a total of 11 MW. We are expecting an important increase in the coming quarters from both activities, build-to-own and build-to-sell, and a more balanced picture at the end of the year.
On the capital markets side, we keep accomplishing new milestones, and indeed, we did secure a new green bond program of EUR 100 million in the period with the first issuance of more than EUR 50 million. All this was achieved under very difficult market conditions due to the, well, as you know, the geopolitical situation in Ukraine. Going to operational execution, our pipeline keeps growing to 11.5 GW in our three platforms, with more than 1.2 GW either in operation, under construction. More importantly, more than 800 MW in backlog with several large plants in Spain, and some also in Chile and Peru due to start construction very soon.
We estimate that the amount of plants under construction will be much higher in our next update in September. This is giving us full visibility of more than 2 GW, either connected, under construction, or in backlog, with a very strong construction activity on the second semester of this year and first semester next year in 2023. More importantly, we have also close to 3 GW as advanced development projects coming up.
A very important milestone this quarter is the start of construction of the construction works of the interconnection and substation in our Gran Teno project of 240 MW, which is the largest one the company has ever accomplished, and once commissioned, will also be one of the largest ever built in Chile and in Latin America. Going to ESG, regarding ESG, and María will comment on later on, one of the main highlights of the quarter included the publication of our 2021 sustainability report. As you know, this is one of the most important documents that we produce in the year, where we describe our annual progress in ESG risk management and where we disclose thousands of comparable metrics and KPIs that allow our stakeholders to measure our performance in sustainability.
I really encourage you all to read the report. It really reflects the company value creation driven by our sustainability strategy and made possible by the efforts of our team in every project and every country. In the report, we presented a new emissions reduction target, raising the bar of our commitment with the fight against climate change and aligning ourselves with the necessary efforts to limit global warming to 1.5 degrees. The values we uphold in Grenergy also had to translate into action when we learn about the horrific invasion of Ukraine. Our team designed and launched a dual initiative to support the victims of the conflict in Ukraine and the refugees fleeing the war to neighboring countries.
As María will explain later, that involves collaboration with NGOs, as well as a plan to incorporate at least five refugees within our team of engineers at Grenergy. This is introduction. Thank you, and I give the floor to Daniel for the financials.
Perfect. Thank you very much, David. Let's move on to the financial part. As you can see it in slide five, total revenue was EUR 46.9 million. That is three times revenue we had in Q1 2021. As David explained, in Q1 2021, we didn't have rotation of asset, while in this quarter we had one sale of one PMGD asset in Chile of 11 MW, and then some capitalized works and that is reflected as revenue. Then the energy sale reached EUR 10.1 million compared with EUR 3.1 million in previous year. As you may know, we have been increasing our solar and wind portfolio during last year, and this amount will grow quarter after quarter. Especially this quarter, we had Escuderos project producing 100%.
Services division reached 0.8% compared with 0.5%. That is an important increase, 49%, mainly because of new projects that we are now providing O&M services, operational maintenance and asset management. That is the main reason of tripling, you know, the revenue compared with previous figure. If we move to slide number six, you will see that total EBITDA reached EUR 7.4 million. That is more than 4x EBITDA in Q1 2021. Mainly again, because of the rotation of asset in Chile compared with almost nothing from EPC milestone that we had in Q1 2021 to reach EUR 3.4 million in development and construction division in this Q1 of the year.
The energy division as well tripled the EBITDA to EUR 6.3 million compared to EUR 2.7 million in Q1 2021. The service-based division EBITDA was in line with previous year figures. Regarding corporate expenses, we had an increase. The total amount moved from EUR 1.3 million- EUR 2.4 million in this quarter, mainly because we are now increasing our structure to be able to increase the development of new solar, wind and storage project. As well, because last year, as you may know, there was a quarantine, we had very limited travel expenses that in the very Q1 of the year has increased.
The total figure reached that EUR 7.4 million with an EBITDA margin of 41% compared with 18% the year before. Moving to the slide number seven, we have invested almost EUR 32 million in the Q1 . Nearly EUR 20 million in the distribution project, mainly PMGDs and distribution project in Colombia, and some investment in the utility scale project we are building, Belinchón and Escuderos in Spain. We have some development CapEx, that as you know is the key, you know, to keep growing that pipeline. We have in Europe EUR 1.6 million of investment, and in Latin and USA, EUR 5.7 million.
That amount of EUR 5.7 million includes the investment cash out for the 40% stake that we have in Sofos Harbert, U.S. developer. In next slide, number eight, you can see the evolution of the cash balance position from EUR 68.7 million. We have the positive EBITDA of EUR 7.4 million. There has been some negative operating working capital, EUR 17.9 million, mainly because of some payment to supplier and as well some client balance position pending to be collected that I assume will be matter of months. We have the tax and financial expense cash out, EUR 3.9 million. Some non-cash exchange rate differences, EUR 5.5 million. The already explained growth CapEx, EUR 32 million.
This mainly was financed by the financial debt, EUR 31 million, and some commercial paper, you know, for the working capital issues, EUR 18.6 million, to reach a final balance position of EUR 65.2 million. Finally, in slide number nine, you can see that our overall leverage increased to 6.2x , mainly because of the investment in new projects that we are now building. As David mentioned, we have been able to issue a green bond during the first part of Q2, in very difficult moments for the fixed income market, and you will see it reflected in the net debt in next quarter. Okay, so that is all from my side. I let David to continue with the pipeline.
Thank you, Daniel. Moving to slide 11, page 11, this is our global footprint. Again, 11.5 GW of PV and wind under development and 5 GW hours of storage already. This is what we actually believe we're going to need in the next few years to meet our build-to-own or build-to-sell targets. We are now in 10 countries in three platforms with a very diversified portfolio and operational plants already in six countries and making sure we have the capacity to deliver more than 1 GW per year, even more if possible, in the coming years.
Going region by region, we want to remain a leader in Latin America, where we still see a very remarkable growth ahead for renewables in the three markets where we are most active. This is Chile, Colombia and Peru. Rebalancing our activity to Europe and the U.S., which are now offering unbelievable opportunities for growth. Despite the situation with import restrictions on panels from Asia right now, which we are more than happy to comment in the Q&A, we believe it is. The U.S. remains the most promising market in the world, and according to some estimations, they are targeting a figure close to 1,000 GW. This is 1 million MW of PV expected for 2035. This is just from 60 GW now.
As we explained in February, we are working hard with Sofos Harbert, our partner in the market. Basically, we want to make sure we have the right projects ready to build in 2024 and ready to deliver as early as 2025. From there on, we are aiming to have a consistent delivery of projects year-over-year. Again, when we speak about this market, we want to make sure we do the right things right, and we want to make sure we are ready to tackle this very strategic and complex region. Looking in more detail in the next slide to Europe, well, there couldn't be more tailwinds in the region.
We knew this was coming when we unveiled our strategy of expansion in the continent two years ago. The energy transition efforts were there already, but we believe the acceleration of targets we are witnessing due to the energy independence concerns are frankly exceeding all our expectations, right? The REPowerEU program has just announced a global target of 740 GW of PV for as early as 2030, and is intending to mobilize more than EUR 300 billion. As we said on this slide, this is an unprecedented opportunity for a company like us.
The program will focus on acceleration of auctions, PPAs, simplification of permitting processes, and I believe it's also addressing a very important problem, which will be the availability of skilled workers in certain markets, which we are very sure will be one of the major constraints and hot topics in the near future. Let's remind we are already very present in the region. We currently have 2.2 GW of pipeline just in Spain, and close to another 2 GW coming from our newer markets, Italy, U.K., and Poland. We see plenty of more opportunities in the region. Only Germany just announced 215 GW for 2030 from just 60 GW now.
To put this figure in the right context, this is more than the optimistic estimations for Italy, Spain, and France together, and a great opportunity. There will be auctions every quarter for ground installations for projects up to 20 MW and a very interesting PPA market will get developed in Germany. Most estimates are forecasting more than 10 GW per year just for ground installations as early as 2023. There are other very interesting markets in the region too. Just some examples we show in this slide. We are showing the targets for Austria, Romania, Czech Republic, and Hungary. Renewables, particularly PV and storage, will be definitely booming all around the continent in the next decade.
Moving to the next slide. That's the slide we are all familiar with. We can see a large increase in identified opportunities in new markets. Not all of these projects will make it to early stage. Just let's remember when we move one project to early stage, it means that we start investing development CapEx in the project. But the higher our base of identified opportunities, I think the higher the success rate of the projects once we start investing in them and they move to early stage. So it's very important to have a large and consistent base of projects.
Going down, again, close to 600 operational, 660 under construction, and more than 800 backlog, and the three categories account for more than 2 GW. Next slide. Well, we are not going to stop for a long time here, but this is what we update every quarter and we show region by region, market by market, and technology, the status of development, and we can see how the new markets are maturing at a very good pace. Going to the next slide, storage. Well, we are doing developments in every single platform in storage. We will have advanced development in Chile quite soon, and once again, we are very lucky to be in this market. We believe could be a pioneer market in storage.
We could provide deliveries in this market as early as 2025, hopefully even 2024. I'm sure we will give some fresh news in upcoming presentations. Finally, a closer look at page 16. I think this is very important. We give full visibility and project by project of the situation of the operational projects, of the projects we do have under construction. You can see Belinchón in Spain, 150. We have currently more than 25 PMGD projects under construction in Chile. This is a record activity for this segment. More importantly, we are starting the works for the substation and interconnection for our largest project in the country to date, which is Gran Teno.
We still have two projects under construction for the previous package in Colombia. Looking at the backlog, some of these projects, this is the case of Ayora, Tabernas, José Cabrera in Spain. The reason these projects are not under construction is unfortunately due to the permitting process, right? We are really expecting the DIAs, the environmental permits to get obtained before the end of this quarter. We cannot really announce and sign the binding agreements for PPAs unless we have full visibility on the permitting process, right? The moment we get the DIAs, I think, we will announce the PPAs, and the plants will be moved to the construction phase.
Hopefully, this gets done during Q3. There are also some plans, very material projects in Chile, more PMGDs. We have another project of Tamango that we are also securing a PPA. We hope we can make some good announcements in Colombia and Peru as well, before the end of the year. Thank you, and I give the floor to María for ESG.
Thank you, David. Well, as you all know, we put forward a commitment to update you all about the progress of our ESG action plan on a quarterly basis. At this slide, we present once again the objectives that we have been working on for this quarter. As David mentioned earlier, we recently published our sustainability report 2021, and you will see some of the highlights in the next slide. We also carried out a gender pay gap assessment in Spain in collaboration with a specialized external consultant. The conclusions so far, no gender-driven pay gap identified, and we continue to assess the rest of the employees of the company and will inform you as soon as this exercise is completed. At this slide, as we were saying, we published our sustainability report 2021, sorry.
Here are some of the main figures. To be able to meet the growing demand from our stakeholders for more transparent and more comparable data, last year we worked to really strengthen our internal reporting systems and to expand the coverage of KPIs. As a result of that work, this year we produced a more robust report that is aligned with the most recognized international standards for sustainability reporting, such as Global Reporting Initiative, also responds to the UN Global Compact reporting needs, and considers the legal requirements for disclosure of non-financial information ahead of application to our company.
In the report, as you can see in the next slide, we presented the results of the calculations for our carbon footprint 2021, which this year also obtained ISO 14064 verification from an independent and accredited third party that ensures that this statement is, you know, transparent, is complete, is coherent, with regards to the emissions of greenhouse gases. We also continue to advance on our climate strategy, and we set ourselves a new and additional emissions reduction target to reduce 55% our scope one, two emissions by 2030, and this is in absolute terms. We're raising really the bar to align with the 1.5 degree level of ambition.
Finally, and just to finish my part of the presentation, what we say and do in sustainability would not make all sense if we were not able to react and to take action in the face of a really terrible conflict such as the war in Ukraine that is causing so much suffering. This is why in March, the team designed and launched a dual initiative aimed at providing assistance to the Ukrainian people and its refugees. On one hand, our human resources team launched a program to incorporate at least five refugees within Grenergy, in either U.K., Spain or Poland, in permanent positions, hoping to provide them an opportunity to continue their professional development and to recover economic and emotional stability.
In addition to this program, Grenergy also signed collaboration agreements with two NGOs, Doctors Without Borders, who is able to stay operational inside the country and really close to the front line, so to provide support equivalent to all medicines and material needed to perform 400 emergency surgeries. Also through the Polish NGO, PAH, we were also able to channel our support to refugees in Poland fleeing the war. That's all on my side, David. Thanks.
Okay, perfect. I think now the presentation is over, so let's move into the Q&A session. If you have any questions, please send a message to the administrator. We will let you talk. Okay. We have Fernando García from RBC.
Good morning, Daniel. Thank you for taking my questions, which is regarding 2022 and 2023 installation target of Grenergy. For 2022, I remember that in the 2021 call that Gran Teno was pending financing and Tabernas was going to get or pending environmental permit. Now I can see that Gran Teno is under construction, and you say that Tabernas is going to start shortly construction. If you can provide details about these two key projects for 2022? For 2023, I was adding up this morning everything that you have under construction or project that you expect to start construction shortly to the install capacity, and I got 1.7 GW. My question here is that, how you see the 2.4 GW target for 2023, and linked to that, if you see any acceleration of permitting in Spain? Thank you very much.
Thank you, Fernando, for the questions. Well, as you mentioned, Teno, 240 MW, and Tabernas, 300 are two of the largest plants, the two largest plants we do have in our current goals for the next few months. The situation was different. I mean, in Teno is fully permitted, right? So it's been ready. It's ready to build. Basically, we were waiting to secure the PPAs or at least to make 99.9 sure that we are securing the PPAs. This is where we are now.
We are about to announce. I think we will announce in a few weeks the strategy will be different. It might be multi-PPA strategy. We will close two-three PPAs for this plant and with different off-takers, but it still will be. It's close to Santiago. It's in a very attractive area. There's a very high demand for energy right now and we are very sure that we have enough confidence to start construction. When we start the construction of such a large plant, which normally takes 12, 13 months, first thing you need to do is make sure the subcontractors for substation and integration line start. This is what we have done so far.
Now, in the next few weeks, we will mandate the banks for the project financing, that we already have a short list of three possibilities, and we will announce some of the PPAs. If possible, we will disclose the name of the off-takers, right? About Tabernas, it's a different situation. This case we have the PPAs. We could have announced the PPAs long time ago, but we are waiting for the permitting and that's a problem in Spain, as we have been stating. I'm going to your last question about whether the permits are somehow getting. If we see any difference? Honestly, we don't. I mean, we were expecting these DIAs back in April. Remember, that was the previous deadline.
When the government extended and gave, like, nine months extra, we knew that somehow it was gonna cause an extra delay, right? We believe we are really there. It's not just Tabernas. We have another project in Comunidad Valenciana, Ayora, 172. Both projects are in a similar situation. We are in both cases expecting the DIAs as early as June, and the plans will be fully permitted with licencia de obra and everything in September. The moment we have the DIAs, I think we will be in a position to announce and sign the binding agreements for the PPAs, which are very advanced.
We will immediately order the transformers and substation from Siemens or ABB, which is the first thing we always do. Unfortunately, this situation, we would have loved to start construction earlier on these two projects, but we need to wait for the final permits from Comunidad Valenciana and Andalusia. About our targets, well, we currently have close to 600 operational. Considering Gran Teno, we have some extra 600, I think 660 under construction. If you look at the backlog, well, many of these plants are about to start construction. It's Tabernas only 300. Ayora is 172. We have a plant in Peru, which is 80 MW.
I think we can finally do 100. We have another plant of 45 GW, 50 MW in Chile. If you put all this together, I think we might be close to 2 GW. We are not far from the 2023 target of 2.4 GW. There is still some other plants coming up in advanced development. We are expecting an extra package in Colombia. We will wait until maybe Q3 to announce the new PPA. This will be one extra 70, 100. We have many more, for us it's business as usual, PMGDs also coming up, we might expect another package of 150 or 200 there. We are looking at more opportunities. We believe that the 2023 target, we are gonna be really on track and many of the projects for 2023 will be already under construction in our next update in September.
Many thanks, David.
Thank you.
Thank you, Fernando. Now we have Fernando Lafuente from Alantra. Hello, Fernando.
Hello. Two questions for me, please. The first one, it's on PPAs. You were saying, David, that you are in the process of negotiating, or at least in the last stages, close to announce the binding agreements. Just wonder, how are these negotiations in terms of prices and length? If I recall correctly, in the last call, we were talking of a potential increase in the price versus, I would say, pre-crisis levels, and also potential extension in the length. So a little bit of information on that side would be great. The second question, it's more on the debt side this time. Well, actually three questions here. The first one, there's been an increase, a significant increase in corporate debt during this quarter.
Was wondering what is the reason of this increase, if it is early works in projects waiting for project finance? What should be the, let's say, normalized balance between corporate debt and non-recourse or project finance debt? The second one, it's your net debt estimation for year-end. More or less, what are the moving parts? How much CapEx do you expect to invest, and where do you see your net debt by the end of the year, if possible. The third one, it's on the recent increase that we are seeing, not really in the spreads, but in the mid-swaps, for basically our financing, given the increase in interest rates. How this is affecting to you, and how are you seeing these negotiations of new project finances for the upcoming projects? Thank you so much.
Hola, Fernando. Thank you. Okay, about the first question, about the PPAs, it's the ongoing negotiations, right? We're talking about very advanced negotiations we have been for plants like Tabernas and Ayora. We have been holding these conversations for many months already. It is true that every month we've been in a better position to somehow request on a slightly better price and better conditions, right? I would say that the conditions that we are about to close for the newest PPAs are now even better than those we achieved back in 2019 with Galp for our first PPA in Spain, large PPA in Spain.
Since we are now moving back to high thirties. When I say high thirties, I mean PPAs starting maybe in mid-2024. Obviously, if this PPA would start right now, it would be a much higher figure. Also about this tenor, we are now moving to tenors of 15 years in some cases, right? This, I believe, will give a lot more stability to the project and will improve the financing conditions. We will still bet on leaving an exposure to merchant of roughly 30%. This is slightly higher than what we were doing two years and a half ago.
Also we are aiming at getting our first year full merchant, which we believe is an upside. I think before our next update in September, you will have some news. Again, if we are not announcing new PPAs, it's because we are not streaming. We still don't have absolutely full visibility on the permitting of Tabernas and Ayora. Everything is going. We expect no surprises. Unless we have the DIAs in hand, we don't want to make further commitments with off-takers, right? Because then you commit to a date, and if for any reason the permitting, the permits get delayed, we might be in trouble. Yeah. About the debt, and maybe Daniel, you want to add on this.
Yeah.
I can mention myself. The company is going to double in size this year. I'm talking in revenues, right? It will again nearly double in size next year, right? We are basically getting ready. We are reinforcing our sources of finance, and that includes short-term facilities like commercial paper and long-term facilities like Pagarés, like bonds. We are also now in the process of reinforcing all the lines with corporate lines, with banks, with commercial banks, particularly for bonds.
We need to keep ready for what is coming and for all the construction activity we're gonna have in the next few quarters, that we will need plenty of LCs to import materials, particularly panels. We're gonna need plenty of working capital to finance this construction. We are also, and I think we talked about this in previous presentations. We are now. Well, we have the means or the possibilities of starting some plant with working capital, and we don't need to wait for the disbursements from project finance. We can wait till the right moment to do that. We are not really, you know.
Because otherwise, in some cases, the construction works could get delayed because sometimes the project finance requires a lot of time for the disbursements, right? About the net debt at the end of the year, maybe Daniel can give you more light on this. Before that, well, about the conditions for project financing, well, we don't see a big change. It's true that the interest rates are going up. Still we are getting very good conditions, I would say, for senior debt in Europe below 2%, right? Maybe for swap. We remain with a very relaxed situation in this area, right?
In Latin America, situation might be changing a bit, and we are seeing more and more commercial banks offering us mini-perm or short-term construction solutions. There is a very attractive market for USPP bonds in the US for longer tenors once the plants are de-risked after COD, right? We are looking at that path for financing, which is different from what we were doing before, that it was just arranging the project finance from the very beginning. Now we're looking at construction facilities, and it's a more flexible way of building plants and then refinance with project bonds once the plants are operational, right? Maybe, Daniel, on the net debt, you can reply better than me.
Well, net debt evolution will depend on CapEx investment, as you may imagine. CapEx investment will depend on the project we have under construction and when those invoices are registered. If we want to build what we are planning, the total CapEx, well, consensus is stating, like, EUR 400 million for this year. It could be in the range of EUR 300 million-EUR 400 million, EUR 400 million something, depend on that. Okay?
Phenomenal. Muchas gracias.
Gracias.
Okay. Now we have, Jorge Guimarães from JB Capital.
Hi, good morning, everyone. Two quick questions from my side. Firstly, on CapEx evolution, if you can share with us your views about CapEx for the cost of CapEx, I say, for 2022 and 2023. If we could be around EUR 0.6 million per meg, 2022, and 0.255 for next year. Also, how do you view long-term margins on the build-to-sell business? If you can provide us with an idea about the range of gross margins and the EBITDA margins for the build-to-sell division in the long term. I'm talking about IFRS margins without build-to-own capacity at the same time. Thank you very much.
Okay. Thank you, Jorge. Yeah, well, there are no really fresh news. It is what you say, it's $0.6 and moving down to maybe $0.55. We are getting now better offers for Q1. We are seeing an important increase of prices from Q1 for panels. We are now talking about $0.23, $0.24 per watt for deliveries in Q1 next year. This is deliveries in Q4, it's around $0.25. At the highest point, remember at the end of last year, they were peaking at $0.30. So it's really more than $50,000 less per MW. I believe this trend will continue, right?
With, again, supply and demand market. Some people is saying that since the U.S. is somehow on hold due to the investigation there, well, maybe there is less demand. Well, that's a theory. We don't really think that the U.S. was that important this year. But it's really the ramp up and the expansion of capacity of many manufacturers in China is now really effective. Well, we are optimistic about the reduction. We believe we might see the panels well below $250,000 per MW. And the rest of main components, particularly trackers, I think due to reduction in steel prices, are also going slightly down. The other thing is logistics.
Well, the price remains high or very high. Not as high as Q3, Q4 next year. At one point, it was even very challenging to even secure a shipment, right, a container. We were paying up to EUR 14,000, EUR 15,000 per container or $20,000 to ship containers from China to Latin America or to Europe. Now there's availability of containers, but we're still paying very high prices of EUR 7,000, EUR 8,000 or close to $9,000, which are still three times what we were paying before COVID. We don't really see any reduction anytime soon. That's more or less the picture on CapEx.
About the long-term prospects. Well, for the build-to-sell activity, we really don't see any reduction in margins. In some markets, the higher the energy prices, the higher the prices of permits and the higher the margin on build-to-sell activity, right? We don't really see any reduction in these margins in countries, particularly in Europe, right? There are some markets like Italy where now permits are getting paid at EUR 300,000 per MW. This is really astonishing, right? The higher the energy prices get, the more valuable the projects and the permits are. I don't think this is changing. Well, it's more stable maybe in countries, more mature PV markets now, like Spain and Chile, but it is getting higher by the day in new booming markets in Europe, right?
Okay. Thank you, Jorge. Now we have, Anis from Oddo. Hi, Anis.
Yeah. Yes. Hi, Daniel. Good morning. Thank you for taking-
Good morning.
My question, sir. I have only one question left. It's about IRR, and do you think you will be able to compensate at the IRR level, the increase in materials and the increase in interest rates, by the increase in PPA prices? I mean, how do you see the evolution of the IRR on your main markets? Thank you.
Thank you. Thank you, Anis. Well, the answer now is very clear. Yes, we can more than compensate. If you would have asked me, like, maybe two quarters ago, at that point the supply chain concerns and the inflation on CapEx maybe was really a challenge because well, still energy prices or PPA prices, they were slightly going up, but somehow we were not compensating, so we might be losing IRR in some cases. I think now the situation is the opposite right now. I mean, we are back to where we were, even higher energy prices in the PPA negotiations.
We have a very interesting upside with merchant, at least for the first period of life of the projects and the CapEx prices is going down as we previously replied to Jorge in the previous question. The IRR levels are somehow remains stable, and in some particular cases, I believe we can achieve higher IRR levels than expected. I think it will be the case of Spain and maybe Gran Teno project in Chile.
Okay. Thank you, Anis.
Thank you, Anis.
Now, I'm not sure, but we have Daniel Rodríguez from Bestinver.
Hello, good morning. Buenos días.
Daniel, what's up?
Just a couple of questions, just to follow up on Spanish permitting. I would like to understand, I mean, if you can give us an answer on what is the obstacle for all the permitting process and whether this obstacle could be cleared through regulation. I mean, is there anything that the administration could do in order to change the situation? Whether you are finding different scenarios in the different Spanish regions, just to understand where is better to build or where is worse situation to build. A second question, considering U.S. platform, an update on the import restrictions in the U.S. and the anti-circumvention, what is your view on the potential outcome and the timing of this outcome? Thank you.
Thank you. Hola. Buenos días. About the permitting, the Spanish permitting, and I think somehow it's a very similar situation in countries like Italy. Again, we are talking about very decentralized countries. The governments, the central governments, as now the European Union, are making very flashy announcements and very, you know. I think they have the best of the intentions. The truth is that the regions in general are not really. There is a real bottleneck because there are so many projects under development, and they have not really recruited the staff they needed. It's that simple, right? In general. Some regions have done things better than others.
I would say that maybe Extremadura, we are not there, but from what we hear from some peers, is doing things right. In our case, we are very present in Castilla y La Mancha. We will have all the DIAs there, right? We are just expecting only the project 50 MW we have in Guadalajara. We are expecting that anytime, right? Andalusia, it's well, only in Almería, they have so many requests. There is this queue and you need to wait, right? We have the favorable reports. Everything is supposed to. We have really worked very hard with administrations, but the truth is that now we need to wait for environmental permits.
Last update is that we're getting the DIAs before the end of next month, June. It's a similar situation in Comunidad Valenciana, which is a very difficult community to develop. This is our most mature pipeline, so the new measures that the government is announcing are not really affecting these projects because we are in the very final phase. Whether we will see some help, in Spain, we have Clara Campoamor project. It's close to 600. This is a complex project with different locations in Castilla y La Mancha and in Madrid. Everything is running well. Most projects are in public information and we don't see any major concerns.
You know, some people is saying that interconnection line is very long, but we really not see any reason why, environmental reason why this shouldn't be accomplished. We are fine. We have also plenty of identified opportunities. We need to wait for the auctions from. Now it's, I think the government did this two years ago and I don't see. Instead of helping, I think it's been really an obstacle. They also announced this acceleration of permits for some smaller projects, but we still need to see the results, right? That's the situation in Spain. Unfortunately, I would love to be more optimistic, but it's really a problem at the regional level more than the central government.
About the situation in the U.S. The market is on hold now because the investigation got public on the first of April. For all of those that are not familiar with this investigation, one very small manufacturer of panels, I think with a capacity of 150 MW per year, so it's really nothing. They raised this issue with the government, and it was not expected to get through, but finally it got through, and the investigation is ongoing. Basically they
The investigation is checking whether the manufacturing or reassembling of panels in different countries like China, like Malaysia or Vietnam is circumventing the restrictions and the duties to apply to Chinese modules. The whole industry is on hold and we believe and the industry believes that, you know, there are so many hundred thousands of jobs and the whole industry is now on hold because you're missing the main input, which is the price and availability of panels. Let's remember that there is one single large manufacturer of panels in the U.S., which is First Solar, but they are only ready to supply 5 GW, 6 GW per year right now.
Everybody thinks that one way or another this situation will get solved, whether by a new law from the government or I don't know. I mean, the optimistic expectation is that this will somehow be clarified in August and September. The moment we have the inputs, which is basically whether Chinese panels can get into the U.S. and what duty you need to pay manufacturer by manufacturer. The moment you have this information, then the whole markets will develop, because right now it's very difficult or nearly impossible to commit to a PPA price if you are missing the main input. I think once we have that, the PPA price will adjust and the whole market will resume. In our case, again, we are developing projects, thinking more in having them ready to build in 2024 and or end of 2023. I don't think we will be affected by this. This is our view on the U.S. market.
Thank you, Daniel. Okay, now we have José Ruiz. He's on the phone, so he cannot talk. He sent to me his answer. He's asking about what is the increase of debt in foreign currency from the total increase in the net debt. If you may, I will answer, David.
Okay. Okay, please go ahead.
There has not been any new project debt in foreign currency during this quarter. The effect is very limited. Just some effect due to the exchange rate increase, and it has been just EUR 200,000 . Okay? I think we are over. We don't have more questions from analysts. Thank you very much for your time.
Okay.
We can always be in contact.
Okay. Thank you. Have a great day. Thank you very much.
Thank you.