Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us today for our 2020 first half results presentation. More important, we hope that you, your family, friends, and colleagues are all safe and well during this global pandemic. Now on to the reason why we are all here, our H1 results presentation, which will follow our normal format. Firstly, we will begin with an overview of the results and the main developments during the period given by the senior executive team that we usually have with us. Our Chairman and CEO, Mr. Ignacio Galán, Mr. Francisco Martínez Córcoles, Business CEO, and finally, the CFO, Mr. José Sainz. Following this, we will move on to the Q&A session. I would also like to highlight that we are only going to take questions submitted via the web.
Please ask your question only through our webpage, www.iberdrola.com. Additionally, we expect that today's event will not last more than 60 minutes. Hoping that this presentation will be useful and informative for all of you. Without further ado, I would like to give the floor to our Chairman and CEO, Mr. Ignacio Galán. Thank you very much again. Please, Mr. Galán.
Thank you, Ignacio. Good morning, everyone, and thank you very much for joining today's conference call. Over the last month, we have gone through some of the most challenging times in our lives. Fortunately, in Europe, the spread of the virus is now widely under control, and other geographies are also showing positive signs. I hope you and your families stay well. The confinement measures that had to be implemented as a consequence of COVID-19 are having a profound economic impact, and now probably the main challenge we have ahead is to contribute to a quick and sustained social recovery. Our first priority in these months has continued being the safety and welfare of all our employees, customers, and society as a large.
From the donation of healthcare materials worth more than EUR 30 million to the authorities of the countries we operate, to the service to millions of people who depend on our operations to power their houses and businesses, I am proud to say we have delivered on our responsibilities. Thanks to the dedication and professionalism of all our employees who have always put their duties first, quality indicators have remained at normal levels during the crisis, and we have guaranteed the supply to critical infrastructures. My most sincere gratitude to all the women and men who work for Iberdrola Group, especially those who have been in the field over this month. They all make this company outstanding. Building on our investment in digitalization and technology, we have put in place all the necessary precaution measures to maintain our operations and now to enable a safe return to the workplace.
I am glad to say that just a few days ago, the international certification company, AENOR, has granted the Iberdrola Group a global quality certificate for the comprehensive system of measures we have put in place to manage the effect from COVID on all our stakeholders and especially of all our employees. As a consequence of these measures, employee infection rates has been much lower than the average rate in the countries where we operate. In some cases, up to 10 times lower. However, we have sadly suffered the loss of two employees worldwide. Our thoughts and our support are with their families. Now it's our responsibility to go back to normality, always in a safe manner and in line with local regulation applicable.
In continental Europe, we have already completed the reentry plans, and all our employees are back in the office, which have been adapted to ensure social distancing. Similar plans are progressing in other geographies with approximately 50% of our office staff already in workplace in the U.K. and U.S., for example. The commitment of our workforce has also enabled us to maintain our ambition investment program. Despite lockdown measures, in the first half, we increased investment compared to 2019. Which, as you know, was already a record year, reaching EUR 3.6 billion in just six months. The close collaboration to our supply chains has been essential to achieve this. In order to help our suppliers maintain their activity and provide them the visibility they require, up to June, we have awarded contract totaling EUR 7 billion to them.
Since the outbreak of this crisis, we have also focused on keeping security of supply to the home industries we serve in all countries. Implementing measures to protect the special vulnerable group, including a free of charge service for in-home electric repairs, enabling special emergency service center for them. It is our commitment to continue navigating this situation in full compliance with our model, which seeks to balance and maximize the interest for all our stakeholders, including, of course, our hundreds of thousands of shareholders. In the first half of 2020, we have delivered once again increasing the results. 2020 adjusted EBITDA, with excluded COVID impact, exceeded EUR 5 billion, with a 4.2% increase year on year. Including COVID impact, reported EBITDA reaches EUR 4,918 million. Over the quarter, we have continued executing our plan. As mentioned, investment reached EUR 3.6 billion year to date.
From April to June, even with lockdown in many of our countries, we have managed to increase investment versus first quarter. We've also continued improving efficiency with net operating expenses down 3.3% year-on-year. We have reinforced our financial position thanks to our full access to market, having even increased our liquidity. In the last month, we have continued reinforcing our growth potential in the medium long term through transactions in Australia, France, and Sweden, which create new development platforms for the company. As well as with the new addition to our pipeline of renewable project, which is now close to 60,000 MW. Reaffirming our unique position as first runners in the global transition to green energy. This leadership is well-recognized by ESG agencies and specialized investors, which rank Iberdrola among the top performers.
All in all, adjusted net profit rose by 7.5%, and reported net profit, which includes EUR 153 million of COVID-19 impact and the effect of the U.K. government decision to maintain corporate tax rate at 19%, as well as capital gains from the investment, reached EUR 1,845 million, up 12% versus previous year. Focusing now on group operating performance, adjusted EBITDA increased by 4.2% to EUR 5,075 million thanks to the positive evolution of renewables and generation and supply. Renewables EBITDA was up more than 5% due to the contribution of new capacity installed over the last 12 months, mainly U.K., thanks to East Anglia ONE offshore wind farm, now fully commissioned. The increase in production in U.S., driven by new capacity and the normalization of the wind resource and improvement achieved in the availability of our green fleet, as well as the increase of hydro production in Spain and Brazil.
By hydro reserve in Spain stand at more than 7.5 terawatt-hours, 60% above previous year levels. Generation supply EBITDA reflects an increase in production as well as the impact of price hedge and lower procurement cost. In addition, despite market situation is still challenging result in U.K., improved significantly year-over-year thanks to the adjustment made in the tariff cap methodology in the fourth quarter 2019. However, additional adjustment will be required in the coming months to reflect the impact of COVID-19. Finally, network result continued to be affected by the transition to the new regulatory period in Spain, which we expected to be offset in the future by the higher asset base, especially if the government continues to increase the investment cap, was adjusted very slightly in a few months ago.
In U.S., despite the stable result in US GAAP, driven by the positive effect from the new rate cases in Connecticut and Maine, EBITDA in IFRS has been impacted by temporary adjustment related to deviation in demand and energy cost versus assumption. As you know, these amounts are fully recognized as regulatory asset and therefore will be recovered in the future with positive impact in consolidated results in future as well. In Brazil, the cycle from tariff reviews and higher efficiencies more than compensate for an exchange evolution. All in all, COVID-19 has a total impact of EUR 157 million at the EBITDA level. The operating situation we were starting to suffer due to the pandemic when we held the last result presentation generation retail market in Spain, U.K. in April is gradually normalizing.
Monthly power demand has been consistently recovering by around 1.1% per week, moving in Spain from -18% in April, -25% during the worst week, to -5% in July. As a result, we are reaching levels closer to those registered before the crisis. Similarly, 2021 forward prices are moving upwards, having increased by around EUR 5 per megawatt-hour in the last month. In any case, all our production for 2020 and most of 2021 output is already hedged. Regarding customer debt at retail business, total rolling credit costs stand at 0.94% of total sales, 30 basis points above usual levels. Our CFO will give more details later on. In our regulated business, COVID-19 impacts are expected to be mostly covered by regulatory framework, and we have made significant progress over the last month in United States and Brazil.
In United States, we filed a joint proposal with the staff of the commission and 21 parties more for a new three-year rate case in New York, which will imply more than doubling our investment in the state at a return on equity of around 9%, also improving cost recovery, for instance, in the case of the storm and vegetation management. United States regulators are also launching initiative to track all related expenses in order to allow recovery in the future years. In Brazil, an agreement was also reached to recover extra costs related to COVID-19 through end of balance sheet loan that will imply BRL 1,660 million for Neoenergia.
An extraordinary tariff review is also already under negotiation that we expect will be finalized after summer. Thanks to all regulatory arrangements, we expect to recover most costs related to COVID between 2020 and the following years. The current circumstances have also led us to an extra effort on cost rationalization, having achieved a decrease at net operating expenses of 3.3% to EUR 2,074 million. Even after the inclusion of EUR 33 million of one-off expenses, mainly due to donation of medical equipment like ventilators related to COVID-19. All in all, the ratio net operating expenses to gross margin improved by 30 basis points year on year to 25.8%. As mentioned, gross investment reached EUR 3,482 million, driven by networks and renewables, which increases our 4% in both cases. These businesses contribute to 90% of total gross investment.
Lower investment in generation and supply, partially related to the slowdown on new commercial activity, fell by 70%. Let me highlight once again that quarter-on-quarter, our investment increased by 7%, despite lockdown in most countries. This leads us to maintain our expectation to invest close to EUR 10 billion in 2020. In terms of new capacity up to June, we have commissioned 1,600 megawatts, and we continue with our plans to install over 2,000 megawatt in the second half of the year, including close to 100 megawatt in Spain, with nine projects under advanced construction. 500 megawatt U.S., where we have seven projects progressing, with the rest corresponding to U.K., Mexico, and other countries. We saw in the last 12 months, we have installed almost 5,000 megawatt, and we have more than 7,500 megawatts already under construction for commercial operations, mostly before 2021 year end.
Operating cash flow also grew in the first half, reaching EUR 3,132 million, allowing us to combine the acceleration of investment with a reinforcement of our financial external liquidity. Our FFO to adjusted net debt ratio stand at 21.7% an improvement 110 basic points versus 12 months ago. In terms of access to capital markets, despite the overall contraction of the debt market, in the last two quarters, we have been able to issue EUR 2,600 million of new green and sustainable financing, driving group total sustainable finances to close to EUR 23 billion now. Following this performance, credit agencies have recently confirmed the ratings for Iberdrola. This comfortable financial position allow us to continue looking for growth opportunities through the greenfield acquisition of the addition of new projects to our pipeline.
In both cases, we are following the same strategy of the last two decades, integrating new companies in new countries and transforming them into platforms for organic growth. That was the case in U.K., United States, and Brazil, where we have multiplied investment by two or even by three since the integration in the group. In the last month, we have announced three transactions that replicate this model. In Australia, we already have a 300 MW wind and solar hybrid project under construction. Following one year of conversation, we launched a friendly takeover bid for Infigen, one of the country's largest renewable developers, and a company with a strong customer portfolio and deep know-how of the Australian PPA market. This company will add 1,100 MW to our installed capacity and a growing pipeline of projects which today has already more than 1,000 MW.
In France, we have reinforced our presence in the onshore wind market through the integration of Aalto Power, a renewable developer with 800 MW in operation or advanced development. Additionally, we have become 100% owners of the company developing the Saint-Brieuc offshore wind farm, which is 496 MW, as you know, which is progressing well to reach commercial operation by 2023. In offshore wind, we have also closed a transaction that create huge potential opportunities for the next decade in Sweden, a country with a clear plan of substitute nuclear power with renewables in the late 20s and 30s, reaching a project pro-portfolio up to 9,000 MW that could start operating from 2029. Putting us in a position that reminds me what we did in U.K. 10 years ago when the East Anglia phone auction was held.
All these projects will further reinforce our renewable pipeline, which as today reaches 58,000 MW, 60% of these projects are located in the U.S. and Spain. In the U.S., we have 20,000 MW in total, out of which 7,500 are offshore wind, 5,000 MW offshore wind, and 8,500 solar PV. In Spain, over the last year, we have increased our pipeline by 30% to reach 14,000 MW of solar PV and onshore wind. The remaining 40% is spread over Brazil, Mexico, continental Europe, U.K., where we have already, you know, 4,500 MW of offshore wind project and the rest of the world. Out of this total, we already have 7,000 MW of renewable capacity under construction, 80% which will be finalized by 2021, with 1,000 MW of onshore in Brazil completed in 2022 and the Saint-Brieuc offshore wind project in 2023.
Additionally, we have 14,000 MW which already have permits, most of which will be operating by 2024, and 37,000 MW more of pipeline in earliest state of development will mature from 2025. Let me highlight our pipeline in offshore wind, which amounts to 12,000 MW in the U.S., U.K., and continental Europe, with full seabed rights before including the transaction of Sweden. In order to assess the dimension of offshore wind pipeline, it is essential to understand that offshore wind generates around five times the EBITDA per MW of other renewable technologies like, for example, solar photovoltaic. You see Iberdrola taking a leading role in the acceleration phase we are entering. All countries are taking multiple measures to anticipate the investment, in many cases driven by reconstruction plans.
In Europe, the European Commission presented the long-term budget for the period 2021 to 2027 for EUR 1.1 trillion, and the NextGenerationEU recovery plan with an allocation of EUR 750 billion, of which more than half, EUR 390 billion, will be subsidies, with the rest being loans with the different levels of conditionality depending on countries. Close to EUR 460 billion, that is more than 25% of the combined amount, will be dedicated to green and climate-related investment. In Spain, the government has submitted a revised national climate and energy plan to Brussels and is also reaffirming the green ambition with a climate change and energy transition bill that is currently being discussed at Congress. In the U.K., the Green Recovery Challenge Fund was also approved.
In the United States, around EUR 3 trillion were approved by the federal government to provide relief in a wide range of areas in response to the COVID pandemic. A new PTC extension was also passed with five years of safe harbor. At the state level, we continue to see more and more ambitious green targets. For instance, New York has set an objective to reach 70% of renewable energy by 2030 with the coming of offshore wind options, and Virginia has also increased offshore wind ambitions. Finally, in Brazil, an economic stimulus package was approved for around BRL 750 billion. As we anticipated in last result presentation, we are currently executing new Iberdrola Retribución Flexible Program, which will amount to at least EUR 0.232 per share, either in cash or shares, and will be paid on the 4th of August.
Adding up the interim dividend paid in February, total annual shareholder remuneration amounts to EUR 0.40 per share, reaching already the floor set for 2022, three years in advance. Reaffirming our model that seeks to create sustainable value for all our stakeholders, including, of course, our shareholders. A model that has made us a best-in-class company in ESG investors. After 20 years anticipating the transition to a greener and more sustainable energy system, today, prestigious international entities such as RobecoSAM or MSCI are giving us their highest rating, and the largest investment fund in the world, BlackRock, consider our bond as dark green, their highest green bond rating. Just a few days ago, we signed a new facility with the European Investment Bank and the ICO for EUR 100 million, driving the total green and sustainable financing in the group for more than EUR 22 billion now.
I will now hand over to the CFO, who will present the group financial results in more detail. Thank you.
Thank you, Chairman. Good morning to everybody. I will now go through the results. I would like to start explaining the two main COVID impacts considered in our accounts, totaling EUR 228 million at the EBIT level. EUR 157 million related to demand decrease, affecting both generation and supply, up to EUR 92 million, and network business, EUR 65 million. As I was saying, this EUR 157 goes at EBITDA level. Another EUR 71 million of bad debt accounted for as provisions, reducing our EBIT. EUR 35 million in the network business and EUR 36 million in generation and supply. In networks, as the Chairman has said, we're expecting recovery of most of the impacts through the regulatory mechanism. In generation and supply, bad debt impacts will be managed through our commercial activity.
As also the Chairman has pointed out, we have submitted a proposal for recognition of impacts in the SVT tariff into the U.K. regulator. Our reported first half EBITDA decreased 1.4% to EUR 4,918 million, but our adjusted EBITDA is up 4.2%. FX lowered our EBITDA by another EUR 92 million, related basically to the BRL evolution that has depreciated 19% against the EUR during this period. The U.S. dollar rose around 3% and the sterling was flat. Reported net profit was 12.2% up to EUR 1,845 million, and adjusted net profit is up 7.5%. Our adjusted results, already advanced by the Chairman, as we have explained already in the Q1, exclude the most relevant non-recurring items, both in 2019 and 2020 first half, but does not consider any FX impact.
As you can see in the slide, 2020 first half adjusted EBITDA is EUR 5,075 million, excluding the EUR 157 million COVID demand effect. First half 2019 adjusted EBITDA was EUR 4,868 million, instead of the EUR 4,990 reported, as it excludes EUR 121 million of non-recurring, EUR 89 million from our LNG contract sale that we did in the second quarter of 2019, and EUR 33 million from settlements in the Spanish networks. As a consequence, adjusted EBITDA grew 4.2% instead of the 1.4% fall reported. If we would have added the FX impact, EUR 92 million, our adjusted EBITDA would have grown 6.1%. Adjusted net profit of EUR 1,670 million instead of the EUR 1,845 million reported exclude all the COVID net impacts in our accounts. EUR 153 net of impacts, they already mentioned on the EBITDA level, and another EUR 71 of bad debt net of taxes.
Adjusted net profit also exclude the EUR 485 million of the Gamesa gain and another minus EUR 157 million of non-recurring negative tax impacts, mainly due to the U.K. deferred tax impact, as they did not reduce the tax rate to 17% from 19%. As a result, adjusted net profit grew 7.5% instead of the 12.2% growth reported. Revenues fell 9.9% due to EUR 16.5 billion impacted by COVID and weather-related lower demand. Procurements fell 16.3%, reaching EUR 8.4 billion. As a consequence, gross margin was down 2.2% to EUR 8 billion, also affected negative by EUR 121 million of negative FX impact. Net operating expenses improved by 3.3% to EUR 2.1 billion. The improvement in net operating expenses is driven by cost containment and efficiency plan. Positive FX impact compensates the EUR 33 million of donations and other expenses related to COVID accounted for in the second quarter.
Levies fell by 3.4% to €1,057 million, with lower output and prices in Spain being a key factor to this evolution. As you can see in the slide, Spanish taxes on generation improved EUR 28 million. Analyzing the results of the different business and starting by networks, its EBITDA fell by 10.6% to €2.3 billion, considering EUR 65 million negative COVID impact on demand and EUR 140 million of IFRS accounting effects in the U.S. that will start to be recovered from the second half of this year onwards. As you can see in the slide, Spain contributed 34%, the U.S. 23%, Brazil reached 21%, and the U.K. contributed another 21%. In Spain, EBITDA fell 5.5% to €791 million due to a 50 basis points lower remuneration for this year, bringing down revenues by EUR 29 million.
The impact of the mentioned EUR 33 million of positive settlements accounted for in the first half of 2019. Net operating expenses and taxes improved, compensating partially this fall. In the U.S., IFRS EBITDA was 25% down to USD 588 million, driven by USD 142 million negative temporary adjustments under IFRS, as a consequence of difference in volumes and energy cost due to an extremely mild winter and storms that appeared in the second quarter. Most of these negative impacts will start to be recovered during the second half of this year and following years. US GAAP EBITDA, excluding those accounting translation impacts, decreased just 0.9% or USD 144 million more than the IFRS EBITDA reported. In Brazil, EBITDA grew 4.2% to BRL 2.6 billion.
Tariff revisions in Coelba and Cosern from April and in Elektro from August, increasing contribution from transmission assets and cost contention due to efficiency plans have been almost compensated by BRL 150 million of COVID impact on demand, expected to be recovered mostly in the third quarter of this year. A BRL 1.7 billion Conta-COVID account as an off-balance sheet loan from Neo has all been already approved by ANEEL. In the U.K., EBITDA was 3.3% up to GBP 431 million, with higher revenues both in transmission and distribution as a consequence of the growing asset base due to investments, partially offset by GBP 20 million less revenues due to lower demand to be recovered in 2022. Renewables EBITDA grew 5.3% to EUR 1.2 billion, driven by the growth in the U.K. and the U.S., despite weak conditions in the second quarter.
Nevertheless, hydro conditions were good, and our level of reserves increased 55% year-on-year. Our average operating capacity increased 6.1%, and our total installed capacity reached close to 33,000 MW or an increase of close to 8%. In Spain, EBITDA was €301 million, 21% below last year, despite an 18% higher output due to 51% higher hydro production, as well as higher PV capacity. This was more than compensated by lower prices in our sales to our supply business. In the U.S., EBITDA increased 12.4% to $313 million, caused by a 21% higher output following the 791 MW increase in operating capacity and a higher wind resource and higher availability of our fleet.
In the U.K., EBITDA was 54% up to GBP 329, with higher contribution both in offshore, 12% higher, and offshore especially, 270% more as a result of the East Anglia production, which is ramping up as its 740 MW are already in operation. In Brazil, EBITDA decreased 12.6% to BRL 269 million, with 7.8% lower output and prices normalizing versus last year extraordinary high levels. In Mexico, EBITDA decreased 14% to EUR 39 million as a consequence of an 8% lower output. Finally, in the international business, mainly in Europe, EBITDA fell 3.4% to EUR 177 million due to higher development costs as business expands. Generation and supply EBITDA was up 14.3% to EUR 1.3 billion, including EUR 92 million negative impact of COVID on demand. In Spain, the EBITDA was up 8% to EUR 113 million, with 16% lower output, but higher purchases at lower prices versus the first half of last year.
We continue our active management of our customer portfolio of energy and smart solutions. There are, as I mentioned, EUR 89 million negative non-recurring from our LNG contract sale accounted for in the second quarter of last year. In Mexico, the EBITDA grew 3.7% to $423 million, thanks to higher sales as a consequence of an 8% production increase, partially compensated by a lower availability of one of our plants. In the U.K., the EBITDA grew 130% to £112 million after SVT tariff was adjusted upwards. Some COVID impacts on demand are being negotiated to include it on the 2021 SVT review. Brazil added BRL 167 million to the EBITDA in a context of business normalization after the one-off negative effect that lowered results in 2019.
In international business, EBITDA was EUR 6.4 million negative, improving versus last year, but still affected by initial development cost of our supply business in Europe. Nevertheless, we have reached 1,650,000 contracts, 50 to more than one year ago. EBIT fell 10.6% to EUR 2.7 billion as provision grew 47% after including EUR 71 million of bad debt COVID provisions. EUR 35 million in networks that will be mostly recovered through regulatory mechanisms and EUR 36 million in generation and supply to be managed through our commercial activity. In addition, our amortizations increased 7.6% due to the increase of the asset base and activity. Delinquency rate measured in our supply business, measured as rolling credit cost versus billing, has grown from 0.8% in the first quarter of 2020 to 0.94% in the first half due to the COVID impacts.
Net financial expenses improved to EUR 111 million to EUR 400 million, driven by EUR 182 million linked to one-off FX hedges. Another EUR 72 million positive impact due to the lower cost of debt that improved 40 basis points to 3.23%, and a EUR 43 million negative results due to higher average debt. As the chairman has pointed out, our reported credit metrics improved compared to last year, despite of this mentioned debt increase. On a like-for-like basis, considering homogeneous criteria for debt in both periods, FFO-adjusted net debt improved 1.1 percentage points to 21.7%. Adjusted net debt EBITDA improved to 3.7 times from 3.8. Our retained cash flow over our adjusted net debt improved to 20%. Our adjusted leverage ratio was 44.9%.
As of today, we maintain ample liquidity of around EUR 14.6 billion, more than fulfilling the rating agencies' requirements with 30 months coverage of financial need in our base scenario and 23 months in the stress one. Our sources of financing continue to be highly diversified. Currently, the bond market is 63% of our sources. Weight of bank financing is 11%, giving us opportunity to increase this kind of funding is required and supranational lenders have another 11% share. Up to date, the group has obtained €5.6 billion equivalent of new funding in different markets and competitive levels, continuing with our green financing strategy. In the bond market, we have issued €2.1 billion equivalent, €1.1 million, $975 million, and BRL 560 million. In the bond market, we have raised €1.4 billion.
As the chairman has said, we have recently signed a loan with the European Investment Bank and ICO, and further loans with the Banco Nacional de Desarrollo of Brazil. Iberdrola Group remains the world's leading private group in green bonds issued, the most preferred asset class for ESG investors due to the use of proceeds, strict reporting, and external verification. Our current asset base and investment plan focused in the energy transition will allow the group to continue taking advantage of this green bond market. In 2020, Iberdrola signed new transactions totaling EUR 2.6 billion of green financing, maintaining our leading position, as the chairman has pointed out.
The group has a total of EUR 22.6 billion of green sustainable financing outstanding as of today. Reported net profit grew 12.2% to EUR 1.8 billion, affected by non-recurring results with Siemens Gamesa capital gain, partially compensated by negative impact on taxes, mainly in the deferred taxes in the U.K., as I explained previously. Adjusted net profit grew 7.5%, as I have detailed in slide 21. Now the chairman will end this presentation.
Thank you, Pepe. To conclude, over the last six months, probably in the most challenging scenario in decades, Iberdrola has continued growing. We have achieved this reaffirming the same model we have been implementing for 20 years. A model based on social market economy, on a strong belief of the benefit of balancing the long-term interests of employees, shareholders, and society as a whole. In moments like this, everyone needs to move from words to action. The 40,000 employees of Iberdrola have proven their readiness to do it. Maintaining electricity supply with absolute normality in all our countries, providing visibility to our suppliers so that they can preserve jobs with EUR 7 billion awarded in just six months. Dedicating EUR 33 million to the purchase and donation of health supplies in the countries where we are present. Progressing in the execution of our investment plan.
Despite all restrictions, we have started the construction of 350 new MW this month. Year-on-year, we have completed close to 5,000 MW, increasing our total installed capacity for more than 53,000 MW, almost two-thirds of which are renewables. We have been able to combine this growth with efficiency measures, driving the net operating expenses down by 3.3%, and with a strong financial position as shown by all our solvency ratios and our available liquidity which exceeds EUR 14 billion. Reported net profit grew at 12.2% to EUR 1,045 million, despite the negative impact of EUR 153 million as a consequence of COVID-19. For the rest of the year, we are confident that we will continue to perform according to our plans. We maintain our target to invest EUR 10 billion in the year, installing totally 4,000 MW of new capacity.
Results will also be supported by tariff reviews in Brazil and especially by the new rate cases in New York, which we expect to close in October with retroactive effect from April. We will continue putting in place new efficiency measures. We have lived three months of a sharp contraction in economic activity. Our diversified business model has proven once again our capacity to resist external shocks. These are unprecedented times, and despite seeing clear signs of improvement in power prices, demand, and overdue debt, it is still early to be certain about their evolution in the coming months. As explained earlier, regulators in all our market are also working on measures to mitigate impact. Taking all this into account, we are today maintaining our net profit guidance at mid-high single-digit growth with dividend growth in line with the net profit.
We still have significant challenges ahead, but you can be sure that everyone in Iberdrola will continue to rise to them. Thank you very much, and now we reply your questions.
Now we are going to start with the Q&A session. The first question comes from Harry Wyburd, Bank of America, Merrill Lynch, Sam Arie, UBS, Alberto Gandolfi, Goldman Sachs, and Manuel Palomo, Exane BNP. It is related to the wording of the guidance for the end of the year. Are we correct that there has been a small change of language of the guidance now mid-high single-digit growth instead of previously high? Is it just the impact of COVID, or is there something else driving the small shift? Does the updated guidance mid-high single-digit growth in net profit include or not the capital gains from the sale of the Siemens Gamesa stake? Are you downgrading your guidance?
Are you comfortable with full-year Bloomberg consensus of EUR 3.6 billion net income?
My God, it's too many questions in only one. When we met already three months ago, we were not aware about the strict lockdown measures which are going to be in place. In April, when we presented first quarter result, we have only a partial understanding of the situation. Today, the situation is different. The COVID, we know now what has been the impact in our accounts. At net profit level, it represent EUR 153 million. EUR 153 million roughly represent 45% of our annual net profit. Looking forward the full year, it should depends very much on certain factors as I comment.
There are good signs of stabilization of the demand and power prices. We don't know what is going to be the future evolution, depending how is going to be the COVID behavior in the next month. Similarly, I think we are collaborating actively with the regulators. We expect recover partially this impact, but I think we are in talks with them. Still, we are not already confirmed to recover during this year. That's why, I think, in summary, our position is that we continue delivering increased result, but depending on the evolution of those factors, we could grow something like mid or high single digit. I think the fact today, this EUR 153 million represent 5%, or almost 5%, 4%-5%, of our expecting net profit. I think if we recover completely that one, the number should be that one.
We recover it partially, should be another one. If we succeed already in the negotiation with regulators to be registered this year, certain of these expenses in the account of this year, the result should be one. If we are not succeeding, if we will register the following year, the result should be another one. There are too many uncertainties around, then it's impossible to say what is going to make. What is important is to say that our expectation is to continue delivering increasing results, which I think with the uncertainty period we are living, I feel is really something very important to be said. There are areas in which we are already is in our hands. I think we are in our hands to increase the power, the installed power.
It's in our hands already, almost in our hands, to get already the confirmation of our rate cases from New York. It's in our hands already to reduce already our expenses, there are areas which is not in our hands. I insist on that one. I think if any of you can guarantee to me that there's going not to be another important infection in autumn. I think now we are not sure that that cannot happen. We have already passed the worst period, in the worst period, our net profit is growing by 12%. That is what I can already tell you for the time being.
Next question comes from Fernando Lafuente, Alantra. "What should be the reasonable EBITDA performance for the full year?
Well, I think it's excluding the non-recurrent items you saw, the adjusted EBITDA already grew by 4%. I think I insist in the same message I insist before. Now it seems that we are coming back to a gradual normalization after the COVID impact during this quarter. I think there are positive things, which is New York rate cases, which is going to be already from April. This tariff will be retroactive in April. We are a new megawatt, which is going to be put it in operation to reach 4,000. I think our feeling is that the EBITDA levels of growth in the year, with all those if, if, will be already lying similar of those one we have already been having at the adjusted terms during the first half of the year.
That allow ourselves to be in the range to middle to high single digit range.
Third question comes from Fernando Garcia.
In net profit, sorry, yes?
Sorry. Third question comes from Fernando Garcia, Royal Bank of Canada. "How much of the COVID impact do you expect to recover through regulatory mechanism?
What, you can repeat?
Yeah. How much of the COVID impact we expect to recover through regulatory mechanism?
We feel that we are trying to get at least half of this. I think it's, we are already negotiating and the numbers we are already thinking in this moment is to get something like EUR 180 million-EUR 100 million during the year. I think now is that is what we have mainly just negotiating in Brazil, in the rate case, new tariff review, which is mainly in Brazil, and certain thing what we expect as well to recover in other countries. I think that is more or less the number we are expecting, and that is where our the numbers is based.
Fourth question comes from James Brand, Deutsche Bank; Jorge Guimaraes, [Hotare] Capital Markets; and Jorge Alonso, Societe Generale. "Could you provide some details on your expectation for the Brazilian tariff review and whether this should allow a full reset to take into account the volume and bad debt impact from the crisis?
From Brazil, I mentioned in the last opportunity we joined together. Now Brazil has already approved this, they call Conta-COVID, this loan of balance loan, which for Neoenergia is going to be awarded with BRL 1.6 billion reais. We expect that 95% of this amount will be already cash by the 31st of July, and the rest during August. Almost everything in the next two weeks. The tariff review now is under negotiation. The expectation is that this tariff review will be completed during the third quarter. We don't know it will be end of August, September, but during the third quarter is the expectation will be ready. What we are expecting, it will recover all the extraordinary cost incurred, which is hundreds of million BRL reais in our account.
Question number five is related to the real key position of the U.K. regulator and it comes from Javier Suárez, Mediobanca; Fernando Garcia, Royal Bank of Canada; and Martin Young from Investec. The U.K. regulator has put out a tough regulatory proposal. Can you please comment on that and your comment to that regulatory document?
We have been really surprised and disappointed by the Ofgem draft proposal. It's especially surprising after two years of close collaboration. I think it's a surprise. I think we've been doing two years talking and negotiating with Ofgem those terms. I think they have already recognized during these two years in our draft of our proposal, they recognize the best investment plan of one of the networks companies. Until very recent days, Ofgem has pointed publicly to a rate of return around 4.8, plus further incentives. Suddenly they modified that one at 3.9 with no incentive or little incentive. Also, I think this, and especially as well surprised because this proposal goes against the government priorities and policies. The government priorities and policies is saying that they would like to increase investment infrastructures, and this proposal is reducing investment in infrastructures.
The government would like to increase the need of new jobs, and that is going in the opposite direction. If it's less investment, it's going to be less jobs involved from that one. The government policy is net zero target, and they are trying for this to increase the electrification of the economy. With less investment, we are preventing the electrification of the economy. I think if there are less electrification, the emission is going to increase. All this mess has been generated just because an extra cost for consumer, less than £1 per customer per annum. I don't know, in the regulated activities, how to mobilize the investment required if there are no stability and predictability. A regulatory sector is not a sector you can give surprises, and that is a surprise.
You have to imagine the investment we are making in this is stand for over 40 years. I think we have to take decision for the next 40 years. We've been investing heavily in the last eight years in the RIIO-T1, expecting a continuity in the terms of the condition. Of course, adjusted to the circumstances, but continuity. Therefore, I think if there are not already predictability, I don't know how we can already convince investor and to raise money for making already the investment the country require. I assure them, it's so strange, all we have already happened, that we will find out a solution. I assure the government of U.K. has been very clear about the climate policies and goals, and I assure they are going to help already to move in this direction. Trade unions as well, British trade unions are very surprised.
They are already calling for a solution to protect the thousands of jobs, not only in our companies, in the companies and the suppliers. I think we've been developing during the last eight years a British supply chain which employs dozens of thousands of people. We are putting their jobs at risk. It's reasonable the trade unions are already worried for what can already happen. If nothing is changed, I think we will explore, as always we did in defense of the interest of our shareholders, legal action, and we will explore as well the situation of cutting jobs as well.
Number six comes from Alejandro Vigil, Cygnus; Stefano Vezzato, Credit Suisse; Harry Wyburd, Bank of America Merrill Lynch; and Javier Suárez at Mediobanca. This one is related to Mexico. Regulatory risk in Mexico and investment plans of Iberdrola there.
Well, you know always I said that energy policy is decided by governments. I think no doubt on that one. We are in a country, we have to follow the government decision. Far, setting apart of all noise, the only measure which is confirmed which impacted Iberdrola has been the increase in transmission cost for renewables, which, in the case of Iberdrola, has a small impact in our financial result. I think for which we have already asked a courts of injunction, like the rest of the sector. Many of those of the sectors has already some of those members, another people of the sector, has already received a positive response from the courts at this moment, actually.
Related to our future investment, I think the only plan what we were already in project was planning Tuxpan. I think Tuxpan, we have not still the gas contract. I think we cannot take the decision up to the moment we cannot secure the gas for the next 20 years. When we will have this contract ready, we will decide what to do. Until then, nothing has been stopped in this direction.
Question number seven comes from Antonella Bianchessi, Citi, and it's related to an update on the forward sales for 2021 and 2022 in Spain.
Paco?
Thank you, Chairman. Well, as the chairman mentioned during his speech, 100% of our hedgeable production for 2020 is closed above €70 per megawatt-hour, as I mentioned during Q1. For 2021, 90% of hedgeable production is closed at similar prices. Now, for 2022, we expect to close our production at similar prices too, as the forward curve for 2022 is very in line with the one of 2021.
Number eight comes from Fernando Lafuente, Alantra: Where do you see debt leverage as of the end of 2020?
Pepe, do you reply?
Yeah. I think that we are expecting to be around EUR 39 billion in debt. Depends also if we finally do the Infigen acquisition, that will add another EUR 800 million to our debt. Our FFO over net debt will be, in principle, around 21.5% in our calculations and about 18% in the rating agency calculation, so well into the BBB+ rating.
Next thing through Meike Becker is asking about the expected evolution of the CapEx during 2021 and 2022.
As I commented during my speech, we see no reason to change our expectation. I think even in the tough condition we've been living in the second quarter, we have already managed to invest more than in the first quarter, and that is going to accelerate in the second half. For the detail of the future years, I think we will inform you in the capital market day. I think just, we have already talked about our pipeline. I think we have a huge pipeline. We have huge opportunities. We have customers ready to sell the energy. We have markets. We have new cases. We have people. I think now we are making EUR 10 billion. Why not to continue in the same line in the future?
I think we have all the means for already continuing the same direction, but the detail we will provide to you in the investor day.
Number 10 comes from Jose Ruiz, Barclays, Harry Wyburd, Bank of America Merrill Lynch, and Manuel Palomo at BNP, and is related to our greenfield M&A in Australia. In the last improved offer price last night for Infigen, the final one, if you are successful in your bid for Infigen, would you expect this to have a material accretive impact on earnings, and would this impact your guidance? Will it be in your guidance, the strategy related to Australia, if we are just focused on renewables?
Well, the first thing is, as I explained, I think we've been already in talks with this company for the last three months. I think suddenly, somebody makes already us a bid for it, and I think we'll be forced to reply to this bid, and I think we are in this process. I think for us, as I mentioned, it's already a greenfield M&A. I think this company, what gave us is the opportunity and the possibility of growing faster in Australia. We are already doing things in Australia in this moment. We are building 300 MW of wind and solar, and that gave us the opportunity of starting with 1,000 MW with Infigen in operation, plus our 300, plus a pipeline we have already, as I mentioned, of 1,000 or 1,500 MW more.
I think that is in the short term, that I feel is not already going to affect, not to our financial solidity, nor our result as a whole. I think it's a good opportunity for future growth for the future years.
Alejandro Vigil from Cygnus is asking about the appointment of the new CEO at Avangrid and the recent withdrawal of 2020 guidance. He's asking, Alejandro, which are our perspectives from 2020 and 2021?
Well, Dennis Arriola today I think is the third day in the company. I think I gave to him some time to know what is in the company, what is the plans, but I think in three days it's impossible to say things about that one. I think to ask him to take a commitment, what is going to be the long-term plan, et cetera, I think we have to give some time himself to do so. I think he is already in the process of analyzing the company in detail, and he's in the process of setting priorities. I think what I can tell you is a guy with 25 years of proven experience in the sector. He got great ideas for Avangrid. That is the conversation we have already had during this process.
We are convinced that Avangrid is in a strong growth platform. I'm sure that after his analysis of the company, he's going to come with good ideas, which we can share with you in the next capital market day in November.
Next question comes from James Brand, Deutsche Bank, and is related to the expectation of the bad debt in the coming quarters. Which is our expectation for the remainder of the year? Bad debt in the rest of the year. We expect an increase on it or?
Well, I think perhaps you, Pepe, you can reply to that one. I think we are already passing very bad times, but I think that is a wave, which Pepe can already reply to that one.
Yeah, we are expecting, especially in the third quarter. This is obviously in our forecasting and our calculations, obviously, we are expecting that the bad debt will grow during the third quarter, especially. As the Chairman was saying, this is one of the question marks that we have. We think that by the end of the year, we could have around the double of what we have right now in terms of bad debt.
Jorge Alonso, Societe Generale, is asking about the impact of COVID-19 on working capital.
To Pepe.
That has improved. In the first quarter, we talked about EUR 700 million, and now we are talking around EUR 500 million, more or less.
Question 14, from Jorge Guimaraes, JB Capital Markets. Regarding the recovery of EBITDA in the U.S., you mentioned from second half 2020 onwards. Could we expect the full recovery still this year?
About the COVID?
The-
No. We will start in the first quarter, but I think mostly it will be in the following years.
It's a similar question, the number 15, from Arthur Sitbon from Morgan Stanley and Jorge Alonso, Societe Generale, is related to the reconcilable items between US GAAP and IFRS. If we will see a positive impact in our European accounts in the third quarter, or will it take more time to recover this?
The same. It's the same thing.
Sorry, Pepe. If we can quantify the impact in this half between US GAAP and IFRS.
We will start to recover, especially in the fourth quarter. I think that there could be a positive impact of EUR 30 million, EUR 40 million, EUR 50 million. Depends a little bit. Most of the impact will be recovered in the next years. Also taking into account what the Chairman has said, from November, we are expecting to start in the IFRS to get the results of the joint proposal in New York, which is important in terms of growth. I think it would be basically in the fourth quarter, we'll start to see a significant recovery of the IFRS GAAP.
Alberto Gandolfi, Goldman Sachs. His question is number 16. Can you please comment on the Spanish National Energy Plan and the CapEx upside that this could bring for you?
Well, I think I commented during my speech. You know we have already 14,000 MW in this moment with permits in the country, and I think in the pipeline, we can already be transformed rapidly in opportunities. We have already thousands of MW in construction in advanced states for starting construction rapidly. I think certain, that gives an opportunity of acceleration. I think that is what we are making last year and this year, accelerating the construction in advance. You have to be aware that all the coal power plants will be closed. Those which are not closed will be closed in the next two years. The nuclear will be most of them closed during the decade as well. That both together represent almost, [Foreign language] Paco, 50%-60% of the total production.
Sooner we have already all those things ready, as much safe we'll be already the supply in the country. That is what we are trying to profit. I think there are certain things which are already helping in this direction, is the hybridization of the existing power plants. I think we can use the existing transmission, we can hybridize and put inside the existing power plant another one of renewables. With that, already help, because it's not needed to build a new transmission infrastructure or acquisition infrastructure for making that one. That give already an opportunity of acceleration of the investment, an opportunity of increasing the investment in the country. The details, 11th of November.
Number 17 is from Stefano Vezzato, Credit Suisse, and is related in the same topic that Alberto questioned previously. It's related to the European Recovery Fund and the possible increase in Spain of CapEx in renewables. That has been already answered. Number 18 is from Antonella Bianchessi, Citi. Does your EUR 10 billion target of included acquisitions, if I'm not wrong, Antonella is asking about if Infigen and another greenfield-
In principle, not. I think we are talking about the CapEx, what we are making organically. That is not included there. I think you know always in the CapEx there are, let's say, a floating amount depending on the level of execution of the investment already going on. I think EUR 500 million in EUR 10 billion is not already an important amount represented as a whole.
Andrew Moulder from CreditSights asks about the realistic position of the renewable pipeline. Finally, how much we will be able to develop out of the 58,000 MW of pipeline.
I think we put already things here very clear. In this moment, we are at 7,000 already in construction. I think that is fully realistic. 14,000, which is with permits. Those ones are going to start construction, I've mentioned some during this year and the rest during next year. I think all these two probably will be all of them completed prior to 2023, 2024. This one with permits in process, I think most of them will be mature from 2024 onwards. What is realistic? Probably a huge majority. I think you see the offshore one, we have the seabed. I think it will depend if we win or we will not win the auctions which are going to be held.
I think the fact that we have already the seabed, we have the land, we have the connection, which is part of this included here, that already gives us the opportunity of making already. You never know that they will have some environmental restrictions on them. I think our aim is the majority of those ones will be transformed, potentially to be transformed already in a real generation.
Next question comes from Stefano Vezzato, Credit Suisse. It's if we can comment on the recent statement from Minister Ribera regarding a possible electricity market reform by year-end. Do you believe the current system marginal price model should be changed? If yes, which model should the government adopt?
As far as I know, the vice president, she's repeating that in a model with massive renewables, it's going to affect already to the fixed with no variable cost, can already affect to the price like it is today. We have to do something to secure the service and to absorb the fixed cost that the system have. I think you are aware in this moment, there are certain technologies which are providing this security, which is nuclear, which is combined cycle of gas, which are already not a very good, healthy, to use a positive word, of results. I think those one are needed. If it is needed, some system have to be introduced in order then that will be compensating the manner to maintain the activity in those ones.
That is what I understand the Vice President Ribera, she's mentioning when she talk about that we have to look systems to compensate the fixed cost of the system to provide the reliability that the system require. I think that is what they're going to do. What their idea is how to make that one, still we have not really been talking about this one, but I think the aim is to solve this situation.
We have a couple of questions, number 21 and 22, regarding the pipeline of renewables from Javier Suárez, Mediobanca, Jorge Guimaraes, J.P. Morgan Capital Markets. If they don't mind, we are going to answer them through the investor relation team. Please move to the 23rd question, and it's coming from Harry Wyburd, Bank of America Merrill Lynch, and Javier Suárez, Mediobanca. What is your view on the European Union hydrogen strategy, and do you see an opportunity to build incrementally more renewables capacity to power the proposed 40 gigawatts of European electrolyzers? Is this something that could be relevant in the CapEx plan you outlined in November?
I've been already in touch with the Commissioner of Energy and with President Timmermans during this confinement period. I think I was very much expecting what he's going to do finally. The objective of decarbonization of Europe are so clear that there are certain processes which can be electrified, but there are things which cannot be electrified. I think it's easy to electrify the electric vehicles. It's easy to electrify the cooling and heating of the homes, but it's not easy to make another thing to electrify, for instance, to production of ammonia. It's a process which require hydrogen. This hydrogen today is already produced with natural gas. I think they make the process where they call a steam reform, in which they generate CO2, which emit it to the atmosphere, and they are already generating a hydrogen.
Well, this hydrogen is used already for this process. That can be transformed. I think like that one, there are several process for heavy transport. Same thing as well for heavy transport. Probably today still is not the most competitive thing to use already batteries, transport with trucks of a vessel with batteries. I think probably with hydrogen is a good solution. That's why I think what they already promoted is very easy. All those things which can be already electrified have to be electrified. The hydrogen have to be used for those processes which cannot be electrified, but can be already transformed in that one. This hydrogen have to generate it using already electrolyzers by electrolysis. We know through the use of fossil fuels for production. I think that is a positive approach.
For that, I think they are seeing that in Europe will be needed on the range of 40,000 MW of installed capacity of electrolyzers in this one. That is a huge amount of electricity generated because it works 24 hours a day. That's why we are already aware of that one, and that's why we have already just in this moment launching the first largest project of hydrogen with electrolysis to be made probably in this moment in Europe, but certain in Spain, which is going to generate this hydrogen inside of a fertilizer company using the electricity generated for a photovoltaic power plant, which is close to that one. That is what we are trying this moment to expand another one. It's an area we are analyzing in detail.
We see that that is an opportunity, clear opportunity for energy consumption, clean energy consumption in the future. Of course, then we would like to be on the front of this development. We are already in this moment with a project which is in Puertollano in Spain, inside the Fertiberia, making already the first electrolyzer, 20 MW electrolyzers, which using already a photovoltaic power plant which are in the neighborhood.
Let me now ask the last question in Spanish. How do you assess the recent agreement reached by European leaders? Sure.
Well, I think that the agreement is positive, or very positive rather. Well, for three reasons. Firstly, because this means that the European political project has been consolidated. Those of us that are pro-Europe believe that this is a major opportunity because it's the first time that debt has been issued at a European scale at this particular magnitude. Secondly, it represents the consolidation of the Green Deal as a project for economic growth and for the economic recovery of the EU. Those of us that have been fighting for the last 20 years in favor of energy transition, it's magnificent news.
Thirdly, because as regards our country, it's also a very positive move for our country, that apart from the contribution of the EUR 140 million that are going to arrive, this, I think, is going to assist us to implement reforms that change our production and management model to become much more competitive and much more sustainable with the EUR 140 billion. I think it's positive at all levels.
The floor to the chairman to conclude this event.
Thank you very much for taking part of this conference call. Let me remind that our investor relation team will be ready to reply for further information you may require. I hope, take care all of you, stay safe, and enjoy a well-deserved summer break. Thank you very much. See you in November. Thank you