Buenos días, señoras y señores, buenos días.
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 2023 Q1 results presentation. As usual, we will follow the traditional format given in our presentations. We are going to begin with an overview of the results and the main developments during the period given by the top executive team that usually is with us. Mr. Ignacio Galán, Executive Chairman, Mr. Armando Martínez, CEO, and finally, Mr. Pepe Sainz, CFO. Following this, we'll 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. Finally, in order to be helpful for you, we expect that the today's event will not last more than 60 minutes.
Hoping that this presentation will be useful and informative for all of you, now, without further ado, I would like to give the floor to Mr. Ignacio Galán. Thank you very much again. Please, Mr. Galán.
Good morning, everyone, and thank you very much for joining today's conference call. On the Q1, 2023, net profit reached EUR 1,485 million, thanks to external operation performance. EBITDA increased by 30% to EUR 4,064 million, driven by the recovery of the retail deficit accumulated the previous years in the UK. A better operating performance in Europe, mainly due to the normalization of production after low hydro and wind factors registered that year, which obliged us to purchase energy in the wholesale market at very high prices. Growth related to new investment in networks and renewables, which in the last 3 months reached EUR 10,400 million. Of that amount, EUR 4,800 million were invested in networks, increasingly diversifying our asset base even more, and EUR 4,600 million in renewables.
Fully in line with our strategic guidelines, we have combined this growth with an additional improvement in our financial strength. Our ratio FFO and adjusted net debt increased by 130 basic points to 25.3%. Driven by our strong cash flow generation, we exceed EUR 3 billion in just three months. As you know, a few weeks ago, we reached an agreement to sell 60% of our business in Mexico, mostly gas generation asset. They have CFE as sole customers for $6 billion. This will allow us to focus on renewables and our thousands of industrial commercial customers in the country. In addition, we have continued to close new partnership with world-leading investment funds.
Yesterday, we announced a new deal with GIC, the sovereign fund of Singapore, to co-invest in transmission in Brazil in a similar transaction to one we announced with Norges Bank some months ago for renewables in Europe. Thanks to all this agreement, in just 3 months, we have already reached our asset rotation target for 2025. Joining forces with our tier-one partners, they will reinforce even more our investment capacity. Now that we need to accelerate decarbonization and self-sufficiency through investment in electrification is more evident than ever. The latest policies announced in Europe, United States, U.K., and Australia are fully aligned with these goals. All in all, these results show very significant progress in our 2023-2025 plan after just 3 months of implementation in terms of profit, cash flow generation, asset rotation, and partnership, and financial strength.
Moving to operating result, EBITDA reached EUR 4 billion, up to 30%. The network's business has benefited from higher asset bases in all geographies and higher revenues to the new tariff in U.S. and Brazil in accordance with the current regulatory frameworks, which also include clause that protect our results from higher inflation. Energy generation and customers reached an operating result of EUR 2.5 billion, increasing this contribution to more than 60% to total EBITDA is slightly above normal due to some non-recurring impact both in 2022 and 2023. In the U.K., ScottishPower recovered the deficit accumulated along the last quarters in its retail business, market condition improved slightly thanks to increases in the tariff cap. Renewable production has increased due to higher resource and the contribution of new project that began operation along 2022, mainly U.S. and EU.
A nuclear output has normalized in Spain after the unplanned outage of our Cofrentes plant during the Q1 of last year. Both effects have resulted in much lower energy purchase to third parties this year compared to 2022 when prices were exceptionally high, as you know. By geographies, 80% of EBITDA comes from regulated countries with 42% correspond to EU and 36% to UK and United States combined. As mentioned, investment reached EUR 10,400 million in the last three months, with more than 90% allocated to networks and renewables. Network investment reached EUR 4.8 billion, up to 22%. As a result, our asset base reached EUR 39 billion of March 2023, with an increase of 11% from previous year.
Renewables account for 45% of the total investment or more than EUR 4.6 billion. As of today, we have already in operation our in construction 60% of our total capacity additions planned for 2025. We expect investment to accelerate in the coming quarters, reaching a total EUR 3 billion by the year end. This acceleration will be driven by our offshore wind project under construction in France, US, Germany and UK, which will add 3,500 MW with a total investment of about EUR 11 billion. All projects are progressing on schedule and on budget with the first export of Saint-Brieuc in France and Vineyard Wind US expected this quarter and the last quarter of the year, respectively. These two project will double our current offshore wind capacity, reaching 2,300 MW.
On top of this, we expect Baltic Eagle in Germany to be operational in 2024. Saint-Brieuc 3 in the UK and Windanker in Germany are starting production in 2026. We have already secured the supply chain in all these projects and the route to market for the period of 15 to 20 years through feed-in tariffs in Baltic, Saint-Brieuc, of contract for difference in Saint-Brieuc 3 and PPAs in our US and German projects. Let me highlight that in the few months, we have sold 100% of the output of Windanker in Baltic Eagle in Germany through PPAs to commercial and industrial customers, showing that markets are moving in the same direction as the European Commission is in its proposal for the electricity market reform.
Today we can affirm that our offshore wind expansion plan is already secured to 2025 up front. We have secure supply chains for the construction period. We have also secured the resources required to build them on time and budget and to operate them efficiently. We have secured revenues for at least 50 years at attractive prices, providing our access to all routes to market. We expect an average spread on WACC between 150 and 200 basis points in all those projects. Funds from operation have continued to show a strong evolution, exceeding EUR 3 billion in the Q1. Driving a further improvement in our financial ratios with FFO auto-adjusted net debt increasing by 130 basis points to 25.3%.
As the Pepe will explain later on, net debt has remained flat over the quarter at EUR 43.7 billion, with an average maturity close to six years. Around 75% of the debt is at fixed prices, or 87% if we exclude Brazil, securing significant stability in our financial expenses in the current macroeconomic scenario. In addition, our liquidity position of EUR 21 billion covered 22 months of financial needs. As we announced it three weeks ago, we reached an agreement with Mexican Infrastructure Partners for the sale of 60% of our business in Mexico. A transaction fully supported by Mexican authorities and in compliance with the country's energy policy.
The deal involved the sale of 13 plants that have CFE as customer, almost 100% gas combined cycles, for a total price of $6 billion to be collected at the closing expected in Q4 of this year. The transaction will allow Iberdrola Mexico to remain fully committed to the country, maintaining a business platform that generates an EBITDA of $400 million per annum, including 15 operational plants, 9 of them renewables. Our commercial capabilities with thousands of Mexican industrial and commercial customers, and they can be sure that our commitment with them will continue in the future. Even accelerating our growth, thanks to our pipeline of more than 6,000 megawatt of renewable projects. Let me thanks again to all parties involved in this deal for their openness and attitude based of mutual dialogue.
On top of this, just yesterday, Neoenergia announced another very relevant co-investment partnership with GIC, the sovereign fund of Singapore, for co-investing in transmission in Brazil. The deal, based on a 50/50 co-ownership, will include our all 8 operating asset and the asset currently under construction as they reach commercial operation. It also covered the option for GIC to co-invest in any new project, giving our Brazilian subsidiary even more access to new opportunities in the booming transmission sector in Brazil, with, as you know, will hold new tenders worth BRL 51 billion only in 2023. Improving at same time Neoenergia financial position as well.
Globally, this transaction adds an additional world-leading fund to the group of partners that have decided to co-invest with us over the last months, including of course, Norges Bank, MAPFRE Spain or bp for charging infrastructure and green hydrogen, or joining, or another one like Shell. In addition, two deals mentioned imply reaching in just three months the EUR 7.5 billion financial target included in our asset rotation and partnership plan for 2023/2025 plan. Providing Iberdrola even more access to new investment opportunities under profitable terms. This also shows our ability to reach agreement with tier one global companies who want to co-invest with Iberdrola. Over the last three months, we have continued to sign new PPAs with leading corporates, providing them competitive electricity and helping them to meet their climate goals.
Like Mercedes-Benz with a PPA linked to our offshore wind project in the Baltic Sea, Meta for solar energy in the United States, Amazon Web Services has signed with us a PPA linked to our offshore facility in Baltic Sea as part of a global agreement that will be expanded to other geographies. The ability to sign multi-country deals with global corporate customers is one of our key competitive advantages with the PPA market, which is booming, driven by the strategic decision of leading companies to secure competitive and stable prices and access to the most efficient decarbonization solutions. We already have multi-country agreement with companies from different industries like Beam Suntory, Telefónica, Holcim, Amazon Web Services, Vodafone or Heineken. Apart from relevant agreements focused in a single country.
We are talking about PPAs in more than 10 countries with an average duration of 10 years. Which together with our feed-in tariffs and contract for differences linking mainly to offshore wind with an average tenure of 15 years, and our access to retail SME market, basically in UK and Spain, with an average contract duration of 3 years, have allowed us to hedge 95% of our current production for multi-annual period, providing us visibility and stability at attractive prices. I'm sure that the share of PPAs in our portfolio route of market will continue to increase in the coming years, driven by regulatory incentives provided in all geographies from the US to Europe. In the last days, our listed subsidiaries, Avangrid and Neoenergia, have presented their Q1 result, showing a robust performance in both cases.
In the U.S., Avangrid EBITDA reached $633 million US GAAP, with net profit $245 million. The company continues to accelerate growth in networks and renewables with $2.7 billion invested over the last three months. In progressing the new rate case for its New York, Maine and Connecticut subsidiaries, we will feel confident we'll be close in the coming months in terms in line with our assumptions. In addition, Avangrid and PNM Resources announced the extension of the merger agreement until July, allowing sufficient time for the New Mexico Regulatory Commission to assess the deal. Just last week, Avangrid received a positive unanimous decision from the main court to go ahead with the NECEC project of transmission. In renewables, Avangrid continues to progress in its installed capacity expansion plan with 1,700 MW under construction.
Half of offshore wind, with Windanker construction progressing as mentioned. Half in onshore wind. In Brazil, Neoenergia EBITDA increased by 14% to BRL 3,320 million and net profit reached BRL 1,215 million, driven by new investment of close of BRL 10 billion in the last three months. Just last week, new multi-annual tariff reviews were approved for Bahia and Rio Grande do Norte, covering almost 60% of our Brazilian asset base in terms better than planned. We have commission for new transmission assets. In renewable, we have reached 4,300 MW of installed capacity, including the Paraiba complex, which I had the opportunity to integrate with President Lula da Silva one month ago. Moving to the current energy context.
After two years of crisis caused by gas prices, we see signs of a gradual normalization driven by a soft winter and efficiency measures introduced in Europe which have helped to reduce impact on industry and residential customers. As a result of this, higher energy purchase, we see record high storage levels and more normalized prices. However, the crisis has shown with all clarity the Europe dependence on imported fossil fuels. Fuels need to be reduced quickly. For that reason, new energy policies in Europe in all our key markets are aiming to boost electrification through the acceleration of renewables and networks investment. In the EU, the European Commission has published its proposal for the electricity market design reform, an Net-Zero Industry Act, based on explicit recognition of the proper functioning of the current electricity market over the last decades.
The Commission proposed an evolution based on more single market and incentive to PPAs. This position was backed by 85% of the European stakeholders in the consultation made. The document does not allow any retroactive measures with a voluntary CFD auctions only for new renewables investment. As regard any potential new stress situation, the text is again seeking for a more unity. In this case, an emergency statement issued by the European Commission will be required based on a fixed criteria before any new measures is decided by member states.
In addition, the proposal includes new support mechanisms to storage and grid to incentivize flexibility service, recognizing the key role of these technologies for the sustainability of renewable-based electricity system. As you know, following the standard process for the approval of EU legislation, the reform will require proposal both from the council and the parliament, followed by negotiation among these 3 institution through the so-called trilogues, publication of the final legislation and, finally, implementation for each member state. This process, which usually takes around 2 to 3 years, is trying to be accelerated in this occasion. Iberdrola stand ready to continue collaborating with all the institution stakeholders to reach a balanced solution that maximize energy security, strategic autonomy, decarbonization, competitiveness and affordability for all Europeans.
The commission also unveiled recently its proposal for Net-Zero Industry Act, which the goals of building stronger supply chains in the EU, seeking specific targets of European production, and new measures to provide more regulatory flexibility and easier access to EU funds. The Act signals 8 key net-zero technologies, including onshore and offshore wind, solar PV, storage, heat pumps and smart grids, and sets target for local production in each of them, from 40% of solar PV components to 85% for wind turbines of heat pumps. This regulation also calls for an improvement of the current approval procedures for electricity project, including faster permitting and easier access to financing.
When once approved, this new regulation will join the recent agreed Renewable Energy Directive, with increased renewable targets from the previous 32 to 42.5% share of the total energy consumption by 2030. We could mean more than 1,000 terawatt-hours of additional renewable electricity. Although the on the other side of Atlantic, new relevant regulation have also been introduced, like the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. The Inflation Reduction Act, or IRA, has the clear goal of promoting electrification through more renewable than others. To that, it increases the visibility to tax credit for wind and solar PV, securing finance level for 2 years, and introduce clear and simple incentive to green hydrogen, promoting also local supply chains through PTCs and ITCs.
The Infrastructure Investment and Jobs Act introduce additional measures which are similar goals, focusing on grid infrastructure improvement to increase resilience and digitalization, a specific support for EV charges and easier financing and permitting for transmission project. In the U.K., the recent Powering Up Britain package reaffirms the target of full decarbonization for the power sector by 2035, with an acceleration plan for renewables and networks investment, and increase decarbonization ambition for transport, industry and heat, including new targets like the replacement of all natural gas boilers by 2035. By the way, very recent Germany recently went further and advanced this target to 2025. In Australia, following the new legislation introduced by Prime Minister Albanese, the country's emission reduction target is now set at 43% by 2030.
This will require installing around 60 GW of renewable capacity and huge increase in transmission and distribution networks. Before passing the floor to Pepe, let me now share some highlights of our pro-progress in ESG issues following our commitment to social dividend. The transaction announced in Mexico means an additional step forward in our decarbonization effort, reinforcing our target to reach net zero Scope 1 and 2 by 2030, and in all three scope by 2040. In terms of circular economy, we have announced new batteries and blades recycling plan and the cross-sectional 2 solar PV models manufacturing facilities, showing our focus on reindustrialization and local supply chains. We have also presented several innovation projects related to EU funds, mostly focused on green hydrogen and green products.
We hope the approval process will allow us to start investing as soon as possible and contribute to Europe leadership ambition in these technologies, who will be key to decarbonize our economy, increase our sense of visibility and create new jobs. In terms of governance, as you know, we will hold our general shareholders meeting in just two days. Glass Lewis and ISS, two of the most relevant proxy advisors, have recommended a positive vote for all items in our agenda. We also continue to receive different award, in this case, from the World Jurist Association in New York for making climate change one of the pillars of our governance sustainability system and for our defense of the rule of law. I will now hand over to the CFO, who will present the group financially starting from the detail. Thank you.
Thank you very much, Chairman. Good morning to everybody. As the Chairman has explained, EBITDA was up 38% to EUR 4.1 billion, and net profit grew 40% to EUR 1,485 million. FX evolution has had a positive effect on results. The dollar rose against the euro by an average of 5.4%, the real by 8.7%, more than compensating the pound depreciation of 5.4%. This will change in the following quarters, but we have already hedged our FX risk for the year. Let me highlight that the strong growth in Q1 is driven by higher production and higher sales, much lower energy purchases, and much lower prices than in the Q1 of 2022.
We had, in this quarter, a one-off effect, which is that the U.K. retail deficit was fully, or almost fully recovered in this quarter, versus our expectation to recover it during the year. Obviously, we had also a positive effect on gas management versus last year Q1. These results, as the chairman has said, will moderate through the year, as next quarters will not be as strong, together with some additional one-off results in 2022 that will lower the difference. Let me point out that the big driver of the growth in profits this year is basically going to be our U.K. business. Revenues increased 27.2% to EUR 15.5 billion, and procurements 10 percentage points lower, 17%, reaching EUR 8.8 billion, with less energy purchases at lower prices, as I have just explained.
Gross margin in our net operating expenses increased 27% to EUR 1.5 billion. Excluding the negative FX impact, $88 million for a pension one-off in the U.S., and EUR 110 million linked to the above-mentioned reconciliation effects, that are also recognized at gross margin level, net operating expenses increased 70%. Excluding these impacts, net personal expenses that, on a reported basis, increased 30%, grew 8.1%. Reported external services that increased 22% grew 7.4%, excluding the FX, EUR 101 million of reconciliation impacts in the U.S., as I explained before. Reported operating income, other operating income grew 15%.
Starting by Networks, its EBITDA grew 4.5% to EUR 1,659 million. In Spain, EBITDA increased 6.1% to EUR 434 million due to the regularization on revenues linked to investments made in previous years. In Brazil, EBITDA grew 18.7% to BRL 3.3 billion, driven by positive impacts in distribution from tariff adjustments and higher contribution from transmission assets. As the Chairman has explained, tariff reviews for the next four years have been better than expected, those will incentivize, continue to incentivize investments in Brazil.
In the US, IFRS EBITDA was 14% down to $408 million due to a negative impact corresponding to the reversal of $99 million from pension provisions accounted only in IFRS in Q1 2022, partially compensated by the recognition of bad debt costs associated to customer protection measures during the COVID called arrearages. US GAAP EBITDA increased 7.9% to $535 million. Finally, in the UK, EBITDA decreased 10.1% to GBP 225 million with lower contribution from transmission assets affected by temporary remuneration effects to be recovered from Q2 onwards. Energy production and customer business, EBITDA, increased 77% to EUR 2.4 billion. This growth, as mentioned, is influenced by several factors, and will moderate through the year as next quarters will not be as strong.
In Spain, EBITDA was EUR 1,190 million, with higher production, thanks to higher output, especially in hydro and nuclear, with 3.1 additional terawatt-hours produced, that have driven higher sales and low energy purchases at lower prices. There is a positive effect in gas management versus Q1 2022 that will not repeat during the next quarters. In the UK, EBITDA increased 144% to GBP 580 million, thanks to the collection of GBP 275 million past tariff deficit in Q1, which had a negative impact in 2022, together with margin recovery partially compensated by lower onshore wind output. The exceptionally strong results of this quarter will come down through the year as we have collected in Q1 most of our 2022 deficit.
In the US, EBITDA increased 13% to $167 million, thanks to 4.7% higher output due to new installed capacity and better prices. In Mexico, EBITDA grew 3.7% to $223 million, thanks to a new capacity in operation since May 2022, partially compensated by a lower wind load factor. In Brazil, EBITDA fell 2% to BRL 412 million as contribution from new renewable-Installed capacity is offset by lower contribution from thermal business. Finally, in the rest of the world, EBITDA grew 1.5% to EUR 131 million, with higher capacity and operation compensated by higher costs associated with international expansion. EBIT was 57% up to EUR 27 billion.
DDA plus provisions grew 10% to EUR 1.3 billion, mainly due to the higher asset base and activity and bad debt evolution due to the increased customer billing. Net financial expenses grew EUR 111 million to EUR 510 million. Debt-related costs grew EUR 164 million. EUR 74 million increase is due to higher average net debt, mainly due to growth in CapEx. EUR 68 million due to the higher cost of debt. 96 basis points to 5.08% and 78 basis points excluding Brazil to 3.63%, despite interest rate increases of over 220 basis points. Brazil's cost increase is compensated at EBITDA level by revenues indexed to inflation. This has been partially offset by EUR 53 million positive non-debt related results, mainly linked to the FX hedges.
Our reported credit metrics remain solid. As for the last four quarters, average FFO increased 14% versus an 8% average adjusted net debt growth. As a consequence, FFO adjusted net debt rose to 25.3%. Retained cash flow adjusted net debt remains stable at 21.2%. Our adjusted net debt to EBITDA improved to 3.1 times. Our adjusted leverage ratio was 42.2%. Adjusted net debt remained below EUR 44 billion, similar to the levels of the end of 2022, driven by our strong cash flow generation. Given recent transactions in Mexico and Brazil, debt will improve versus guidance when we close these deals.
Net profit grew 40% to EUR 1,485 million, with lower equity method coming from Avangrid due to the offshore CIP reorganization in 2022 that increases tax rate but reduces minority interest this quarter. Taxes in 2023 are affected by the non-deductibility of the 1.2% tax in Spain. The chairman will conclude the presentation. Thank you.
Thank you, Pepe. As you have seen, this set of results shows a strong operational performance in the first 3 months, 2023. We expect this trend will continue over the rest of the year, driven by an acceleration of organic investment in the coming 3 quarters to EUR retail billion in the full years due to new permits, progression of our offshore wind project with first export, as I mentioned, for Saint-Brieuc in France, planned in just a few weeks and full commission in December, and Vineyard Wind in U.S. having also its first export before the year end. In addition, the new rate cases in U.S. and Brazil, the U.S. already I think starting from May and Brazil it has been approved, will also drive increasing investment.
On top of that, business conditions continue improving with hydropower reserves now at average levels and renewables to normalize, additional revenues from new tariffs in our networks business in the U.S. and U.K. and Brazil, the recovery of the retail deficit in U.K., and the ongoing improvement of operating efficiency. We've also increased even more our financial strength, a key pillar of our strategy. We've already implemented 100% of our asset rotation plans targets with proceeds cash before the year-end. Our operating cash flow continues growing, allowing us to maintain our debt flat and reinforce our ratios. 75% of the total days at this rate, up 87% including Brazil, in minimizing our exposure to any volatility. Our liquidity needs are covered for 22 months, and our business profile continues to offer protection against inflation and interest rates.
Finally, following our risk policy, have closed hedges to secure the value of our net profit in euros. We also expect a normalization of the quarter distribution of net profit after the unusually low evolution in the Q1 of 2022, driving to increase our net profit outlook to mid to high single digit growth, excluding additional extraordinary items, showing that we are already progressing our plan 2023-2025 ahead of schedule on result, on asset rotation, on investment, with around 60% of our planned capacity addition are already now in operation and construction, and our net growth investment fully backed by rate cases approved under advanced negotiation. On our strategic investment partnership with the world-leading firms like Norges Bank, EIB, in addition to our 11-year strategic alliance with Qatar Investment Authority, with key industrial partners.
All this make us optimistic about reaching the financial, industrial and social target included in our plan. Thank you very much, now we will be more than happy to answer your question. Thank you.
The following financial analysis professional have asked the question that I will now submit to the managers which are driving this event. First one is Gonzalo Sanchez-Bordona, UBS, Manuel Palomo, Exane BNP, Javier Garrido, JP Morgan, Rob Pulleyn, Morgan Stanley, James Brand, Deutsche Bank, Mark Freshney, Credit Suisse, Ahmed Farman, Jefferies, Jose Ruiz, Barclays, Fernando Garcia, Royal Bank of Canada, Fernando Lafuente, Alantra, Jorge Alonso, Societe Generale, Javier Suarez, Mediobanca, Philippe Ourpatian, Oddo, Jorge Guimaraes, JB Capital, finally, Andrew Moulder from Credit Suisse. We have a set of first question regarding the growth.
I think the drivers are simple.
I think it's, we are planning 3,000 new MW of additional capacity, which, 500 of those will be offshore. A higher hydro and wind output due to the higher reserves and normalized wind factor. In networks, the rate cases in Brazil, as just mentioned, has been approved, Pepe mentioned already. In the U.S., which we expect we'll start already, New York especially from May. The recovery, to continue recovery, even in a small scale, the previous year deficit accumulated in U.K., accumulated in U.K. after new regulatory measures as well as adjustment of the price cap from April. I think it's the optimization as well of the financial profile, thanks to the inaudible of the capital instruments.
But I think I would like to insist, yes, we are already increasing our local outlook from mid to mid to high single-digit for the reason I had already explained.
Second one is, does the guidance includes any potential capital gains from Mexico and Brazil transaction? Can you please clarify if the guidance for 2023 for mid to high single-digit net income growth includes the impact of the Spanish special energy tax?
Our guidance does not, as I mentioned before, does not consider any additional extraordinary result. I think that is our case. It's not already considering any result for transaction already closed. When we make our estimate, we always are considering, we are not considering capital gains from our asset rotation transaction.
Of course, in terms of the, of the taxation, it's included. It's already included in the Q1. This 1.2% is already in our accounts for the Q1 of the year, as Pepe has already mentioned. Has partially already compensated by another positive things we had already this year. Mainly the fact that we've been not forced to buy huge amount of electricity because of the problem we faced last year with Cofrentes and because of the low hydro and wind resource we had already during the Q1 last year. That this year fortunately, that year, very high price. This year fortunately, all this thing has been normalized. Cofrente is working as a normal condition, and hydro is already in a average reserve.
We have already a reasonable situation during the first months of the year in our total reserve of our dams are already at the normalized, fully normalized.
This question is related to the weather condition in Spain. Could you please update the situation of the hydro reserves in those areas where you are exposed to, and how it compares with historical average, if possible?
Armando, can you?
Hello, good morning to everybody. As the chairman has just said, our reserves now, it's normalized based on the rain that we have on December and January. That was mainly on the northwest of the country and also for our pumping storage capability. I think in the Duero and Tajo River, we are increased a lot compared with last year, and also in Minho. I think our reserve now is around 60%. It's not the same case in the Ebro River that is decreased, because now the situation is much better in the northwest.
Next question is considering the asset rotation done, new guidance for net debt by year-end, and also on the dividend per share.
Pepe, can you?
Yeah. Yes, including, you know, the PNM deal, our guidance will go below EUR 50 billion. Remember that more or less, our budget was that we were going to be around EUR 54 billion, including PNM deal, and now we are expecting below EUR 50 billion. On the dividend per share, I don't know if you want Chairman to comment on the dividend per share. They are asking also the dividend per share.
How much it would increase?
Yes.
I think as always, in line with increase of the net profit as well. I think we will continue our policy always on the payout on 65 to 75% payout, and that makes the increase in dividend will be in line with increase on the profit. That is the idea.
Next question is a kind of crystal ball question. When do you think the clawbacks in Spain and windfall taxes in Europe will be removed?
I think we are seeing then the market of gas market is becoming normalized. Our guidance consider that it will be the co-consider they will be extended for the whole year. We are seeing this normalization of gas prices, we are not seeing any reason to extend beyond the summer. The fact we are seeing then the Spanish exception is not being applied at all in this moment because the prices are lower than those has been already intervened.
I think my point is that we need already huge investment required if we would like to become more self-sufficient, if we in energy, if we would like to avoid already situation like we passed last year. For that we need huge investment. For making this huge investment require a stable, predictable frameworks. I think it's the way of continuous intervention, I think last year was already, if I don't remember, but I think 12 different changes in legislation in Spain for in electricity when the problem was gas. I think we need already this stability, predictability. It will lie then this decarbonization and self-sufficiency will be done.
I think my word, and I'm using the word with some of my colleagues are using systematically, we need in Europe more carrots and less sticks. I think we need already to be to provide more like America are doing, providing more carrots. I think we need already facilitating, facilitating, incentivizing, incentivizing. Not penalizing, penalizing. If not the investment will be not already flowing in the amount which is going to be required.
This question is related to the European regulation. When do you expect firm details from European power market reform, Net-Zero Act, and Net Zero Green Deal Industrial Plan? What are market expectation for the European Union Renewables Directive and whether permitting can be accelerated?
Well, many things in Europe has been done. I think we are talking too much about IRA, American IRA, which I think is great, I have to recognize. Mainly IRA, American IRA is really providing this stability and predictability. I think the ITCs and PTCs were already in the system since the Obama's administration. That is 20 years ago, 13 years ago. I think now they're providing visibility 14 years. They're really facilitating the access to this credit through much large number of pro-potential providers. And they have already single simple system for accessing to this support.
Either for the ITCs and PTCs related to the investment in renewables or for the green hydrogen or for already any industries related with the decarbonization. In Europe, we've been already, we had already these funds, and we have already this thing in many years ago. The NextGenerationEU was precisely the funds were 40% of these funds were for allowing and permitting accelerating the energy transition. I think that's there. The point is that we are sometimes we need to accelerate the implementation. For instance, I think in the green hydrogen, there are very many projects. We have already many projects in Spain for that one, and other countries.
Still we don't know what is going to be the support we are going to have for those projects. I think we need to already accelerate it. Brussels already approved, but it's still is pending of the Spanish approvals. In terms of the market, energy market reform, I think all improvement are fine, but I think something which is important has been said by European Commission, as I mentioned, is the first thing the market has already performed well. I think we have not had blackouts in this, in Europe. I think it means the investment has been flowing in time for such the European will enjoy a very good electricity system in the continent.
That's why I think they are saying what they are trying to improve. They're trying to promote long-term contracting, so this promote these PPAs. They are already trying to promote already even a secondary market if needed. They are giving already the voluntary CFDs in some situation. We are having CFDs in this moment in some countries, but they say CFD options. Voluntary ones. They are already trying to make the things in a manner that incentivize the flow of money, the flow of investment into the continent for diminishing our dependency, external dependency of fossil fuels and increasing our self-sufficiency.
Next question is related to the PNM deal. Can you give us the latest update on the situation for the approval of the PNM deal?
As I mentioned, we have already signed with PNM an agreement extension for 3 extra months, which we consider is time enough for re-being revised all the deal by the new regulatory commission. We continue committing with the transaction. I think that fits with Avangrid strategy and it's very positive for New Mexico customers. The fact, I think there are big social support to the transaction in New Mexico. That demonstrate in the 24, 23 of the 24 parts we has been parties, has already been presented in the deal, so I think they are already supportive. All the permits related to the rest of federal authorities, et cetera, et cetera, all are of time.
I think we are confident and we are fully committed, and the thing we expect in these three months, a agreement extension, will be enough for already obtaining all the permits to continue and to complete the transaction.
Question number eight: Does Iberdrola plan to bid in the UK offshore CFD auction Round 5 this year?
So can you repeat, please?
Does Iberdrola plan to bid in the UK offshore CFD auction Round 5 this year?
Well, I think we are selective. I think, as I mentioned before, I think auction is one of the routes to the market. I think we are countries and we are already having these CFDs auctions. In Britain, we have already East Anglia THREE in that one. In Germany, we are already through PPAs. In the States, we are through PPAs. It depends. I think in that case, I think we already we will analyze and we will decide what should be the route to market we are going to take for this project. Our intention certainly is to go ahead with the project if the terms and the condition are attractive enough.
The supply chain is the next question. Do you see any risk in the U.S. regarding the supply of PV panels from Asia? Initiative to revert the exception granted by President Biden of the fees for 2 years.
Well, I think it's that is some question that you have already passed to me previously. I think if I not remember that, I think we had only one project who has been affected for the restriction in the state, the solar panel, who now is solved. I think the restriction that we have to already have removed, but I think is the, our plan is in this moment, as I mentioned, 1,700 megawatt under construction. Offshore is accounting for 50%, and the rest is already just fully covered by all the agreement with the supply, with the suppliers. As I remember, only we have already problem with one. With now is fully removed the restriction we had already.
This question related to the U.S. offshore wind activity. May we ask the latest on U.S. offshore wind? Is Commonwealth Wind canceled? What's the latest of Park City negotiation? Does Iberdrola still see U.S. offshore wind as an attractive market for the capital allocation?
It's related to the Commonwealth.
Commonwealth Wind and Park City.
Well, I think it's, we, the system in the United States, the auctions in the United States is based on a fixed price with no revision during long periods. I think that has already been working for the few years. Once you can already fix your CapEx with the suppliers, we can already give it to you fixed terms for making already the complete construction of the project. Unfortunately, the thing, and I think that's where the terms in which not ourselves, everybody, another project who already bid in this context.
The fact, I think in the terms of the agreement, the contract has a clause that you are allowed to leave this project, if you are, for whatever circumstances you feel that you are not already ready to build on the terms you have already committed. I think that's already is in the contract. It's already a penalty, if I remember that, on the range of $20 million, something else. I think it's already that one. I think, and what has already happened? Since the moment we make the we went to the bid and we make the offer, the things, the world has already changed. I think now the prices are not any longer, the level they had already few years ago, are much, much higher.
The offer, the prices we've been offered by the vendors, they even, they are not ready to keep already these prices fixed for a period of 4, 5 years, we takes the construction of those assets. I think we've been forced to say, "Sorry, we apply the clause number whatever, which is in the contract, and we will not proceed with the project in these terms." That's it. I think... What that means? That means then, they probably they're going to make a new auction, I think we will revise the terms of the new auction. If the new auction and the terms are already attractive, we will go ahead with it. If not, we will look for another route to market. It's the same thing.
It's not, our commitment in the state continues. I think the fact we are the only one which really we are already building and constructing an offshore wind farm, which is East Anglia Three, with the first export is going to be held during this quarter. I think our commitment there is continue, but I think we are not ready, when we have the certainty that the terms in which we have already gained the bid are not any longer sustainable, we have already, we have to denounce that one and to move back to better condition and to apply the clause in which we have the right to leave the project if that is not really convenient.
This is everybody in the state has really done the same thing. It's, it's not ourselves, everybody, we are in the same, in the same position.
Next question is, could you update us about the US IRA short-term impact already secure? Question number on the IRA, US IRA, the impact.
Well, yeah. I think as I mentioned, I think it's a good news. I think that give already visibility for 10 years. In terms of the ITCs and PTCs, we can already ahead. The second thing is we have access to much more potential providers or the funds for the ITC, PTCs, so I think we can diminish the cost of financing on these terms. The third one, I think there are certain another kind of support related to the grid where they're going to, they are going to make providing certain extra funds for electrifying, increasing transmission, electrifying certain services. They are giving us our money for providing power for charges, et cetera.
Finally, we have a good thing, which is the access of our repowering. We are unique. We have almost 10,000 megawatt already wind installed in United States. What they're allowed probably 30%, 40% or 50%, I don't know how much, but very huge amount of this are allowed to be repowered. This repowering has access as well to these ITCs, PTCs. We have already for those customers, we have as well the PPA sign, which I think we can extend the PPAs, and we can already extend for longer, even for better condition with a more powerful wind farms that with much lower CapEx than those if we have been forced to make already a greenfield.
Which I think that is a great opportunity for us, all this repower, that probably, I think, I imagine my colleague, Pedro Azagra, will explain to you in due time about all this thing in more detail.
Next question is regarding asset disposals. Once the target has been completed, could you consider selling additional assets? Is it still the sale of renewable assets in the U.S. on the table?
Well, I think we are always revising our asset base. I think we make already a target. The target is completed. That doesn't mean that we are going to go to bed. We will continue alive, and we will continue analyzing and seeing the opportunities. If there any opportunity arise, sure, then we will be ready to look at it. Now our plan for 2025, it's important to say it is completed. I think always we are ready to look and to revise. Now there are not any new plan to make any another thing, unless we will, those will be needed in some particular places.
Next question. Can you explain the rationale for the deal with GIC to promote electricity transmission in Brazil? With this agreement, is your asset rotation plan finalized or there are more to come, saying to say?
I think for me, the most important thing with GIC is that the largest sovereign funds of the world would like to be our partners and to co-invest with ourselves, I think for ourself and for our team is a very good news. Means we are a reliable company which people likes to do things together. Which I think that means our reputation in this financials, large financial institution means is very good. The second thing, I think that for me is important. I think to have as partners Norges, to have as partners GIC, Hispanic, IKEA, to have as partners Shell.
I think that offer to us already, it's often a very good sign that we are serious in our approach to doing things. In the case of Brazil, I mentioned the opportunities of transmission are huge. I think only this year, the plan presented by the government is BRL 50 billion investment in transmission. I think we are in this moment making 1,000 kilometers of transmission, high-voltage transmission lines and something like 30-35 substation. Which I think is a huge investment. That offer the opportunity, the possibility to accelerate our presence and our expansion in Brazil without sacrificing the financial solidity our subsidiary.
That will allow Neoenergia to diminish, to consolidate any huge amount of their own debt, and to have the opportunity of participate in another transmission, which we are demonstrating that has already generated a lot of value. I think when we won three years ago, these auctions, soon, people were criticizing that those has not already had value. I think the fact that these large sovereign funds are already ready to buy and to participate with ourselves means that for them, that is already a business which adds real value. I think it's adding real value, if we analyze already the transaction and the opportunities which are generating.
We have already accumulated huge experience in that one, which I think allow ourselves not only to make this thing in Brazil or in the United States, also we are looking opportunities in Australia because as we had already these opportunities in Britain. In Britain, you know, we have already been awarded with another submarine transmission line to connect, it called Eastern Link. Similar to those one we make the Western Link, connecting Scotland with Wales, the western, and connecting Scotland with England, the Eastern Link.
I think that is one of our, let's say, areas of a special skill, special knowhow that we are already developing, and that is already why certain largest sovereign funds of the world would like to share with us and to in-co-invest with ourself in this project because I insist they are generating value. They consider generate value. We are convinced they're generating value.
This question has been already answered, but I would like to just to point it out that is interesting to repeat. Can you explain the 400 BIP versus consensus of Q1? The second part, can these results be considered as the quarterly underlying performance for the rest of the year?
Well, as we have mentioned, obviously, this has to do with, especially I would say there is a GBP 275 million improvement in the UK business and also, as the, in Spain we have had higher production and normalize hydro situation as Armando has explained. Also that we don't have the problems of the nuclear plant. Also we have, you know, a better performance in our gas business. I think these numbers are, we cannot consider that this could be repeated, and I think that in the next quarters we will see that although we will have a relatively good performance, we will not be repeating these numbers, no?
We are now reaching the last question, number 17. The rest, if there is another one question that we are going to receive, we will answer it from the investor relation department. Number 17 is said, "Iberdrola is promoting the largest green hydrogen hub in Huelva. Can you update us in our view on the role that hydrogen is likely to play in the European energy mix?
I think this project, as you know, is already our plan we have already building soon a solar power plant in the area. Also which can be combined as well with another sources of renewable we have as well in the area, wind. We have already the mix of wind and solar in the area. We had already the land and all those things for making that one. We have already presented that one to the European funds. Has been approved, the IPCEI funds in Europe as the project has been considered as a project to be already funded. I think we are at a total CAPEX involved on the range of EUR 2.5 billion, something like that.
The plan is not only to produce hydrogen, it's to produce ammonia. Ammonia we can be used already locally or can be exported, so that is a conglomerate on that one. Now we are expecting just the decision from the Spanish authorities. I think Europe has already approved. We have already all the premises, the land, the connection, the power, everything is ready, and we are pending to know what is going to be the level of support of this project. We have a similar project as well in Sines in Portugal, which as well has been presented to the European funding projects, and I think is to make that one. I think there are two similar one as well.
In Sines we have the land, we have all the project approved for making 1,200 MW already in the near area of solar. And also the similar one. I think in both cases are identical in the sense to producing electricity, renewable electricity, wind and solar. Plus to make hydrogen, and this hydrogen to be transformed in ammonia. Ammonia to be used locally or to be exported, and we have already even soon a MOU signed with soon takers of that one in Netherlands. Which I think the projects are very advanced.
Okay, now please let me, give the floor to Mr. Galán again to conclude, this event.
Thank you very much for taking part of this conference call. I would like to remind you that on Friday, we will hold our AGM, which as you know can be attended through different digital channels. In any case, for what today's presentation, our Investor Relations team will be available for any additional information you may require. Thank you very much, and I'll be delighted you attend already this AGM. Thank you very much.