Good morning, ladies and gentlemen. First of all, we would like to offer a warm welcome to all of you who have joined us for our twenty twenty one first half results presentation. And secondly, we wish you a safety and health period for all of you and your families. Moving now on to the reason why we are all here, our H1 results presentation, which will follow our traditional 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 Galan Mr. Francisco Martinez Corcoles, Business CEO and finally, the CFO, Mr. Pepe Seinth. Following this, we will move on to the Q and A session. I would also like to highlight that we are only going to take questions submitted via the web.
So please ask your question only through our webpage www.iberdola.com. Additionally, we expect that today's event will not last more than sixty to sixty five 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 our Chairman and CEO, Mr. Ignacio Galan. Thank you very much again.
Please, Mr. Galan.
Good morning, everyone, and thank you very much for joining today's result presentation. Almost eighteen months after the outbreak of the pandemic, I would like to begin today hoping you and your families continue to be healthy and sending our best wishes to everyone affected, both personally and on behalf of the Holy Bergdola Group. Let me transmit a cautious but positive message on the global prospect of recovery. As vaccination is progressing rapidly, recovery plans are already designed and starting to be implemented, and more and more countries are focusing on green growth. Also, tariff restrictions are being lifted, allowing us to return gradually to business as usual.
Personally, I've already had the chance to travel in the last weeks to United States, where I finally met some new members of our green management team in person, France and Germany, where we resume our resort activities. This ongoing normalization will allow Iberdrola to continue executing our plans with even more determination, accelerating clean investment, promoting economic activity and creating jobs all over the world. All this is reflected in today's presentation. In the 2021, adjusted net profit reached EUR $1,144,000,000, up 8%, with a reported net profit of EUR 1,500,000,000.0 once we include nonrecurring tax items mainly for the noncash impact in our deferred taxes due to the U. K.
Government decision to raise corporate taxes from 2019% to 23% from 2023 onwards. EBITDA grew 10% to 5,444 million euros or 15% excluding COVID and foreign exchange impact, showing the group's solid underlying performance. Investment increased by 37% to almost €5,000,000,000 in line with our expectation of acceleration driven by electrification and green economic recovery. In the last twelve months, we have added close to 3,000 megawatts of new renewable capacity, and we have more than 8,500 under construction. We have also closed several transactions in Allianz, creating new growth opportunities in our core countries and new markets.
And we have continued reinforcing our financial profile and credit ratings. We support our shareholders to Iberdrola's strategic direction. The support of our shareholders in Iberdrola's strategic direction in governance and sustainability system was once again reaffirmed in the Annual General Meeting celebrating June with a quarter of almost 60% and the proposals including the agenda approved with almost 97.6% a favorable voting average. A final dividend of €0.254 per share was approved in this meeting. For a total annual remuneration of €0.422 per share, a 5.5% increase compared to the previous year.
As mentioned, EBITDA was up 10% to €5,400,000,000 thanks to the good evolution of renewables and networks, more than offsetting the negative impact of our generation and supply business from higher commodities prices, coal snap and COVID-nineteen effect on the retail debt. Networks showed a strong performance in all regions, thanks to the increased revenue for new rate case in mainly New York, the good performance of NeoNegia in Brazil, driven by tariff adjustment and reviews, additional result from transmission investment and the contribution of Nenea Brasilia since the March and finally, the expansion of our Regurgote's asset base in U. K. Renewables EBITDA increased by 63, driven by a new operating asset in all geographies like the Sanglia 1 offshore wind farm in The U. K.
And higher production from existing facilities, mainly offshore wind and hydro in Spain, with more than offset lower wind results in The U. S. And U. K. COVID had an impact of €108,000,000 in EBITDA and foreign exchange impact reached $287,000,000 Excluding both, adjusted EBITDA rose 15%, which, as I said, demonstrated capability of our business model to deliver increasing result in all scenarios.
By geographies, A rated countries like United States, The U. K, Spain, Germany, Australia, France contribute 80% to EBITDA, reflecting the group's ultimate geographic diversification. Building on last year record, in the 2021, we have kept spending our investment, reaching almost €5,000,000,000 in just six months, thirty seven percent above the 2020, with more than 90% allocated to renewables and networks. Networks, which increased 40%, was once again the largest investment destination with 46% of the total. Investment in network grew in all our market and especially in Brazil, where €410,000,000 correspond to NIAYA Brasilia.
Renewables investment increased by 35%, thanks to the acceleration of our dozens of offshore and offshore wind and solar PV projects, mainly in the European Union, United States, U. K, Brazil and Australia. Over the last twelve months, we have commissioned close 3,000 megawatt of new onshore wind, solar PV and batteries, driving a total renewable capacity to more than 35,500 globally. Additional includes 2,000 megawatt of onshore wind installed in several countries like Spain, Brazil, U. S, U.
K, Australia and Portugal 900,000,000 of solar PV in Spain and Mexico and 80 megawatt of battery storage located at hybrid facilities with wind farm in The U. K. And Australia and solar TV facilities in Spain. On top of that, we have already more than 8,500 under construction on both sides of the Atlantic, of which 2,600 are in the offshore wind area. By geographies, more than onethree of the total capacity correspond to Iberdrol Energy International in European countries like Portugal, France, Germany, Greece and Australia.
For a total of 1,000 megawatt of offshore wind project under construction, 1,200 of pumped hydro and battery storage and three fifty megawatt of offshore wind and solar PV. Almost another third comes from wind power and solar in United States, and the remaining 34% is located in Spain, Brazil and to a lesser extent as well in U. K. Once we have the capacity we have already installed from the 2020 and the project they are under construction are ready to build, we already have 22,000 megawatts. That is 80% of our target of new renewable capacity for 2025.
And we continue adding new project to our pipeline, which has reached a new record of 81,500, which is a balanced mix of technologies and geographies. As you know all, in the last month, we have seen strong price increases in several commodities and raw materials used in clean energy projects like steel, copper or aluminum. We have analyzed our position in detail. And in the coming years, we do not expect any material impact from this situation that for now seems to be temporary. All group major equipment is purchased globally through long term strategic agreement that allow us to benefit from better price and delivery time.
In addition, we have advanced purchase orders worth €18,000,000,000 to our suppliers in the 2020. As you know, the purpose of this was to provide them certainty to mitigate the impact of the pandemic in their activity and employment. But now, we are also benefiting from this relevant side effect of that decision. Also, we have fixed or hedged prices for high share of our purchase for the next years, isolating ourselves for any potential disruption in global supply chains. Taking all this into account, as well as other protection included in regulatory frameworks of our network activities, we estimate our exposure to lower is lower than 4% in our total investment plan up to 2025.
This is particularly relevant in large scale projects like offshore wind farm. In this respect, let me say that our projects under construction with total 2,600 megawatts are no relevant impact. All of them are progressing according to plan. San Briggs, with 500 megawatt is already being built in Brittany and will be operational by 2023. The manufacturing of the offshore substation and other components is progressing well, and we are starting installing the foundation.
In The United States, Binyard Wind, we will become the first largest scale offshore wind farm in the country, began construction of the coast of Massachusetts after completing all permitting and authorization process in May. And a few days ago, we signed with local union the first project labor agreement for end offshore wind fund in United States with attendance of the President Biden Climate Advisor, Gina McCarthy, and the several congressmen for Massachusetts as well. We are also moving forward with our second offshore wind mega project in The United States, Pasitiguin, off the coast of Connecticut. And a few weeks ago, Boeing issued a notice of intent to proceed with a primary permitting document for the project, and the design and procurement process are ongoing. As you know, both projects already have secured long term PPAs with local distribution companies.
Finally, Baltic Eagle in Germany is also progressing as scheduled. We have signed as many supply contractors and started the construction of the Osorsabe Station. We expect the permit from the Federal Environmental and Marine Authority by September, and we have in 2034 as full commissioning date. Additionally, we are working on different offtake opportunities to ensure routes to market for all the project in our pipeline, like several auctions and tenders that, in some cases, include also CVED rights for new investment opportunities. In Europe, we are participating in the auction that will close after the summer in Germany with a preferential right inside of our Windyker 300 megawatt project.
We are also ready to participate in the full round of contract for difference in The U. K. With our 3,100 project. And we are preparing bids in several process to add new pipeline, giving us growth opportunities for second half of the decade. This is the case, for example, of the Scott Wind leasing round in The U.
K, which includes rights for fixed and floating project, where we have already reached a partnership agreement with Shell or the auction schedules for the last quarter in Merca in Denmark, where we have an alliance with Total or Netherlands in early twenty twenty two, again, with Shell. All silver dollar has already been prequalified for up to ten fifty megawatts in Normandy, France, building on our capabilities in this country. We have also built new platform of other countries like Poland and Ireland. We have published ambitious target for the coming years, giving us further opportunities for additional growth. And we are also building an optimal position ahead of the option expected in U.
S. Asia Pacific market. We already have 3,600 in Binyar Wind area eligible to compete in tenders in The U. S, like one already opened in Massachusetts for those expecting Rhode Island in Europe for 2021 and 2022. Also, we have 2,000 megawatts ready to participate in auction in the next three years in Japan.
We are working on the forthcoming tenders in Taiwan to secure new pipeline there. Finally, other opportunities are arising in The U. S. Like big area lease sale for over seven gigawatts of the state of New York and New Jersey. As anticipated, last quarter had progressed in multiple areas with companies from several sectors, willing to improve their carbon footprint and take advantage of the investment opportunities arising from electrification.
This is the case of leading Spanish insurance company, MAPFRE, where formed a co investment vehicle to accelerate the build out of solar PV and offshore wind in Spain with a target of more than 1,000 megawatt just in the first phase. In the last month, we have already allocated two twenty five megawatt of this vehicle. 100 megawatts will be integrated in the third quarter. For Iberdrola, these areas provide visibility to the value of our pipeline as well as a new growth platform optimizing our financial structure and generating additional revenues from development, construction and maintenance of the projects. We are also expanding our other alliance to promote decarbonization with companies from different industries, like energy, where we are partnering with offshore wind development, as I had just explained.
Chemical and manufacturing for the electrification of industrial processes with heat pumps, electric boilers and ovens along with dedicated PPAs and for the use of green hydrogen in high temperature processes. In Zero Emission Mobility, we have closed agreement with leading car manufacturers like Volkswagen, Renault, Mercedes, Oirisat in heavy transport and with public administration as Glasgow City Council for Hubert Vaz fleets, retail company like Mercadona Macro and developers of electric charging systems such as Gwalbox, a company which Iberdrola is a relevant shareholder and that will be soon trading in the euro stock exchange. Additionally, we have signed relevant agreements like the one with Cummins to install in Spain one of the largest electrolysis and manufacturing plants in Europe. The consensus about the need to speed up the carbonization is becoming unanimous, involving government, citizens and investors who are pushing for more sustainable and electrified models. There is a clear political support to green investment identified as a great opportunity to generate wealth, employment, competitiveness and better social models.
All major economies are committed to achieve net zero emission and are accelerating their carbon reduction target. Also, several governments are organizing business summits to attract international green investment in the context of increasing competition for capital like Choose France, organized by President Macron, which I attended last month in Versailles or The U. K. Summit, to which I have been invited next October. All countries are also putting investment in renewables, network storage or green hydrogen at the center of their recovery plans to build back better from the pandemic.
The new the next generation plans, The U. K. Green industrial revolution or the American Just Plan are three relevant examples. The sense of urgency is higher than ever. The international energy agency has just warned that the CO2 emission electricity generation will increase again by 3.5% in 2021 and by 2.5% in 2022, which will lead up will lead to all time high.
To mobilize the huge investment required in the transition is also fundamental to have full consistency between energy policies and regulatory frameworks as well our more agile permitting processes for clean energy projects. The European Union is probably the best example of the execution in this respect. Shortly after adopting new climate law, the increase of the EU emission reduction target from 40 to at least 57% by 02/1930. Last week, the European Commission published the FIFA 55 legislative package to deliver on this commitment. As President for the Alliance has highlighted, Europe is now the first continent that presents a comprehensive architecture to meet the climate ambition.
The pact include legislative proposal to reframe carbon price as a fundamental instrument to cut emission in the European Union, strengthening the emission trading system for industry and power generation and creating a second ETS on buildings and road transport. It's also proposed measure to increase the share of renewable sources in the energy mix, rising biding targets from 32% to 40% by 2030 and then the efficiency objective to 36% by 2030 as well or to promote electric mobility with a target of 100% of zero emission new car by 2035 and specific objectives to deploy charging infrastructures. Finally, the package also covers energy taxation, one of the most relevant pending reform in the EU, with an ambition plan to comply with a polluted base principle and increase consistency among the member states. We expect all this proposal to progress in the coming months. Other countries have also published relevant regulation in the last months, like Brazil, which is preparing a comprehensive set of measures to minimize impact of the current drought.
As you know, last December, the Ministry of Mines and Energy, NANEL, the regulator, renegotiated the debt outstanding from the past, a hydroelectric risk through the extension of concession. Now although rationing is currently not expected as new power plant and transmission line make the situation very different compared to the previous droughts. The government has created a committee with different ministers to monitor the situation and has reviewed the system of flags increasing surcharges to customers. In The U. K, the sector appeal to some aspect of the RIIO T2, linking mainly to regulatory terms, is ongoing.
And all distribution companies have submitted draft business plan to again for the next regulatory period with increasing investment in the range of 15% to almost 50%, 30% in the case of Scottish Power. In Spain, the Climate Change and Energy Transition Act was finally approved with Ero and Macabre consensus. And the bill for creation of a national fund for the sustainability of the electricity segment is progressing through the legislative process. This measure will distribute the cost of renewable currency almost fully supported by electricity bill among all energies, allocating the carbonization effort fairly and establishing a level playing field. In addition, the government recently submitted a draft bill that will impact non polluting technologies of life to pay for CO2 they do not emit.
As stated by rating agencies, analysts and several organizations, these unexpected changes will seriously harm the regulatory stability and predictability and legal certainty, which are essential to attract green investment and to guarantee security supply in the coming years. For the moment, this proposal is still open, and I am confident that over the process, a balanced solution will be reached. Fully consistent with European guidelines and in accordance with the principle polluted state, but not whatever does not pollute pays as well. In U. S, the Connecticut Regulatory Authority approved new rates for our gas subsidiary until 2023, also in line with other state recently was passed in New York, asking all utilities to identify climate change vulnerabilities and proposed three years plan to increase investment related with a strong impact.
This will be an opportunity to improve the system and security of supply. The transaction with TEN Resources, the New Mexico Texas utility, is progressing well. All federal authorization has been received, and the Public Commission of Texas also approved the merger, having only pending approval of New Mexico. We expect final closing in the last quarter of the year. Moving to the group financial performance.
The resiliency of our business model, strong cash generation and our growing balance sheet management measures resulted in even stronger ratios. Operational cash flow grew 8%, reaching 4,246 million euros leading to an improvement of 160 basis points to our FFO to adjusted net debt to 23.6. Following our performance, Credit Suisse have reaffirmed our daily rating for Iberdrola. In addition, our liquidity position reached €17,600,000,000 securing access to financing in very competitive terms. Since January, we have also signed €10,000,000,000 of new green financing, sustainable commercial paper and credit line, linked to sustainability indicators, consolidating our global leadership in green and sustainable financing with almost €32,400,000,000 outstanding.
As part of our commitment to environmental, social and government criteria, we have been the foundation of our business model for decades, in line with the 17 Sustainable Development Goals now fully integrated in our strategy. Iberdrola was the first mover in the energy transition, having closed all our coal and oil plants well before competitors and investing heavily in renewable energy networks and storage. As a result, our emission currently stand at just 43 grams of CO2 per kilowatt hour, and we will achieve zero emission already by 02/1930, twenty years ahead of EU targets. Iberdrola is also the largest corporate issuer of green bonds worldwide, and we have fully implemented the recommendation of the task force climate related financial disclosures. And we delivered these results, demonstrating that fighting climate change is the best way to create wealth and jobs.
Since the beginning of last year, we have awarded purchase of €18,000,000,000 supporting €400,000 globally through our supply chain, which sees 1,000 new hires and reinforcing our commitment to learning and development with four times more hours of training per employee than average in Europe. Finally, our governance sustainability system continues to receive several international recognition from corporate nights or the Hispanic Institute among others. And we are constantly adopting best practice in corporate governance in much as a standardity or diversity and inclusion or climate action with a new commitment for our Board of Directors to approve and update annually a plan with the aim of becoming carbon neutral. This one of the items approved in our last Annual General Meeting celebrating a month ago in a fully virtual format for the second time. Attendance was close to 60% of the share of the capital with a very high participation of institutional investors, mainly international.
As I say, all the proposals received a massive support from shareholders with an average favorable vote of around 98%. Another approved proposal was a supplementary dividend of €0.254 per share, which added to the interim dividend of €0.168 per share already paid, leads to a total remuneration of €0.422 per share, a 5.5% increase versus the previous year. I will now hand over to CFO, who will present the group financial results in further detail.
Thank you, Chairman, and good morning, everybody. Let me advance before I start two nonrecurring tax impacts in the second quarter of the year: €463,000,000 corresponding to The U. K. Deferred taxes approval, as the Chairman has explained, that will start on April 2023, so it doesn't have any cash impact in our accounts. And €245,000,000 positive after tax impact due to the reversal of the retroactive Spanish hydrocarbon corresponding to the years '13 '14 after a court ruling in April, and this is reflected by with €265,000,000 at the EBITDA level and in the net financial results with another €62,000,000 First half reported EBITDA was 5,444 million euros up 10% versus last year, excluding €108,000,000 of COVID impact and the €265,000,000 due to the Hydro Cannon.
Our adjusted EBITDA increased 3.8%. FX impact has been €287,000,000 after the valuation of Real, more than 18% and the dollar, more than 9%, while the British pound remained stable. Excluding also FX impact, our EBITDA would have grown around 10% showing the real recurring performance of the EBITDA. Revenues increased 30.9% to €18,700,000,000 and procurements 21.7% reaching €10,200,000,000 Gross margin rose by 5.7% to €8,500,000,000 and 10.6% excluding COVID and FX impact. Net operating expenses rose 3.2% to €2,100,000,000 as group's growth is almost compensated by FX positive impacts.
Excluding FX, net operating expenses grew to €109,000,000 due to the contribution of new businesses, including NEO Distribution Brasilia from the March 2, Infigen and Alto Power. Analyzing the results of the different businesses and starting by Networks, its EBITDA grew 10.6% to €2,600,000,000 and 18.5% excluding $2.00 €3,000,000 negative FX and COVID impact. The latter will be partially recovered. EBITDA grew in all geographies. As you can see in the slide, Spain contributed 33%, Brazil 26%, The U.
S. 21% and The U. K. 20%. In Spain, EBITDA was up 5.8% to €836,000,000 due to the impact of €25,000,000 of positive settlements from previous years as a consequence of improvements in quality and regulated OpEx and 12% lower net operating expenses and despite lower remuneration that, as you know, has come down in 2021 from 6% to 5.58%.
In Brazil, EBITDA grew 64% to BRL 4,351 million driven by positive impact from tariff updates and inflation adjustment in our distribution companies and the increasing contribution from transmission assets. Energia Distribution Brazil contributed with $50,000,000 In The U. S. EBITDA, IFRS was or IFRS EBITDA was 13.7% up to $670,000,000 due to the increase in investments and to past cost recognition, but affected still by higher storms than last year. That will be reconciled in the next years.
Excluding COVID impact on demand, EBITDA would have grown around 16%. U. S. GAAP EBITDA amounted $830,000,000 $140,000,000 over our IFRS EBITDA mainly due to the difference in the timing of accounting of the levies that in IFRS are fully accounted in the first quarter and in U. S.
GAAP through the year. Finally, in The U. K, EBITDA grew 3% to £445,000,000 thanks to the higher asset base. Demand still affected by COVID will be recovered in 2023. In renewables, EBITDA rose 63 to 2,005 million euros and 45% excluding the negative FX impact and €265,000,000 positive impact from the Spanish hydrocarbon reversal.
This growth is driven by Spain, The U. S, Mexico and Brazil. Production increased almost 17% with 8.8 more installed capacity that reached 35,676 megawatts and a higher load factor due to hydro with higher average price in Spain and The U. S. In Spain, EBITDA was €990,000,000 €690,000,000 over last year, thanks to higher price of the supply business and 29% higher output with 38% higher hydro, 12% higher onshore production and 138% higher solar production, whose installed capacity already has reached fourteen thirty megawatts.
It also include, as mentioned, two sixty five million from the Hydro Cannon accounted at the levees level. Excluding this nonrecurring positive impact, EBITDA would have still grown by €425,000,000 In The U. S, EBITDA increased 42% to €448,000,000 with positive contribution from the Texas cold snap and new capacity and despite a 3% lower output with two percentage points lower wind resource than last year. In The U. K, EBITDA fell 7.7% to $3.00 £4,000,000 due to a 16% lower onshore production and lower prices, partially compensated by higher offshore production due to a Stanglia I contribution.
Let me point out that it has been the lowest wind conditions in the last thirty years in The U. K. In this first half. In our International Energy business, EBITDA fell 2.9% to €172,000,000 due to lower production from Wickinger and higher development costs despite Infigen and Alto Power increased contribution. In Brazil, EBITDA grew 30% to €350,000,000 thanks to the extension of the hydro concession to recover costs from previous years.
Finally, in Mexico, EBITDA rose 112% due to the higher operating capacity coming from Pierre and Santiago onshore wind farms and Cuyoaco. Generation and Supply EBITDA decreased 41% to $8.00 €8,000,000 and 38% excluding negative FX and COVID impact. The business has been negatively affected by lower thermal output, higher prices negatively affecting our Spanish business as well as coal snaps in Mexico and Europe. On the positive side, The U. K.
Showed a better performance. In Spain, the EBITDA was down 58% to €350,000,000 with flat output due to higher renewable production and energy purchases at higher prices with output already sold at fixed prices and the additional negative heat from the Filomena storm, while COVID improved its negative impact. In Mexico, EBITDA fell 21% to $336,000,000 negatively affected by the Texas coal snap for around $70,000,000 In addition, there has been an increase in access fees of over $20,000,000 In The U. K, EBITDA grew 21% to £135,000,000 with higher sales despite COVID effect, mainly due to weather condition and improved margins, especially in gas. Excluding COVID, EBITDA grew 11%.
Brazil added BRL251 million to the EBITDA, highlighting the better performance from our CCGT plant and improvement of COVID impacts versus the first half of last year. In our International Energy business, EBITDA was minus 16%, affected by coal snap development costs and lower sales due to COVID. EBIT was up 20% to €3,600,000,000 Excluding FX COVID and Spanish Hydro Cannon, EBIT grew 13.2%. D and A remained stable at €2,000,000,000 due to the fact that FX has compensated the 7.3% growth mainly due to the larger asset base and activity. Provisions were down 18% to $2.00 €3,000,000 as consequence of the lower bad debt provisions related to COVID compared to the 2020 as collections are improving.
Net financial expenses grew €72,000,000 to €472,000,000 mainly linked to positive FX hedges in the first half of last year, partially compensated by other nonrecurring accounted for in the Q2, mainly the accrued interest from the Hydro Cannon that amounted €62,000,000 Debt related costs remained stable, minus €31,000,000 due to the higher cost of debt that increased 19 basis points to 3.38% from 3.19% due to higher costs of our Brazilian inflation linked debt more than offset at the EBITDA level, compensated by a 5% lower average net debt. Our reported credit metrics improved due to the following reasons: first, the adjusted net debt decreased €515,000,000 to €36,600,000,000 despite the investment efforts thanks to the hybrid issues. And second, our resilient business model improving our cash flow generation. Our twelve months FFO grew 6% to 8,625 million euros Our adjusted net debt to EBITDA improved to 3.4 times. Our FFO adjusted net debt grew 1.6 percentage points to 23.6%.
Our retained cash flow over net debt improved to 21.2% and our leverage ratio strengthened to 41.6%. Adjusted net profit grew 8.4% to $1,844,000,000 euros compared to last year's of seventeen oh two million euros Adjusted net profit excludes extraordinary impacts including COVID, Hydro Cannon and non recurring items, but not FX impact as we consider FX part of the risk that brings being a global player. Reported net profit was $1,531,000,000 euros 18% below last year due to the accounting of The U. K. Corporate tax as explained previously.
Thank you very much. And now the Chairman will conclude the presentation.
Thank you, Pepe. To conclude, this set of results shows that in this unprecedented period, we have continued to make progress ahead of our plans and delivering result in line with our forecast in the first half of the year. We have accelerated our investment in renewables, adding 3,000 megawatts in twelve months, with 8,500 under construction. And we and the rate case closed in the last months, for instance, in New York, are driving additional investment and result in networks also boosted by the contribution of new transmission project. Both businesses, coupled with ongoing improvement in operating efficiency, have more than compensated the complex situation of generating new supply in the period affected by high commodity prices, string weather and COVID-nineteen.
We've also managed to further improve of our financial strength as reflected in our key ratios and reaffirming our leading position in green and sustainable financing. And we expect this positive trend will improve even more in the second half as a result of the acceleration of capacity addition with 3,000 new megawatts expected in the second half and the recovery of wind resource to usual levels more than U. S. And U. K, increasing result in networks reflecting additional investment in new regulatory frameworks and the normalization of business condition in retail, allowing to reaffirm today's our net profit guidance for 2021.
But over the last month, we have also focused on expanding our footprint to create new platform and ensure additional growth in the years to come, taking advantage of the increasing investment opportunity linked to decarbonization all over the world and our track record of innovative clean energy solution and new technologies such as offshore wind, confirming our role as an engine for industrial development and job creation. Fully aligned with our two decade commitments to social market economy, the increased value for all shareholders, employees and the shareholders they serve. In just one year, we have agreed large scale corporate transaction in networks in The U. S. And Brazil, then strengthening our position into our fastest growth markets.
We have also expanded our presence in offshore wind in new markets from France and Germany to Sweden and Poland and Europe, Japan, South Korea, Taiwan and Asia, and we have reinforced our position in Australia. And we have leading presence in the green hydrogen value chains and the new initiative to promote electrification in transport and industrial processes. In other words, Iberdrola is today stronger in the businesses and the geographies that had driving our growth in the last twenty years and has more than enough option to deliver even higher growth rate in the twenty years to come. You can be sure that the management team and the 40,000 women and men who make up Iberdrola are more than ever committed to continue this success history. Now we will be more than happy to answer your questions.
Thank you.
Us say a few words on the news that have been appearing in the last weeks about the Senate case. Maybe there are some question on this as well. This is an issue of seventeen years ago when at least 21 Spanish companies and some government bodies contracted a registered and legal security company called SENIT. In any case, from the moment Iberdrola knew about this in 2018, we did all the compliance and internal audit procedures as well as fully independent forensic by PwC. In addition, we have a legal opinion from the international law firm, Baker McKenzie, saying that there is no illegality or irregularity by members of the Board of Directors or senior management and all the corporate governance procedures has been properly working.
We are talking about an order of €25,000 plus VAT for services provided in Romania for an employee of a subsidiary Iberdrola Renovable Energia of a subsidiary of Iberdrola parent company, Iberdrola S. A, so like a granddaughter. Be sure that we will take all legal action to defend in one hand the reputation of the company and on the other, the interest of our shareholders. We will continue informing you with fully transparencies as usual. Let us now move on to the Q and A session.
And the first question comes from Fernando La Fuente, Alantra and is regarding the EBITDA guidance for 2021 after this strong H1.
I think in the first half, the result are progressing better than expected that you mentioned. Operating performance continues to be very good. We have accelerated investment in capacity additions. We have new rate cases in Europe and addition growth in transmission. We have improved our financial strength.
So what we expect in the next month is higher renewable operating capacity and the recovery of good results, especially in The United States and U. K, has been very poor. The acceleration of net good result as a result of investment especially in distribution and as well some new regulatory framework, which is going to be coming to force in the next few months as well. And I hope the improvement in retail after the normalization of the nonrecurring effect with Pepe has already mentioned, the call is not, and we hope then the COVID as well. That's why, thanks to all these things that where we are affirming our guidance for 2021 in as I mentioned before.
JOSE Next question, since I have in mind beat the record of people interested, is around the CO2 draft proposal of Globak, and it's coming from Alberto Gandolfi, Goldman Sachs Elquimumabov, Bloomberg and Jorge Alonso, Sogden. In summary, our five main questions: first is chance to be approved second, timing third, sorry, has it been discussed with the European Union fourth, impact on Iberdrola and finally, possibilities to be improved.
So I think the first thing I would like to say is that this draft bill is not a good news. I think it's a surprise to everyone after three years of a clean a clear direction in energy policy. I think we've been already passing through a period, which has been very, let's say, abnormal because traditionally, our regulatory authorities used to give surprises time to time. So I think that is not the case. That has not been the case.
And suddenly, that was a surprise. Surprise for trying to solve something that is going not to solve. I think I would like to explain you more or less what is the situation in this moment of the crisis. So approximately 90% of the energy of Spain today is not affected by the spot prices because they are already fixed prices. From this 90%, approximately is 15% are already residential, which I think will less than 10 kilowatts that with the measure where the government has already taken at present, the diminishing for this, the VAT, they have not only not been paying more, they are paying less, around €5 less per month because they have already fixed price that we, the company, we are already absorbing because we make already this contract we fix with them.
In the industry, the industry in the service, which is the 75% of the total energy consumed in the country, is not at all affected because most of them are already fixed prices and therefore, they agree with the commercial companies or they already agree with the operators. The only one which are affected is 10% of the energy, which are those residential customers without already they use what they call the PVPC, the price for the small consumer, which is regulated. And because of the decision of this government, the previous government, is already supporting the volatility, hourly volatility of the market. Probably, the only country in Europe we have already such because everybody is already using, as we had in Spain before, already some kind of baskets of prices, which can already provide already a fixed price for a long period of time. So nevertheless, with the measures taken by the government in terms of reducing VAT and taking into consideration then 70% of the almost 70% of the bill is related to fixed prices, which is all the regulated part of the one, only 30% is affected by energy.
So that represent with today's prices, which are already higher than those that were already the average of the previous year by €30 €40 the impact daily impact of those consumers is €0.12 per customer daily, so means less than €4 per month. That's it. So I think that has a very easy solution, is to move toward prices basket prices, which can already fix the price for those customers which are more affected at present on that one. Saying that, I'm quite convinced that during the approval process that can during the process of approval, they can already been improving on the terms of actually. The fact the CNMC has already made certain technical improvement, we can already improve this situation.
So I think in terms of the chances to be approved, I don't know. I think that has to pass through the parliament. And I think probably it's going to take several months. Now it's on the state council. We have to make their own report.
And I don't know how it's going to take. Related to you, of course, we are talking with you about that one. I think we are already just informing about the situation because it's precisely a contradiction. What about the for five is already being proposed. I think Fifth for 55 is precisely saying they apply the principle who pollutants pay.
And I think that is who pollutants pay and who is not polluting pays as well. And with the risk that with this law, why not in five years' time, somebody, whatever government, this one or the government can already as well try to do the same thing with the technologies which are today being built or another sector, the steel industry, that's already made already certain transformation of their production, reducing CO2 using another kind of thing, they have to pay because now they are benefiting of the higher prices of carbon. So I think it's something which is absolutely contradiction, and we have already been, of course, explained to the European Union. In Patroene de Broda, we should see what is the result of that one, but certainly it's going to be several hundreds of millions of euros and that has happened. But I think we have to take certain decision because certain in certain situations of low gas prices and high prices of carbon, even the income or the revenue is going to be less than the tax we have to pay.
You can see that is already a situation that we have to be very careful because we cannot be ready to produce in a situation in which every megawatt we produce is more we have to pay than we have already to receive. And the position to be improved, I'm sure then that is there are already possibilities because I think I understand the position of the government. They are already impressed because of these prices. But the point is simple, is to explain what I'm saying. The impact of these prices is only to the 10% of the energy already sold in Spain, and that is representing 0 point dollars per one day per customer.
And that is easy to resolve making already a basket of energy using the forward prices, which are lower than those prices we have today or using another thing that we offer, for instance, for these short for these small consumers or using, for instance, a fixed price for nuclear that French are already doing or another countries are already doing. So there are solutions. We can already achieve the same result without making already this deservancy of the regulatory orthodoxy, which are already generating, I understand your position, already nervousness, which has not already been in line, what has already been done up to now with DyninCist, has been very orthodox and doing the things very well in the right direction in all the bill we have been passed up to now from this government.
JOSE Next question comes from Ralph Pulleyn, Morgan Stanley, Harry Wyburt, Bank of America Merrill Lynch, El Quimah, Madhu, Bloomberg. Impact of the inflation in our business.
So certain, the global disruption in supply chains caused by COVID-nineteen has increased, as I mentioned, the raw material prices in the short term. My feeling is then that is going to be correct progressively. I said we have not expect significant things in 2021 and 2022 in our exposure. And I said already, by 2025, the numbers we are making with today's situation is just 4% of our in our investment plan, so which I think is something which is already digestible. I think we most of our key money is purchased globally.
We have already advanced orders, as I mentioned, for €18,000,000,000 since the beginning of 2020, where the prices were lower. All our investment decision under construction is made with very high share of the CapEx costs already fixed. I would like to say 18%, 90% of those ones which are in construction is already all this already fixed. And as well, major equipment contracts have some kind of a sort of price indexation with generally said. I would like to say one project, which I think is the we don't think in my mind, which is already can be affected, which is already which is committed to be already in operation in 2025, which is part city wind offshore.
We have the PPA signed, but we have not still already fixed the site, all the purchase, all the equipment necessary, the turbine, not the substation, not the all the infrastructure. So but I think from now, still we have a few years before we started the construction. I think we expect that this situation improve. I think if my memory is the only one which can be already affected, but I think it's a minor part in comparison with the total investment we have to make, which I mentioned in almost 8090% are fully hedged and fully covered in this moment. So also, I think in the that increase in prices becoming structural for the future, so I think that setting will be already reflected in pricing in the same manner that it was already decreasing prices when the equipment reduced the price as well.
So which I think I would like to transmit your tranquility in the sense that for now to 2025, almost all our investment is already covered with the exception of Dispar City by memory, which I think that one which is already the most important. And if this is structural, the prices in the future will be adjusted according with advance, so according with increase in the raw materials.
IGNACIO Next question comes from Alberto Gandolfi, Goldman Sachs. In light of the European Union recovery fund money, can you tell us what upgrades to investments do you envisage from it? What could be the DDA or net income upside from this in the period 2022, 2026?
So I think, as you know, the Spanish recovery transformation resilient plan has been already approved by European Commission. And we know the government, the Spanish government is working on their processes to allocate these funds. I think you know that Spain is going to receive close to EUR 9,000,000,000 in the next two months. And we are already in this moment responding to the request for proposal linking to our business. As I mentioned in last presentation, we have already presented several projects, I think 175 projects, I think 180 projects in very different field from floating offshore, wind, green hydrogen, electric mobility, energy storage, altogether can already mobilize close to €30,000,000,000 and generate something like 60,000 jobs.
But I think I would like to stress in our business plan is not dependent at all of this project. So I think that will be something more if we get some of those things, will be an upside in our plan. I think no one of those are already included in our business plan. I think I don't know how much it's going to take. I think another day was announced something on the area of the car industry for electric vehicles.
But I feel even if that one was announced, the total amount they would like to allocate in that one, but it still has not to re approve any other project because they have to be make under a competitive system. So which is still we don't know how it's going to be the system, and we don't know much about that one. Sorry not to be able to send more because, unfortunately, we have it's one of the secret better maintain. I think we have not told information. Everybody is talking to me about the same thing.
Said, well, with your relation with the government, you have to know something. I don't know anything. So even if some of the project, theoretically, you have been already part of the work has been announced, I think we don't know how, when and which place it's going to be built. So I'm sorry not to be able to say more because I
don't know more about that. Jose Javier Ruiz, Barclays will send this question. Could you update on the closing of PNM acquisitions? Will PNM have to increase the benefit to rate payers during the negotiation? You talk about P and M?
P and M, yes, right.
So well, I think it's not changes from our previous conference call. I mentioned already, we have all the federal permits, which is something like 20 or 25 permits for different areas. We have already the permit of Texas, and we have already are now in talks with New Mexico. I think there are hearings expected by August. And I hope during this hearing, the thing will be clarified.
We are expecting that all will be already clear. And I think so I think our expectation is in the fourth quarter to have already just to complete all this one. But I think that is what I can say about P and M.
Okay. Next question comes from Emmanuel Palomo, Exane Xavier Garido, JPMorgan. I think that has been almost answered in your premium when you talk about the CO2 clawback draft legislation, but I'm going to read it. High power price environment in Spain. Can you elaborate on the expected impact of the current high power prices in H2 twenty twenty one and in 2022?
When do you expect to start to see the benefit in your earnings, if any? News about how the Spanish government will liaise with the strong increase in power prices? And how do you expect the wholesale market to evolve in the coming years with expected increase in renewables installations?
So as I mentioned, I think my feeling is that, that is a temporary situation. I think it's mainly due to these high commodity prices. And I think the forward prices, I think in the case of the gas, as far as I know, is due to the lack of the stocks. The stock the companies in the countries are already feeling the stock with the word already at minimum. So but I feel something I would like to say very clearly is that we, utilities or companies like ours, so we are not benefiting of these high prices.
I think that is something I would like to stress very strongly. I think we are I think what I mentioned before about the consumers, 90% of the LNG already not affected is because we are already absorbing this cost. And that's why, among other reason, why our retail business has been affected negatively in that one. So I think a part of that one, you know the situation we faced at the beginning of the year with Filomena, in which we had already as well just a very high prices and high demand. And I think we have not able to we have not hedged all this demand.
And that's why we were forced to buy this one. But also in those what we are already yes, we have to produce, in some cases, are not enough and that we are forced to buy. So I think we are affecting negative on that one. I think that is something I would like to stress because the high prices is not already improving our result. Today's high prices are already affecting negatively our P and L globally.
I don't know, Pablo, you would like to stress something more in this respect.
No. I think I have nothing more to That's the situation, and this is, what is going what we are suffering this year.
This question comes from Alberto Gandolfi, Goldman Sachs, Javier Suarez, Mediobanca, and it's a follow-up of our introduction that we make about the Senate case. Can you give us your read of what is going on with these court cases against Hilderola in Spain?
Well, as Ignacio mentioned, we have been reading about this issue in the press for almost three years without having access to the dossier because we were not part of the process. Even if we ask to be part of the process, the judge doesn't deny to be part of the process. So finally, we have access to that one. And as Ignacio said, during this period, I think without having access to the ADUCR, we put in place all our corporate governance and control procedures from internal audit to compliance and even we use already independent forensic made by PricewaterhouseCoopers. Also, we have already, as you can imagine, we have already had legal advice from national and international law firms.
And also, we have already got a legal opinion from Baker and McKenzie. I think it's, Ignacio, that is on the documents we So you can read that one. All of them, internal and external law firms, the legal opinion from Baker, all of them have read the same conclusion. Nothing illegal or irregular was done by any member of the Board of Directors or senior management. And the government procedures are working properly.
I think that is what I can say. I think once we have already that is the information we can already say. I think we have nothing illegal, irregular was done by no one member of the Board of Directors in the management, and the governor procedure was has already worked properly. So I can tell you we have already had something like 40 meetings of the committees, the boards, and we have already analyzed and talked about that one without having the access. When we have access to the dossier, no new fundings were there, we have not really properly analyzed.
That's it.
JOSE On Page 21 of the presentation, you can find this document legal opinion from Baker McKenzie. Next question comes from Elquimah Madhuf, Bloomberg. Output and prices hedged in the coming years. Tacon?
Okay. Thank you, Chairman. For 2021, we have 100% of estimated price driven output already hedged at around €75 per megawatt hour, let's say. And for 2022, we have three quarters of the year around 74% of estimated price driven already hedged at above €80 per megawatt hour. This is in Spain.
And in United Kingdom, we have almost 100% of the two years already sold or closed or hedged at similar prices in pounds.
Next question comes from Jorge Guimaraes, JV Capital. Is it possible to clarify the impact of Hydro Cannon recovery at EBITDA and net income? At EBITDA, was €265,000,000 and net income, $245,000,000. Is the difference just coming from taxes or is also something included in financial results?
Let me say what we have is €265,000,000 gross at the EBITDA level plus €62,000,000 gross and financial expenses. So, in gross terms, it's €327,000,000 divided €265 in EBITDA and 62,000,000 in financial expenses. If you take away the taxes, then it's this €3.27 becomes €2.45 which is what we are stated to compare the impact with the €463 of The U. K. Taxes that is also net.
So that how you reach the $245,000,000
Stefano Becciato, Credit Suisse. And Jorge Guimaraes, JotaV Capital. Can you elaborate on the drivers for the very weak performance of generation and supply in Q2 in Spain? How much of this is driven by margins being transferred to the renewables business?
Yes. In Spain, the key question has been, let's say, two halves. The first half is the transfer or contract between renewables and generation and supply business. And this is this accounts for 200,000,000 And the other half, other €200,000,000 comes from two main issues. One, let's say 15% of this, about 30%, is technical constraints.
It's due to the fact of the higher payments we have made as a supplier because we have had generation that has been forced by the grid in Spain for the network constraint. And the rest is about €170 comes from the fact of having sold the energy last year for the future, I mean, for this year with an environment of very low prices. And that's the typical fact that when you have to sell the future and the environmental or the prices of the moment where you are, the spot price and even the forward prices are very low, you are not able to pass all the margins and all the costs well, all costs for sure, but not all the margins you want. So that's the other 170,000,000 So that's a gun for 200,000,000 plus 200,000,000 So 200,000,000 has no effect because appear on renewables and the other 200,000,000 are the one that I mentioned.
JOSE May we ask sorry, Rafael A, Morgan Stanley. Yes, you can, Rafael. What the COVID impact are in H1 and why they are still twothree of the level in H1 twenty twenty last year rather than having fallen more?
So unfortunately, we are seeing that everything is moving back to normality, but I think the first time that our people and the people are able to move freely in some countries like Britain is very recent. Same in The United States, I think in which still there are already certain restriction of the people to go to the office, etcetera. And I think the main consequences of the COVID are part of the demand in the past already is the bad debt in retail. I think the bad debt is already and I think if the people cannot really go to try to recover that one or the people cannot go to the bank for pain, etcetera, so I think we are already facing this problem. The things are recovering.
I think the amount is less than it was, but still it's already time for being full normality for already mainly for diminishing this bad debt because we are collecting as much as to come into the normality in collection. So there are countries which is going better, so which is the case of Brazil, but I think still is not full normality on that one.
JOSE Next question comes from Alberto Gandolfi, Goldman Sachs. Would you consider a spin of the offshore business to fund your 22 gigawatts pipeline?
Well, I think that question was passed to me, I think, in the last presentation. As I mentioned that time, we are always study all potential measures to optimize our balance sheet and our financial profile. I think certain in areas attractive, this one, so we are already looking with very, very detail on that one. So why? Because I think in Offshore, we have 1,300 megawatts in operation.
Almost they are contributing already a €600,000,000 EBITDA. They are we have two more than 2,600 under construction. As I mentioned, they are at least 12,000 megawatts offshore, which can be already in operation by 2030 with almost €30,000,000,000 investment. No decision is taken, but we are analyzing with very detail. And I think if we take any decision, we will inform you about that one.
But certain is an area that we are already analyzing, and we are in an area where we see that we have some hidden values inside, and we in due time, we will see how can be already be materialized, but nothing is decided yet.
Manuel Palomo, Exane BNP Paribas. Reasons to enter in the Vietnamese market, could you please share your views on the updated renewables target in Japan?
So I think I used to say that the pandemic during this time of confinement, even if our many people has been unable to travel, but they feel the new technology has already facilitate to them to do a lot of deals, a transaction. I think our expansion in Asia has already been almost made, thanks to the pandemic period. I think we went to Australia, we went to Japan, we went to Taiwan, we have reached agreement with Korea. We are now looking from this in Vietnam. And what is we are seeing there, I think, is a country where they are already given potential growth in this one.
I think is the agreement with this is a portfolio of almost five fifty, 600 megawatt. There are five wind farms and 50 megawatt of floating photovoltaic project. And I think we expect to start operation between 2022 and 2024. You have to know that Vienna has an objective of '20 gigawatts renewable by 02/1930. Is already the regulation there is quite attractive, which I think that can already provide us this possibility of being in this country.
Same thing in terms of Japan. In Japan, I think, it's a target capacity almost 45,000 megawatt already of offshore, which I think we would like to be part of these possibilities. Always already have the same one. We would like to go to countries with a large with a good potential in which we can use our skill and knowledge and capabilities. Think certain we have already developed certain knowledge and skill and capabilities in offshore, and we would like to come to those countries.
We can already provide legal certainty with attractive environmental regulatory environment and using our skin and our experience. And that is what we've been doing, I think, during this time with this Asian expansion already.
Question 15, Harry Wybur, Bank of America Merrill Lynch and Javier Suarez, Mediobanca. Can you elaborate in your view of the EC's Fit for 55 proposal and the implication for the group?
Well, think we've been, during twenty years, already moving in one direction. It was not precisely the direction that most of government and competitors and business leaders were already, yes, supportive. They were already, yes, against almost everybody in this direction. For us, seeing this sort of legal regulatory framework, I think we see as a great opportunity because that can already generate wealth, employment and investment, and we can already use all our skills and accelerate whatever we are being developing for many, many years. Certain, I think now is a consensus global political consensus to promote this decarbonization.
My concern on that one, and I think that is something which is well reflected, a part of the objectives in terms of renewables, in terms of energy efficiency, in terms of the new ETS sectors as well. I think it's the fact that they're trying to make a full consistency between policies and regulatory framework and fiscal framework as well. So the fact that they are saying that the intensive taxation any modification, any taxation has to be approved by the 27, I think, is a good news. I think we can avoid these situations, surprises that we've been already supporting in our country for so many years. So whatever thing to transform Europe in a real energy union, I think that should be great because we can already move across Europe with much more facility than we are already today.
We have already with such differences between countries in taxation, with such differences in the permitting process, with such differences between what the politicians said that regulation facilitate, I think all those things, as much as can be unified, standardized and facilitated things, as much better should be for achieving the net zero and achieving the target of decarbonization. If that is not happening, it should be impossible. I think I mentioned before, then the last International Energy Agency report is saying that the carbon emission in 2021 continues increasing and the carbon emission in 2022, nothing changed, continue is going to continue to increase. So when we move fast, if we try to unify all our effort to apply the principle who pollute is paid or we cannot achieve that one, with measures which are already just disincentivating those which are already not already polluting. If we're already trying to maintain those ones which are polluting in a, let's say, in a better situation, we will not achieve the target.
So I think that's my point. So I think it's ambitious plan, but it's reflecting the demand, social demand for trying to diminish that one. You see the situation of float in Germany, So which I think all those are dependent on that one. Another day, one of our board members, one mentioning that in Brasilia, they had never seen already a storm of Granito, I don't know, a kind of snow in Brasilia. So it's ice already, yes, raining ice.
So it has never happened, but has already happened in Brasilia, and it was affecting already the service during this time. So I think that's why I think it's a good news. Hail, sorry, hail is the right word. So Brasilia with hail. So it's incredible.
This question comes from Javier Garido, JPMorgan. Avangrit has outlined the sale of seven eighty megawatts of renewable developments. What gains would you expect of the sale? And when should they be booked in your account?
Well, I don't know the detail, but I think it's we are always looking opportunities to maximize the value of the pipeline. I imagine that one should be something which probably they are not really been interested for them to build. And therefore, they find out somebody which are already ready to pay something for development and they see that this better for to obtain a better return, selling the development instead of building and operating that one. I don't know the detail, but I think you like Matthew, you can release it. But I think it's something that we look continue the opportunities of that one, but I don't imagine it as much.
But I think you can already inform me that one you obtained the information. I don't know what it is.
Last question comes from Jorge Guimaraes, HOTABY Capital. How is the Tamaga hydro project in Portugal evolving? When should we expect it to be totally online and producing? 2021 for the first stage and 2023 for the final one?
So I think as far as I know, it's going well. We've been not allowed to travel to Portugal. I plan to go this during my summer holidays. I'm already just very close to Portugal, and I will try to use one of my holiday days for visiting that one. But as far as I know, the thing is going very well.
I think the information I got is that one of the power plant, Gubay, is this year is going to be already just in operation. It's already 100, three twenty megawatts. And another one, Dibois, I think probably as well can be already by the year end, is another 100 or 120 megawatts. And the thing which still we are already willing for the so the major part of the project is going to be by the year end already in operation. And what we call Alto Tamega, which is the big dam, which is already in the at the north of another two, I think they are already now in construction.
And that the plan was to be completed by 2024, I think. So but I think the two first large group, which is what is the storage, I think they will be in operation by the year end this year. But I can already next in the next presentation of results, I can already give you more detail because I'm going to visit those ones during this summer.
Okay. So just please let me now give the floor to Mr. Galan to conclude the event.
So thank you very much for this for taking part in this conference call. If you have any doubt, as always, our Investor Relations team will be available for any additional information you may require. So we have not really had the opportunity to meet you before. Have a good holiday for those we are going to take, and we'll be in touch in the next presentation or result in October. So thank you, and good summer for everybody.
Thank you.