Good afternoon, everyone, and welcome to Solaria 2023 nine months result webcast. My name is David Guengant. I am the Head of IR of Solaria. I am joined today by Arturo Díaz-Tejeiro Larrañaga, our Chief Executive Officer. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our prediction and expectation as of today. During this presentation, we'll begin with an overview of the result, with the key highlights and the main development during the period given by our CEO, Arturo. Following this, we will move on to the Q&A session. I would also like to advise that you have to submit all your question via the web. So thank you very much again, and I will now hand over the word to Arturo.
Thank you, David, and thank you to everyone joining the call, this conference call, no? I think, recently, we have been in the CMD. You have received a lot of information recently, you know, and, of course, we will do a fast conference call explaining nine-month results, and then we will pass to the Q&A session, no? First, in order to give some information, we continue growing revenues, capacity in operation, EBITDA, net profit. Now, in order to give some guidelines, some financial guidelines, as you know, we have promised to finish this year with EUR 200 million of EBITDA. The nine-month results, I think that we have good rhythm.
We are achieving a good rhythm of installation, of connection, of PV assets, and we are comfortable with this guideline of EUR 200 million of EBITDA for this year, no? We have increased our capacity in operation, and obviously, we are increasing at the same time, revenues, net profit, and EBITDA. Now, this quarter, we have achieved EUR 86.4 million net profits, and hopefully, we will finish with much more, no? Of course, price of electricity where we are, you know that, during this year, we are suffering less price of electricity reduction in price of electricity if you compare with last year, no? It's good for consumers. It's the correct way that should follow the price of electricity.
But in all cases, we are happy with the actual situation of price of electricity and especially with the actual situation of price of PPA. Recently, in the CMD, we announced a PPA deal with Endesa. Hopefully, in the short- term, extremely short term, we will announce a new PPA deal that will be in a similar interval of prices, probably similar or even better than previous deal announced in the CMD. Size will be similar, and we will continue signing PPAs, no? For us today, the price of PPA that we are touching and the actual CapEx is a perfect combination that gives to us really good levels of project IRR. Price of modules, we have explained in the CMD, the situation of the modules is crazy, decreasing price per month.
Probably, we think that we are achieving the top part because today we are closing deals using prices of EUR 0.10-EUR 0.11 per watt. That is incredible because with these prices, the CapEx that we could achieve is even less than we have announced in the CMD, EUR 0.375 per megawatt, no? This is the critical point for us, as you know, because it define the final project IRR that we are going to obtain next years. If we are able to maintain a CapEx or even to reduce this CapEx of EUR 0.375 , the project IRR is crazy, you know, and it's something that it's a warranty that we are going to execute all of our business plan, all of our Pipeline, during the next years.
Of course, from operational point of view, we continues increasing per quarter. Energy production obviously is better this quarter than previous because we have had more assets functioning. Price of electricity is less because, if you compare with other quarters, especially with last year, the average price of electricity is less. Why? Because we are using PPA prices. PPA prices are out of the merchant market, and PPA prices, you know, the average price is close or around EUR 40s. And, obviously, price of electricity, merchant price of electricity today is, the average is around EUR 70s, EUR 80s. It depends on the day, but even more, sometimes more than EUR 100.
Obviously, using PPA, you have more security, more reliability, but at the same time, the average price in your electricity is less if you compare with merchant. More assets, more volume, more revenues, same people. At the end of the day, we are more efficient than in previous quarters, and we will continue improving. We have hired a lot of people and staff associated with our international expansion. As you know, we are extremely focused in Italy, in Germany, in Portugal, and we have increased our staff, but at the same time, we have increased more our revenues and, at the end of the day, our EBITDA. We are more efficient than in previous quarters, and we will continue, guideline on track. Our guideline for 2023 was EUR 200 million.
We have present, we have shown in the CMD presentation. As I have mentioned, we are comfortable today with this target, and I think that we have high level of security that we are going to achieve this number or even better than this number at the end of the year. Cash flow. We are using a lot of cash and a lot of our project finance structure in order to pay all of our investments. We will continue this investment or with our investments, our investment plan that will grow more in the next quarter. The good point, as we explained during the CMDs, we have a strong support from our project finance bank and institutions partners.
We are covering our CapEx, as always, with project finance, and we will continue with this situation for the long- term. Of course, I have done a fast presentation. I think it's more interesting if we go to the Q&A session.
So thank you, Arturo. We will now open for Q&A session. And once again, thank you for your time. Just let start one minute. First question is coming from Jorge Guimarães from JB Capital. First question is: It is possible to elaborate on the evolution of working capital as of 9 months, 2023? Why is the company consuming EUR 79 million of working capital? The second question from Jorge is regarding average price, EUR 67 million, according to Jorge calculation, EUR 67 million in Spain in the third quarter and EUR 64 in the second quarter. However, as a percentage of pool, it go down from 79%- 69%. Why is this reduction in capture price in Spain?
The third question is: Where do you see the debt by the end of this year?
Thank you. Of course, about working capital, as always, we have a mismatch between investments and disbursement of the project finance that, for example, today are corrected, because we have received the payment from project finance, no? But, for the last day of September, 13th of September, it was this situation, no? But from in my view about working capital, I'm not worried about this, no. I think that in the fourth of February, you will have a great photo from working capital point of view. I think that in the next 90 days, things will happen and a lot of things, and I think that the situation... I'm always talk about the general situation, no? The good point is our CapEx is our record CapEx.
The project finance is covering. It's covering more than our CapEx. Like, we are generating cash, and, for the fourth of February, the situation will be extremely good from working capital point of view, no? And, I'm happy in this point, and I think that, we are going to improve a lot in the next presentation, the situation, no? About the price of electricity, no, and the situation, as I have explained, we are using now PPA contracts, and, obviously, good or not, or bad, but, PPA reduce average price because, you know, our PPA price is around EUR 40s , around EUR 40s . New PPA is better, old PPA is less EUR 40s . And, the average price is around EUR 40s . Obviously, if you compare with price of electricity, it's, it's worse, the situation of PPA, you know?
At the same time, as I have explained, gives reliability, good and security, good financial situation and security for the long- term, no? But in the short- term, this is the result. And, the debt, no, the situation of debt for the end of 2023. Theoretically, should be around EUR 1 billion. But, we will see because, as I have mentioned, numbers are functioning, and, I think that we are going to generate a lot of cash, but around EUR 1 billion is reasonable.
Next questions are coming from Fernando Garcia from RBC. First question is: Can we update the existing capacity under construction? And second question is: Can we give some color about expectation about infra revenue for the coming quarters?
Then, about capacity under construction is around 1.3 GW, and hopefully we will include more in the next month, no? In next month, next two months, depending of answers of the government, final permits and final steps of the license process. But, 1.3 GW is under construction today, no? And, about expectation about infra revenues, it's difficult. It's difficult to predict this because it depends of third parties, especially our theoretical competitors or customers that needs to use our infrastructure. It's complicated to predict when they are going to use, when they will need, no? But, I think that, I prefer not to give this number because it's, extremely complicated to predict.
Next question are coming from Eduardo Imedio from Renta 4. First question is regarding Garoña. As Garoña obtains a final administrative authorization. The second question is that when we expect to close the next financing under the EIB agreement?
About Garoña , hopefully in the next weeks we will finish and we will receive the final authorization, and we will start with civil works. We are now executing parts of the substation line, acquiring equipment, but we need the final authorization in order to enter in the civil works. Hopefully, we will receive on December. The message from the government is, y ou will receive in December. We will see. Next financing. We have today in the market the second gigawatt, and there's a financing agreement that today are receiving proposal from banks for additional 1 GW that hopefully will use or could use the European Investment Bank agreement. And not only European Investment Bank, there will be other players, other banks, that are trying to get position inside the deal.
I think that price is in a better situation if you compare with last deal signed. I think that today the situation is even better. And hopefully, before the end of this year, we will present to the market a new project finance agreement associated with approximately 1 GW.
Next question is coming from Eduardo González Martin from Banco Santander, and from Victor Peiró from GVC Gaesco, regarding the capacity at the end of the year: Are we still confident to close 2023 with around 2 GW in operation?
Yes, we think that we are going to finish approximately with, at the end of this year, we are going to connect at the end of this year, and we will finish with, 2 GW of capacity. Of course, we continue with our construction plan and our business plan that we have presented and we have explained to the market.
Next question are coming from Alberto Gandolfi from Goldman Sachs. The first question is: For how long do you expect the modules oversupply could continue? The second question: Do we believe that PPA price will adjust downward to the next new cost of equipment, and where do you see them going to over the coming 12 months if equipment cost remain flat? And the third question is: What do you think is our marginal refinancing of offer... Sorry. What do we think about our marginal refinancing cost today?
It's complicated to predict the price of modules. Today, we are living a oversupply situation. And Chinese players, they have serious problems in order to enter with modules in United States. They are used in Europe. Europe is not following the theoretical rhythm of installation that all people predict few years or few quarters ago. And, you have, in China, you have a delay in some installation, as you know, and, at the end of the day, you have a oversupply situation. It's true what the-- with the actual cost, I think that some players could go to even, I could say, I'm not going to. They could have some manufacturing companies, they could have financial troubles, no? Because the price is extremely aggressive.
But I don't reject the possibility to see even less price in next quarters, because you don't have real demand coming from Europe, not too much. As I explained in all the conference, no, and do I repeat, the rhythm that the Spanish government, that Europe promised to the market, is not being achieved. And this is a problem, because Spain, yes, you have a lot of gigawatts theoretically on the system, but they are not constructing these gigawatts. They are not constructing these gigawatts. And it's a serious problem that Spain has, not only Spain, globally, Europe, no? And all the market has done the homeworks. They have prepared factories, they have prepared module manufacturing chains for an enormous demand of modules. But the real situation is not, it's not happening.
It's not over the table today, and, and you have an oversupply situation. My view is that, it could continue at least this quarter, this last quarter of the year. I think that actual prices are great, and, we are closing really good deals because our CapEx, actual CapEx, is great. It's something that could affect PPA prices. The key point is PPA prices depends of solar. This is something important. Our PPA players, they are, they don't care about the situation of solar. Today, they are worried about the situation. They are more worried about the price of oil or gas in the short- term and medium- term than solar, because the guys that are defining the price of electricity, at, at least here in Spain, are gas players, not solar players.
Even with a reduction in the module price, is something that is not going to affect the price of electricity in Spain, and not only in Spain, globally, in Italy, in Germany, in all the places. Solar is not defining the price of electricity. I don't know if in six, seven, 10 years, we will define the price of electricity. Today, in the short- term and in the medium- term, solar is not defining the price of electricity, no? And, equipment cost is not only an issue of modules. At the same time, trackers, inverters, substations, all, is reducing cost. They have better prices, and they are improving prices per quarter, no? And not associated with solar situation.
I think that is you have more players, more experience of players that have to construct substation, and they have equipment, and, we are reducing, in general, all the cost of the installation. About the last question, marginal refinancing cost today, no, it's still too early. We are doing primary allocations. We are allocating today project finance in primary structures. Probably, it's not the best moment for, refinancing. We have really good opportunity because if you see the balance of the company, you have a lot of assets that, have repaid an important part of the project finance. It could have sense to initiate a refinancing process, but I think that, it's better to wait few quarters in order to see better price of interest rates.
Probably in two, three quarters, we could close better refinancing deals.
Next question, coming from Manuel Palomo, from BNP and from Nash Cui, from Barclays. I think that we already answered to this question regarding working capital, no? Mismatches between project finance disbursement and investment. Next question is coming from Manuel Palomo from BNP, regarding curtailment. There have been curtailment already in the Spanish market due to the high renewable penetration. Could you please tell us if Solaria has been impacted at all by this curtailment?
Of course, curtailment is, it's a word that today, all the people talks about curtailment. And, the key point of curtailment is, when you see the map of construction, of new assets, of new renewables assets in Spain, you have a strange phenomenon. It's, There are a lot of installation in the same place. It's like we are not installing enormous volume of, megawatts per year. This year, we are going to finish not with too much gigawatts, but all of them are in the same places, usually in south of Spain, Extremadura, Andalusia. Curtailments today, are more frequent and, are especially, they are suffering in some places with, that are fully book of wind or solar installation, especially Andalusia and Extremadura.
But at the same time, if you see, for example, to the north, for example, Castile and León or regions like Basque Country. In Basque Country, the only player that are developing today renewables is Solaria, practically. Of course, some wind assets, but not too much players, no? And, you don't have a fully booked situation in this connection points, no? And, and curtailment is associated not exactly with an enormous volume of gigawatts in the electrical market of Spain. The curtailment is associated with some nodes, some connection points, that has, at the same time, wind and solar capacity, enormous volume and, of wind and solar capacity, and this node is not able to receive all of this electricity. And Red Eléctrica decide to cut some of this installation. Today, in our Pipeline functioning, not Pipeline, assets functioning, the curtailment is an exception.
When we have curtailment, it's an exception. You know that we have some assets in Extremadura, are the assets that have suffered curtailment. The other assets are not under curtailment situations.
Next question are coming from Nash from Barclays. Can we give some color about other income? I will answer. You know that in this quarter, we recognize EUR 10 million of other income versus EUR 15 million in the first half. And we think that at the end of the year, we may obtain a little bit more more than EUR 30 million. Maybe if we can provide some color about the PPA market, especially in Spain, and what is the price range we have been seeing?
About other incomes, it's as I have mentioned, it's complicated to predict the new deals that we could sign, but I'm going to give to you an example. Recently, one week or two weeks ago, we have closed a deal of EUR 7 million with one of our colleagues that needs to use a substation, and the property and the installation is from Solaria. And they are going to use, and they are going to make payments for EUR 7 million. I know that we have an order book of new players that want to use our infrastructure, a significant order book. For example, we are close to sign other deal of EUR 8 million, that if we sign, we will receive immediately these EUR 8 million and other deals.
But difficult because we depend on third parties that needs to use our installation, our infrastructure, substation, cable, or whatever, no? It's true that Solaria today, and it's different if you compare two years ago or three years ago, Solaria today, we are extremely active offering services to these guys. Why? Because some of them, of them, they are extremely serious, oil groups, foreign oil groups, oil groups that if we are able and we close a good deal, we are able to construct for them a substation or whatever, some infrastructure that they need. And we are more active, and we are offering these kind of services to third parties. Because we think it's a healthy business with really good numbers, and we have the skills, capabilities, and team, and we are offering.
Difficult to say the amount of millions that will come in the next quarters, no? Update of PPA market. PPA market, as I have mentioned, probably we are going to announce a new deal, a new PPA deal, in similar terms that we announced to Endesa, no, with Endesa, no, in the CMD presentation, no? Mm, I think that probably will be similar, no? Will be similar. I have say even better, no, but in a probably better range of prices, but similar conditions.
Next question is also coming from, from Nash from Barclays. Pipeline development. I understand that Solaria is targeting 6.2GW of capacity by 2025, and yet in your EBITDA guidance, the capacity number is four gigawatt. Just wonder where we are now, and do you think we are on track to achieve this four or six gigawatts capacity by 2025?
I think that in Spain, we will give good news about new capacity in the short- term, but I think it's not a surprise. We're continuously increasing our Pipeline, but we are extremely focused in Italy and Germany. I think that good surprise should come from Italy and Germany that needs to grow more. As you know, in Italy, we have a global pipeline of close to 3 GW, and we are growing. And in Germany, we think that in Germany, we will obtain volume, important volume. Now, in Spain, of course, but if Spain, for me, we made a good job and it's okay if we get more. But the critical for us is the international expansion, and it's Germany and it's Italy, no? And hopefully, in the February presentation.
I think that in the February presentation, you will see a lot of things from Solaria, no? It's not a CMD, but probably more complete than a CMD. You will see new business, you will see enormous amounts of new pipeline that will come, you will see connections, and you will see a lot of new things and new surprises. I think that in the next 90 days will happen a lot of things.
Next question are coming from Sonia Ruiz from Mirabaud. If we can give some update on possible asset rotation. Second opinion on future auction in Spain, and then any progress in Germany.
Asset rotation, as I always say the same, asset rotation has sense for us if it's, it includes something more. From a financial perspective, no. We need to close global, deals with much more visibility that only price and cash. I understand that, usually you execute this kind of asset rotation based on cash and, and price, but in our mind, needs to include cash, price, and something more. You know that in the past, we made an asset rotation. We did an asset rotation in the, in the Basque Country. Probably, we will expand, and we will extend our collaboration there, and we will extend our asset rotation there. On February presentation, we will see. And, always, we are looking for strategic deals, global deals, that gives to Solaria much more than the money and the financial results.
Of course, auctions no, auctions of Spain and Germany. And if the government approve here in Spain or in Germany approve auctions, we are going to stay. We are going to participate. We will go with the correct price, as always. If they offer with a extremely low price, we are not going to present proposal. Our intention and our view is an auction should be in the range and in the interval of the market. If today Tier 1 players, Tier 1 customers are paying whatever, EUR 40s, auction should be on this range. Out of this, we are not going to participate. Germany—about Germany, I think that is our key country. We are expanding our team, we are increasing our team, we are trying to allocate today land.
That is the first priority today of Solaria in Germany. But I think that we are getting good results and good successful, and, in the February's presentation, we will give more information. Now, as we have explained in the CMD, we have allocate opportunities. Opportunities for us is land and possible connection point that, will be answered by the authorities in the short- term. When we say opportunities, it's because we haven't received yet the confirmation from national authorities of this connection point. As I have mentioned, in the next 90 days, a lot of things will happen. Probably in Germany, we will obtain, connection points, and we will give more information.
Maybe the last question from Tomás Reis from CaixaBank. First question is regarding tax rate, what we could expect in next quarter and next years. Second question is regarding the actual percentage of installed capacities that is covered by PPA. And maybe the last question from Thomas is: Our PPA, are usually pay as produced or base load?
About tax rate and new laws, difficult. You know that today we don't have government, not yet. Theoretically, we will have government on Friday, but who knows. In this country today. And after the new government will be approved, we will see the new laws that they could want to approve. Honestly, I think that today, to talk about this is speculation. You know that European Union is recommending to eliminate all the different, weapons or measures that that the government laws or provisional laws that the government approve, associated with, oil crisis, no, gas prices, gas price crisis. And we will see.
Honestly, I think that I have talked with them, and I talk with European Union, and I talk with all the authorities today in Spain; it is difficult to predict the movements of our government, you know. No, you know that the situation is not easy to predict. PPAs versus merchant today, and the mix that we want to achieve is 70-30, 80-20, approximately. 70, between 70-80 is PPAs, 20-30 merchant prices. And today, probably we have more covered by PPAs, but the global mix in the future should be around 70-30s, 80-20s. And the situation of the pool price, of course, yes. But it's our job, no? Some days you have prices of EUR 0, of EUR 10, and then suddenly you have prices of EUR 150 and EUR 140, no?
You need to see the average price of the year, And, the average price of the year, unfortunately for consumers, is extremely high. And this, this is one of the questions that, I ask always to our government, no, and to all the people is: The only reason, because the only point that, the only weapon that you have for reducing the price of electricity, solar and wind technologies. Why you are not massively installing solar and wind technologies that could reduce the price of electricity? This is the key question, no? Today, you have a lot of speculation, people that say that has connection points, that has permitting or whatever, but they are not constructing the megawatts. And we continue with the same situation.
With this situation, you will see in one month, especially if the situation in Middle East is worse, extremely high price of gas. And if you see extremely high price of gas, you will see price of electricity of EUR 100, of EUR 120, or EUR 130. And we are not going to control this situation because we depend on gas prices, and gas is not in Spain. It depends of third countries, not Spanish, not European countries. Unfortunately, this situation haven't changed, not today, not in the last years, and it's not changing. And unfortunately, in next years, you are not going to see any change in the situation of pool prices if we don't install massively solar and wind technologies. And honestly, I don't think that I don't think we are going to see in the short term, no?
Our PPA is usually pay-as-produced. Base load, we haven't signed, and probably in the short- term and in the medium- term, we are not going to sign base load. We are not obligated by customers, because customers are signing pay-as-produced deals, and we will continue.
Okay, so I think this is the end of our conference call. So thank you very much for joining to this call, and I will let the word to Arturo to conclude this conference.
I think that we have done a fast conference because recently we are launched a CMD. So I have explained. In February, we will present a. We will give a full presentation of results, new business plan, new business that we are going to to start, and that we are now developing. More information about Pipeline and a lot of surprises that will happen in the next 90 days.