Ladies and gentlemen, thank you for standing by, and welcome to EDP's first half 2020 result presentation. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If you should require any assistance during this call, please press star zero. As a reminder, today's conference is being recorded. I would now like to turn the call over to Mr. Miguel Viana, Head of Investor Relations. Please go ahead, sir.
Good morning, ladies and gentlemen. Thanks for being with us today in the conference call on EDP's first half 2020 results, which this time, the results are being reported exceptionally right after the summer holidays period. We hope you managed to take some rest and recharge batteries. We'll begin with the main highlights on the results. We'll provide an update on the strategy execution. We'll move to the Q&A session, in which we'll be taking your questions both by phone and via our webpage, www.edp.com. The call is expected to last no more than 60 minutes. I'll give now the floor to our interim CEO and also CFO, Miguel Stilwell de Andrade.
Hello. Welcome, everybody. Thanks for taking the call, and I hope you had a good summer break. I'm pleased to present a pretty solid set of results for EDP this morning. You'll have seen it came out last night, and to take you through it. I really think it also shows that the strong foundations of our business, and the resilience, and the robust response, has allowed us to continue to make progress on the execution of our strategic business plan. To talk about the Viesgo acquisition in Spain, which we announced in July. That was a significant achievement for us, and it really allows us to grow in activities that we believe are fully aligned with the energy transition, namely networks and renewables.
We also continue to see important regulatory developments and a growing public support for the green agenda technologies in our core markets in Europe and the U.S. I think that's come out also very intensely over the last couple of months. While I think we've also felt the impact of the COVID pandemic, it's also been really a catalyst for progress in an area where we're very well positioned to generate additional value and more opportunities. It's been a tough couple of months, but I think it's also highlighted the strength of our business. Let's go to the presentation in terms of the highlights for the first half. In this period, EBITDA fell 3% year-on-year to around EUR 1.9 billion.
On one hand, EBITDA benefited from the recovery of the hydro in Iberia, close to the historic average in the first half of 2020, so compared to a very dry first half of 2019. The hydro factor was approximately one. We also had very robust results in the energy management segment, and this was driven by our hedging strategy in the energy markets. This benefited obviously from the significant decline in the energy prices and the increase in the energy markets volatility. However, we also saw some negative pressure on the EBITDA from the depreciation of the Brazilian real and the contraction of the electricity demand in some of our key markets. Obviously, this affected both our supply operations in Iberia and also the performance in our distribution business in Brazil, where it's not unbundled because the supply and distribution are essentially the same thing.
In terms of recurring net profits, this increased by 8% to EUR 509 million. This was exclusively driven by the Iberian business at an increase of EUR 120 million, so it almost doubled. I think this is a really strong performance from the Iberian businesses here. This more than compensated EDPR and EDP Brasil's lower contribution. In addition, we also saw the average cost of debt improve by 70 basis points to 3.3%. This is essentially as we've seen more competitive refinancing costs compared to our maturing debt. Overall, the reported net profit decreased by 22%, so this was dragged by non-recurring items in the first half of 2020. Essentially, the key items here are the impairments in the coal assets following the anticipated closure of Sines coal plant in 2021. We announced that in July.
Also the one-off cost of the hybrid bond repurchase, which we did in the first quarter of this year. Net debt down 2% year to date, to EUR 14.1 billion. Obviously, this reflects in the first half the payment of the annual dividend in the second quarter, which is a recurring event every year, so just more pressure on the second quarter. Also, I like to note that the net debt in June 2020 was flat versus June 2019. As a result, the ratio of net debt to EBITDA was 3.7 x in June 2020, just slightly above the 3.6x in December 2019, and clearly below the 4.1x shown last year to date, last year, June 2019. In terms of cash flow, recurring organic cash flow rose EUR 0.3 billion to EUR 1 billion.
This is obviously supported by better performance in activities in which we don't have partners or minority interests, and also the lower interest costs. Despite the COVID restrictions, and I think this is important to note, our expansion investments continued to move forward at a good pace, and they reached around EUR 0.8 billion. Of which almost 90% was allocated to new renewable projects, and the remaining, to the expansion of electricity networks in Brazil. We've also made good progress on the implementation of our strategy, post June 2020. As you know, we closed the agreement for acquisition of Viesgo with a good valuation. This includes, as you know, the long-term partnership with Macquarie for the electricity distribution business in Spain. It reinforces our regulated and long-term contracted risk profile.
We've had the opportunity to talk about this in detail in July, so I won't spend much time on this. Obviously associated with this, we raised EUR 1 billion for the rights issue, representing around 8.5% increase in share capital. I think this was well-received by the markets, obviously critical to support the Viesgo acquisition. I'll touch a little bit more on this later on, but I think the general perception was very positive. Finally, we also announced over the last month two asset rotation deals totaling EUR 1.1 billion of enterprise value. The first deal, which we announced in mid-August, was 240 MW in Spain at an EV multiple of EUR 2.1 million per MW. This was for a portfolio with an average age of nine years.
The second deal, which we announced this week, refers to 560 MW in the U.S. at an EV of $2.1 million per megawatt as of COD. I just highlighted as of COD is the reference that we should use. Implicit valuations in these transactions, they support the positive outlook that we've shared with you in the first quarter conference call, so I think it's just reinforcing this trend that we've had. Let's move forward to the next slide. On EBITDA and the breakdown by business platform. As I mentioned, consolidated EBITDA down 3% year-on-year, but it would've been flat if we excluded the forex impact, namely the Brazilian real, which depreciated 20% versus the EUR.
Within renewables and despite the 83% increase in our hydro production in Iberia, just 4% below historical average, the EBITDA had an 8% decline, mainly due to the decline in the wind and the solar. This in turn is explained by the wind resource in our global wind farms portfolio was 9% below long-term average. The average capacity and operation decreased by 6%, and this is essentially due to the asset rotation last year of 51% stake in a 1 gigawatt wind portfolio. Obviously, that has a relevant impact at the EBITDA level. It was EUR 87 million year-on-year impact on EBITDA. Obviously, at the net profit level, this is much less relevant since it's also post minorities. Finally, the decrease in asset rotation gains by EUR 74 million year-on-year.
In the first half of 2020, the asset rotation gains were EUR 145 million, reflecting the valuation and the shareholding adjustments from the transfer of most of our offshore wind assets to the new 50/50 wind offshore joint venture with Engie. As you know, it's called Ocean Winds. Turning to networks, the 7% fall on EBITDA is mostly related to the depreciation of the Brazilian real. In local currency, the EBITDA from networks in Brazil grew 12%, supported by the expansion of the transmission activities, fully mitigating the 8% decline of electricity demand in our distribution areas. In Iberia, EBITDA evolution reflects the decline of regulated returns in Portugal to 4.9% roughly, and in Spain to around 6%. Finally, the improvement in client solutions and energy management. I think this is a strong improvement.
It's fully driven by the positive hedging results in Iberia, partially offset by the 17% decline in EBITDA from supply in Iberia, mostly given the contraction in electricity supply volumes by 7%. This was most relevant in the B2B segment, where the decrease in volumes reaching 14%, and was only partially mitigated by the 1.5% increment in the B2C segment. Let's move forward to the next slide on financing costs. Here, interest cost down 16%, supported by 70 basis points decline in the average cost of debt, as I mentioned, and a 6% decrease in the average debt. Now, this better performance can be, I mean, it's due to the more active debt management, that the rates of maturing debt were much higher than those for new financing we've got this year.
Also just to mention, there's also a significant reduction in the short-term rates in Brazil. As you can see here on the table on the right-hand side, we continue to have some short-term debt maturities with relatively high rates that will be maturing over the next quarter. This should continue to support the downward trend on the average cost of debt over the next couple of years. I mean, this is something I think we've been flagging, and you guys have also asked us about this over the last year or so, and I think we're seeing that flowing through now the P&L. Let's move forward to the next slide on recurring net profit.
Here, the negative FX impact of EBITDA is obviously more diluted at the EBIT level and even more at the net profit level, since we typically fund our operations in the local currency. Below EBIT, there's a positive impact from lower net financing costs, and there's also lower minority interest, both at EDPR and EDP Brazil. This is partially offset by a slight increase in effective income tax. Overall, recurring net profit up 8% to EUR 509 million. Reported net profit significantly impacted for the reasons I've already mentioned, namely coal and the repurchase of the hybrid bond and listed. Let's move now to strategy and execution, and just a few slides on this and a few key messages. Just quickly recapping what we've done since we announced our strategic update back in March 2019.
I think we've really shown in this period, it's basically a year and a half, that we've been front-loading the execution of this plan. This has been really important, particularly given what's happened over the last couple of months with COVID, because we've managed to really lock in a lot of value creation, and it's put us on the right path to extract value from growth opportunities that we've been developing now for a number of years. In renewables, as you know, 84% of the 7 GW targets for this period, with long-term contracts. We're well-positioned now for the accelerated growth in Europe and in the U.S. Brazil, delivering on the transmission projects ahead of the regulatory schedule, even taking into account the COVID restrictions. Viesgo, stronger presence in activities aligned with the energy transition in our core markets, and I think also a significant number of synergies.
Regarding portfolio optimization, we've already closed or agreed more than 55% of the EUR 4 billion proceeds related to asset rotation. On top of that, we've announced EUR 2.7 billion of proceeds from two disposals in Iberia, so the six hydro plants in Portugal and the two CCGTs in the B2C supply portfolio in Spain. Overall, I think we consider this proactive portfolio restructuring as being a major source of value creation. On the balance sheet, obviously reinforced with EUR 1 billion of rights issue. As mentioned, reinforced a low operating risk profile with the increased weight of the regulated activities. On efficiency, fully on track to meet the targets in our strategic plan. OPEX decreasing 3% year-over-year in the first half of 2020.
Obviously, part of that to do with COVID, but it also really allowed us to accelerate some of these savings, given increased digitalization and also greater operational efficiency that we were redesigning during this period. I think it's given us a boost in that respect as well. On shareholder remuneration, so we're comfortable with the sustainability of our dividend policy. As you know, the EUR 0.19 floor, target payout 75 to 85%, and we're completely committed to reinforcing our green positioning and accelerating our decarbonization. As you know, that's a key part of our strategy, and it will continue to be. In the first half of 2020, 80% of our electricity production came from renewables, and our CO2 emissions factor decreased by 67%. Obviously, this is very much supported by the 74% contraction in coal production.
Our reposition is also reinforced not only by the closure of coal, but also involvement in some of the energy transition projects, including we're beginning to participate in the green hydrogen project in Portugal. We have some storage projects under analysis for Soto 3 , and we also have some renewable projects that we're intending to develop in Viesgo's coal sites, which are being decommissioned in the south of Spain. Definitely, green positioning is extremely important for us. Let's just move forward to the next slide. Just a quick note here on the rights issue. As you know, successful 8.5% increase. I won't do all much on this, but I think the market reaction to the operation show the merits of the combined acquisition and the rights issue deal. As I say, that's something which is done. We move forward to the next slide 10.
I think here, this is an interesting slide. It shows how we've been active in reshaping our Iberian portfolio. Just reminding you, in December, we'd announced the disposal of six hydro plants in Portugal for EUR 2.2 billion. It's already gotten the EU merger control approval, and we believe the Portuguese regulatory approvals are also on track. In May, we had the sale to Total of the CCGTs in the B2C portfolio. EU merger control already approved this transaction, as you know, last couple of weeks. The transaction and the restructuring and carve-out of the assets is ongoing. Again, on track. In July, we also announced the acquisition of Viesgo, more recent deal, so it's still ongoing approvals, both at the European and Spanish regulatory level. Again, we think that's on track and we expect that to be done by the fourth quarter.
In fact, we expect all of these transactions to be completed in the fourth quarter of 2020. As we indicated in the strategic update, the overall aim of the group is to reduce merchant price exposure and to really enhance the visibility of our revenue by increasing our long-term contracted assets. I think these recent transactions are a really strong step in this direction. A note here, just regarding the integrated industrial project for Viesgo. We're already working on a plan to be implemented in the first 100 days, and expect it kick off just after the financial closing of the transaction. This is something we already have the teams working on this and fully developing the 100-day plan. Let's just move on to slide 11. Maybe a note here on the asset rotation.
The last couple of weeks have been really busy for the teams here in terms of finalizing these deals. Back in August, we announced the sale of the 240 MW, as I mentioned, in Spain, EUR 2.1 million per MW. By comparison, our previous asset rotation deal in April was at around a multiple of 1.6. Significant uplift in value despite a slightly older portfolio. I think here the message is a lot of competition, despite the COVID situation, and very attractive prices. This week, we announced the sale of an 80% stake in a 560 MW portfolio in the U.S. So it's both wind and solar, got an implicit EV multiple of $2.1 million per MW, as of COD, as I mentioned. If we only consider the wind assets, the multiple would be around $2.4 million per MW.
That's also a significant increase versus our previous transaction in North America. Obviously the EV multiples expansion in these transactions is not only due to the lower interest rates, both in Europe and in the U.S., because the 10-year government bond yields are declined by about 1% in Spain and about 2% in the U.S. We continue to see, as I mentioned, strong appetite among institutional investors for these green assets with regulated or long-term contracted revenue. I think there's a strong market there for the product. Let's move forward to slide 12. Here, in terms of build-out. Despite the COVID, we've managed to keep a strong execution of the PPAs. We have the 84% of the 7 GW, as I mentioned.
In terms of project delivery, there have been postponements, as you know, as we'd mentioned earlier, imposed by COVID on some construction activities and also on the manufacturer's value chain. In some cases, this could imply some delays for up to around 500 MW of wind, which we had under construction in the U.S. for 2020. It might slip from the fourth quarter to the first quarter of 2021. I don't think this has any impact or material impact from a valuation perspective. The PTCs will still be there. It's really just the COD will be beginning of 2021. As you know, there was this extension for versus the previous of the PTC versus the previous target of December 2020. We're pretty comfortable there.
In relation to installed capacity, by 2020, the number should be offset by the consolidation of the 500 MW of wind capacity coming from Viesgo, which relevant financial closing is also expected before year-end. Regarding offshore wind, the JV is done, so established. Ocean Winds, as you know, brings a positive impact because of the assets that were transferred and the revaluations that were done. Two remaining assets to be transferred from our side, Mayflower in the U.S., and WindFloat in Portugal before the end of this year. On the ENGIE side, the SeaMade in Belgium is also expected before the end of this year. In relation to our project, the WindFloat Atlantic, this was commissioned in the summer. Some have asked us about this project. It's an interesting milestone for the offshore industry.
It's the largest turbine ever installed on a floating platform. The two projects, also in relation to offshore, two other projects that are pretty advanced stage of construction, SeaMade in Belgium and Moray East in the U.K., I think also going to be good references for our offshore targets. They continue to evolve in line with the construction schedules, and I think that's on track. Let's move on to slide 13. Here, just I think a more high-level note just on additional opportunities on the green recovery. I think we've seen important developments and public support for the green technologies in general, and obviously for renewables in particular. In Europe, a number of mechanisms have been designed by the European institutions to support the economy, the environment, digitalization, basically aiming to promote a recovery based on a more sustainable economic model.
This really fits well with our strategy, and I think we're really well positioned to benefit from it. Overall, the national energy plans estimate over 340 GW of new onshore wind and solar capacity by 2030, of which 55% correspond to the eight European countries where we're already present. It's important also not to forget other investments that will be key, namely the hydro, electric mobility, smart grids, where we've also been very active. I think in general, good news for where we are strategically. The European institutions also created the Just Transition Fund, which can also be used to support the regions affected by the coal plants shutdown. I think this will also be an added incentive to accelerate this transition and really accelerate the shutdown of coal and moving to renewables.
In the U.S., definitely we benefit from the extension of the PTCs and also some pretty ambitious energy transition policies that will be discussed in the run-up to November's election. Again, pretty exciting times, I think, for the green economy. Now let's move to slide 14 and just a word on Brazil. Brazil's obviously been significantly impacted by the pandemic. I think it's also been interesting to see that the Brazilian institutions have reacted in, I think, a really solid way to create several mechanisms to support electricity companies and sector and the consumers. Just to highlight a couple of these. The distribution, I would like to mention the creation of the COVID-account. This increases the liquidity for the company. It's also a pass-through of costs related to the estimated COVID impact due to the surplus of long-term contract electricity volumes.
Last July, EDP Brasil got essentially around BRL 600 million , referring to the COVID-account, which reinforce the financial liquidity. It was a good measure for the sector as a whole, and obviously we benefited from that. In generation, there was a recent approval by the Senate of new legislation to solve the GSF issue. I think this is a critical step to reduce the regulatory uncertainty. There's still the presidential approval, which is required to proceed with the release of the detailed rules from the regulator. The solution involves the extension of the concession periods for some hydro plants in exchange for some upfront payments that will solve some pending financial settlements. It will solve some uncertainty that existed until now. I think that's also an important step that took place in August.
In transmission, we had some delays in the construction works, given the COVID, but the construction has resumed. 71% of total CapEx for the six transmission lines was already executed. Last month, we announced the completion of the second part of the Lot 11 in the Maranhão State. It's fully operational now, 12 months ahead of regulatory schedule. Regarding future transmission auctions, we'll obviously continue to review opportunities. We'll also be disciplined in the way that we approach this, as you know we are when we go into these auctions. Looking at the macro environment, strong depreciation of Brazilian real, so that worsens our financial in EUR. Also some positive indicators from a macro view in Brazil, namely really low interest rates, I mean, record low interest rates. The Selic, the benchmark rate, is recently reset at 2% by the Brazilian Central Bank.
In that sense, also greatly reducing the funding cost in Brazil. In March 2020, so beginning of the crisis, Brazil took several preventive measures to protect financial liquidity. Obviously, there was a lot of uncertainty at the time. They initially cut the dividend proposal and had some CapEx postponements and increase of credit lines. As a result, they had a very strong financial liquidity of BRL 3.4 billion, the low leverage of around two times net debt to EBITDA. Given they were in a strong position, things seem to be recovering. Brazil just now announced a share buyback program and a clarification on this dividend policy, setting a dividend floor of BRL 1 per share with a 50% payout on adjusted net profit. This is very much in line with the dividend proposal announced by Brazil in March.
It was withdrawn because of the COVID, we're now reaffirming that and maintaining that for the next three years. In the press release that the company made, it was also stated that the absence of investment opportunities in Brazil at attractive conditions, the remaining cash flow would be distributed either as buybacks or additional dividends. Basically, the idea is to have an optimized capital structure in Brazil and make sure that it's efficient. Let's just move to slide 15, talk a little bit about something which I know also interests many of you, which is the Iberian energy markets. As already mentioned, we had pretty solid results in energy management in the first half. This compensated the negative effect from weaker volumes and lower energy prices.
For the rest of the year, we expect much lower energy management results, below the average of the last five semesters. Really the first half, and particularly the first quarter, was exceptionally good. Obviously going forward, so for the remaining months of the year, the second half, the reason for this is on the back of hedging and it's got to do with seasonality and basically the recovery of energy prices. Just wanted to remind you, though, that this expectation is already reflected in our guidance, which we've been providing. Also, in relation to 2021, and also something I'd like to highlight, and we've been doing that over the last couple of months, is we are reducing our merchant exposure. Disposal of the hydro, as I mentioned, the CCGT plant, the B2C portfolio, the shutdown of the coal.
All of this contributes to reducing our merchant exposure in Iberia. We also have now almost 100% of our hydro nuclear production hedged at an average price of around EUR 45 per MWh. This is aligned with the forward prices, and 60% of our expected gas production, CCGT production at a mid-single-digit spread on average. This is essentially 2020, 2021, pretty much locked in. Let's just quick mention on slide 16, on impact. Just to say, as I've mentioned before, it really shows that throughout this really challenging time, we have shown a lot of resilience. In particular, the second quarter of 2020 was particularly tough in terms of the lockdown, in terms of the impact on the economy, and I think despite that, we were able to have solid results.
This has to do also with the adaptation capacity of the company, but also our people. There was a lot of focus here on the business plan execution throughout this period, despite the lockdown and everyone being remote. There was a lot of support to our suppliers, to clients, I mean, just generally the community. I think in general, we try to really have a holistic stakeholder view here. This translated also into a good quality of service, also even in terms of both in the supply business and the distribution business. Coming out of this, I think there's really an opportunity to take some of the lessons learned and benefit, not only from an efficiency point of view, it's obviously relevant, through digitalization, but I think also new ways of working.
I think this is really making us also reflect on how we, even post-pandemic, how we'll reflect that in the way that people interact here in the office and everything. I think that will bring a lot of benefits also in terms of motivation for our team. Last slide, and let's just move into summary. We're maintaining the financial guidance that we shared with you just a month ago in the Viesgo acquisition and the rights issue presentation. Despite 2020 being difficult for COVID, we are keeping solid earnings resilience. Recurring EBITDA, EUR 3.6 billion, recurring net income, EUR 0.85-EUR 0.9 target. As you know, our recurring net profits assumes the sales as non-recurring, so if you take that out, we're sort of at EUR 0.8, and including the sales.
In terms of the deals we expect to do in the fourth quarter, we expect to conclude in the fourth quarter. I think that will be positive obviously for the post-2020 periods. We see Viesgo clearly earnings enhancing, significant value from the industrial project, and also I think the better than expected returns of the asset rotation deals also allows to take a more optimistic view versus our strategic plan assumptions regarding the transactions over the next couple of years. We still have around EUR 2 billion, slightly less than that to do over the next couple of years. I think what we've seen in terms of the asset rotations over the last 18 months, 24 months, this has allowed us to be slightly more optimistic versus our business plan assumptions. We also see improved growth opportunities for renewables, both wind onshore, offshore, solar, hybrid.
May include also storage, green hydrogen. I think there's a lot of moving pieces here, which I think will give us good opportunities to create value. Improved economics, a lot of public support both in Europe and in the U.S., I think, we have some tailwinds here. The portfolio restructuring and the focus growth in the long-term contracted and regulated activities is also going to reduce our merchant exposure and improve our low risk profile. That, together with very supportive credit markets, with lower yields for longer, should allow us to also continue to reduce our average cost of debt. This overall combined effect allows us to feel comfortable about the dividend policy, as I mentioned.
Just generally, I think we continue to see a very positive outlook regarding EDP's capacity to lead this energy transition and to really continue to create value for our stakeholders and our shareholders, obviously. We obviously then have a couple of annexes. I'm not going to go through that, but you have a lot of the information we typically provide in other presentations, and we can refer to that in the Q&A if necessary. I'll just stop here and turn it back over to Miguel, if you want.
We can start now the Q&A session. Maybe we start with the questions on the phone, please.
Ladies and gentlemen, if you would like to ask a question at this time, please press star one on your telephone keypad. To cancel your question, please press star two. We will take our first question from Mr. Alberto Gandolfi from Goldman Sachs.
Thank you. Good evening, everybody.
Please go ahead.
Thank you so much for taking my questions. I will stick to three. The first one is a bit pedantic, and I apologize in advance. Just to be clear on your EUR 3.6 billion EBITDA for 2020 and EUR 0.85 billion-EUR 0.9 billion, you call it recurring. I think out there's different definitions by different people, like analysts, investors. Would you be so kind to tell us how much asset rotation or offshore JV gains you are including in there? What one-off costs do you include in there? I tell you this because you're talking about EUR 190 million one-off costs at the bottom line from Sines, the liability management, early purchases of bond, and the extraordinary tax. You don't explain it here. That also not recurring, so I was wondering how you treat that here.
Lastly, you are not really giving here a big COVID impact like some of your competitors. I was wondering, can you give us a EUR million figure impact from COVID? Be not currency, but perhaps just volumes and maybe adjusted for some of the extra gains in energy management you have. It would be great to really get to a clean figure here to understand your underlying earnings power, which I believe is the key debate today. Second question, I am really intrigued, Miguel, by your comment that talked about 85% secured of the 7 GW. If I put that together with your recent balance sheet measures, very interesting the sentence you used there, you said, "We are well positioned for growth opportunities in Europe and the U.S." Can you elaborate on that?
The balance sheet of EDP by year-end, once you close all those transactions, probably going to be EUR 5 billion stronger, really EUR 5 billion broadly. Securitization, asset rotation, disposal. What are you going to do with all this money? I guess, growth opportunities, you talk about the renewable. Can you give us more? Tell us, what is the organization ready to deploy? Is it going to 3 to 3.5 to 4 GW within the next three years of gross capacity additions? I'm not asking you a preview of the CMD, but just trying to understand what the potential here. Last question, very quick. Quite surprised, given that most of your enterprise value is renewables, you do not seem to show a pipeline here. Can you share it with us, a gross pipeline? We know some projects will never materialize, we know some projects will.
We know you need to keep every day working to beef up the pipeline, but can you tell us a snapshot, where is it today? Thank you.
Okay. Thank you, Alberto. In relation to your first question, which is how much asset rotation is in the recurring numbers I was talking about. We're expecting that for the full year, we should be close to EUR 0.4. I think we had EUR 145 in the first half, and we've had two recent deals, which will be, as I said, closing in the second quarter. I think from the multiples, you can assume that there's obviously going to be relevant capital gains associated with that. I think we'll be well ahead of what was our initial expectation. That's allowing us to mitigate the impact of the COVID, which was the second part of this question. Asset rotations, close to EUR 0.4. What I would like to highlight, though, also, it does show the recurring power of this business model.
It's not one, it's not two, it's not three, it's not four. It's already several transactions that we've been doing over the last couple of years, or certainly the last two years, of selling majority stakes, where we have consistently shown are not only the market appetite for these assets, but also the interest, and the attractiveness of these assets, which has obviously increased even during this period. In this question, in terms of one-off costs. As I say, in Sines, we're obviously impairing the asset value. We're also impairing some of the coal value, and restructuring costs associated with that. The liability management is what it is. It's obviously the hybrids buyback we did at the beginning of the year and the sales as well. I think this is detailed in the presentations.
Essentially that's sort of the one-off, which is clearly signaled and is not part of these numbers. The Spanish coal, we'd already done that last year, really the big Sines, the coal is really Sines now in the second quarter. COVID. We were obviously impacted by COVID and heavily impacted by COVID. Everyone was. It has an impact at the EBITDA level, let's say, above EUR 0.1 billion. Don't forget, a lot of this was also in Brazil. When it gets down to the net profit line, it's mitigated. In Iberia, it was also impacted our commercial business. That was also mitigated by part of our energy management. I certainly wouldn't draw the assumption.
On the contrary, we were heavily impacted by COVID, but fortunately, we also had other levers, which then allowed us to mitigate that impact, so that on a recurring basis, we ended up in a good place. In relation to your second question, the well-positioned for growth. Listen, I think we're focused on the business plan. As I mentioned, we're still at 84%. You can look at it as we're positive we're at 84%, and say that we still have some work to do to get to 100%. We would look at going to the market at the beginning of 2021 and providing an update on how we see the company going forward for the next couple of years. We would then be able to elaborate a little bit more. Just also in relation to this question, I think it's a relevant point.
Our balance sheets will be at the end of the year where we wanted it to be. In other words, we are still a BBB- rating. We have the objective of trying to move to a BBB rating. That means that we need to be consistent in the way that we move in this direction. The transactions we're doing are allowing us to get a little bit more freedom and to move towards the BBB. Doesn't mean that we suddenly have a huge amount of space. We are moving in the right direction, but on track. In line with what we expected. I'd say that in relation to the capacity for more growth, really, I'd like to probably answer that when we do a full sort of CMD.
When we can take all the different pieces, put them together, and have a solid, coherent plan, rather than just answering just a part of it, in relation specifically to renewables. In growth pipeline, the third question, you're right, we don't typically provide a lot of information on pipeline. Obviously, as we go on closing the PPAs, we provide that. We have a very large pipeline, which has allowed us to feed, and it's basically a funnel, and I think we've talked about this a little bit in the past, certainly in some of the conversations that sometimes you need to be developing this pipeline for four, five, six years in different geographies until you actually get it to maturity.
We don't provide that information, but I think the fact that we are able to deliver the PPAs and deliver the growth shows that it's a pretty solid pipeline that we have that's backing that funnel.
Sorry, Miguel, just to be clear on the first answer, thank you, that was very comprehensive. You have EUR 400 million gains from rotation before taxes and those not very high tax rate here. You have EUR 200 million one-off cost, EUR 100 million volume cost both on a pre-tax basis. On the EUR 100 million, some of it, a big chunk of it is Brazil. It's kind of, if I were to think, EBITDA would be EUR 400 gains and EUR 300 costs, right?
Yeah.
Thank you.
Roughly.
Thank you so much.
We will take our next question from the line of Harry Wyber from Bank of America.
Hi, everyone. Three questions from me, please. First two, I'm afraid, also on the guidance. I just kind of sense when rewinding back to May at your first quarter results, it was a fairly positive update, and I think certainly my interpretation was that the wind was sort of more blowing towards potentially this year coming out ahead of guidance, and you sort of updated it and the range you'd given to perhaps a touch below if you're pedantic. What I'm interested in is what's changed. You sort of alluded to a less good outlook in the second half for Iberia retail. Compared to where we were when we were last speaking in early to mid-May, what's really changed in the second half?
Has there been a sort of negative movement in the outlook for retail or any other part of the business that perhaps means we're less looking at a guidance upgrade or beat? Is it just that the COVID impacts are actually bigger than what you'd anticipated back in May? Second one, sort of very granular, mainly yes/no question. Does the EUR 0.85 to EUR 0.9 guidance and the EUR 0.4 of gains includes an assumption for the remaining assets that are going to be folded into the NG JV? Would that be upside to those figures? What are you assuming for the U.S. dollar in your 0.85 to 0.9? I.e., is that based upon a mark-to-market as of today? Third and final question, just on the legal case.
As I understand it, there's now a potential legal case where EDP would be a defendant. Can you just help us understand the timeline on that case? Is that something that is expected perhaps to drag on for years or tens of years? Or is this something that you think could come to a head relatively quickly? Thank you.
Okay, Harry. Thanks for the questions. Maybe on positives and negatives versus May. I think in May, we'd already tried to factor in a lot of the moving pieces, which as you know, as I mentioned earlier, we were hit hard by COVID. There are also some positives that we were already beginning to see. We sort of built that into our view at the time. Positives. We have already seen the lower interest rates. We were seeing already higher gains in the asset rotation. Some of the negatives that have, let's say, been highlighted over the last couple of months. A stronger devaluation of the Brazilian real, and obviously the demand.
I think definitely those pieces have continued to move, but the positive ones we're already seeing, I think the Brazilian real has continued to devalue a little bit further versus where we were back in May. In terms of the energy management also for the remaining part of the year, I think, as I mentioned, we had an extremely or extraordinarily strong first quarter. Second quarter was good, obviously less strong. Typically the second half of the year is less strong than the first half. As I mentioned, that's also already all built into our target. We're already now in September. Already had the chance to sort of incorporate the latest assumptions, I think these positives and negatives lead us to be comfortable with the guidance we provided a month ago. In relation to your question on the net profit.
Yes, the guidance already assumes the gains that may come in from moving the remaining projects into the JV. That's also built in. It's essentially Mayflower and SeaMade, which are the ones that will have the greatest impact in that. That's relatively quick question. I think you also asked about the euro dollar. That's 1.15, roughly, is what we were assuming for that forecast. In relation to the legal case, listen, there's not really very much I can add to what we've said in the past. Timeline is uncertain, but certainly it's something that we don't expect a lot of news in the short term. It could drag on. As you know, the legal cases in Portugal typically do drag on for a number of years. There's not any information that I can provide. No news in this respect.
August is a pretty slow month, judicial holidays, and so nothing more to say here.
Okay, many thanks. Just perhaps just on the legal case, have you had to provision anything in your accounts for that? Has there been any impact on the accounts there?
No. Listen, I'll be very clear about that. We have not provisioned, and we have no intention of provisioning. In fact, there's not even any number out there that we could possibly even try to understand, have a reference for that. No provision, no intention of provisioning, and not even a reference that exists.
Got it. Very clear. Thank you.
We can go to the next question on the phone, please.
We will take our next question from the line of Arthur Sitbon from Morgan Stanley. Sorry, now the next question comes from Manuel Palomo from Exane.
Hello, good morning, everyone. Thanks for taking my question. I've just got two questions. Well, one regarding Portugal, in which I will ask you to please update us on the latest on the extraordinary CESE tax. Two, related to recent auction, what's your view on the results from that auction and why you did not gain any, or why you were not awarded any of these projects under the different optionalities for the auction? Second one, again, not trying to preview your CMD in the future, but I was wondering whether you could tell us what is the run rate in terms of installations that EDP Renováveis could do. Are you already at the peak of that, or do you see still some room for improvement in the coming future? Thank you.
Hi, Manuel. In relation to the Portuguese regulation, I think, essentially we have the three different topics that we typically talk about, which is the sales, the clawback, and the social tariff. I would say that in relation to the sales, the extraordinary tax, clearly there's a commitment to have this evolve, and that was set out in the government budget for the year, that it should be reduced in line with the system debt. Unfortunately, this coincided with the COVID, the system debt is actually not expected to decline this year. We do expect it to continue to decline going forward because the COVID is obviously a one-off impact, it creates short-term pressure this year.
We continue, when we look forward, when we project the tariffs going forward and the system debt, we continue to see it's completely sustainable and will fall away over the next couple of years. In that respect, I think that political commitment is still there, and it's a question now of following this and seeing how it evolves. In relations to clawback, again, I think maybe some positive news on that, which we hope will come out over the next couple of weeks, maybe. Essentially, some steps were taken. As you know, the Secretary of State has already mentioned that we should net off the sales and the social tariff against the clawback. That now needs to be detailed and reflected in specific regulation, and that's being done. Hopefully we'll have some news coming out of that.
In terms of the social tariff, not really any news on that, no change there. That's Portuguese regulation. In terms of solar auction, we obviously go to these auctions, and we participate the same way we participate in many other auctions around the world. We do our best. We set up the teams. We find the locations. We use our pipeline. Then we're also disciplined about what we see as the returns that we expect for these type of projects. We'll go in, and we'll have a price that we're willing to go to. Then if it goes beyond that, then we'll step out, and we'll invest elsewhere. I think it was interesting to see the solar auction. Obviously, we'd also participated last year. We were awarded, not in the auction, but afterwards, with the project there.
This year, it had a particularity, which is you could also bid with storage. 75% of the solar, of the 700 MW, ended up being taken in the modality, which is solar plus storage. That ended up being extremely competitive and, say, on a CfD basis, if we had to do a, in one case, it was EUR 11 per MWh , and in some cases, it could even potentially be negative. Very aggressive prices. I'd have to also mention here that half of those megawatts were won by a South Korean company, which is also a producer of panels and storage, so they may have, say, a different view on the economics, and so they were able to be more competitive there. Can't really tell, I guess it would be certainly interesting to try and understand a little bit more of those economics there.
It's part of life. We go to these auctions, we win some, we lose some. We just have to be disciplined in how we approach this. In relation to the question on the run rate. Clearly we're ramping up, as you know, within renewables. We were at a run rate of around 700 MW, and we're ramping up to around 2 GW. We have the pipeline, and I think that's something that we've all stressed, is the big change, I think, strategically that we had, was to build as much as we can, and then if necessary, sell part of it to continue to recycle that capital. From an organizational perspective, we've also been ramping up. We've been hiring a lot of people. We've been building out the organization, obviously to match that.
This year we would be already, obviously now with the COVID, it's been slightly delayed, the number of megawatt we're building this year. We'd already be getting close to 2 GW. We'd be in the 1.5 to 1.9 type range. As I say, some of those MW have slipped into 2021, but I think the organization is there. We continue to ramp up the organization. I think we had the heart of it, the core that we already had in terms of energy assessment, in terms of the relationship with the turbine manufacturers. I think that's there. We're really fleshing out in the different markets and in the markets where we already are to make sure we can continue to deliver those megawatt. This is all just to say, we're comfortable with the run rate of the 2 GW.
I'd wait to see sort of the full CMD to talk about any other numbers apart from that.
Thank you.
We'll try now to answer some questions from the web. We have here some questions regarding Viesgo acquisition in terms of integration. Stefano Bezzato from Credit Suisse and Jorge Guimarães from JB Capital. Are you in position to provide more detail on the expected synergies and tax benefits from the connection with Viesgo? Is it now possible to provide more detailed view about potential synergies? Also, Jorge Alonso with the same direction. Miguel?
Sure. First, as I mentioned, we're focused now on just on executing the M&A side and trying to get that closed by the end of the year and getting this through the different regulatory hurdles. We're also in parallel working on the integration plan for the first 100 days. This will be basically more than doubling our size in networks, for permanent concessions. We'll be combining two industrial projects. Obviously, I think we can all intuitively understand that this has a lot of value creation potential. I've seen some of the numbers from some of you guys, from sell side analysts, and we're comfortable with those numbers. I think they're aligned with the benchmark for these kind of deals. Certainly our internal numbers, which would not be very different from those, but I really can't share much more detail than that.
I would just also say in relation to the tax issue, obviously, since we will have more than 75% in the distribution holding company, we will have the full fiscal consolidation within the EDP España perimeter. We expect that to also generate significant value.
We have a question also from Jorge Guimarães, in terms of coal plants of Viesgo impact on EBITDA in 2021. I think this is quite easy. Maybe we don't expect any EBITDA contributions. We expect that all the extraordinary costs for shutdown will be already accounted both in 2019 and 2020. Finally I think we are reaching the end of the call. We have a last one on the fixed income from James Sparrow, BNP Paribas. Can you talk about your funding needs after the capital increase, and recent asset sales having issued equity? Do you no longer need to issue hybrid debt? Will the focus be more on issuing cheaper senior debt in the future? Miguel.
The answer here is yes. We'll continue to issue senior debt, probably most of it will either be euros or dollars. We also think it's important to continue to issue dollars since part of our growth is also U.S.-driven, dollar-driven. Hybrids, listen, they're a tool and we may use them in the future, so I would never say never. We need to reinforce credit metrics, but certainly we don't have any plans to do that at the moment. We're just focused on executing the deleverage plan, which doesn't require any more hybrids for that. The capital increase was obviously just necessary because of the Viesgo acquisition.
I think with this, we can conclude. Miguel, I don't know if you have any final remarks.
Listen, obviously the second quarter was a tough quarter, and we would have liked to go out to you guys in July and present on that. As you know, it wasn't possible. I think we are very comfortable. We have solid results. We're comfortable with the guidance. We're comfortable in terms of the asset rotation deals. We're comfortable in terms of the way we're managing the energy management. We're feeling very positive about the company, and several of you raised this in terms of our future prospects. I would prefer to have a, let's say, a comprehensive discussion and presentation to you all on this in the future, but certainly we're feeling very good about the company and about the prospects going forward. I think we're in a good place.
With this, we finish the call. Thank you very much for your participation, and hope to have you in the next weeks in some interactions, in several conferences, and then on the third quarter results conference call that is reaching very close already. Bye.
Thank you.
This concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you.