Good afternoon. We welcome you to the EDP Renewables first quarter 2024 results presentation conference call. During the presentation, all participants will be on a listening-only mode. There will be an opportunity to ask questions after the presentation. If you wish to ask a question during the Q&A session, you may do so by pressing the star key followed by five on your telephone keypad. If you're experiencing any difficulty in listening to the conference at any time, please make sure you have your headset fully plugged in, or alternatively, please try calling from a different device. I now hand the conference over to Mr. Miguel Viana, head of IR and ESG. Please go ahead, sir. Mr. Viana, please go ahead.
Good afternoon, everyone. Thank you for attending EDPR's first quarter 2024 results conference call. Our CEO, Miguel Stilwell d'Andrade, and our CFO, Rui Teixeira , will run you through the financial performance over last quarter, along with the execution update and financial guidance of our strategic plan until 2026. We'll then move to Q&A. We'll be taking your questions in the conference chat or by phone, and the duration of the call will be close to 60 minutes. I'll now give the floor to our CEO, Miguel Stilwell d'Andrade.
Thank you, Miguel. So good afternoon, everyone. It's really great to be here once more and be able to discuss the first quarter of 2024 performance and also the execution update for EDPR. Today's call will be a little bit more detailed. We'll give you a sort of a very in-depth update of our business and financial outlook for the 2024 to 2026 period. I just wanted to highlight that this reflects a deep internal bottom-up analysis that was developed by our teams over the last couple of months, and that's led to a recalibration of our operational and financial targets for 2024 and 2026, considering the most updated market outlook in terms of energy prices, regulation, interest rates, etc. So, we'll get to that in the second part of the presentation, but it will reflect, let's say, a deep bottom-up analysis.
If we go to slide four, so just kicking off, talking about the first quarter numbers. So this quarter, we clearly saw the recovery of the pace of capacity additions. So we'd had a very strong fourth quarter last year. Then this first quarter, we also had 0.5 GW of capacity that was added, and it was driven basically by the recovery of the solar projects delivered in the U.S., and this is following the normalization of supply chain bottlenecks. I think, fortunately, the outlook for 2024 in the U.S. is very different from last year. We have 100% of the solar panels for our solar projects to be commissioned this year already delivered to their destination sites in the U.S., so I think that's very positive news.
Regarding generation volumes, so we generated almost 10 TWh of renewable energy, so this is slightly lower than expected, reflecting the adverse impact of the El Niño on the U.S. wind resources. As you know, that was something that was coming through also in the end of last year. But then we did have a good recovery in February and March. So part of this generation volume is relating to the El Niño. Part of it still reflects a low contribution from some of the most recently installed capacity, which we'll see gradually ramping up over the first few quarters. On selling price, so this decreased 3% year-on-year. So this is a trend we'd already anticipated in the previous quarterly results conference call.
This results essentially from the decline in spot electricity prices in Europe, and we'll get to that in a bit more detail in a second. So it was also a good quarter in terms of delivering the asset rotation transactions. We rotated, around half a GW net in both the US and Canada, so total enterprise value of about EUR 0.9 billion. So it's an important contribution to our target asset rotation proceeds of above EUR 1.7 billion this year. And finally, I think also very positive, was the developments in terms of efficiency. So our core OPEX per average MW in operation declined 7% year-on-year, and that results from the stabilization of costs and also the recovery of the pace of capacity delivered the last two quarters.
I think, as we'll see, and we'll talk about that later on, we expect we will be able to continue to deliver good efficiency, progress over the last next couple of quarters and years. Anyway, I'll stop here. I'll pass it over to Rui for more detailed analysis of the financial performance in this first quarter, and then I'll come back to share the updated medium-term vision and 2026 financial targets.
Thank you very much, Miguel. Good afternoon to you all, and let's move to a more detailed review of the financial performance in this first quarter. If you move to slide five, EBITDA increased to EUR 454 million. This is on the back of installed capacity increasing 12% to 16.5 GW installed capacity, while the average installed capacity rose 8% to 14.6 GW.
There's a 3% year-on-year decline in generation volumes, but this is essentially impacted by lower generation volumes in Brazil due to the deconsolidation of wind assets that we rotated by the end of last year, low wind resources in that region, and a gradual ramp-up of new installed capacity in late 2023. You can see also the 3% year-on-year reduction of the average selling price. This is mostly driven by a 15% decline in the average selling price in Europe when compared on a year-on-year basis. Please note that the average selling price in Q1 last year did not include yet the impact from the retroactive downward review of regulated prices in Spain. You may remember that the Spanish government, I'm sorry, implemented this in the second quarter of the year.
Asset rotation gains amounted to EUR 58 million in the first quarter of 2024, associated with the two transactions that we previously communicated to the market, the one that we closed in the U.S. as well as in Canada. And just a final note, in the first quarter of the year, we have an impact of EUR 27 million in Colombia. These are related to the costs associated with the active PPAs that we also have recently renegotiated in part, and a EUR 13 million non-cash cost from hedging positions that we closed in Romania back in 2023. On slide six, on financial results, financial results amounted to EUR 108 million in the first quarter of the year. It's a positive evolution versus last year, so it's a decreased 14% year-on-year.
This is a result of the, on one hand, the rebalancing of our debt mix by currency. You may remember that we decided to increase the weight of euro versus US dollar denominated debt and therefore converge to our asset mix by currency, but also capitalize financial expenses that reflect the higher volume of projects under construction and on the advanced stages of development overall. Average cost of debt was flat year-over-year with lower cost year-over-year from the new debt that is being refinanced. Finally, a note that more than 75% of our debt is maturing post-2025, oh, sorry, post-2026, therefore representing a very low refinancing risk, and low refinancing needs in this medium term. If we now move to slide seven, net debt at EUR 6.7 billion. This is an increase of EUR 0.9 billion versus the December closing in 2023.
Obviously, it's on the back of the growth, with EUR 1.2 billion of expansion CAPEX. This is partly offset by the asset rotation proceeds and operating cash flow. Just a note, the asset rotation in Canada was closed only in April. This would, if it was closed, in the first quarter, this would have an impact of about EUR 130 million of lower debt as we are versus what we are reporting. In any case, this will be recorded in Q2. Asset rotation and tax equity proceeds are expected to be higher in the last part of the year and therefore compensating for the evolution of investments throughout the remaining of the year, with more than EUR 1.5 billion expected cash proceeds coming from the asset rotations and then more than EUR 1.5 billion expected from tax equity proceeds in the U.S.
Just a final note on slide eight, net profit, and that we ended the period with a net profit of EUR 68 million. This is fundamentally impacted by the top-line performance, the asset rotation gains, and the improved financials that I just explained. So now I will hand over back to Miguel that can take us through the updated on strategic execution and 2026 guidance.T hank you.
And thank you, Rui. So let's move to slide 10. So here I just wanted to start off the section by taking a step back and really focusing on the fact that we have a high-quality portfolio of renewable assets, and this results from a long track record of close to 20 years developing renewable projects. I'd like to highlight that we have low-risk European and North American markets representing almost 90% of our asset base.
In terms of technology mix, EDPR keeps a very high weight of wind onshore in the portfolio, again, more than 90% of our renewable generation in the first quarter of 2024, and the solar growth is mostly focused on pay-as-produced contracts and solar distributed generation. Also, our portfolio has a very strong long-term contracted profile. Around 90% of 2024 volumes are being sold within long-term contracts with either fixed price or with caps and floors, and with an average maturity of 12 years for the fixed through medium-term hedges. Also, the portfolio is based on competitive renewable mix. We have an average selling price expected at around EUR 53-EUR 54 per MWh in 2024. I think I've gone into that in the previous call, but I'll also give more detail in a moment. And so all in all, we have a solid portfolio. It's well diversified geographically.
It has a strong bias to wind, which is a premium technology. And so I think that's the underlying, that's the basis on which to build on going forward. I think if we move on to slide 11, I think this is another point which is worth continuing to highlight. Renewable energy continues to be backed by a very strong increasing demand worldwide, and there's been a lot of talk, and I'm sure you've all heard about it and, and sort of been reading about it, whether it's in relation to AI, whether it's in relation to some of the hydrogen projects. So there is a very strong support in the market for renewable growth through this increasing demand worldwide and also support of government and regulatory frameworks.
And that continues to be true today as it was, over the last couple of years, and we believe will be over the next couple of years as well. In Europe, regulated auctions are expected to continue delivering the bulk of the renewables growth. Around 45 GW expected to be auctioned just in 2024 in EDPR's markets. Demand will be highly supported also by corporate PPAs, mainly driven by sustainable corporate targets, and technology companies playing obviously a key role, in the increase in the European renewable energy demand, so the big tech. This is also backed by the EU Commission with the data centers' code of conduct. In the US, we expect to continue seeing supportive clearance on guidelines from the IRA, in this case, yep, the IRA going forward. And that will incentivize renewables deployment along with the tax credit financing.
That's expected to raise around EUR 20 billion per year until 2032. The other point worth highlighting is the transferability that you can now do, so it's not just based on pure tax equity investors. You can also do just straight transfers of tax credits, and we expect that will unlock an additional $10 billion-$30 billion in financing per year. So altogether, this transferability we expect will more than double the tax credit financing supply over the next 10 years. So this is really, the big change that came along with the IRA and which is very important for the financing of renewable projects in the U.S. That's a question we get often: how much tax capacity does the U.S. have? Or so some of the corporates, the banks, and I think the fact that this transferability has come along is really opening up that additional market.
You're beginning to see brokers supply and demand, and that's something we continue to see building up over the next couple of months and years. So finally, we continue to see strong demand in the US for corporate PPAs, in big part driven by data centers and big tech needs for power. That demand is actually expected to double between 2022 and 2030, around 17 GW-35 GW according to McKinsey. Besides data centers, the latest targets for the RE100 companies imply a need to contract almost 30 GW of renewable capacity between now and 2030. So it's a fact that demand for new growth is there, and that provides the foundations for profitable growth.
If we move forward to the next slide, I think here it's more a statement that we need to recognize that the market has changed dramatically over the last 12 months, so in terms of some of the energy prices and expectations around cost of capital. So we have a positive backdrop in terms of portfolio, positive backdrop in terms of demand growth going forward, but at the same time, we're obviously very aware of what's going on in the market, and we have seen a significant decline of the forward electricity prices in Europe, in particular over the last couple of months, and this impacts our expected revenues through some of the exposure to wholesale electricity prices, in the region, in Europe. So I, I think it's also consensus that we will continue to see interest rates higher for longer, particularly in the U.S.
In Europe, it appears that there's some evidence or expectations that there will be some decrease over the following months. But anyway, globally, it obviously means that there has been an increase in the cost of capital, and obviously, we recognize that and that the expectations, particularly in the U.S., for higher for longer are there. So we're not ignoring these market signals and assumptions, and so we are recalibrating the 2026 targets on three basic levels, which we think will maximize long-term shareholder value creation. On the first level, less investments, so preserve our balance sheets. So a total of EUR 3 billion less of net investments in the 2023-2026 period versus the plan that we had last year. We're also prioritizing returns over volume as we reduce the number of MW and making sure that we keep healthy spreads and, in fact, expand them. So it's almost mathematical.
As you go bring the volume slightly down, you can be even more choosy over what MW you choose, and so the spreads we expect will increase. We will obviously continue to improve our efficiency, and we expect that the gains that we saw in the first quarter, we will be able to keep that efficiency growth, let's say, improvement over the next couple of quarters and years. And so a 6% CAGR on reduction of core OPEX over average MW. So that's on some of the sort of key issues. We'll come back to this later. Rui will give you some more specific numbers.
But if we move on to slide 13, I wanted to highlight two points which were very relevant or present in 2023 and just give a little bit more detail on this, which I know many of you have asked questions over time on this, and so we wanted to clarify any questions that you might have and give more information. The first is on the left-hand side, just highlighting that EDPR is in a much stronger position in the start of 2024 regarding the execution of the projects in the U.S. We've increased the diversification of our solar panel suppliers to 12 different suppliers for 2024 deliveries. These are all aligned with strong ESG audit requirements and traceability on manufacturing origin that are key elements of our procurement strategy. So we're not going for the absolute cheapest panels on the market.
We are ensuring that we keep the strong ESG audit requirements and traceability. So, that's absolutely key for us. Also, and as I mentioned, 100% of our solar panels for 2024 have already been delivered to our U.S. operations, so they support the prospect of gradual installations over the year. And also 75% of the capacity for 2025 is already secured with equipment 100% assembled in the U.S. So all of these factors, we think, strongly limit our exposure to the risk of potential new import tariffs or the Uyghur Forced Labor Prevention Act risk, but obviously, we'll continue to monitor and manage these risks. On the right-hand side, also following many questions that we've received, I just wanted to give you more information regarding Colombia. So EDPR entered Colombia in 2018, signed the PPA contracts back in 2019.
It locked in the turbines and a big part of the CAPEX in 2020 for the two projects in La Guajira region. Unfortunately, the development risk turned out to be higher: those COVID, supply chain disruptions, political and local communities risk, and then the license of the transmission line was ultimately rejected. So it was a very complex project to be executed. So we are focused on resubmitting this license and getting it before year-end, but obviously, the COD date has been postponed. We are working to improve the economics of this project to compensate the deferred COD.
I have to say that in August of 2023, we've had support from the Colombian government over the last year, and last year in August, they issued an emergency decree to essentially suspend the PPA contracts, and that would have stopped the bleeding associated with these contracts. In the case of EDPR, it was around EUR 50 million in 2023. Unfortunately, the decree could not be implemented, and it was declared unconstitutional. So that was a big blow in August of last year. However, then the government supported us in renegotiating 70% of the PPA volumes associated with the project and suspending the delivery of these volumes until 2027. So that is, in effect, as of April. We still have the first quarter where those PPAs were being enforced.
We still have 30% exposure to those PPAs, but the rest is now being essentially pushed back to 2027. In parallel, we are working on improving the project economics, including regulated revenues, long-term financing terms, and project cost optimization. We hope we'll get a lot of these. And we're also exploring options of partnerships that can bring value to the project. So I would like to highlight, though, that the maximum exposure to the project expected by year-end, so including book value and other liabilities, including deferred tax assets, FX, guarantees, penalties, everything, including the costs incurred, turbines, etc., would be around EUR 0.7 by year-end. So we'll continue working to reach the end of 2024 with clear visibility on the future of the project and then take whatever decision maximizes the value for shareholders, and that's very clear for us.
If we move on to slide 14, and talking about value creation and capacity additions. We have updated our outlook regarding capacity additions. We're now targeting adding around 10 GW of renewable capacity in 2024 to 2026, so this is an annual average above 3 GW per year in the period. Of these 10 GW, we already have 7 GW secured, including the 0.5 GW installed in the first quarter and 4 GW on the construction, for this year. Those 7 GW represent close to 70% of the capacity to deploy between 2024 and 2026, leaving around 3 GW to be secured. Also, a big part of these GW will come from core low-risk markets like North America and Europe, so that will be around 85% of the new additions, and solar will play an important role to increase our portfolio diversification.
If we move on to slide 15, giving you a little bit more color on the renewables PPA demand from big tech and from others. As I mentioned, we do see very strong demand coming from the big tech sector. And I'll just give you a small anecdote on that. But from the 7 GW of secured capacity, around 70% is with corporate PPAs. Around 70% relates to big tech companies, mainly in the U.S. and Europe. And these companies are facing strong demand for renewable energy, as you know, from the data centers associated with either just their natural growth or artificial intelligence. And just as an example, I mean, even last night, I received word that we had two players competing and presenting offers for one of our projects with a PPA price close to $70 per MWh.
So interesting that rather than us participating in RFP, it was actually becoming a bit of a seller's market in some cases, which is obviously good for, for pricing of PPAs. Regarding the target 3 GW to be secured for 2025 and 2026, we expect new capacity to be contracted to keep a good level of diversification, and we expect a gradual increase of APAC in the, in the portfolio driven very much by the solar distributed generation. We have good visibility on close to 1 GW of PPAs currently under negotiation, both with big tech and utilities, and the remaining capacity to be backed by future regulated auctions. So a lot of demand from P&I, PPAs, and then we also have the solar distributed generation in APAC and North America, which benefit from a shorter period between contracting and commissioning versus the utility-scale renewables projects.
If we move on to slide 16, talking about returns, as I mentioned a little bit earlier, but just going into a little bit more depth. So we do continue to see attractive projects with good returns considering our investment criteria. You know, we stress this over time, and we're seeing our investment thesis play out. Over the last six months, rather, we've seen the support of PPA prices, and they have been impacting the IRR not just in absolute term but also in terms of the weight of the NPV that is contracted, and so short- and medium-term good cash yields. I'd stress that it is important to invest throughout the economic cycle to ensure a good blended portfolio yield. So, you know, that's what I think our long-term shareholders expect, and that's what we're going to do.
In light of the current context, we've also recently approved the stricter investment criteria, so we're increasing our target spread for the portfolio to at least 250 basis points spread on WACC, for these. The previous target, as you know, was around more than 200 basis points. So this will keep a strong focus on contracted cash yields and keeping our risk policy of contracted NPV higher than 60%. So I'll s top here. I'll just pass over to Rui and then come back for some closing remarks.
Thank you very much, Miguel. So if you don't mind going to slide 17, we have a EUR 12 billion gross investment plan for these three years. This, of course, is to deliver the 10 GW of capacity additions between 2024 and 2026.
It also includes some additional equity investments such as the EUR 0.7 billion buyback of a 49% stake in 1 GW of green assets in Europe already communicated that we expect to close in the second quarter of 2024. Also, as you know, an important building block of the strategy is the asset rotation, and we are not changing materially nor the capital gains, the target proceeds, nor the capacity versus what we currently consider. It does, however, represent a higher weight over target additions at 45% versus previously 30%. But in the past, you may remember as well that we rotated as high as 50% of the additions. So right now, I think that we are within a sound range. Also, as of now, good visibility for the execution of the 2024 expected transactions. Tax equity proceeds of around EUR 5 billion.
This will come mostly from the solar ITCs and, of course, an important funding from the U.S. installations. This would lead to net investments of around EUR 4 billion and only EUR 1 billion net debt increase, and therefore, I would say, keeping a sound balance sheet. On slide 18, this I think it's important also to show the exposure that we currently have in the portfolio to power markets, where we do maintain a high weight of long-term contracted and hedged electricity sells. Let me just go one by one. So a long-term contracted represents most of our portfolio generation with 70% of weight, with an average maturity of 12 years of remaining contract life in line with our investment criteria of targeting long-term contracts, typically 15-year maturity and above.
This generation is sold approximately 70% through PPAs, approximately 20% through feed-in tariffs or regulated contracts, and the remaining 10% through CfDs. On the hedging share, hedges are mostly with financial counterparties that even include EDP's Global Energy Management Unit, and we have an average of 2-3 years of maturity. Overall, 50% of the hedges are in Europe. That's mostly in Spain, and around 50% are in the US. And regarding our merchant exposure, sorry, which is mostly associated to wind generation and therefore with a realized price structurally different from solar and actually much closer to the base load, it is 50% located in Europe, again, mostly Spain, 30% in the US, and 20% in Brazil. We will continue hedging future merchant generation, and we typically end up the year with a merchant exposure of around 10% of the current year and the following months.
So this residual exposure to spot electricity prices is also associated to our own risk management. So that's sort of, you know, structurally where we are typically landing on an annual basis, and that is those 10% once we hedge. Our assumption for electricity wholesale price in Iberia for 2026 is EUR 58 per MWh. Therefore, we expect our realized prices in Europe to decrease over the period 2024 to 2026 but overall continuing above EUR 70 per MWh. North America being stable above EUR 40, Brazil and APAC also stable above EUR 30 and EUR 80 respectively. And I hope that with this information, we better explain the dynamics of our portfolio, with the average expected realized price of 2024 in the range of EUR 53 - EUR 54 per MWh and for 2025 and 2026 to be around EUR 50 per MWh.
On slide 19, Miguel addressed this already, obviously, we will continue our efforts to reinforce efficiency, namely refocusing growth on core markets, pursuing a simplification of the company structure, but also extracting value from the global presence, namely leveraging synergies between EDPR and EDP as a shareholder and as much as we can working in a very integrated way to capture all those synergies. We estimate that these internal efficiency strategies will materialize in a compounded 6% annual decrease of the core OPEX per MW per average MW in operation, again, in the period between 2023 and 2026.
On slide 20, I would like to highlight that with these updated financial projections for the 2024-2026 period, we expect to deliver a significant improvement of, I would call it, the cash ROIC, return on invested capital, of the company versus a bottom level of one that happened in 2023, which was penalized by a peak of work in progress in our balance sheet, mainly from longer-than-expected construction periods to reach COD, but also on the top line, some of the headwinds that were clearly explained in our previous earnings call.
But as a result of the gradual increase in the weight of operating assets, normalization of average construction periods for new projects, and the higher returns in absolute terms from the new project that we have been securing, we do expect the company sort of cash return proxy on operating assets to be improved north of 8%, again, for the operating base throughout the period 2024-2026. So to finalize and before heading over to Miguel for final remarks, just on the updated guidance, we expect new capacity additions to result in a 13% average annual growth in renewable generation between 2023 and 2026 to approximately 50-52 TWh with an average selling price stabilizing around at around EUR 50 per MWh for 2025 and 2026.
We obviously, within the asset rotation gains, we are targeting a stable EUR 300 million contribution, and this would lead to a recurring EBITDA average annual increase of about 9%. And if you look to the underlying EBITDA, so excluding capital gains, that would be even a stronger growth of 15% per annum. Net income growth of 11% per annum reaching EUR 0.7 billion in 2026. Net debt level will remain stable between 2024 and 2026 at around EUR 7 billion. And finally, we do maintain the attractive dividend policy through the Scrip Dividend Program with a target payout between 30%-50%. So, Miguel, back to you for closing remarks.
T hank you, Rui. So maybe just some final comments. I think basically six points. First, I just wanted to reiterate our commitment to solid and sustainable growth. Our first quarter performance showed a good delivery of capacity addition, normalization of wind resource or the beginning of normalization. It did show a declining average selling price driven by the European markets as expected, and but it also showed a good performance in terms of efficiency. The bottom update on the most recent market assumptions resulted in expected average selling price in the range of EUR 53-EUR 54 per MWh for 2024 and around EUR 50 per MWh for 2025-2026. I think that's, second point.
Third point, just to say we've revised our target renewable capacity additions to close to 3 GW per year in the 2024-2026 period. 7 GW already secured, 3 GW to be secured. The target portfolio IRR of a WACC spread increased to at least 250 basis points versus the previous 250, so prioritizing returns over volumes.
Target gross investment in renewables, around EUR 12 billion for this period, 2024-2026, funded by EUR 5 billion of asset rotation proceeds and EUR 3 billion of tax equity in the US. That's a mix of tax equity investments and transferability, and so making sure we preserve a sound balance sheet. We will continue to deliver efficiency improvements targeting a reduction in core OPEX per average MW of around 6% per year on average in the period. So together with the high weight of operating assets, we are expecting to have a good support for, operating assets improvements ramping up through 2024 to 2026 to around 8%, returns. Finally, these assumptions result in an updated target recurring EBITDA of EUR 2.4 billion. That's a 9% CAGR versus 2023 and the target recurring net profit for 2026 of around EUR 0.7 billion, so an 11% CAGR.
Just before I close the presentation, turn it over to Q&A because I saw that there are about 10 of you that already have your hand up. I'd just like to highlight that the world's capacity to generate renewable energy is expanding faster than at any time. And I think that's why it's important sometimes to take a step back and look at the forest. In 2023, there was an increase in renewable generation of around 50% year-over-year. In the next five years, we will see faster growth yet. So we are well-positioned to capture this growth globally through the regional hubs, and we will be pursuing sustainable and solid investments to build up a really, truly great renewables portfolio. And so we're building on a solid platform. We see good opportunities ahead.
We've obviously been through difficult periods in the past with the inflation, interest rates, and energy prices, but we are seeing remarkably good investment opportunities. And so investing throughout the cycle, the economic cycle, I think, is important to get good overall returns. And I'll stop there and turn it over to Q&A. Thank you.
Thank you, ladies and gentlemen. The Q&A session starts now. As a reminder, if you wish to ask a question, please press star followed by five on your telephone keypad. Thank you.
Thank you. We'll try to have two questions by each analyst. Then at the end, if we have more time, we can have more questions. First, the question comes from the line of Alberto Gandolfi. Alberto, please go ahead.
Miguel, thank you. I'll stick to two questions. So, the first question is first of all, I wanted to thank you for the strategic update. It takes lots of courage to really mark to market so decisively. So, so thank you for that. Really appreciate the switch towards, you know, more value creation as well, and flattened debt. So just, just a very quick one on the bridge. So if we are looking at 2024 versus 2026, would it be okay to tell us how much incremental EBITDA you expect from new MW? So I guess now it's about 160 so it's about 3-something GW net in 2025-2026. And what is the headwind from power prices? And maybe if you can tell us if you're assuming that Romanian taxes disappear, Colombia resolves, I guess so.
you know, also part of this question, I welcome the fact that I think for the first time you're disclosing the return on invested capital for the portfolio of 8%. 8%, does it mean we should assume I guess this is for the average of the portfolio, but should we assume also an 8% on additions, meaning like an 11% EBITDA yield over CAPEX? So I just take 8 + 3 of depreciation, 3-point-something, so maybe 11.5% EBITDA yield. So if you can help us on the bridge between 2024 and 2026. Secondly, I wanted to ask you about returns. I really like your upgrade from 200 to to from more than 200 to more than to 50, especially after power prices have come down. So that is probably equally so it's even more relevant.
And I would argue you know, my question here is the following: Are you now, because you're reducing investments, selecting better projects, or are the competitive dynamics in the industry improving? And maybe, you know, if you can comment as part of it, if it perhaps is more for the US thanks to data centers or if Europe. Thank you for your patience.
Thank you, Albert. I'll just do the second one then and come back to the first one, which has two parts. But on the returns, what I can say is we are seeing good projects come along. And as I say, you know, I'm coming into this call quite confident and positive because, you know, maybe it's anecdotal, but it's, and it's not. It's becoming more of a trend.
We're actually being more of a seller's market almost in the US with having multiple companies bid for our projects, basically competing for our projects. So it's not us needing to sell the energy to third parties. It's actually switching around. Obviously, there is certainly a question of dynamics which is happening and which is encouraging. Certainly, over the last couple of weeks and months, we've been seeing that. Obviously, there is also a question of better projects in the sense that if we are doing 3 GW instead of 4, you know, we can drop the 1 GW which perhaps had the lower returns versus the others. And so that will also increase the average portfolio. But I wouldn't say it's just that.
I think there is also a good dynamic we're seeing, particularly in the U.S. at least, over the last couple of weeks and months. In Europe, I think it depends. In some geographies, it does have these dynamics, but there maybe it's more a question of dropping some of the projects with lower returns versus the others that have higher sort of, you know, 250 points plus of returns. On the first point, you know, and I'll do the first part, and maybe we can also touch on the second part in terms of the returns. But I'd say that, you know, there is a, well, you can assume Colombia and Romania disappear certainly by 2026. That's clear. We are seeing a big delta in terms of power prices.
So prices going from EUR 53 per MWh to EUR 54 per MWh down to EUR 50 per MWh, also an increase but then on the other hand, we have an increase in the tax equity revenues. Overall, in terms of volumes, we see +10 TWh increasing from 2024 to 2026. So if you break it down into price and volumes, +10 TWh minus EUR 3-4 per MWh and an increase also of, say, revenues over this period. So, I mean, I think you can do the math in terms of EBITDA, but, but basically, that's how it, it works. Then there's also contribution from efficiency. And so let's say that's what I gave you was on the revenue side. On the cost side, we are making a big effort to really start to extract economies of scale.
So I think there was a big push over the last couple of years to grow the business. And as you know, we went from building around 700 MW to building around 3 GW, and this year, we're actually building around close to 4 GW. So there was a big push on growing the company for that. And now we're very much focused on, you know, extracting maximum value. So on the cost side, there is also, an improvement there on the cost per MWh cost per MW. And that also feeds through then into the EBITDA numbers. Rui, thank you,
[crosstalk] Miguel. Thank you, Albert. Hi, Albert. That's a bit clearer. Thank you. All right.
Just on the return, just to highlight, so we are now looking at and this is the average last six months, looking at cash yields around the 8%-9%.
So, I mean, these projects will start kicking in, you know, throughout 2025, 2026, as they achieve COD, also for some of the 2024 projects as well. So I would say that, I mean, I would see a positive impact, everything else being equal, a positive impact into the sort of the portfolio overall, the return or cash yield proxy, as we move forward and as these projects, these vintage new vintage of projects actually start to contribute to the, to the overall returns.
We can go to the next, questions from, comes from the line of Javier Garrido from JP Morgan. Please, Javier, go ahead.
Thanks. Good afternoon. So my, my first question would be, back to the 250 basis points spread over, over WACC, and particularly on U.S.. If you look at the trajectory of earnings in the U.S. in the last few years, and, particularly we strip out the non-cash contribution of, accrued PTCs/ITCs, the cash flow generated in the U.S., has been relatively weak, for different reasons.
But my question is, when you look at, such a key market as the U.S. going forward, are you factoring in a higher risk profile than you used to do in the past, or are you happy with the same approach that you have been having in the last few years? I just wanted to assess how robust is, in your view, that expectation of a higher IRR? How comfortable would you feel with that, expectation in a context where in the last few years, performance in the U.S. has been below expectations?
And then the second question, it's, and apologies, Rui, that is a bit detailed on the 2026 targets. If I look at 2024, you are looking at a proportion of net income EBITDA of roughly 20%. In 2026, you are looking at almost 30%. That's a very significant increase. It's in a context where you are adding EUR 3 billion of tax equity investors, which is expensive net debt, and you are adding 5.5 GW of capacity net. So how, how can you see that big expansion in the bridge between EBITDA and net income? Is this assuming you are buying out for minorities, or is there any other assumption behind? Thank you.
Thanks, Javier, for your question. So taking the first one, I mean, I do recognize, you know, and we've been clear that the U.S. has had a low earnings profile over the last two or three years, sometimes for different reasons, but I do agree with your assessment. But going forward and if I understood your question correctly, are we trading off IRR for risk, or maybe I mean, the question is no. If anything, we're trying to make sure that we are not taking risks like basis risks or that we are pricing the projects better.
I think, you know, we are being very disciplined on not just on the returns, but on the risk profile of the projects to avoid precisely taking on projects which then have hidden risks in terms of whether it's the PPA profile or whether it's, you know, sort of the CAPEX. So obviously, that was very much impacted in the last couple of years by all the inflation, and things seem to have normalized, as I say, now, and we have much better visibility and hold on CAPEX. So, we are repricing to get more spread because I think the dynamics are also there, as I mentioned in the question to and the reply to Alberto. But it's not at all at the sort of the expense of taking on more risk. Was that more or less your question, or?
Yeah, that was my question. And, when you say that you are trying to minimize the risk, does that mean higher proportion of NPV in the initial PPA, or is it just simply another way related to the price?
No, okay. Yeah. So being very clear, we are seeing higher NPV contracted NPVs. We are seeing higher cash yields over the next 10-15-year 5, 10, 15 years that are sort of, you know, some of the key targets. So we are seeing clearly much better quality projects sort of in the short, medium term, I mean, or sort of, say, 5-, 10-, 15-year cycle. So it's not driven by any assumptions on the back end or anything like that. On the contrary, we are seeing, and that's, I think, my point.
We are seeing the higher IRRs, but also higher NPV contracted and be much more focused on, on making sure we're getting the good cash yields upfront and not, let's say, any back-ended assumptions or anything like that. On the second point, Rui, do you want to take that?
Thank you, Miguel. Hi, Javier. And maybe on this second one. So in terms of the impact to net profit, we are expecting on the financial results to obviously keep benefiting from that structural shift into more euro-denominated debt as relative to US dollar-denominated debt. So that has a positive impact that you already saw in the first quarter, and you'll keep seeing into the rest of the period.
Also, in terms of minorities, so we did bought back those 49% of minorities, the 1 GW wind portfolio in Europe, and that will contribute positively into, you know, the rest of the period. We are expecting closing in the second quarter. But beyond that, we are not considering any further minority acquisitions, in this, in this plan. And again, just maybe just one final note on also on your remark about cash flows in U.S. So as you know, once we close the projects or once we start COD, we get the tax equity funding. In terms of ITC, we are you have the 30% base ITC. In some cases where we have been awarded with that, with the 10% adder, for example, we had in the local communities, that's ultimately 40%. Can be even higher if you can achieve other thresholds or KPIs.
But the point being that there is a substantial part of the cash flow that is captured upfront as you monetize the ITC. But again, to your comments on the net profit over EBITDA, I hope I was clear.
Okay. Thanks for all the details.
Thank you, Javier. The next question comes from Fernando Garcia from Royal Bank of Canada . Fernando, please go ahead.
Thank you, Miguel, for taking my questions. Maybe this first one is a question more at EDP level, no? But given EDPR finances mostly at parent level, I assume with this update, EDP is within the threshold of rating agencies. And I will appreciate that if you can provide some detail on that. And then the second question is just if you can inform us about the evolution of tax equity investors' stock all on the plan. Thank you.
Excellent, Fernando. So, on the first one, I think it's a very straightforward answer. We are keeping the BBB at the group level, and we're keeping sort of a solid balance sheet, not just at the EDPR level, but at the EDP level. So obviously, we'll give more information on that tomorrow on the call, but that's clearly the objective. On the second question, I didn't quite catch it. I'm sorry. Could you just repeat?
Yeah. See, if you can provide the evolution of tax equity investors, all on the plan, no? So what will be the tax equity investors end of 2024, 2025, and 2026? Thank you.
So if your question is specific numbers, I mean, I think the point is we're expecting about maybe $1.5 billion of tax equity expected for 2024. That's already in relation to the projects that we have. We do see the market developing, as I mentioned earlier, sort of not just the amount the tax equity investors, but, which are sort of the more traditional structures that have been implemented over the last couple of years, but also this issue around the transferability, which will also be something going forward.
And so there, what we see is that, you know, brokers are coming up. You're getting sort of supply and demand. You're seeing sort of tax credits being traded at $0.92 on the dollar. I mean, it varies, but that's sort of the type of range. And we expect that that market will mature over time. I don't have here the specific if that was the question. If the question is specifically tax equity investors, like, in our business plan, I don't have those numbers here with me, but perhaps we can get them to you offline.
That's maybe you can then provide the evolution if you expect another evolution of that figure that you commented of the EUR 1.5 billion, end of 2024. Thank you.
Okay. We'll, we'll provide that offline then. Just speaking to Fernando, so in terms of the total tax equity proceeds that we expect for the period 2024 to 2026 is what we have on page 17 of our presentation, which is EUR 3 billion, right? So, so that's the total amount of tax equity proceeds.
And again, just to highlight, the bulk will come from ITC.
The reason why we're—why I highlight this is, as Miguel said before, given the transferability market development that we are observing, witnessing, then these are not only funded through the traditional tax equity structures with, with banks. We actually have corporates buying into the ITC, which is a, you know, one shot. So it's, you know, they manage their tax capacity in a single year. Again, this gives a lot of, credibility comfort to this sort of EUR 3 billion target. But if there are further details, obviously, very happy to follow up on, on that.
Thank you. All right. We can go to the next question from Arthur Sitbon from Morgan Stanley. Arthur, please go ahead.
Hello. Thank you very much for taking my question. The, the first one is on the driver of the improvement in, IRR/WACC spread targets.
So you were talking about market dynamic improving there, among other things. I was wondering, you, put the emphasis a bit on, on big tech as a as a offtakers. I was wondering if you're seeing basically better pricing power with, with this type of offtakers than, than with other sectors. And generally speaking, what is the, the risk profile of the contracts you sign with them? Are they happy or not to go with, as-produced PPA as you as you usually do? And just a last, quick question. You talked about a $70 per MWh contract, negotiated with one of these offtakers. I just wanted to know if that's on wind or on solar. And the second question, on asset rotation, EUR 300 million of, asset rotation gain per year, that seems to imply lower multiple than in than in previous year.
I was wondering if that's you being conservative as usual on the asset rotation front or if you've seen any change in the asset rotation market in recent months. Thank you very much.
Thank you, Javier. So on the on the first one, so definitely, we are seeing, you know, sort of a lot of demand coming in from from big tech and these markets. And there, you know, we are seeing good demand for players and projects that are credible and that can be delivered. And so they are comfortable to take pay-as-produced contracts, and that's been what we do. We don't sign baseload PPAs. And this is a solar these are solar projects, big part. So we're not taking any volume or shape risk. These are pay-as-produced PPAs. The dollar amount I gave you was in relation to to a solar.
And so I think that's well, that's just a very straightforward answer. But we're seeing sort of we continue to see in the US relatively high PPA prices. And I think I see the team quite motivated and quite, say, optimistic and, and positive about, the way that, the market is developing there. So I think that, that gives us some comfort here, in relation to this. On the, the proceeds, sort of on the capital gains, I mean, well, we tried to, you know, to give what we think are, are realistic estimates. We've we, we have managed to outperform in the past, but we don't necessarily count on that when we do our projections. I think what we'll see what we do see is obviously lower multiples in the U.S..
I think that's just a function of the higher cost of capital and the fact that there were sort of CapEx overruns over the last couple of years. But going forward, I think we expect to see that expanding. But for this year in particular, I'd say that this is a function of projects that we are selling in Europe and in the US instead of the blended multiple being lower. That's maybe summarize it.
Thank you very much.
Next question rom the line of Enrico Bartoli, Mediobanca. Enrico, please go ahead.
Hi. Good afternoon. And thanks for taking my question. First question is regarding the procurement of solar panels in the U.S.. You highlighted that you have secured a large amount of panels.
But I'm wondering if, actually, the taxes, the import taxes are going to be raised, particularly considering what some manufacturers there are asking. What do you think that would be the impact on the market there if you think it's possible that there will be a further slowdown in the availability of modules, affecting the execution of the project like we had in the past? The second question is related to Europe. If you can elaborate on, let's say, the market that you expect to be the most interesting for further investments over the planned period. And in particularly, if you can elaborate on your approach on the Iberian market where we've been seeing pressure on prices from solar capacity additions, what is going to be your strategy in that market? Thank you.
Thank you, Enrico. So in relation to procurement in the US and I'll ask Miguel to complement. But I mean, as we mentioned in the presentation, so we are sourcing mostly U.S. modules, and so import taxes, we wouldn't be impacted by that. I mean, obviously, it would have an impact on the market as a whole. It would increase the prices. And so, well, that would have a knock-on effect. But for us, in our case, we are already locking in a big part of those modules for projects that we've already identified, certainly for 2025 and 2026. Would it slow down modules coming into the U.S.? I think that if it's a question around tariffs, it's more a question of price rather than being able to or the modules being slowed down.
I think what really slowed down the modules in the past was the additional burden of certification on the Uyghur Forced Labor Prevention Act. And that's, I think, what was effectively holding up modules physically getting into the U.S. That's overcome. And so now it's a question of tariffs, which is a question of price and whether projects are then, you know, able to, to take those on or not for the wider market. For our case, as I said, we are more immune to that. In Europe in terms of interesting markets, listen, I think there's quite a wide variation in Europe, which is why it's also an interesting region for us as a whole. In some markets, let's say Italy, you have very few projects available, but if you have them, they are very profitable.
And so we've been fortunate to have developed a presence in Italy over time, which allows us to develop profitable projects. Poland, you know, similar thing. France would be an interesting market, but very small in, in terms of small projects and, and difficult to extract. Iberia is a good market. You can get typically quite larger volumes, but obviously, more pressure on, on prices and returns. So, you know, it really depends. And I think one of the good things about having a diversified portfolio is that we can go on cherry-picking the projects that we think have the best sort of combination risk-return at any, any particular point in time. Want to comment on the procurement as well?
Oh, yeah. Thank you, Miguel. Hi, Enrico. I mean, so U.S., 25, 100% sourcing from U.S., factories. So assembly factories from Qcells and from LONGi. And therefore, I mean, there are no tariff risks depending on those assembled modules. And as Miguel said, we don't foresee any delay on those modules being delivered. Even for 2026, we have also for solar contract, so that essentially increases the visibility in terms of execution.
Or putting it the other way around, it reduces drastically, if anything, the risk of delays. And this was a shift, because we understand that it is really important, even though we don't have an ITC add-on or a PPC add-on coming from domestic content because that's only, I would say, nowadays applicable to some of the First Solar modules. But even though it reduces drastically the execution risk. So that's how we have been proceeding with, you know, the procurement for US. For Europe, it's different because for Europe, we have been sourcing directly from Chinese manufacturers, obviously, fully compliant with traceability according to our ESG standards.
Next question comes from the line of Jorge Guimarães from JB Capital Markets. Jorge, please go ahead.
Good afternoon. I have two questions, if I may. The first one, it's related to the asset rotation you are putting including in the guidance. You are reducing your gross, gross, estimates, but effectively, the asset rotation volumes at first sight are not down. So I would like to understand why you reduce the gross but maintain the same MW or increase the MW on asset rotation. So this would be the first one. And the second one is, it's related actually with the result. There was a relevant increase in the, in the fixed assets working capital and, on my view.
Could we see something as you slow down the CapEx, could this mean that the, the net debt will slow down, at a slower pace than what it would be expected? Meaning, the gradual reduction in the negative working capital of the fixed asset suppliers could reduce the pace of the net debt reduction? Or is this, totally diluted in the total, big scheme of things? Thank you very much.
Thank you, Jorge. So I'll do the first one, and, and if you could take the second one. So on the asset rotation and maybe taking a step back because I think you're, you're raising an important point, which is how do we think about sizing our growth and our capacity addition? So we look at our balance sheet. We look at what is the cash flow that we're expecting over the next couple of years.
And obviously, that's being impacted by lower power prices, and so less cash flow, less balance sheet capacity. We then prioritize keeping a solid balance sheet, you know, compatible with the BBB rating at the overall group level and, and keeping the dividend policy. And by difference, you end up what is the net investment that you can make? So for certain financial ratios on the balance sheet, assuming a certain dividend policy, what is the net investment that you can do? We then back out what we think is the reasonable asset rotation that we can do, and what is the gross investment that we can do as a result? And therefore, going to your point, we're not reducing the asset rotation because if we did that, then we would be able then we wouldn't be able to have as much gross investment.
We are keeping the pace of the asset rotation so that we can go on redeploying that capital back into profitable projects going forward. At least that's the way we think about it and the way we structured this, to calculate what is the gross and what is the net investment. The delta is obviously the asset rotations that we think is feasible given the demand we see in the market and the type of assets that we have. Hopefully, that helps answer your question. Perhaps on the second question, Jorge, if you want to take that.
Sure, Miguel. Hi, Jorge. So just first of all, Q1, obviously, we do have the impact from typically what is more of a seasonal effect on the investment that comes online in Q4. Therefore, you start having some payments or Q3, Q4, and then you start having some payments in, in Q1. So that's, that's one. Secondly, maybe if you go back to that slide 20 that I presented, that we have in our presentation, you'll see that we do have sort of a peak in terms of working capital, in terms of weight, on the total assets of 30%. And as we look to 2024, 2025, and 2026, on average, it will come down to 20%.
So what we are expecting is that we will have, again, a normalization on this, on the working capital from the peak of 2023. And that is baked into the numbers when we look to the net debt and see a net debt flat for 2024-2026 around EUR 7 billion. That's already baked in, I mean, whatever impact from working capital is already baked into those numbers.
We have now a question from the line, sorry, Jorge. We have now the question from Olly Jeffery from Deutsche Bank. Olly, please go ahead.
Thanks very much for the presentation, Miguel, Rui. So two questions. The first one is just coming back to the 2026. Can you give more visibility on what you're assuming between EBITDA and net income on minority costs, net financial costs, and taxes? And then the second question just is around Colombia, and a few things around that. So the first is, you still expect things to get the transmission permit later this year. Are you including Colombia within your 2026 target? And what is the risk if you're not able to renegotiate the other 30% of contract to the 2026 targets?
Thank you very much. Okay. Thanks, Olly. In relation to the first question, I just didn't have any specific detail I can give on that. Jorge, do you want to take that one? I can jump so basically, you know, what we are looking at is a sort of if we look to, let's say, 2026, I would say that financials would be around EUR 400 million-EUR 420 million, so that's financial results. And then minorities would be around EUR 100 million. So I think ballpark, those should help you guide you to net profit.
And on Colombia, so the teams are working hard to try and get the environmental license. We would also be looking to get improvements on the regulatory front in terms of remuneration or financing costs or financing, you know, subsidized financing for the project, to ensure that this can be a viable project.
And then we'd be taking a decision on go, no go. We are not assuming it in the 2026 target. And so, you know, once we get the license, we would then take a decision and then obviously adjust sort of the investment program if we had to as a function of that. But we're treating it sort of slightly on the side just given it's very particular projects with its own particular issues. So it's not in the 2026 numbers.
Thank you, Olly. So the next question comes from Jenny Ping from Citi comes from the line of Jenny Ping from Citi. Jenny, please go ahead.
H i. Thanks very much. A couple of questions from me. Just on, following on from the previous question on Colombia, can you just give us a sense of what the hit would be for the remaining 30%, which I presume is still going to come through for the rest of the three quarters and into next year? Then secondly, more bigger picture, just on the PPA pricing, you obviously talked about a lot of interest and very much of a seller's market in the US. What are you seeing in terms of the PPA market in Europe? How much of a sort of a competition is there? And just any comments on the general trends? Then very lastly, just going back to you know the asset rotation. Obviously you're selling some of your solar assets which saw higher CapEx which effectively you're just looking to get your CapEx back.
So I just wondered what sort of dynamics are there between, you know, you selling those assets, which obviously dragging down the overall weighted average multiples versus your commentary earlier in terms of higher WACC equals lower multiples, especially in the US? What's the and any qualitative dynamics you can give us there would be helpful. Thank you.
Yep. Thanks, Jenny. So in relation to Colombia, so in relation to the 30% that hasn't been suspended or renegotiated yet, so we'd expect about EUR 20 million for the rest of the year. And then we would expect zero for 2025 and 2026. So the way the negotiation has been well, it depends. We're assuming those 30% at some point would be 100%. But certainly for the 70%, that was locked in sort of at the end of the first quarter.
So that wouldn't be in 2025 and 2026. For the remaining three quarters of this year, I think around EUR 20 million would be a sort of around, well, the number to use. In relation to the PPA pricing and the market, I'm not you were asking in relation to Europe, was that? If I got that right.
[crosstalk] Yes, that's right. Your pricing benefit around your yeah, that's right.
Yeah. I mean, so slightly lower volumes than in the U.S. So it's probably more driven by regulated auctions. And we see that sort of in places like Germany and Italy and France and others. So there, there's a little bit more of that rather than just pure PPA. But you also do see some of the big tech in Europe continuing to buy. And so we've closed some PPAs there as well.
But I'd say that in the US, you know, a vast bulk of our projects are either big tech or regional utilities. So let's say straight bilateral PPAs. In Europe, there's still a strong component of regulated auctions that we participate in, as well as PPAs. In relation to the third question, if I got it, so yes. I mean, obviously, selling solar assets, if there've been CapEx overruns and, you know, higher cost of capital, if we get our CapEx back, that's for us that would be an okay outcome to basically redeploy that capital back. But I think the point is that when we redeploy it, we are seeing the higher WACC but also much higher IRRs.
And so that's where we're able to redeploy the capital and capture that spread on new projects rather than hanging on to projects that have, you know, don't have the profitability or the return that we're looking for. Does that help, or do you want me to go deeper on any of those?
Yep. No, no, no, that's perfect. That's, that's the point I wanted to make. Thank you.
Yep. Yep. Thanks.
Next question from Manuel Palomo from BNP Paribas. Now, please go ahead.
Hi. Good afternoon. Thanks for taking my questions. I mean, you know that I tend to ask about the duration of the PPAs. Given that you were trying to maintain that risk policy of contracted NPV above 60%, I wonder whether you could make any comment on the duration of the PPAs, whether you are seeing any change, and that helps you to maybe keep that well low-risk policy. That would be the number one question. Second question is, I see that, I mean, you have sort of downgraded from March 2023 your installations from around 4.5 GW a year, give or take, to 3 GW a year.
And I understand that you had already dimensioned the company for the 4.5 GW a year. I wonder whether this reduction could also lead to some sort of efficiencies and helping the returns for the assets. And if so, my question would be where? In what markets are you foreseeing those efficiencies? Thank you.
T hank you, Miguel. So, in relation to the first one, I mean, as a result of the, let's say, the higher spreads, we do end up having more contracted NPV and, and so lower-risk projects. You're absolutely right on that. And that's been one of the targets. The PPAs we in the US are typically 15-20 years. So that increases also the contracted NPV component for the project. PPAs in Europe typically slightly lower, 10 years. But regulated schemes, sort of the auctions, you know, government-driven auctions, typically closer to 15 years. In Spain, we've seen sort of 12 years. But so that type of range. So 10-15 years in Europe, 15-20 in the US. So, it means that, you know, a big proportion of the NPV ends up being contracted upfront and, and de-risking the projects. So hopefully, that answers the question.
On the second point, the down sort of on deferring these sort of moving to the 3 GW per year. So we dimensioned I mean, we haven't built 4.5 yet, but we've been dimensioning the company certainly to be growing sort of faster in this year. As you know, we have around 4.6 GW under construction. I think going forward, there are certainly markets that we can potentially exit and streamline. Certainly, in APAC, we're doing that and moving sort of to, to five markets. There were previously nine, probably even down to four. We may exit a couple of markets that are smaller on the margin, and so really sort of focus on markets that are deeper and that we can, you know, that have a good risk-return profile. So I think you will see that.
And that will obviously drive some efficiencies as well, in terms, let's say, from a geographic perspective. On another level, obviously, as we scale up and get more MW, we've now stabilized in terms of structure. So one thing is the growing pains that you sometimes have when you're sort of ramping up, you know, significantly. When you start to sort of taper off into a more, let's say, stable growth rate, you can really start working on the economies of scale. And sort of, one of the implementations that we've done on an organizational perspective is really tighten up and go much deeper on sort of the operational efficiencies on the asset operation on, let's say, on the asset management side and sort of single dispatch centers, common O and M policies, really trying to go deep there.
So, part of it will come from focusing. Some of the efficiencies will come from focusing. Others will come from just driving sort of some of those economies of scale as we grow.
Thank you. So going to the next question from Gonzalo Sánchez-Bordona from UBS. Gonzalo, please go ahead.
Hi. Good afternoon. Thank you for the presentation. I just have one follow-up on the comment you made on the potential acquisition of minorities to propel the cash flow. I was wondering, how much could that be an opportunity for you? That's one part of the question. The other one would be, would that result in lower gross investments, slowdown in other capacity? Because I understand, obviously, there is a trade-off in terms of further growth or earnings accretion. So that's, you know, any detail you can share on that, that'd be great. Thank you.
Okay. Thank you, Gonzalo. So first, if there are good opportunities to take out minorities, obviously, we would do that. But there needs to be a willing buyer and a willing seller. So, it's not something that you can necessarily plan for or manage 100%. But obviously, you know, we'll have our eyes and ears open. And if there are opportunities, we would look to do that. It has to compare favorably with investing organically in new projects. But if it does, if it's, let's say, you know, good cash yield, if it meets the investment criteria, if it allows us to have an accretive impact, you know, on day one, then obviously, we will look at that.
And in some cases, we may forego some other organic growth investments to be able to do these minority acquisitions. So we will look at really what is the value that we're creating with those opportunities and, you know, and compare it with the organic ones.
Right, Gayle. Thank you.
Okay. The next question comes from Meike Becker from HSBC. Meike, please go ahead.
Hi. Thank you very much for taking my questions. The first, would you walk us through the pricing trends of your Spanish portfolio, for 2024, 2025, and the moving parts between the regulated the will be quite helpful. The second question, is on your, planned additions. I'm assuming 2024 is closed, as you've sort of, like, said before. But how, how much of the planned additions, are still open for 2025 and 2026? And where would you like to be on that by the end of 2024? Thank you.
Okay. Thank you. So Meike, if I answered correctly on the first one, it was the Spanish pricing and how that's moving. Is that? Yes. So, kind of like, listen, on the Spanish, I mean, we can follow up with them in some details. But basically, as you know, we have the regulated assets. And they follow just whatever band and reference price that then impacts the gross margin and or the gross profit and EBITDA. And basically, we are using whatever is currently defined. Even for 2026, we again would just take the formula, take that 16% up or down bandwidth, and apply. And that's basically what's baked into the numbers. If it is merchant, then we, you know, we then hedge it periodically.
So there's not much more into the, to the Spanish context. Again, highlight that the merchant exposure that we have in Spain is still mostly wind. So therefore, the realized price is not substantially different from the realized price in solar. It's actually closer to the base load prices than anything else. But if you want, we can follow up with more in detail on the dynamics of the, the Spanish regulation and impact on price. The other phone. Yep. Yeah. Sure. On, on the second one, so you know, we're currently at about, what, 2.5 GW or something for 2025. I think over the next six months, you know, close 2025. So we have time to then build out those MW in time. In 2026, obviously, the number that's locked in is slightly lower than that, probably slightly under 1 GW.
And so over the next year, year and a half, close in the remaining, you know, 2+ GW that are that are left, for 2026. So, you know, roughly, that's, that you know, we'd like to work 12-18 months in advance of getting the, the projects, like the COD, have them locked up in terms of PPAs and sort of good visibility on CapEx and everything. And then obviously, there's a part of it which is DG, particularly in APAC and in, the US, which can be done into a year. And so, you don't need as much, let's say, lead time.
Thank you.
Is that clear? Okay.
We have now the last question from José Ruiz from Barclays. José please go ahead.
Yeah. Good afternoon. Just two questions on my side. The first one, on data center demand in the US, we have recently seen some different profiles in terms of PPAs. We have seen data centers signing PPAs with nuclear power plants, with thermal power plants. So my question is basically, is really renewables capacity or particularly solar capacity being fit to cover this new demand profile from data centers in the US? The second question is, if you can confirm I'm trying I've been comparing with the capital market, the mix of technologies in terms of new additions, that you're clearly pivoting into solar, that most of the projects you're dropping are wind. And considering the higher IRR-WACC spreads for solar, this is how you're pushing your target up. Thank you very much.
Yeah. Okay. Thanks, José But as I say, you do have ESG targets to meet. So I wouldn't see that's the main thing. So I think having solar and wind, it does have the right profile, certainly to try and make up as much as possible of, let's say, that demand that's coming up. Now, in relation to your second question, so there is, I would frame it in the following sense. Solar is obviously faster to deploy and to permit. And therefore, as we ramp up, solar is coming in first. But we do have a strong focus to bring in wind projects as quickly and as much as possible. So between a wind and a solar project, we would choose the wind project. The issue is that wind typically has longer lead times in terms of permitting and licensing. It's obviously more intrusive.
And so ramping that up is taking more time. We're expecting it towards the back end of the business plan, 2026. We may defer some of those MW to 2027 and beyond. But, you know, we're not discussing post 2026. But if we were, I would say that, you know, we would still expect wind to then start picking up, materially. And we're certainly, you know, we would like that to happen because we do think it is a premium product. So, so yes, there is a pivot to solar. But I, I would say that we are keeping also very focused on developing the wind pipeline and portfolio, as much as possible going forward.
Thank you.
Miguel, maybe for the final remarks.
So, I mean, very quickly, and obviously, we've gone on I think it's almost on an hour and a half. So thank you for the patience. What I would say is, yes, this is a first-quarter results presentation. But I think it's also very much about giving you visibility and comfort and guidance in relation to what we're seeing in the markets, both in terms of power prices, in terms of demand in the various different geographies. Ultimately, yes, there is a reset of targets based on a lot of these market dynamics. But at the end of the day, if you look at the numbers, it's still a significant underlying growth in EBITDA and net income. And we continue to see good growth opportunities and good returns. I think we talked quite a bit about that in terms of the PPA demand and all that.
In that sense, I think, you know, we continue to, as I said, you know, believe in our investment thesis and see it play out as we invest throughout the economic cycles. This is actually a good moment to invest. And, you know, I, I truly believe that. And we are seeing that sort of in very concrete terms. And hopefully, the projects that we're developing now, we'll see them coming online 2025 and 2026. And, and we'll see the results of that. So thank you very much for your patience. And hope to talk to you soon. Take care.