Hello, and welcome to the EDPR first quarter 2022 results call. My name's Rhian, and I'll be your coordinator for today's event. Please note, for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypads. To withdraw your question, please press star two. If you require assistance at any point, please press star zero, and you'll be connected to an operator. For now, I'll hand you over to your host, Miguel Viana, to begin today's conference. Thank you.
Good afternoon, everyone. Thank you for attending EDPR's first quarter 2022 results conference call. We have here with us our CEO, Miguel Stilwell d'Andrade, and our CFO, Rui Teixeira. We'll run you through the key highlights of the business plan execution and first quarter 2022 results. We'll then move to Q&A, in which we'll be taking your questions, and the call is expected to last one hour. I'll give you now the floor to our CEO, Miguel Stilwell d'Andrade.
Thank you, Miguel. Good afternoon, everyone. I hope you're all doing well. It's also great to speak to you and I think in this quarter we have a couple of interesting points to talk about, and we'll do that over the next hour or so. Let's move into the presentation. First thing I'd start off by saying is that our first quarter numbers showed a really strong growth in EBITDA, so up 46% to almost EUR 400 million. Very much supported by the expansion of our asset base with installed capacity increasing 13% year-on-year. We had strong renewable resource, namely strong wind volumes in this quarter, so 2% above the long-term average for our portfolio. April is also doing pretty well. I think clearly very positive that we are above...
We had a wind resource above the average. Finally, we also saw a good improvement in the average selling price, and that increased 12% year-on-year with some positive impact from the increase of the electricity market prices. Net profit increased 75% to EUR 66 million, reflecting the strong EBITDA performance. Focusing on the capacity additions. We have a total of 2.8 GW added in the last 12 months. EDPR is progressively ramping up the growth towards the 2025 target of 20 GW of additional capacity. Regarding the execution of the strategic plan. We added 1.1 GW of projects contracted and committed since the beginning of the year. Now we have a total of around 9.6 GW secured or committed capacity for the period until 2025.
That's close already to the 50% of the 20 GW target that I just mentioned. I think good execution on that side. As you know, there are a couple of PPAs that we were renegotiating at the end of last year, and most of that came through in the last couple of weeks. That's that additional 1.1 GW that I just mentioned. Overall, solid ramp-up of growth and good returns across all regions and technology. On value, just a couple of comments here. We completed the first asset rotation of 2022 in Poland. We'd announced that last year. We closed it already. Strong multiple EUR 2 million per MW and about EUR 0.3 billion of proceeds.
We're expecting to have a total of EUR 1.8 billion of proceeds already achieved in 2021 to 2022, and we have other transactions under negotiation that we expect will bring us above EUR 300 million of asset rotation gains this year. We expect to close the Spanish portfolio also in this quarter, the second quarter, so we'll have closed both the Polish and the Spanish in the second quarter. On the excellence, in terms of operational excellence, clearly recognized as an enabler of the energy transition, best in class regarding ESG performance. Have several achievements in this first quarter of 2022, and we'll talk about that later on in the presentation. We move to slide six and talking about renewables development for 2022-2023.
We're on track to deliver the renewable capacity addition of the 3.5 GW annual average in 2022-2023. We have 6 GW secured for the period. That's 86% of the capacity additions targeted for these years. I think though it is important to highlight that there are some short-term issues around the uncertainty on the current anti-circumvention investigation in the U.S. and also restrictions in the supply chain, namely in solar.
That implies that the annual capacity additions are now expected to be in the 2 GW-2.5 GW range in 2022, with a shift from 2022 to 2023 of between 700 MW and 900 MW of capacity additions, mostly in the U.S., linked to the anti-circumvention investigation by the U.S. Department of Commerce, and also partially, as a result of the supply chain constraints we faced previously. Obviously this uncertainty around the investigation is not helping in terms of the decision to start construction. We're keeping the targets for the 2022/2023 cumulative period, as we expect to recover in 2023 the lower capacity additions of 2022.
In terms of cash flow, we don't expect it to have a material impact since most of this capacity was scheduled to start operating in late 2022 and now it starts operating in 2023. Moving on to slide seven. I would like to highlight that there's been a strong focus by governments globally, and particularly in Europe to reinforce energy independence and the concerns on reducing energy costs. This represents a good opportunity for faster renewables growth as the right answer to the current energy crisis. I think, you know, we're all very aware about what's going on in the world, in Europe, with the Ukraine invasion and everything. There are a couple of good reasons, I think, why we believe that the governments will be pushing for this even stronger now. Environmental reasons, obviously complying with the Paris Agreement.
That was already something that everyone was aware of. Increasingly, the issues around energy independence, the idea that one megawatt-hour produced with our own resources is one megawatt-hour less of gas or coal or some other fuel, fossil fuel that's not imported. Third, I'd say that the renewables provides predictable energy prices that you can lock in for the next 10, 20 or 30 years. I think these three reasons, environmental, energy independence and predictable energy prices, are strong drivers for a more positive outlook for renewables. We've seen that several governments have been trying to approve or to implement various measures targeting to simplify and reduce the timing for the permitting of renewables.
It has to do with not only the environmental permitting, but interconnections, more focus also on the development of storage and other technologies. This is not gonna have a material impact in the short term capacity additions, but definitely I think in terms of medium-long term growth prospects, it is definitely positive. By date, over the last 15 months since our capital markets day in February last year, we've increased this by over 60%, or approximately 3.6 GW that we've added, in terms of secured capacity. We've moved from 6 GW to the current 9.6 GW of capacity. This includes all the capacity that already has long-term contracts or CapEx committed, includes the 3 GW that are already operational, 2.4 GW that are already under construction.
These 9.6 GW of capacity secured represent close to the 50% that I mentioned earlier of our 20 GW target additions until 2025. Note also, I think that this contracted growth continues to follow our investment criteria, with the average IRR over WACC above 1.4 x, and that IRR spread over WACC of around 300 basis points on average. As I mentioned, I think we took some time to close some of the additional PPAs, but to make sure that we were able to close them, with the profitability targets and sort of the investment targets that we look for. We are definitely confident on the execution of the business plan 2025 target. As I mentioned earlier, we see that positive trend on the renewables medium-term prospects.
A couple of comments maybe just here, in terms of the U.S. I mean, clearly the renewables are critical for the national decarbonization targets and keeping energy costs under control. We do have some expectation that the government and legislation will contribute to promoting the renewables medium term. Although Europe and North America represents close to 80% of our capacity additions until 2025, we're also seeing good growth prospects in South America and APAC. I mean, if you think about South America, and especially the countries we're in, like, Brazil, but also, Colombia and Chile, I mean, there's incredibly competitive renewable resources with extremely high CFs, both wind and solar. It's got fast-growing economy, strong demand for electrification. We are seeing a lot of good opportunities there.
We're also very excited about Asia-Pacific. Together with the Sunseap transaction, we think we are really positioning ourselves there for areas that have good energy demand, high dependence on fossil fuels, but also this desire to move to more renewable sources. We think that's an untapped growth opportunity that we can take advantage of. We move to slide nine and talk about PPA pricing. This is something we've been mentioning. I mean, it's been impacting our sector over the last 12 months. I mean, CapEx inflation. I know we've discussed it. You've asked a lot of questions about this already, probably for the last nine months or so. We have seen upward revisions of CapEx costs in the renewable projects between 5%-15%.
It's been more material in solar than in wind, and this has been translated into upward revisions of the PPA prices of between 10%-15%. Obviously for PPA prices that were under negotiation and for new PPAs that we're bidding for. Making sure that we're preserving our rates of return and our investment criteria. For everything that was already committed, as we've mentioned previously, everything that didn't have necessarily a PPA that was open, we already had a big part of that CapEx already closed. But we don't think that this increase in PPA prices has impacted our competitiveness. Clearly, we see that this is a sector-wide movement impact. From an offtaker perspective, the PPA prices continue to be well below the alternatives, especially in the current context of the high gas and power prices.
I think that that's very clear when we show that, you know, we are able to renegotiate the PPAs and come out with, you know, over 1 GW of long-term contracts now in the last couple of weeks, after having renegotiated that. We have another around 6 GW of PPAs under negotiation or shortlisted. We'll obviously also be participating in public auctions in all of our markets, typically for the CfDs or the PPAs that happen in many of the different countries. We move to slide 10, talking a little bit about our energy position. Here EDPR's asset portfolio, I mean, we have a high level of long-term contracted revenue. That's always been a characteristic. It's something that we, you know, we value because it really provides that stability to the portfolio.
We have close to 93% of long-term contracted in 2022 for the good times and the bad, but at least it's been part of our philosophy of investment. In any case, that still does leave some even though we have a high level of long-term contracted, we do have some exposure to the current market environment of higher prices, namely in Europe. Going forward, as the hedges gradually roll over, we will be repricing our renewable generation more in line with the current market environment. The merchant exposure as a percentage of total revenues should be on average around 17% in 2023-2025, and that will allow us to reach average selling prices above the assumptions that we had in the strategic plan.
We're also adjusting our hedging strategy slightly to increase exposure to the market on a more structural way and to avoid over-hedging in the case of low renewable resources and high merchant prices. On the other hand, we are also seeing several cases of short-term government intervention in the energy markets. That's clearly the case in Spain with the gas clawback and the negative impact on cash flow from the regulatory changes that were approved in the parliament in Spain. We're also seeing clawback taxes implemented in other European countries. For example, the one in Italy has a very limited impact in our Italian portfolio. The clawback tax in Romania does have a more material impact.
In any case, we think that it is, let's say, or we think the impact is going to be lower than perhaps what we would have thought, a couple of weeks ago. Overall, we expect a net positive short and medium-term impact from this gradual repricing of our renewable generation, even considering the negative short-term impact from government intervention in the electricity market. Obviously some positives, some negatives, but net-net, we expect it to be positive. We move to slide 11, just talking about the asset rotations. We are seeing still very strong demand for renewable assets. You know, we continue to see high appetite from investors, and we expect another solid year in terms of the asset rotation execution, with gains above the business plan average target for the year, which, as you know, was around EUR 300 million.
We've already closed one of the three transactions, the Polish portfolio I mentioned of around 150 MW. It's closed at the EUR 2 million per MW. As I mentioned, we expect to close the other Spanish portfolio still within this quarter. Apart from that, we've also kicked off earlier this year two additional transactions or asset rotations, one in Europe, one in South America, and we have good indications of that, both in terms of the demand for these assets and also in terms of the, let's say, the value of those assets. All in all, completing the transactions that were already signed, moving forward with the additional 2022 transactions.
Overall, we expect to be above EUR 300 million in 2022, but below the 2021 numbers, which, as you know, were very high. It was almost double the EUR 300 million . We'll be somewhere in between those. Moving on to slide 12, before turning it over to Rui, just a quick word about Ocean Winds. I think Ocean Winds is actually doing really well. I mean, it's continuing to grow. It's now got a portfolio of 11 GW versus 6.5 GW at the same period last year. All the European projects are well protected against inflation, namely France and Poland. We've been successful in recent tenders over the last couple of months this year, so Caledonia very close to Moray East and Moray West, so it's contiguous.
1 GW of seabed lease there. We've also been granted the electricity business license for 870 MW in South Korea. The model is slightly different, but basically the award resembles a seabed lease. We've also been given exclusive rights to develop around 1.7 GW at the New York Bight seabed tender. I think a lot of positive news flow around this, around Ocean Winds over these last couple of months. As I mentioned, we now have a total portfolio of 1.5 GW of installed capacity, 2.6 GW of under development projects with long-term revenues contracted, and 7 GW of under development projects with seabed and connection rights secured. Clearly, Ocean Winds is becoming a reference in the offshore sector.
I'll pass it over to Rui to walk you through the 2021 results, and then I'll come back at the end for closing remarks. Thank you.
Thank you, Miguel. Good afternoon to you all. Now let's move into the first quarter results. I'd say it's characterized by a strong financial result, and this is, of course, on the back of the solid performance on our base portfolio. Starting with the P&L, we achieved EUR 394 million EBITDA. This represents a 46% increase versus last year. The net profit reached EUR 66 million, and that's EUR 28 million above what we booked in the first quarter of 2021. We generated 9.2 TWh of clean energy. That's a 14% growth year-on-year, and this is mainly due to the new capacity in operation and improved the renewable resources, as I'll show in more detail in a while.
EBITDA growth was driven by the impressive performance from the base portfolio. We had very strong financials in Europe due to high average prices and as well as a strong performance in North America, and this is mainly driven by a strong renewable resource. On the other hand, financial costs increased EUR 20 million, mainly due to the increase in debt associated with the execution of our growth CapEx plan, which this quarter included the Sunseap acquisition, some adverse Forex impact, namely from stronger U.S. dollar and the increase in average cost of debt from 2.8% in the first quarter of 2021 to 3.3% in the first quarter of 2022. We had also an increase of depreciation following the growth of installed capacity, some higher taxes and non-controlling interest given the improved profitability of operations in which we have minority partners.
Just a quick note on the balance sheet. Net debt increased to EUR 4.2 billion. That's an additional EUR 400 million approximately. Tax equity increased to EUR 1.5 billion approximately, so also an increase less versus last year of about EUR 600 million. On slide 15 to highlight the operational performance. EDPR grew 2.8 GW of wind and solar year-on-year. This is the highest capacity ever installed by EDPR in a 12-month period, and this demonstrates the ramp up of the company's growth rate. By the end of the first quarter, we had 2.4 GW of capacity under construction, and that is 1.6 GW of onshore wind and approximately 0.8 GW of solar capacity.
At the end of March, we have a portfolio of 14 GW, and this is after successfully completing approximately 1 GW of asset rotation deals. This portfolio has a very balanced mix across North America with 50%, Europe 41%, Brazil 6%, and already APAC with a contribution of 33% to the 14 GW portfolio. In the first quarter, we achieved a sound operational performance with 35% load factor. That's a 1 percentage point increase versus last year. This reflects a renewables index, which is 2% higher than the expected long-term average, as we call the gross capacity factor. On the back of this, the electricity output increased 14% year-over-year.
Of course, this benefits from the capacity additions and the higher renewable resource, which compared to a first quarter last year, where renewable resources were at 3% below the long-term average. As a result, we generated 9.2 TWh of clean energy in the first quarter. This means that we have avoided close to 6 million tons of CO2 emissions. If you move now to slide 16 to look into the price line. Average selling price in the period was 12% higher year-on-year at EUR 58 per MWh . In Europe, the average price increased 15% to approximately EUR 86 per MWh and this is mainly due to the Italian and the Polish assets.
This is partly offset by Spain on the back of the hedging structures that we have for the generation in Spain. In North America, average price increased 2% with higher merchant prices as well. Brazil, average price was 4% higher versus last year on the back of higher inflation. All in all, revenues increased by 27%, totaling EUR 569 million. Again, mainly due to the additional capacity, it's EUR 79 million year-on-year driven by the capacity. A higher renewable resource that it's approximately EUR 20 million year-on-year, and the positive Forex translation and others of about approximately EUR 27 million year-on-year. Now looking at the net profit on slide 17, we totaled EUR 66 million.
That's an increase of approximately 75% year-on-year. In total, EUR 28 million more versus the first quarter of 2021. Of course, on the back of the performance on the top line, which has been very good. Financial costs were up by EUR 20 million. As I said before, this is mainly due to the increase in debt associated to the execution of our growth CapEx plan, including the Sunseap, some adverse Forex impact, particularly from the dollar, and the cost of debt, as I mentioned, that went up to 3.3% in the first quarter versus 2.8% last year. Taxes. We had an effective tax rate of 19%. I mean, as we've stated, I mean, no capital gains were recorded in the first quarter.
The minorities increasing in 29 million- 61 million on the back of this positive top line performance in a portfolio where we have the minority partners. On the net debt on slide 18 was at EUR 4.2 billion. That's versus December 2021 it's an increase of EUR 1.3 billion. This is of course resulting of the acquisition of Sunseap, but also the higher CapEx as the company keeps on ramping up its growth. I think it's important to note that we keep a high weight of fixed rate debt. That's almost 90% of the total debt. We fund our investments in local currency.
I mean, of course, this meets our risk management strategy to ensure that we keep assets and liability balanced. The overall euro and U.S. dollar denominated debt represents more than 80% of our total debt. The tax equity, as I mentioned also before, remained mostly flat over the quarter at EUR 1.5 billion, you know, as compared to end of last year.
Just before I hand over to Miguel for the final remarks, last but not least on ESG, I think the AR year-on-year evolution reflects an acceleration of the growth. Starting by the environmental performance, we keep 100% of our CapEx fully aligned with the E.U. Taxonomy as the CapEx plan is completely focused on renewables. We avoided nearly 6 million, so it's 5.7 million, to be precise, million tons of CO2 emissions. And of course, we are as such actively contributing to the global challenge of the net zero. And we have improved our circularity with recovery ratios up to 77%. On the social dimension, and of course, towards the diversity goal, we still keep on increasing the percentage of female employees. We increased it to 33%.
That's a 2 percentage point improvement versus last year. Health and safety, we have an average of 1.3 work-related accidents per million hours worked. This reflects, of course, the acceleration of growth and construction activities and also the size of the portfolio. From a community standpoint, in the first quarter, we invested close to EUR 1 million, slightly less than EUR 1 million, which is a material evolution. Definitely also delivering on the ESG targets as well. Now, Miguel, just back to you for any closing remarks. Thank you.
Thank you, Rui. Just to finalize a couple of key messages on EDPR performance and the overall environment and outlook. First, reiterating, I think, strong first quarter results. 2% above average renewable resource, 12% increase average selling price, and all of that resulting in an EBITDA around EUR 400 million. Net profit of around EUR 66 million. Strong growth on both EBITDA and net profit. 6 GW total secured capacity for 2022 and 2023, representing 86% of our 2022/2023 growth target, and with a ramp-up trend from 2022- 2023. As I mentioned earlier, clearly a lot of projects moving from 2022- 2023. Committed capacity reaching 9.6 GW, with good returns and risk profile.
It's approximately 50% of the business plan target, which was for 2025, as you know. A note about the hedges. We expect that the gradual hedges rollout will have a positive impact on the average selling price over this period, 2023- 2025. A word about Ocean Winds, operating capacity of 1.5 GW as of the first quarter and a total portfolio of 11 GW, also growing very significantly versus a year ago, versus the 6.5 GW we had a year ago. Asset rotation appetite still very high. One transaction closed in April. As I said, another transaction we expect to be closed still this quarter. We have other deals in negotiation, which should allow us to get more than EUR 300 million gains expected for 2022.
Overall growth continues strong, and we are very well positioned to capture it globally. We now have leading platforms in all of the key growth, regions. I think that enables us to really focus on executing our plan and delivering on the targets for our strategic plan. Thank you once again for participating in the call, and we can move to Q&A. Thank you.
If you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. You will be advised when to ask your question. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our first question comes from the line of Jorge Guimarães from JB Capital. You're now unmuted. Please go ahead.
Hi. Good afternoon. Thank you very much for taking my questions. I have three, if I may. First, is it possible to give us a clear view about the number of megawatts you expect to rotate this year, when you say that you're going to deliver more than EUR 300 million of capital gains but less than EUR 570 million? This would be the first one. The second one, it's a clarification on the CapEx evolution. You mentioned +5% to +15% year-on-year. I assume that is for CapEx for 2022. What are the first indications about CapEx for 2023, since I assume you're already closing projects for that date?
The third one is, you mentioned that you are going to delay or move one quarter to the other 0.7 GW-0.8 GW of projects in the U.S. due to the tariff investigation. If this continues for longer and if the U.S. measures are still effectively implemented, what could be the impact in terms of costs going forward on solar PV? Thank you very much.
Okay. Thank you. Thank you, Jorge. Just a couple of comments on that. First of all, in terms of the megawatts to rotate this year, we're expecting in line with really with what we had in the business plan. We're not expecting, if anything, perhaps even less, because we're typically getting more premium, more value per megawatt than we needed. Like we did last year, you know, we ended up with much higher multiples than what we had in the business plan. We're expecting the same this year. I'd say the total number of megawatts, maybe we can get that later, but it will be. Let's say we're not selling more megawatts to get higher gains. On the contrary, because we're getting higher multiples, we're actually selling less megawatts to get the same gains.
In terms of the second comment, in terms of the CapEx, that increase 5%-15% is versus what was, let's say, the base CapEx. You know, we were negotiating PPAs on a certain basis for both wind and solar, mostly solar in this case. What we saw was significant CapEx inflation, mostly at the end of last year, of around 5%-15%. It's not, let's say, the overall CapEx numbers, it's more the CapEx per project, and that's what's then reflected in the PPA price. When we say the 5%-15% increase, it's because we're then saying, let's say, per project, it's because then that's having an impact in terms of how much we're increasing the PPA to make up for that difference.
On the third question, the 0.7 GW-0.9 GW that we probably moved to 2023, the anti-circumvention, I mean, I'm not a lawyer, I don't have a specific. I believe that they have to have a final investment and final decision by August. Let's say that's our base case in terms of when that decision would be taken. There is quite a lot of, I'm not going to say pressure, but certainly a lot of movement from the industry in the U.S. to see if they can take the decision even earlier. Because obviously this is creating a lot of uncertainty, not just for us, but for other players like NextEra and others. We prefer not to take an investment decision until we know exactly the impact of that investigation.
I'd say August is, let's say, the longest update. I think the U.S. Department of Commerce has to issue its preliminary determination within 150 days, so end of August of 2022. I think that's, let's say, the what we're working with. Having said that, there's a lot. There's a big movement and a big push to actually get a determination before that so the industry can take that decision or start moving forward with the construction earlier. I mean, there's actually some comments by the solar industry, which talk about perhaps half of the forecasted deployments in 2022 being delayed. I mean, it's the Solar Energy Association, which talked about that delay and sort of.
Obviously they're pushing hard so that that decision can be anticipated to reduce that impact. Otherwise, as they say, you could lose half of the deployments in 2022 as a result of that. I think that's pretty much it.
Thank you very much.
Thanks.
Our next question comes from the line of Alberto Gandolfi from Goldman Sachs. You're now unmuted. Please go ahead.
Thank you and good afternoon. Thanks for answering my questions. There are three, please. The first one, can I please have some comments on the first quarter CapEx? How much of the organic CapEx excluding what you paid for acquisition is actually function of an upgrade versus your own business plan, versus perhaps some projects that were delayed at the end of last year and maybe overflew in the first quarter? Because it seems to me the CapEx is growing. I was just trying to separate the two effects. The second question, just to be clear on CapEx cost inflation, when you say 5%-15%, you just commented on that, but just to be crystal clear, is it on existing projects you are developing for 2022, 2023?
Is it 5%-15% on marginal new megawatts that now you've just been awarded and you are, you know, you've just contracted right now? I guess the same on the 10%-15% PPA increase. I assume this is on new projects, but just trying to see if on some of the existing projects, there's also some CapEx cost inflation we should account for. The last question is on the Spanish pricing reform. What is your understanding of the reform? The idea of having a cap at EUR 40 growing to EUR 50 MWh, what do you think will be the impact for you? Do you expect EUR 120, EUR 150 MWh price and that's it?
do you think that potentially the gas clawback will be extended and will be also applied to forward sales? How should we think about the merchant portion of your Spanish portfolio? Thank you so much.
Thank you, Alberto . Maybe just in terms of some clarifications, and I'll pass it over also to Rui regarding the organic CapEx. On your second question, just to be crystal clear, I'm talking about marginal new megawatts. You know, we've highlighted that in previous calls. For what was already under construction, what was already being built, that's all locked in. It is really for the marginal megawatts that there is this inflation on the CapEx side, which also results in an inflation on the PPA increase. It's a marginal.
For example, for new PPAs that we are negotiating now, we're looking at the CapEx, let's say the latest estimates from the solar panel manufacturers and BOPs, et cetera. That's, let's say, where we're seeing that increase, and that's what we're also reflecting in the PPA price. In terms of the Spanish pricing reform, then we could have a debate about an hour, well, about this topic. I think though the most important thing I can probably say is it's still not clear, and the full extent or the full impact, given that, you know, not a lot of details have been released. Yes, there's talk about the EUR 40-EUR 50 per MWh on the gas, and what that obviously has an implication in terms of electricity price.
In terms of the duration, also there's talk about the 12 months, which would take it to probably the end of first quarter, second quarter of 2023. I think in terms of the impact on gas clawback could potentially be extended. I would say that, the impact of the cap, we don't expect it to be, I mean, to really have an impact on us. Because typically we are taking investment decisions on, you know, based on long-term PPAs and sort of auctions. What is in the market is typically already hedged, or, you know, certainly we weren't expecting prices above, let's say the EUR 40-EUR 50 per MWh gas price, implicit in the electricity price of 100-150 thereabouts.
I'd say we don't expect it to have a negative impact, basically bottom line. Listen, it's still early. I think there's a lot of details that still need to come out. Clearly in this, in something like this, the devil is in the details. I prefer to reserve more comments for probably a later stage. Okay.
Hi Alberto, it's Rui here. I mean, regarding the first question, I would say, I mean, it's definitely a mix, and we definitely can follow up in more detail offline. I think it's definitely a mix of some of the CapEx, which is, you know, still from late Q4 additions that, you know, it just materialized in the first quarter, and also from the 2.4 GW that we have in construction. I would say, I mean, it does reflect the, you know, the ramp up in terms of growth, in terms of installations. It's much more volume related. Of course, I mean, mix, you know, depending on what are the mix of geographies and projects that we are building.
It's fundamentally driven by the, you know, volume and mix from the business plan. We can follow up in detail offline.
Thank you so much.
Our next question comes from Javier Garrido from JP Morgan. You are now unmuted. Please go ahead.
Good afternoon. I would like to follow up, if I may, on the circumvention probe in the U.S. because what happens if the investigation finds that circumvention has actually occurred? The duties that are being discussed, 50%-250% are very significant. So what could that mean for the industry and EDPR if they are going to be a total stoppage in capacity additions for the next few years in U.S. solar? The second question would be on your capacity secured for 2022 and 2023. You have secured now 6 GW out of the 7 GW. That would come from an average of 3.5 GW. Are you in time to add the missing 1 GW, or should we assume that such capacity could only come in 2024, 2025?
A third question would be on Spain. I wonder if you have the number, but what would have been the price achieved in Spain if you had had average load factors? Because I assume that part of the hit comes from being over-constructed due to the low load factors. A final question, if I may, what is the estimated impact on EDPR from the change in the regulated renewables in Spain, the decision of the Spanish government to bring forward the date of the recalculation of the prices and the subsidies going forward? Thank you.
Hi, Javier. Okay. On the different topics. On the anti-circumvention, what happens? First, I think if the decision was that there would be some issue, we would obviously have to go back to the off-takers and either renegotiate or pull the project. I mean, drop the PPA and then renegotiate new ones or renegotiate with the current ones. I think that's why we are being slightly more prudent here in the sense of just holding on for, you know, a couple of months. We think it's worth, let's say holding back, making sure that we have full visibility on this before moving forward with the start of construction. I'd say that what happens is that we go and we renegotiate based on the, let's say on the whatever tariffs are finally determined.
I mean, the tariffs. Two decisions. One is, you know, whether or not this is, let's say the Department of Commerce thinks that this has any validity and that, you know, let's say I think the consensus is that it won't go ahead in any case, but still. Let's say you've seen where the things happen. But the second thing is what would be the rate that would be applied? I mean, obviously it could be high rates, but it could also be much lower. To be honest, we've also heard that in some scenarios it could be lower rates, which would be manageable. We just prefer to hold off a little bit, get that additional visibility so we can really move forward. As I say, we're not in the business of just doing megawatts for the sake of doing megawatts, okay?
Want to do megawatts, but make sure that we have good profitable megawatts, and we're getting the investment returns and profile that we like. For that, we need to just be comfortable with whatever the decision that is coming out of there. Hopefully it'll be sooner rather than later, so before August, you know, certainly we're pushing for it, the whole sector is pushing for it. In terms of your second question, as you say, we have six out of the seven. We're still working towards reaching the 7+ in this time period. You know, we have we certainly are not assuming, certainly as of now that we're moving this to 2024, 2025.
I think there's still time to fit in a couple more projects for 2023. Difficult in 2022, but certainly for 2023, we still think there's space to close that gap. On the third question, I don't have the specific numbers set. I'll pass it over to Rui, maybe he already has that. On the fourth one, I would just say that we consider that it's generally positive. It's something that would be reflected probably in the future quarters and months. We're not providing, let's say, numbers on that, but generally I would say it's positive. All things considered. I guess I'll pass it over also to Rui on the load factors.
Hi, Javier. I mean, we had a lower production in Spain of around 140 GWh versus what we expect in terms of long-term average. You know, this meant that we have about an impact of around EUR 31 million less revenues because of that, and given that we have those hedges in place. I think, you know, this basically addresses your, I mean, your question. It's about, you can consider around EUR 31 million impact in revenues.
Yeah, that's very, very clear. Thank you very much.
Thank you.
Our next question comes from the line of Arthur Sitbon from Morgan Stanley. You're now unmuted. Please go ahead.
Hello. Yes, thank you for taking my questions. I have two. The first one is on the impact from intervention in Romania. You mentioned that's a material short-term negative impact. I was wondering if you could quantify that on EBITDA by any chance. My second question is that, basically we're seeing some of the main equipment suppliers, renewable equipment suppliers having quite a tough time at the moment. I was wondering if you could share or at least give us a rough idea of the breakdown of your equipment supplier mix, both in solar and onshore wind. Thank you.
Hi, Arthur. In terms of the intervention in Romania, which is basically a clawback tax above a certain level, I think 450. I'd say that the impact is expected to be probably mid-double-digit pre-tax EUR 1 million EBITDA, or pre-tax if you want. I mean, we have been able to mitigate a big part of that impact. Initially, we thought it would be higher than that, but as I say, it's currently, we're estimating it at mid-double-digits. Part of that's already been recognized in the first quarter, and another part will be recognized over the next couple of months. This mid-double-digits part of that is already in the numbers of the first quarter and the rest will be over the next couple of months.
In relation to the second question, I think we'll probably, well, I'll pass it over to Rui, but I think we'll probably need to get back to you with more specifics. I'm not sure we have the numbers of here with us.
I mean, yes, we can follow up, offline, in terms of more detail, but just, you know, give you a sense. In terms of wind onshore, naturally keep, you know, working with the, Vestas, GE, Siemens Gamesa, and Nordex, so the main, Western European players. In solar, in the modules, you know, we have been working with LONGi, with Trina, also discussing some Boviet. You know, we can follow up in more detail, I mean, sort of the, allocation.
Thank you very much.
Our next question comes from Jenny Ping at Citi. You're now unmuted. Please go ahead.
Hi. Thanks very much. Two questions from me, please. Firstly, just going back to the 12% that you talked about in terms of the increase in average selling price. My understanding is that there was an exceptional boost from Moray East, where you haven't contracted the ramp-up period, and that's effectively skewed some of the numbers. Would you be able to give what that number would be if you X out effectively this one-off, as Moray East then rolls on to the CFD contract? And then secondly, just going back to the OEM previous question, let me ask a slightly different angle.
Obviously, all of these OEMs are in some form of financial trouble, whether it's Vestas or GE or Siemens Gamesa, are you seeing them actually coming to you to renegotiate or sorry, negotiate contracts going forward, not the existing contract, but looking forward, on how they can pass through additional risks to you, whether it's, you know, input cost or any other factors, or do you have any confidence whether you can sort of pass on any additional margins that they would like to make going forward, to ultimately through to your PPAs? 'Cause I understand it's one thing passing through the rising input costs, and that you can explain quite easily, but to pass on margin somebody else could potentially make to your end consumers through the PPA, that's presumably gonna be more difficult.
Thank you.
All right. On the first one, Moray East is not included in the +12% selling price. Because it comes in through Ocean Winds as an equity method, it's not incorporated as part of the consolidated numbers or sort of, let's say. Well, it's not fully consolidated, so it's not in the numbers that we're presenting when we do those comparisons. It would not impact. It's, let's say, independently of how long Moray continues working in the market, it's not going to have an impact on that selling price. On the second question, listen, I think it's in everyone's interest that we have a healthy ecosystem and across the whole value chain. And that means that everyone needs to be making money.
I mean, at the end of the day, this is a business for everybody, and it's normal that not only ourselves, but also the OEMs should have not only recovering their variable costs, but also be making some profits. I mean, that's what we have no interest in them losing money, because then they will not be sustainable in the medium long term. This is a question of pricing, and clearly there is. It's not that they're coming to us to renegotiate. I think for new PPAs or for new CapEx estimates, they are providing their best estimates, and obviously it's a competitive market, so you know, we will go with whoever is most competitive. I assume that they're passing through, you know, let's say the pricing that they think is adequate given all the context.
That's what we're then using to price our PPAs. We're not looking at whether it's coming necessarily just from commodity price inflation or whether it's coming from margin. I mean, we're not, let's say, it's not transparent to that extent. We are reflecting the CapEx estimates that they give or the cost that they give us, independently of the source of, you know, why that's arising. What I think is important to note, and I mentioned it earlier, but I think it really is important. I mean, renewables was already incredibly competitive before this energy crisis. I think now, you know, the impact is, I mean, it's just much more competitive. When you have wholesale prices at EUR 200, you know, EUR 150, EUR 200 per MWh , and, you know, we're discussing whether an increase in PPAs from EUR 50 to
or EUR 35-EUR 40, I mean, it's still incredibly competitive and certainly much lower than sort of the, say, the gas prices and wholesale prices. I think clients have been quite receptive to, you know, looking through that and just incorporating whatever is the right PPA price to develop the project. That's what we're seeing. I think we just need to be careful is when there are market dislocations, as has happened over the last six months. That's why we did take some time out to renegotiate it, because we were hit by a dislocation. Once it's stabilized, whether it's higher or lower, then, you know, it makes it easier to then proceed with the PPA negotiations. Hopefully that helped answer the question.
Super clear. Thank you very much.
Thank you.
Our next question comes from Olly Jeffery at Deutsche Bank. You're now unmuted. Please go ahead.
Thanks. Good afternoon, everybody. Three questions from me, please. The first one just is on the capital gains guidance. You know, it's the second year in a row now where you guys achieved very good prices on a per megawatt basis. If you were redrawing your business plan today, do you think given the fact you've acquired key and good prices, that gives you more confidence that these high prices could be sustained?
Hello? We lost the connection, I think. Hello?
I think you've lost him, unfortunately. I think he's dropped out. I'll just put through the next question. Would you like to continue answering what he's already asked?
Well, if he's dropped off, maybe we'll come back to that when he's back on.
Okay. The next question comes from the line of Manuel Palomo from BNP Paribas. You're now unmuted. Please go ahead.
Hello. Good afternoon, and thanks for taking my questions.
Hi, Manuel.
I'll speak to two. Hi. The first one is again on assets rotation. You give a guidance of above EUR 0.3 million, sorry, EUR 0.3 billion for the period. However, looking at the first transaction, this Polish transaction on the multiple, I mean, I see that,
The number of megawatts needed to reach that EUR 0.3 billion is going to be, I think, much lower. In the strategy update, you mentioned that you would be targeting 1.4 GW-1.5 GW. Looking at these selling multiples, either you will need to include much lower amount of megawatts, or the most recent signed deals maybe draw a much lower unitary gain. Any color on this will be helpful. In the case of multiples remaining healthy, if you're already considering selling less megawatts and sticking to a similar total amount of net megawatts, given that you're going to have lower installations in 2022.
The second question is a bit on the weight of the different geographies. The U.S. was, in the last many years, the key market for EDPR, and I appreciate the increased diversification to APAC, Latin America, and others. My question is whether the weight of the U.S. will remain the same, or any type of hurdles such as this regulatory uncertainty in the U.S. could modify the initial expected weight of the U.S. in the future growth of EDPR. In that case, if other geographies could be enough in order to compensate a drop in the U.S. installations. Thank you.
Hi, Manuel. I think in relation to your first question, as I mentioned, we, you know, we will be above the EUR 300 million gains, but not reaching the level of 2021. 2021, we showed EUR 530 million of asset rotation. Our expectation as of today is that we will be below that number for 2022, but above what was in the business plan. Okay. Somewhere in between. I think we are getting healthy multiples, as you mentioned. You know, we will continue to do that. As I mentioned, not just in the other transactions, the Spanish portfolio, which you expect to close this quarter, but also in the other two that we're seeing already, you know, non-binding offers, which are pretty healthy or very healthy as well.
I think that's definitely a good trend. Will we sell less megawatts? I think, you know, I've said it before, but we are very much focused on the balance sheet and on the proceeds necessary to be able to continue to finance our growth while keeping the healthy balance sheet. The BBB . That's really what drives, say, the volume of asset rotations that we do. If you can do it with less megawatts, then we'll do it with less megawatts. I mean, you know, we're not going to sell more unless we then find a way because we want to then grow more, then we'll think about it. We're not going to do more megawatts just to get more proceeds just for the sake of it.
I think that hopefully helps answer the first part.
Very clear. Thank you.
In relation to the second question, I mean, it's a great question, and really, I'm glad you asked it because it gives me opportunity to talk about the value of our diversification, geographic diversification. Because it really shows that sometimes some markets slow down for some unexpected reason, you know, anti-circumvention, in this case. You know, generally, the U.S. has, over the last couple of months, had some uncertainty around it, which you expect to be transitory, to be very clear. In the meantime, we see a lot of growth in other markets. We see Europe clearly ramping up in terms of their ambitions. You know, you've seen Germany, you've seen many other countries sort of really increasing the level of ambition. We see Asia-Pacific, we see LATAM.
I think that allows us to really go on managing our portfolio and maintaining a relatively high level of growth and build out. You know, some market is a little bit slower. Maybe it's a good opportunity in another market, and we'll take advantage of that. Going forward long-term, we expect the U.S. to continue to be the main market, you know, as a standalone market. The U.S. clearly has a huge opportunity there. It always has had, and we believe it will continue to have. We're currently going through a slump in 2022, but it doesn't change our medium long-term outlook on the U.S. We will be.
Let's say, because we are in other markets, we will be able to invest in other markets sort of, and ride out this slightly slower year for the U.S. As I say, 2023 for the U.S. looks good. 2024 and 2025, we're already beginning to see good projects coming up, so I don't think it's changing our structural long-term view of the U.S.
I think we lost Olly. Thank you, Manuel. I think we lost Olly, so maybe we'll follow up with Olly on private, and then I think we can go to final remarks by our CEO, okay? Please, Miguel, just if you want to go for final remarks.
Sure.
Okay.
No, I think just in terms of quick final comments. I think it was a good quarter. You know, the last couple of quarters, we've had some bad wind and particularly when you look at last year, you know, this time last year we were talking about the solar, the polar vortex in Texas, and we're talking about the very low wind capacity in the U.S. in general. Clearly this year it's different. We are looking at a much higher renewable energy resource in most geographies, excluding perhaps Spain. That obviously translates into better numbers, both EBITDA and net profits. You know, we've talked a little bit about some of the impacts on the net profit line in terms of the financials, but overall, I think pretty strong numbers.
I'd say that the, you know, the 9.6 GW is a good number. We really accelerated over the last couple of months. You know, we talked about that, and I think showing this jump of the 1.1 GW just in the last couple of months and the overall almost 50% of the business plan target, I think that gives us good reason for confidence. I think the fact that we are looking at the higher energy prices and seeing opportunities there as the hedges roll off, that will be an upside. I think, you know, even some of the recent changes of the regulation in some different countries, net-net will be positive. We'll talk about that for sure over the next couple of quarters.
Ocean Winds, I think very positive over this quarter, quite frankly. I mean, Scotland, New York Bight, South Korea, you know, continuing to work on. Just recently, I was in Poland and sort of seeing some of the opportunities there. I think that's also giving us good reason to believe Ocean Winds is really doing well and have great opportunities to continue to grow. I mean, Moray East is a great example. You know, we built Moray East pretty much on budget, ahead of time, and it's obviously creating a lot of value just in these months. Overall growth. You know, I said it, but I'm going to reiterate it because I really believe it.
We were very focused on the growth in renewables because it's a good business on one hand, so primarily, but also because it was very much aligned with our ESG targets and, you know, meeting the Paris Agreement, doing the energy transition. Now things like energy independence and just the predictability of renewables, the fact that you can lock in these 10, 20, 30 year prices that are fixed. We're seeing a lot of, let's say, the government's really reacting to these, to these issues and really moving it up on the agenda. There are short-term challenges for sure, the regulatory uncertainty in the U.S., you know, licensing, permitting, having access to the interconnection, those continue to be challenges, but listen, that's part of the business, otherwise it'd be too easy.
I do believe that certainly medium, long term, this continues to be, you know, continues to see very strong growth prospects going forward. We'll be back the next couple of months to talk about how the business is doing, but I'm sure we'll have good news to tell you. Thank you.
Thank you for joining today's call. You may now disconnect your lines.