Good morning, ladies and gentlemen, and welcome to Enel Chile first half and second quarter 2023 results conference call. My name is Gigi, and I'll be your operator for today. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press Star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star one one again. Please be advised that today's conference is being recorded. During this conference call, we may make statements that constitute forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect only our current expectations, are not guarantees of future performance, and involve risks and uncertainties.
Actual results may differ materially from those anticipated in the forward-looking statements as a result of various factors. These factors are described in Enel Chile's press release, reporting its first half and second quarter 2023 results. The presentation accompanying this conference call and Enel Chile's annual report on Form 20-F, included under Risk Factors. You may access our first half and second quarter 2023 results, press release, and presentation on our website at www.enel.cl, and our 20-F on the SEC's website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Enel Chile undertakes no obligation to update these forward-looking statements or to disclose any development as a result of which these forward-looking statements become inaccurate, except as required by law. I would now like to turn the presentation over to Mrs.
Isabela Klemes, Head of Investor Relations of Enel Chile. Please proceed.
Good morning, and welcome to Enel Chile second half, 2023 and first half results presentation. Thanks to all for joining us today. Joining me this morning is our CEO, Fabrizio Barderi, and our CFO, Giuseppe Turchiarelli. Our presentation and related financial information are available on our website, www.enel.cl, in the investor section and in our app, Investors. In addition, a replay of the call will be soon available. At the end of this presentation, there will be an opportunity to ask questions via phone or webcast chat through the link, Ask a Question. Media participants are connected only in listening mode. In the following slides, Fabrizio will open the presentation with our key highlights of the period, our portfolio management actions, and regulatory and market main updates. Later, Giuseppe will give us a view of the business, economic, and financial performance.
Thank you for your attention, and let me now hand over the call to Fabrizio. Fabrizio?
Thank you, Isabela. Good morning, and thanks for joining us. Let's start our presentation with our main highlights on Slide 2. The first topic I would like to highlight, and will give you more context, is the status of our several portfolio management actions. Together, these actions target the optimization and flexibility of our portfolio in the energy transition scenario. Having followed this path during the first semester, we received the commercial operation authorizations for more than 1 GW of our renewable project. All the growth projects added 0.8 TWh of additional production to our portfolio. Another important topic was all the management and timely effective measures carried out by our team to continue the operation of our plants and safeguard the neighboring communities after the heavy rains during June.
These heavy rains contributed to accumulating almost 1 TWh of water in our reservoirs for the following period, which will be very positive also in terms of reducing spot market prices for the second semester of this year. In terms of market context, the most effective positive news has arrived. The PEC 2.0 factoring process is very close to being initiated. On the regulatory side, we have some updates on the government's efforts to continue pursuing the faster decarbonization path for Chile. On the performance of our business, the second quarter presents a temporary mild performance, taking into account the complex pricing environment, as expected. Looking at the first half results overall, we continue to see a significant improvement in terms of EBITDA, increasing by 50%, mainly due to all the gas optimization efforts we have been performing.
Net debt has temporarily increased, mainly due to the delay in the PEC 2.0 factoring execution. Debt, once executed, could add $300 million to our cash flow. Higher contribution of our generation business in the second half of the year, due to the seasonality embedded in the business, and the closing of an asset rotation transaction, named Arcadia, are going to allow us to reach sounder level of net debt by the end of the year. Let me then talk about Arcadia. As we announced 2 weeks ago, we signed an agreement to sell four non-strategic solar power plants in the north of the country. We expect this to be concluded at the end of 2023. I will give you more details on this later. We continue to develop our strategy toward a cleaner and more efficient generation matrix.
During this first semester, we connected 98 MW of additional net capacity related to the final phase of our wind farm, Renaico II, and the first phase of our solar plant at Sierra Gorda. New renewable projects added around 1.4 TWh of additional generation. During this year, we have also received the commercial operation approvals from the system operator for around 1.1 GW , related to Campos del Sol, Valle del Sol, Finis Terrae Extension, and Finis Terrae , and Guanchoi. The latter being the largest solar power plant in Chile, with a capacity of 398 MW. All these projects together prevent the emission of around 2.5 million tons of CO2 into the atmosphere.
We are maximizing all efforts to advance in the construction of diversified projects in different zones of the country, fully aligned with our strategy to increase exposure to wind, storage, and solar, close to the center of consumption. In the following days, we are also going to receive the authorization for Renaico II, our 144 MW wind project, located in the south. Today, we have around 0.7 GW of projects in construction, which is performing as expected. The deployment of our renewables plan aims to improve our generation mix and increase the flexibility of our portfolio, which today is 76% renewable base. On Page 4, let's take a look at the hydrological condition and the outlook for the second half of the year. By the end of June, there was a significant increase in rainfall, especially in the south of the country.
In fact, in the seventh and eighth regions, where the basins of Maule and Biobío are located, the rainfall almost reached the level of hydrology for a normal year. Fortunately, we had no damage to the infrastructure of our hydropower plants. We also managed our reservoirs in a timely manner, regulating the flows permanently, enabling us to avoid impact on the neighboring communities. In addition, as you can see on the right side of this slide, snow cover in the mountains has been improving in Maule and Laja, particularly during July. So far, we cannot predict the volume of snow. We expect to have more details in August, once the system coordinator performs a new inspection. The situation allows us to foresee an optimistic hydro scenario for the second half of this year.
Based on this, we can fairly estimate at least one up to 2 TWh of additional hydro generation for the full- year 2023, when compared to our last strategic plan. Regarding our gas trading activities, let me highlight some topics on Slide 5. During the last semester, we have continued having plentiful gas availability, thanks to the long-term LNG agreement with Shell and the contract signed with Argentinian gas supplier. Given the availability of Argentinian gas in the central zone, it has been possible to carry out LNG swaps in the northern zone, where natural gas is not available enough. Multiple gas shipments have been sent from Quintero to Mejillones during the first half of 2023, totaling around 12 TBtu, and we expect to continue sending gas to the north during the rest of the year.
As you may recall, during the first quarter of this year, we executed some opportunistic sales negotiated during the year-end 2022, taking advantage of attractive prices of natural gas in the international market. These transactions contributed around $150 million in the period. In addition, we have continued to perform trading activities with local, industrial, and mining customers that continue to bring additional margins for our business. In the second semester, we have already granted some additional sales for the end of the year, expecting an additional $50 million to come from these trading activities. To conclude, let me say that we are also anticipating additional volumes of gas from Argentina for the October-April 2024 period. On Page 6, let's review our performance and new initiatives in Distribution and Analysis, with focus on electrification and decarbonization.
Our main pillars include boosting electrification and decarbonization in the public and private sectors, to face climate change properly. As a result, we have taken an active role and expanded our efforts to speed up these main goals. Let me highlight some indicators and projects executed during the last half, starting with the distribution business. In our concession area, the number of customers and distribution energy continue to grow, therefore, new opportunities and challenges will arise. The important message is that looking in the last 12 months, we see a sound improvement in the SAIDI index of around 4 million. In distribution, we continue to review our processes and intelligence on energy losses to better respond to the current environment, and the current sound indicators level are a result of it. Finally, regarding digital payments, we have continued promoting payments through digital channels.
Regarding Enel X, some important milestones focused on electrification and decarbonization of our clients' energy consumption have occurred. Let me go through some examples from this period. Regarding the decarbonization of households, this semester, we have replaced 1,420 hood stoves with efficient air conditioners, contributing to a reduction of around 2,600 tons of CO2 per year. Most of these replacements are due to contracts signed with companies that seek to offset their CO2 emissions. In the field of efficient lighting in our cities, Enel X has replaced the National Stadium's lighting system for the 2023 Pan American Games, bringing efficiency and quality to this important event. Third, as leaders in electric public transport, we continue participating in new projects. We have signed an integrated offer with a bus operator called Voy.
This offer includes 212 e-buses, 2 terminals, and a PPA for 10 years. We continue working to increase the number of public and private charging points for electric vehicles, and to be awarded more lighting projects throughout the country. All these efforts are noticeable once we look at electrification indicator, that is showing a significant improvement in the period. Regarding market context, let me comment on measure updates on Slide 7. Chile is a reference in the region for its commitment towards the net zero emissions and decarbonization of the matrix. Faster renewables growth and increase in electrification require the country's prompt response. Regulation should continuously adapt to continue giving the right time for the further and faster achievement of the country's goals.
In that sense, we received positive news on the changes in the main characteristics of the 2023 regulated auction, which introduced the concept of segmentation. The generators can choose the zonal areas they would like to bid in the auction, and clear benefit for hybrid projects. In other words, renewable energy plus storage system of four hours. The government has just submitted a draft bill related to energy transition. The government is proposing the realization of a storage auction in 2024 in the North, and the definition of a National Energy Plan to better anticipate and efficiently plan the new transmission infrastructure required for the country. This process is still in the beginning phase, so throughout the year, we might have further details to share with you, and how this draft bill fits with our strategy. Let's share some more good news.
The factoring process of PEC 2.0, also known as the Customer Protection Mechanism, is very close to being concluded. At the end of this quarter, we accumulated around $633 million relating to this instrument. The important and most expecting news arrived, allowing GenCos to start recovering the credits through a factoring mechanism guaranteed by the Chilean treasury. Around half of the accounts receivable accumulated since the second half of 2022 will be paid through an additional fee levied on the final tariff, requiring the publication of decrees for recovery. A second decree is expected to be issued in the following months, related to the second half 2022 period, in order to reduce the gap between the tariff and the contract price, normalizing the process. Regarding the distribution tariff review, we expect the regulator to publish the final report in the following weeks.
As for the process, we still see several lines for improvement, but we managed to achieve some positive outcomes, as the panel recognized some of our claims. I will hand it over to Giuseppe.
Many thanks, Fabrizio. Good morning to all connected. I will start the financial analysis on slide eight, introducing a summary of our main results for the period. In order to better evaluate the earning performance of our company, the 2022 figures are shown as a pro forma, where we are including two main adjustments. In the first half and the second quarter of 2022, the EBITDA was adjusted by the impairment made to the coal stock of the period, which amounted to $63 million and $42 million, respectively. This adjustment had an effect on the bottom line of $43 million in the first half, and $29 million in the second quarter of 2022. The second adjustment, and the most relevant one, is to exclude from 2022 figures the contribution of Enel Transmisi ó n, considering the sales this company executed in December 2022.
We excluded from our analysis the EBITDA of Enel Transmisión for the first half and the second quarter of 2022, which amounted to $54 million and $22 million respectively. Enel Transmisión Chile had an effect on the bottom line of $30 million and $10 million in the first half and in the second quarter, 2022. In terms of FFO, we are also excluding from 2022 figures, the contribution of Enel Transmisión in terms of cash, $2 million in the first half of 2022, and minus $19 million in the second quarter of 2022. In 2023, we are excluding the payment of taxes related to the capital gain of this transaction of $310 million. Taking into the mind, let's see how the earnings indicator and FFO performed in the period.
In the first half, EBITDA net income showed improvement versus last year's indicator, mainly as a result of the trading activity, improvement in hydrology, and new renewable contribution. The quarter earnings performance, on the other hand, was more challenging, particularly due to the temporary effect of higher spot purchases and thermal costs. I will give you more detail in the next slide. In terms of FFO, in the first half, figures continue to be impacted by the accumulation of the back accounts that reached $189 million during 2023. The FFO in the quarter also demonstrates the same impact. I will give you more details later. Let's review our CapEx on Slide 9. Our first half, 2023 total CapEx reached $372 million.
74% of our total CapEx deployment was related to the renewables, and 91% of the total CapEx was linked to the SDG goals. Customer CapEx totaled $41 million, 14% higher than the previous year, mainly associated to the new customer connection in the period. Other investment reached $83 million, mainly as a consequence of the several maintenance and repair activities to guarantee the continuity and resilience of our operation in our power plants. Development CapEx reached $24 million, representing a decrease of 39% versus last year's figures, in line with the remaining portfolio under construction. The 2023 CapEx shall be committed to confirming our strategy of growing in the central part of the country and in the south with wind project. Let's move now to Slide 10, where we have the summary of the second quarter EBITDA breakdown, accounting for $55 million.
Let me remind again, the change in the company consolidation perimeter, mainly as a consequence of the sales of Enel Transmisión Chile in December last year. We have included the pro forma of our EBITDA for Q2 2022 for comparison purposes. Second quarter 2023, EBITDA is $18 million, lower than 2022 pro forma, mainly explained by the following: $55 million increase in thermal generation costs, mainly related to lower thermal generation and lower positive effect of hedging instrument in 2023, versus 2022, partially offset by lower commodity costs versus 2022. A $36 million higher spot price in the period, as a consequence of the higher dispatch cost of the Chilean thermal fleet, particularly coal units, during 2023. Also, as a consequence of the unavailability of different power plants in the system, increasing the spot prices.
The lower effect of gas optimization activities, which decreased $7 million, mainly related to lower gas trading sales of around 3.6 TBtu in the period versus last year's figures. The above-mentioned effects were partially offset by $34 million from higher PPA sales in the 2Q 2023, primarily due to higher average PPA prices, mainly related to the contract indexation, higher ancillary system services and capacity payment revenues, where the last one is mainly due to the two factors: delay in the code of some market renewable projects that increased the payment for all the other projects in operation, and the new power plant connected and commissioned during the second half of 2022 and 2023. Improved hydrology contributed $19 million to our margin, $24 million contribution from renewable volume, mainly related to the new capacity added....
The remaining variation of our EBITDA comes from $6 million due to the grid remuneration related to indexation, lower fines and compensation, and higher demand, higher OpEx and other costs, mainly in the generation business, by $2 million associated to the new renewable capacity in operation and inflation. Now let's move to Slide 11, where we have the summary of the first half, EBITDA breakdown, accounting for $400 million. As we did in the second quarter, we are excluding the 2022 EBITDA of Enel Transmisión for comparison purposes, and for a better understanding of the 2023 results.
Enel Chile EBITDA increased 50%, or $133 million, mainly explained by $124 million from higher PPA sales in the first half of 2023, primarily due to $83 million of higher average PPA price, mainly related to indexation. $42 million, mainly due to higher ancillary services system in capacity payment revenues, where the last one is mainly due to two factors. First, delay in the code of some market renewable projects that increase the payments for all other projects in operation, and two, the new power plant connected and commissioning during the second half, 2022 and 2023. $110 million of gas optimization activities versus previous year, mainly due to higher volume and higher commercialization prices.
Improved hydrology volume, contributing $33 million to our margin, and $33 million contribution from renewable growth volume, mainly related to the new capacity added. The above mentioned effects were partially offset by a $152 million increase in variable costs, mainly related to $129 million, related to higher thermal generation costs due to commodity prices and lower thermal generation. $24 million related to higher purchases in the period, as a consequence of the higher commodity prices during 2023, and for the availability of different power plants in the system, and partially compensated by an agreement with one of our PPA suppliers. The remaining variation of our EBITDA comes from $7 million due to grids remuneration related to the indexation, lower fines and compensation, and higher demand.
Higher OpEx, mainly in generation business, by $14 million associated to new renewable capacity and inflation across all the business. Let's move now to Slide 12, to take a look at our generation KPI. Net electricity generation total, 10.6 TWh as of June 2023, 3% higher than the level recorded in the first half of 2022. This was mostly due to the higher solar and hydro generation during the current year, reflecting the contribution of new projects and higher water availability, respectively. During the second quarter of 2023, net generation reached 5.5 TWh, increasing 8% when compared to the second quarter, 2022, mainly due to higher renewable generation. Our energy sales total 15.5 TWh during the first half of 2023, maintaining the level recorded as of June 2022.
This was mainly explained by lower sales to free markets, offset by improvement in the sales to regulated customers. During the last quarter, physical sales increased 3%, mainly due to the higher sales to free customer. In terms of energy balance, the amount of energy purchased in the spot market, both in solar and non-solar hour, was basically in line with the last year figures. On Slide 13, let's go through the main drivers of our group net income. Net income from the first half this year increased 90% to $141 million, mainly resulting from greater EBITDA of $133 million, as explained in the previous slides.
Flat depreciation and amortization impact, as higher depreciation related to the new renewable projects in operation, are fully compensated by lower bad debt, essentially in distribution, mainly related to the client's debt recovery as a result of the several commercial actions, including disconnection and commercial agreement. Flat financial results and equity investment, considering higher financial income in the period, mainly explained by greater returns on the short- term fixed income investment, related to the higher cash availability and interest rates. Lower debt costs, mainly to lower debt level and higher capitalization interest. Higher financial costs, mainly due to the factoring of accounts receivable executed in 2022, versus the one executed in 2023. Lower financial revenue related to the commissioning of our former coal fleet, partially offset by higher income tax that increased by $61 million, mostly due to the higher EBT results and higher monetary correction.
The second quarter 2023, net income reached a - $33 million, mainly related to lower EBITDA, as detailed in the previous slide. Lower depreciation and amortization, essentially due to the lower bad debt in distribution, mainly related to the client debt recovery as a result of several commercial action, including disconnection and agreement, partially offset by higher depreciation related to the new renewable projects in operation. Higher financial results and equity investment of $70 million, mainly related to lower financial revenue related to the decommissioning of our former coal fleet. Higher financial costs due to factoring of accounts receivable executed in 2022, versus the ones executed in 2023.
Higher financial income in the period, mainly explained by greater return on short-term fixed income investment, related to the higher cash availability, interest rates, lower debt costs, mainly due to lower debt level and higher capitalized interest. Higher income tax that increased by $14 million, mostly due to provision related to the classifying Arcadia as held for sale. Higher monetary correction, partially offset by lower EBT results. Moving to FFO analysis on Slide 14. Let's now see in more detail the FFO for this period.
The pro forma FFO in 2023, that excluded the $310 million payment on taxes from the capital gains generated with Enel Transmisión, reached a - $5 million, which reflects a $217 million improvement when comparing to last year's pro forma figures, resulting from $400 million coming from EBITDA, driven by better hydrology, higher renewable contribution, and gas trading activity in the period. $118 million negative impact from the cumulative stabilization mechanism effect in our receivable, reducing the cash conversion of the period. This situation has slightly improved since the tariff decree for July 2022 period was published, enabling us to start the process of recovery of part of this receivable. According to the mechanism and the process approved, we expect to recover an important part of the balance accumulated during this year.
In August, we expect around $300 million from the factoring process with IDB. Working capital negative reached a negative balance of $111 million, as a consequence of energy and CapEx rebound from 2022 last month, partially offset by cash management action and cash in from the sales of Santa Rosa building. Working capital improvement, once compared with the last figures year, mainly comes from Santa Rosa building and other managerial action. Income tax reached $2 million, mainly related to better results in Generation business in both 2022 and first half 2023, offset by tax recovery from previous periods for both Generation and Distribution business. Once compared, the income tax paid in 2023 versus last year, the main difference comes from the tax recovery from previous period obtained now during the year.
To conclude, now on financial expenses that reached $103 million, mainly due to the debt interest paid during the year, higher factoring costs, partially offset by higher cash interest, financial expense figures are in line with the last year. Now, let's take a look at our liquidity and leverage position on Page 15. Our gross debt increased around $0.4 billion to $5 billion as of June 2023, when compared to December 2022. This increase was mainly related to the delay of PEC 2.0 payment and other network capital needs, as the tax payment of the sales of Enel Transmisión executed last year.
It should be noted that this debt increase is a temporary effect, as we should receive part of the PEC 2.0 funds, hopefully within August, and we will start to see higher income from our operating business coming from the better hydrology, and later this year, the sales of Arcadia asset. All in all, guaranteeing a net debt, EBITDA lower than 3x by the end of 2023. The average of our debt maturity reached 5.7 year at the end of the last semester, maintaining the largest portion of the fixed rate with 77% of the total debt. Regarding our maturity during 2023, in this slide, we are seeing a $200 million maturity for this year of 2023. This amount was already paid early July, using a bridge instrument that shall be paid once the PEC 2.0 factory resources are cashed in.
The average cost of our debt reached 4.7% at the end of last June, little bit higher than December figures, due to the new profile of our debt, prepayment of some bridge short-term instruments, and current market situation. I would like to reinforce the message that the current debt level are temporary, considering all the sources generated by our assets during the second half of this year, as you may be aware that our generation business has an important seasonality during the raining season, and by the sources coming from Arcadia transaction, that Fabrizio will give you more detail. Many thanks. Now, I will hand over to Fabrizio.
Many thanks, Giuseppe. On Page 15, as part of our goal to continue optimizing our portfolio, reinforcing the value of our assets, and as a consequence, strengthening the sustainability of our balance sheet, I would like to speak on the recent announcement of the sale of our subsidiary, Arcadia. On July 12th, Enel Chile signed an agreement with Sonnedix to sell its entire stake in Arcadia Generación Solar. Arcadia operates and owns a portfolio of 416 MW of generation assets, that includes four solar power plants named Diego de Almagro, Carrera Pinto, Pampa Solar Norte, and Domeyko.
The agreement provides that Sonnedix will pay an equity value of $550 million for the entire stake held by Enel Chile, and shall secure back-to-back PPAs to Enel, with different tenures of around 80% of the production of the power plant defined in the contract. The capital gain embedded in this transaction will generate an estimated impact on our net income of $110 million in 2023, and the cash impact of around $500 million, net of taxes of about $50 million. The purchase and sale transaction is subject to certain condition precedents that are customary for these kinds of transactions, like the approval from the Chilean Antitrust Authority, the Fiscalía Nacional Económica. The closing of the transaction is expected by the end of this year.
Finally, this transaction is part of our asset rotation initiative and unlocking value goals, targeting the optimization and diversification of our portfolio. The funds generated with the sale will create further space for our company to execute our CapEx deployment plan, while at the same time, strengthening our financial position in a virtual cycle. With the execution of the Enel Transmisión sale and the share agreement, both executed last year, and the closing of this transaction, we have Enel Chile in a much more comfortable position to continue targeting aggressive and strategic market opportunities. I will point out some closing remarks on Slide 17. The first semester showed a solid operating performance. The elements that we have now, catalyzed by better than expected hydrology, full natural gas availability, and the quality of our assets, support our view for a solid 2023 results.
Our business has progressed in line with our expectations, visibility for the rest of the year allows us to be fully confident in reaching the upper range of our targets provided back in November 2022. The repositioning of our generation portfolio, growth actions, and diversification of our sources continues to evolve. The Arcadia transaction was an important and well-designed action that will support the execution of our committed plan. The growth of our renewable fleet is well on track, and will continue to bring additional value to our portfolio, complementing and diversifying our metrics and sourcing needs. Thanks to the portfolio optimization actions that we have been constantly pursuing, and the significant asset rotation initiative addressed, we continue to deliver a strong economic performance and build a solid financial balance sheet.
This will allow us to leverage our strong positioning in the energy transition context, and exploit the opportunities that will materialize. Let me now hand over to Isabela.
Thank you, Fabrizio. Thank you all for your attention. Now let's begin the Q&A section. We will receive questions via phone and the chat in the webcast on this equation. The Q&A session is now open. Gigi, please, you may start.
Thank you. As a reminder, to ask a question, please press Star one one on your telephone and wait for your name to be announced. To withdraw your question, please press Star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Beatrice Gianola from Mediobanca.
Yes, good morning, everybody, thanks for taking my questions. I ask three. My first question regards Slide 14. I can see there's been some cash flow absorption related to the stabilization mechanism. Can you provide more color on how do you expect this amount to evolve by year-end? Related to this, how do you see debt evolving during the year? The second one in studies on hydro. We see that duration has been positively impacted by good hydro output. How do you see this evolving in 2023? How do you see this in the years to come? A very last one, you confirmed your earnings guidance for 2023. What about the one for EBITDA? Is that still confirmed? Can you please provide more color on this? Many thanks.
I think that I can answer the second question about hydro generation, then let Giuseppe answer to the first and the third question. As I mentioned during my presentation, basically, we already have one more terawatt-hour more than expected in our reservoirs. It's quite easy to predict that we will exceed at least one TWh, our expectation of hydro generation for this year. As for the following years, probably a good level of hydro inflows during 2023 could, in some way, also benefit the beginning of 2024. For sure, this is, of course, a temporary effect.
Let me say that, structurally, it's something that's difficult to comment that we could be more optimistic on the following year. For sure, we are quite optimistic for this year, and some probably also some potential positive effect on 2024.
Okay. For what concern the PEC 2.0, as I said, in the first, also, we have counted $189 million, we believe that we are going to accrue at the end of the year, something like more than $700 million, all in all, not coming from the 2023. I'm talking about the full amount of PEC receivable. Clearly, in August, we expect to perform the first part of our factoring, that is gonna be around $300 million, another $100 million, a little bit more, factoring of PEC by the end of the year. Let me say, full- year, it should be around $400 million factoring.
For what concern the guidance, basically, we are confirming the upper side of our target in terms of EBITDA, because on one side, the remaining margin coming from the trading activity is already closed. We are going to perform the margin in the last quarter. In the same time, the positive effect of hydrology is going to guarantee a certain level of confidence in reaching the EBITDA. This is basically the situation. We have to remember that more hydrology doesn't mean only energy available during the night, but also a reduction in the spot price. Basically, we are benefiting.
From both sides. This is the reason because we believe the target that we had, the guide is reachable.
Thank you. Thank you, Giuseppe and Fabrizio. Gigi, do we have more questions on the line?
Thank you. Yes, one moment for our next question. Our next question comes from the line of Florencia Mayorga from MetLife.
Hey, everyone, thanks for taking my question. I have two questions. One is regarding your expectation on prices for the Generation business, as the spot one, regulating and for free clients. The other one is more regarding your expectation on leverage by year-end, considering both the asset sales recently announced. Thank you.
Okay, let me address the first question, and then I hand over to Giuseppe for the second one. Well, in terms of spot prices, as I said, given the reduction of international commodity prices, which would be reflected in lower costs in the system, and also thanks to the good hydrological conditions, the second part of the year, we would expect a significant lower prices in the spot market. That is good news for us. As for the free clients, I think, I guess, you are referring to long-term contract prices for free clients.
In that respect, we are seeing some positive trend in the market, in the sense that due to the financial problems experienced from some renewable player in the last month, we are seeing a context that in the medium, long- term, seems to be a little bit more tighter, reflecting in a better prices for in the free market. It was some way it was already factored in the last regulated auction last year, but I think this trend has been reinforcing in the last months, so we are enjoying more comfortable prices, selling our energy to free customers.
Okay. For what concern the, leverage that we're gonna have at the end of this year, according to our projection, we are going to be below the 3X net debt to EBITDA, thanks to the confirming the EBITDA of our guidance and supporting our leverage with the cash-in of the sales of the asset. That is gonna be around the $50 million.
Thank you so much.
You're welcome.
Thank you. Gigi, do we have more questions on the line?
Thank you. At this time, I'm showing no further questions. I would like to turn the conference back over to Isabela Klemes.
Perfect. We have some questions here coming f`rom the chat. The first one is coming from Andrew McCarthy. Andrew McCarthy is asking: Did I understood correctly that you expect 1 TWh up to 2 TWh more of hydro generation in 2023, versus the strategy plan forecast of 9.3 TWh? How much additional EBITDA should that your 1 to $1.2 billion EBITDA target for 2023?" Fabrizio, Giuseppe?
Yeah, I can address. We have just mentioned from a physical point of view that it's true, so confirming that we are expecting from 1 TWh-2 TWh more of hydro generation in 2023, compared to our forecast of 9.3 TWh. It was correct, what Andrew was referring to. It is quite easy to say that, as I mentioned, we have already 1 TWh more in our reservoir, so it's quite easy to be in the first part of the range, but I'm quite optimistic seeing also some short-term forecast that we could also have something more of that.
In terms of EBITDA, let me say that approximately each terawatt hour could add like $50 million more in our EBITDA. That was the reason why I also was quite comfortable in mentioning that we are in an upper range of our guidance.
Okay. Thank you, Fabrizio. We have another question coming from Rodrigo Mora, from Moneda. Rodrigo is asking more details about the Arcadia transaction. He is asking if we could give more details about the PPA security, this operation, in terms of the duration of this PPAs?
Okay, let me say that this PPAs is absolutely like a mirror PPA of what originally these plants have in different times of the recent years when they were built. Each PPA started in a different year, and as a consequence, also have a different expiry in the future. We are saying that these PPAs start declining in 2029. The last one that refers to the recent, more recent plant, that is Domeyko, is going to end completely in 2041. As I said, there are contracts that are absolutely in a mirror condition of the original PPAs, that each of these plants signed at the moment of their construction.
Of course, we have mirror sales in our portfolio, that would be, of course, addressed also from the 80% of our energy sourcing that we continue to have, thanks to this mirroring PPA.
Okay, Fabrizio, many thanks. We are all for the questions. I would like to thank all for your attendance today, and any other information you may need, the investor relations team will be available. Okay? Thank you. Have a good day.
This concludes today's conference call. Thank you for participating. You may now disconnect.