Ladies and gentlemen, welcome to the conference call for the full year results 2025 of VERBUND AG. I'm Moritz, your conference call operator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Peter Kollmann, CFO and Deputy CEO of VERBUND AG. Please go ahead.
Ladies and gentlemen, a warm welcome to our presentation of the results for the 2025 financial year. Thank you for joining today's conference call. I'm here with Andreas Wollein, our Head of Finance and Head of Investor Relations. Before we turn to details of our financial performance, let me start with a few overarching remarks. The year 2025 was an important milestone in the execution of our strategy 2030. With a clear strategic direction and targeted investments, we continue to advance value-creating growth, support climate protection, and strengthen security of supply. At the same time, we operated in a challenging political and market environment that required resilience and disciplined execution.
The extension of the Energy Crisis Contribution Act until 2030 further reduced our investment scope, while delayed legislative processes, declining electricity futures, and high volatility in spot markets increased the complexity of our planning. Nevertheless, we remain focused on the consistent implementation of our strategic priorities. Through strict investment prioritization, ongoing improvements in operational efficiency, and flexible financial management, we ensured that our core initiatives continued to move forward. At the same time, we positioned VERBUND to capture opportunities arising from structural changes in the energy market. Against this backdrop, and due in particular to significantly lower hydropower generation, as well as the negative impact of the extended profit-skimming mechanism in Austria, earnings in 2025 were below the previous year's level. However, they remained at a solid level overall. With that, let's turn to our financial performance presentation.
On this page, we highlight the key factors influencing our results development. Overall, average achieved contract prices declined slightly compared to 2024. At the same time, generation from our hydropower fleet was significantly affected by an exceptionally weak hydro coefficient, leading to lower production from run-of-river plants, while generation from annual storage plants also declined despite higher turbining volumes. In addition, output from wind and PV generation was also below the previous year's levels. On the positive side, generation from thermal power increased due to higher utilization of the CCGT plant in Mellach. The sales segment also showed an improved contribution as the retail business stabilized, and earnings from the regulated electricity grid increased. Contributions from flexibility products remained broadly stable throughout the year. Finally, earnings were negatively impacted by the extension of the windfall profit tax regime.
As always, we briefly comment on our hedging position and achieved contract prices. For 2025, we realized an average contract price of 116 EUR per MWh, slightly below the 118 recorded in 2024. The still strong price level mainly reflects early limit sales executed during periods of elevated wholesale prices in 2023. Now looking ahead, our hedge position remains solid. As of the end of 2025, we had already secured around 65% of our expected generation for 2026 at an average price of around 86 EUR, while around 11% of the 2027 volumes were sold at 86 EUR per MWh.
Now, based on current market prices, as of the 27th of February 2026, the mark-to-market average contract prices stands at approximately 86.8 EUR for 2026 and 84.8 EUR for 2027, providing good visibility on future revenues. On the next page, we want to summarize again the profit-skimming mechanism, which you're all familiar with, but here are all the details. The key elements are the investment regulation was finally published at the end of November 2025. This removed the remaining legal uncertainty regarding which investments qualify for deductions under the scheme. For the full year 2025, the levy amounted to EUR 136 million at EBITDA level. For 2026, we expect that the current profit-skimming mechanism will likely be replaced by revised system.
Now, the Iranian war has obviously influenced that, but I'm sure we'll discuss it later. For 2026, we expect a negative impact on the EBITDA of approximately EUR 150 million. More clarity on the new regulatory approach is expected by early summer. On the next page, we talk about our flexibility products. Once again, they provided solid earnings support in 2025. In total, flexibility products contributed EUR 274 million, broadly in line with the previous year. You might be interested why we haven't reached a guidance of EUR 300 million. That was primarily related to pumping and turbining activities, where both spreads and volumes remain slightly below our expectations. Now looking ahead, we currently guide for a contribution of around EUR 250 million.
The lower guidance compared to 2025 reflects mainly two factors. First, we expect a reduced contribution from pumping and turbining due to the outage of Limberg I, as well as lower anticipated spreads and volumes. Second, the contribution from intraday trading is expected to normalize after an exceptionally strong year in 2025, when elevated market volatility created particularly favorable trading opportunities. Now onto our very important hydro segment. In 2025, hydropower generation was very much affected by extremely weak hydrological conditions. The hydro coefficient for our run-of-river power plants stood at 0.79, which was 21 percentage points below the hundred-year average, long-term average, and 30 percentage points below the level of 2024. Generation from annual storage power plants also declined by around 6%.
As a result, our total hydropower production decreased by 8 TWh or close to 25%, to 25 TWh compared to the previous year. In addition to lower generation volumes, slightly lower achieved contract prices, and the continued impact of the windfall tax, weighed on our earnings as well. Consequently, EBITDA in the hydro segment declined altogether by 32% to EUR 2 billion. On the investment side, important milestones in 2025, we completed several projects, that included the 45 MW Reißeck II pumped-storage power plant, then a relatively small run-of-river plant, called Stegenwald, and the very important construction and technical installation of the very large, i.e., 480 MW Limberg III pumped-storage project.
As you know, we had technical damage to the generators at Limberg III and the transformer at Limberg I. Repairs started immediately and are currently ongoing. We now expect the commissioning of the first Limberg III generator by mid-2026, and the second generator by the end of 2026. On to the next page now. On the new renewable segments, in 2025, the coefficient there, and the coefficient reflects the generation from wind and PV assets, amounted to 0.82. In sympathy with hydro, the renewable coefficient went down as well. The previous year it was 0.91. Wind generation as a result of that declined by around 6% to 1.7 TWh.
We added new capacity in Germany and Spain, but that was not sufficient to fully offset the weaker wind conditions across our markets. PV generation was also slightly below the previous year, as new installations in Spain, Austria, and Italy, again, could not fully compensate for lower radiation. As a result, EBITDA in the new renewable segment decreased by 7% to EUR 157.7 million. In addition to lower generation volumes, slightly lower achieved contract prices had an impact as well. Although this was partly offset by reduced electricity procurement costs. At the same time, we continue to make good progress in expanding our renewable portfolio. In Spain in particular, we initiated construction or preparatory construction for projects totaling around 1.1 GW.
Overall, our installed renewable capacity reached 1,256 MW as of the end of 2025. Now let me turn to the sales segment. EBITDA in the sales segment improved significantly and reached a positive level of EUR 134 million. That was primarily driven by the improved earnings contribution from our end customer business. EBITDA in the retail segment increased from, you might remember, -EUR 77 million in 2024 to EUR 4 million in 2025. Big turnaround there. This improvement reflects the successful implementation of measures which were aimed at enhancing our profitability, including an optimized electricity procurement strategy and ongoing cost efficiency initiatives.
EBITDA in the trading business also improved, increasing from +EUR 84 million to EUR 130 million, mainly due to lower negative valuation effects compared to the previous year. Now, looking ahead, our trading subsidiary continues to focus on expanding our storage capacities, particularly in our core market in Germany and Austria, in order to capture opportunities arising from increasing price volatility and system flexibility requirements. Now, currently, we operate around 110 MW of pure battery storage capacity with four large-scale projects totaling 200 MW under construction and a development pipeline of more than 300 MW. The grid segment. In 2025, EBITDA from the electricity grid amounted to EUR 388 million. That represented an increase of around EUR 104 million compared to 2024.
What's the main driver? The main driver is higher auction revenues from cross-border transmission capacities. As required by regulation, these revenues will be absorbed in future regulatory periods. Now looking ahead to 2026, we expect EBITDA from the electricity grid to be around EUR 300 million. Regulatory framework remains supportive. The allowed WACC increase compared to the previous regulatory period. In addition, ongoing investments are expanding the regulatory asset base and therefore supporting growth and earnings over time. At the same time, our strong investment activity leads to higher operating costs that are reimbursed by the regulator with a time lag of approximately two years. This timing effect, together with movements in the regulatory account, is expected to have a negative impact on our P&L of around EUR 50 million in 2026.
By the end of 2026, the regulatory account balance is expected to reach approximately EUR 590 million. Regarding the allowed return, Austrian Power Grid receives a WACC of 4.16% for old assets, i.e., assets commissioned up to 2022, and between roughly 6.1% and 6.3% for new assets commissioned between 2024 to 2026. That results in an average WACC of around 5.1%. The WACC from new assets will be updated on an annual basis as part of the tariff-setting process. Now turning briefly to our gas grid business, Gas Connect Austria. Gas Connect Austria generated an EBITDA of approximately EUR 25 million in 2025.
Now this decline compared to the strong results in 2024 reflected higher fixed costs, particularly increased inter-TSO payments to TAG. For 2026, we expect EBITDA from Gas Connect Austria to amount to approximately EUR 65 million under IFRS. Now with this, I would like to hand over to Andreas Wollein. Please, Andreas.
Yes. Thank you, Peter. Let me continue with a quick description of the developments in all other segments. Generation from thermal power plants was up, as mentioned at the beginning, by 755 GWh to 2,054 GWh. EBITDA increased to a value of around EUR 50 million, mainly due to positive effects from the valuation of future energy derivatives. The contribution from Flex products increased as well by EUR 5.3 million. The contribution from Kelag, the provincial utility of Carinthia, has decreased from about EUR 100 million to EUR 84 million. This year's decreases in earnings is mainly due to the reduced hydro availability, lower achieved prices, and the reintroduction of the windfall tax in Austria.
Moving to the next slide, to the non-recurring effects, let me briefly comment on the development here. During the year, we recognized impairments of around EUR 50 million and reversal of impairments of EUR 50 million as well. The impairments mainly related to renewable assets and projects in Spain, as well as the damage to the transformer at Limberg I. The reversals were also associated with renewable assets and projects in Spain. Overall, the net effect on EBIT level was broadly neutral. In the financial result, we recorded a non-recurring effect of -EUR 31.6 million, primarily related to the measurement of an obligation to return an interest in the Jochenstein hydropower plant. On the tax side, there was a positive one-off effect of EUR 62 million, mainly driven by the remeasurement of deferred tax positions following the Investment Acceleration Act approved by the German Bundesrat.
Minority interest had a negative effect of around EUR 9 million. Overall, the net impact of these non-recurring effects on group net income amounted to approximately EUR 17 million. On page 12, I would like to summarize quickly the development of the key figures for 2025. As a result of the aforementioned factors, EBITDA declined by approximately 21% to EUR 2.7 billion. Depreciation increased by 8% to EUR 625 million, mainly reflecting the higher investment base, particularly at Austrian Power Grid and in the hydro segment. The financial result decreased from 52 to EUR 3.8 million. This development was mainly driven by a weaker contribution from Kelag and lower interest income from money market transactions. At the same time, interest expenses declined due to lower costs related to money market transactions and bank loans.
Income taxes amounted to EUR 422 million. Consequently, the reported group result declined by 20% to EUR 1.489 billion, while the group result adjusted for non-recurring effects decreased by 25.5% to EUR 1.472 billion. Finally, let me highlight our continued investment momentum. Additions to tangible assets increased from EUR 1.16 billion to EUR 1.29 billion in 2025. The main investments were related to the pumped-storage power plant, Limberg III, grid expansion at Austrian Power Grid, as well as renewable projects in Spain, Austria, Germany, and Italy. On page thirteen, let me comment on our cash flow and financial position. In 2025, operating cash flow decreased to EUR 1.9 billion.
This development was mainly driven by lower contributions from the hydro segment due to weak hydrological conditions, changes in margining payments related to hedging transactions, as well as high income tax payments. Free cash flow after dividends declined from +EUR 145 million to -EUR 789 million in 2025. This was primarily the result of the lower operating cash flow and higher investment activity during the year. As a consequence, the net debt to EBITDA ratio increased to 1.0 as of 31st December 2025, mainly reflecting lower EBITDA and higher net debt resulting from the negative free cash flow.
Based on the results for the year, we will propose a dividend consisting of an ordinary dividend of EUR 2 per share and a special dividend of EUR 1.15 per share for the 2025 financial year at the annual general meeting on April 21st, 2026. This corresponds to a payout ratio of 73.5% of the reported group result and 74.3% of the group result adjusted for non-recurring effects. Now let me hand over again to Peter for his final remarks on the CapEx, the new CapEx plan and the outlook.
Thank you, Andreas. Now, for the period from 2026 to 2028, we're planning a total CapEx of approximately EUR 6.8 billion. Of this amount, around EUR 4 billion will be allocated to growth investments and around EUR 2.8 billion to maintenance investments. The largest share of investments will be directed towards the expansion and modernization of the regulated Austrian electricity grid, accounting for around EUR 2.5 billion. In addition, we will continue to invest significantly in renewable generation projects with around EUR 2 billion and in hydropower projects with approximately EUR 1.5 billion over the next three-year period. Now, geographically, the majority of the investments will be concentrated in our core markets of Germany and Austria, representing around EUR 5.1 billion, while around EUR 0.9 billion will be invested in Spain.
For 2026 specifically, we expect total investments of around EUR 2.4 billion, of which approximately EUR 1.5 billion will be growth investments and around EUR 800 million will relate to maintenance. Now, I'm coming to the end of our results presentation with our outlook for 2026. As usual, I would like to highlight our key sensitivities, based on our position as of the 31st of December 2025. A deviation of ±1% in hydropower generation would impact the group results by approximately EUR 14.3 million ±. A similar deviation in wind and PV generation would result in an impact of around ±EUR 1.8 million.
Of course, the price sensitivity, a change of ±1 EUR per megawatt hour, would affect the group results by approximately EUR 6.1 million. Now, based on the assumption of average hydrological conditions and average wind and solar generation in 2026, as well as the current opportunities and the risk profile of the group, we expect reported and adjusted EBITDA to be in a range of approximately EUR 2 billion-EUR 2.5 billion, and the reported group result is expected to amount to approximately EUR 900 million-EUR 1.2 billion. This outlook assumes that there will be no additional material, legal, or regulatory changes affecting the group.
For the 26th financial year, we intend to maintain our dividend policy and plan to distribute between 45%-55% of the group results after adjustment for non-recurring effects. Now, with that, I would now like to open the call for Q&A.
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from Julius Nickelsen from Bank of America . Please go ahead.
Great. Thanks. Thanks for the presentation and taking my question. I have a few. I'll try to keep it to three. First topic is on the guidance that you provided, the EUR 900 million to EUR 1.2 billion. The lower end of that, given where prices have moved, seems quite conservative. Are you already assuming any impact from the current noise that is in the market about excluding carbon from power prices? You know, your view on this whole situation would be quite interesting. Second is on the CapEx. I mean, there's quite some upgrade in, like, the maintenance part of the CapEx, but also the growth coming from renewables, maintenance more from the grid. Could you just explain what are they like, the moving parts, what has changed?
The last one is on the levy. I mean, you already alluded to it in the presentation, that you expect there to be a change announced in the summer. Do you believe there's scope for VERBUND to kind of regain upside to power prices by moving towards, like, more of a per megawatt hour tax rather than on prices? Or, do you think the current situation in the Middle East has changed that likelihood a little bit? Thank you so much.
Yeah. Great. I will start with the third one. We don't know. That's the very straight answer. Obviously, we are discussing the various models with the ministries. However, it's a movable feast, and it has been complicated by the Iran crisis. That is something. When the discussion started, nobody had on the radar screen. Everybody looked at the forward prices of gas coming down. Everybody looked at forward prices of electricity. Then of course, the conclusion was, the cap doesn't make sense when the prices are below 90. However, the energy crisis contribution needs to continue until 2030. The finance minister has said it should be around EUR 400 million for the energy sector.
Our assumption has always been, that, you know, our share of that would be around 40%. Just to give you the framework within which we were discussing things. Now, we have tremendous price volatility since the twenty-eighth of February. On that day, not only gas prices and oil prices jumped up, but our share price as well, in sympathy with those higher energy prices. I think the assumption has been, well, we might be able to take advantage of higher power prices. The answer is yes, partly, but, you know, there continues to be a cap. At this point in time, I would really love to tell you something different and give you a more precise answer.
At this point in time, we're not exactly sure if the fact that with higher power prices, they might be able to get an interesting contribution from, you know, from that specific title, i.e., from the old system or if they're going to change it. The one thing that is important here is that it's not just a Lex Verbund. It is really covering the entire energy sector. You know, for us, the cap is highly significant. For the rest of the industry, you know, that might not be one of the driving factors. It might be other things where, you know, the contribution needs to be made. As a result of that, it remains to be complex. There is no other word for it.
Because it is complex and because we need to put something into our planning, we've basically said, you know, we think that it's fair to say that around EUR 200 million in 2026 could be the energy crisis contribution. Now on the CapEx. The maintenance CapEx for us is very important. I make two distinctions. Maintenance CapEx on the regulatory side and maintenance CapEx on the hydro side. On the regulatory side, maintenance CapEx is as valuable as growth CapEx because it goes into the regulatory asset base.
If we maintain a transformer station or if we maintain cables going from A to B, that is just as important, not only from a technical point of view, but also because it adds on to the regulatory asset base, which is the foundation for how much we make out of the regulated business. On the hydro side, it is different. On the hydro side, the maintenance is very important because we want to have as many of our hydropower stations and pumped storage stations online, as much as possible. We have actually a very good percentage.
You know, we are in areas between 98%, sometimes more, sometimes a little bit less, which is really amazing for hydropower stations, considering the fact that maintenance can be pretty complex in those technical installations. That is something where we profit directly from our very, very good maintenance levels. I would say that every single one of our hydropower stations is at a very, very high level in terms of quality. That is something we don't save money on because we think that it might help short term, but it's definitely negative medium to long term. Yes, on the guidance, yeah, I don't know if it's conservative or not. It depends.
I mean, we are at the beginning of the year, and quite frankly, last year when we had this call, you know, I thought that power prices are going to be the key driving influencing factors. We were hit by the fourth driest year ever since we began looking at the hydro coefficient, which was in 1926. That was, you know, a top five year within the last 100 years, and nobody expected that. That was obviously, you know, the key factor for our lower earnings in 2025. Our guidance, as you know, at the beginning of the year is relatively wide.
When we have more data points in three months, we will obviously give you a bandwidth that is not as wide, and we will continue that until the end of the year. This is at the moment, given all the volatility we're seeing in the market, that is our best guess at this point in time.
Okay, great. Thank you so much. Just a quick clarification. You said on the levy that you assumed EUR 200 million. But the guidance was, like in the presentation, you said EUR 150 million. I'm just trying to make sure which number to use or which one is in the guidance for the full group.
EUR 200 million on the EBITDA level for 2026.
Okay. Thank you.
As a reminder, anyone who wishes to ask a question may press star and one at this time. The next question comes from Louis Boujard from ODDO BHF. Please go ahead.
Yes. Hi, good morning. Thank you for taking my question. Maybe just wondering if you could eventually provide a little bit more visibility on the EUR 200 million that you mentioned. Is it that current framework, and with the discussions that are expected in the summer, do you think that there is eventually a risk that it could kick in in 2026 and make it drift going forward in the year 2026? I appreciate that at this point in time, it may be difficult to give a precise number for the next years, but maybe is it any risk that we should expect in 2026 related to these discussions?
Regarding also still on the topic of political discussions maybe, on the EU ETS discussions in Europe, how do you see them evolving and what do you think could be the impact on your everyday business considering that it's going to be a topic in the relatively short term? Maybe another one, the last one related to the business itself. I was wondering, notably in Spain, for instance, are you going for hybridization with photovoltaic and battery systems? I understand that maybe yes. If yes, could you please elaborate on the potential additional return that it could provide in terms of IRR? Not necessarily providing an absolute figures, but maybe a relative figures in terms of improvement that could be expected from this kind of investment in your view.
Thank you very much.
I will do the political question first. I will do sort of like, you know, how much we are putting into the 2026, as a quote-unquote reserve, for levy, and then a few other things which, you know, which I would like to share with you. I will answer PV plus battery. Maybe, Andreas, could you do PV and battery?
Spain.
Yeah, Spain?
Yeah.
Okay. On the political front, I would like to distinguish between two political factors which we need to observe and which can have an impact on us directly or indirectly. First of all, it is the European level. We have seen a large number of discussion points over the years and we have been discussing it on our conference calls in great detail. I totally understand why it is important to you because you are shareholders and it is important to us, and it has an impact on the power price, and it has an impact on our earnings.
At the moment, there is a clear desire, and I call it a desire because what we get from the European Union very often is what they wish for and what they would like to do, but very often we don't get specific frameworks. I'll give you an example. We have been discussing on this call ETS. I have been saying now for at least two years that I personally think that the ETS is the most direct tool to lower power prices for obvious reasons. Because we're still within the merit order system, and you know, gas-fired power stations are the ones setting the price many hours during the year.
One key factor is not just the gas price, but also the CO₂ price. The CO₂ price is very important if you want to lower power prices. The European Union is discussing things they have no influence over. Like they say, "We would like to have more PPAs." Well, great. You know, there's nothing they can do. I mean, this is something the market, you know, needs to do. Demand supply for PPAs. European Union has no influence over that. The one thing they can really do is they can change the mechanism around the ETS. If they do, if the CO₂ price falls to 40 or 50, that will have a direct impact on the power price. That is something they have announced yesterday.
No details, they've basically said that they're going to look at the CO₂ price. They're looking at the Market Stability Reserve, and they will see if they can change the supply. They haven't been very specific, you know, if they are talking about more free certificates to the industry or the overall market. So that is something we all need to observe because it has an impact on the power price very directly. I could continue on the EU level, but I don't want to, you know, lengthen the discussion. On the national level, on the Austrian level, there of course we have a lot of different discussions. We have a discussion around the social tariff.
We have a discussion around retail prices being too high and what our contribution could be to retail prices. We have a discussion around, like in Germany, around an industrial price of electricity, and that industrial price of electricity should come down, and the energy sector, i.e. us, should make a contribution. This is why, you know, I said this number of EUR 200 when we talked about it before, because there are different components in there. Yeah, there is the levy in there with around EUR 140-EUR 150, the specific levy. Then, of course, there are other factors in there, which are being discussed, you know, which one can read about in the papers.
They have not been specifically decided, but they might come our way. This is where the EUR 200 million number on a national level comes from. Andreas, could you talk about
Yeah.
Spain, please?
Yeah. So you know, we are currently developing or constructing a couple of projects this year. I think it's around 1.1 GW of capacity for especially PV assets. So this is more or less related to the projects we acquired a couple of years ago. We have developed them and now they are, let's say, under construction. Yeah, so with the focus in this year and next year. So, with regard to profitability and optimization of profitability for the PV assets, you're right. We partially do hybridization with regard to returns. I mean, we potentially can increase returns by between 1% and 2%.
It's a little bit dependent on the project. We are also following other routes to optimize profitability. You know that there is a data center demand, obviously hyperscalers have a big interest in securing grid access, as the bottleneck. Also here we potentially have, for very specific projects an upside, when we enter into such kind of contracts, which could potentially also increase profitability by, let's say, by between 1% and 2%. Yeah. Which makes, I would say the overall investment in PV assets in Spain more profitable in any case by doing hybridization and combining it with data center demand. We can potentially, let's say, get higher returns than our WACC.
you know, we have to target to get WACC + 2%.
Thank you very much.
As a reminder, if you would like to ask a question, you may press star and one. The next question comes from Piotr Dzieciolowski from Citi. Please go ahead.
Hi, good morning, everybody. It's Piotr from Citi. I have three questions, please. The first question would be, I've seen from your presentation that your hedges in terms of volumes for 2027 are a little bit light. You just hedged at 2.8 TWh. There was a much bigger number on the one-year forward basis a year ago. Just wanted to understand why is this the case? Is this your expectation that the prices may rebound, or are you behind the schedule, or what's the situation there? Second question I have a little bit more technical, which is, we understand like how you could be impacted by the lower CO₂, but I just wanted to understand how the flexibility product would be impacted by the lower CO₂.
Of your EUR 250 annual contribution, would you see a lower number, and by how much? How to think about this anchor. You said that you can do nothing to promote this long-term PPAs, but if somebody asks you what would be the mechanism to enforce on the companies like yours the introduction of more broad usage of PPAs that would be below the kind of a merchant prices, how could that happen? Is there any mechanism you could think about that authorities will come and say you have to offer, I don't know, industrial price at EUR 60 or whatever. Is there a mechanism you could force VERBUND to offer such product? Thank you.
Okay. I will start with the PPA mechanism. Quite frankly, I don't see any mechanism where the EU could influence the development of the PPA market. I mean, the only thing they could do is that to create some kind of support mechanism for PPAs. You know, whoever does a PPA gets a monetary contribution because it increases the long-term stability of the system and it stabilizes price development because it is taken, obviously, it's taken out of the market. How to price something like that and who would be paying for it? I don't really see it.
I think that at this point in time, but also looking forward, the only thing the EU will do is that they think that, you know, the better the PPA markets are developed, the better it is for price stability. On the flexibility products. Now the flexibility products are obviously influenced by the CO2 price. Because the two different aspects. First of all, what we have in our reservoirs, we will only turbine out of our reservoirs when the prices are very high. The prices are very high when a gas-fired power station is the marginal power producer.
At that point in time, that specific price is influenced by the gas price and by the CO₂ price. That would mean that at that point in time, we would be turbining out of our reservoirs. When you think about pumping and turbining, we obviously pump when the prices are very low. That would in most cases be prices where the gas-fired power station is not in the merit order. But those would be prices mainly defined by renewables or hours where renewables are very strong, so power prices are very cheap. That is where you would pump. Of course, you would turbine again according to the explanation which I've given before.
The spread and flexibility pricing is influenced by CO₂ prices.
So just-
Yeah.
If I can follow up on this. Do you know roughly, so what's the turnover of your pumping and releasing in terawatt-hours? Is this a very easy way to think about it that let's say you pump and release certain amount of terawatt-hours and therefore you kind of lose just a peak prices, which is a gas marginal price setting for the release of the water? Is that the way to think about it?
Well, the way to think about it is, in order to understand the revenue potential of pumping and turbining and the reservoirs is a function of volume and spread. So you need.
Okay.
You need a high spread and as much volume as possible. That is really the relatively simple methodology behind it. On hedging, you were asking for more detail on where we are today?
No. Why are your hedges level seems to be relatively low for 2027? It's just a 10% that you sold.
No, no, Piotr. I think hedging levels are quite accurate and very consistent with our long-term hedging strategy. If you would, I mean, we always communicated that we sell roughly 60% of our annual volumes on annual futures. We start usually to sell, let's say, yeah, 1.5 years before delivery. Usually I would say, I mean, we are now hedged as of March 13, we are hedged about, yeah, 18%. Let's assume we started basically at the beginning of the year and do it relatively constant. That would mean that we should have hedged 15% at the end of-
Okay.
March, yeah. I think it's very consistent with our long-term hedging strategy. Yeah.
Okay. Thank you very much.
The next question comes from Alberto de Antonio from BNP. Please go ahead.
Hi. Thank you so much for taking my questions. I have a couple of follow-up regarding the guidance for 2026. I want just to make sure that on the EUR 200 million impact from the energy crisis, EUR 150 is directly related to the levy. The remaining amount, what is including? Is it including any potential change in the ETS mechanism or the merit order mechanism, or this will be an extra impact? My second question will be if you could provide some guidance on what are you including in your guidance regarding the other segment on Kelag and the thermal production for 2026. Also, if you can give us some visibility on the sales segment. Thank you.
Okay. Now on the EUR 200 million. First of all, the EUR 200 million, and that is really important, is a movable feast. Because here we are talking about areas where we're giving a good guess at the beginning of the year, of an area where we really don't know what the model will be, what the decision by, you know, by the politicians will be, what the exact structure of the level will be. And the EUR 200 million includes a number of factors. The factors are, you know, all the discussions which we're currently having. We are having a discussion around a social tariff. We are having a discussion about an industrial price.
Of course, we have lowered retail prices, and you know, the lowering of the retail prices is going to cost us something. It's going, you know, that cost is going up, obviously, because procurement costs will go up as a result of the Iran crisis. That is a component there as well. The way you should look at the EUR 200 million really is as not just the energy crisis contribution as defined by, you know, last year's law, but should really be understood as, you know, our rough estimate on potential things to come. If it is lower, great. It could potentially be higher. We don't know. We think it's going to be lower.
Hopefully we will know more when we have our next conference call. Andreas will give you the answers on Kelag.
Alberto, I'm not sure if I understood all your questions, but I think with regard to planning details, for this year, I think for Mellach, the Mellach contribution, I think we planned around EUR 40 million. Then you had an additional question with regard to
Yeah. I was asking about the thermal generation contribution, so Mellach and Kelag also, the associates and own, in addition, the sales segment.
Yeah. Mellach is also around EUR 40 million. Yeah. The third one?
The sales segment. Like, if you could give us a split between the two sub-segments.
In the total sales segment, I think we had a planned contribution of around EUR 140 million. I think, Alberto, it's better to do the details in a separate call afterwards. Yeah. For sales segment, we had around EUR 140 million. Yeah.
Okay. Thank you.
We do have a follow-up question from Julius Nickelsen from Bank of America . Please go ahead.
Great. Thanks for taking follow-ups. I just wanted to ask about the hydro coefficients that you've seen so far this year and the latest hedging numbers. Maybe just to also talk about data centers in this call for once. I think Google has received permitting approval for a data center in Kronstorf in January. It would be interesting to hear if you have any conversations with these hyperscalers. Are they interested to sign PPAs and so on? It would be interesting to get your call on this. Thank you.
Now, I will give you. Well, first of all, hydro coefficient year to date is 0.81 for yesterday. So we have started the year, unfortunately, with a low hydro coefficient, 20% below the long-term average. At this point, I have to say that that is not necessarily an indication for the rest of the year because weather, as we all know, is very unpredictable. The second one, yes, I can give you an update on the most recent hedging numbers. For 2026, we are 71% hedged, with a mark-to-market at EUR 92. Strongly influenced, of course, by the market that has moved for the unhedged volumes because of Iran. The same has happened for 2027.
There we are hedged 18%, with a mark-to-market of EUR 95. That has gone up as well. However, when you look at 28, there we only hedged around 2%. There the mark-to-market is EUR 78. You see that we have a backwardation, of course, in the gas prices, but we also have a very significant backwardation in terms of the power prices. The market obviously assumes that once Iran is over, according to Mr. Trump, it has been four weeks, right? What he said. Pentagon has recently said six weeks, so we shall see. That is something where, after the war, things should normalize. This is also reflected in the forward prices. What's another one?
The other one was on data centers.
Data centers. Yes. Data centers, of course. Data centers, yeah. You know, they're an extremely important area. I totally get it. I think more so in the U.S. than in Europe. But yeah, Google has been planning on a very large data center in Austria. The connection is done directly into the Austrian Power Grid, which is owned by us. That is almost now standard that the large data centers try to, you know, to get directly into the substations and into the high voltage grid. That's the question you asked specifically.
In terms of PPAs with the hyperscalers, I mean, I observe the U.S. market with great detail, and I've seen very long contracts at a premium. I wish I could tell you the same is true for Austria, or even for Europe on a wider scale. We don't see the same generosity for me to say for the hyperscalers. Yeah, we're talking to all the hyperscalers, but they are sometimes, you know, they want a discount to the forward curve. It's not the same story that we see in the U.S.
I could be wrong, but my personal opinion is that in the US, where you know, where the large language models are being trained, where the next generation of what Anthropic and all their friends are working on, and we don't know exactly what it is, but that is happening in the States. That requires a lot of electricity, energy, infrastructure, and chips, of course. That is so important, and that is so critical in terms of the competitive battle of the hyperscalers in this market, that they just need to make sure that in their home market where you know, all the innovation is happening, that they have enough electricity for a long period of time. This is why they're willing to pay a premium.
I think in Europe, they're more focused on applications. They are more focused on inference, and they're more focused on data centers, but a different type of data center from the US.
Okay, great. Thank you so much.
Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Peter Kollmann for any closing remarks.
Yes. Andreas and I, we would like to thank you, as always, for a conference call, which we appreciate. We really like to have those discussions with you, particularly against the backdrop of an extremely volatile market. We are, just like you, observing in great detail all the news and all the data points which we get from the energy markets as a result of the Iran crisis. All that has an impact. I look forward to talking to you in three months' time, when hopefully for all of us the war is over and we are going to enter quiet waters. Many thanks, and have a nice day. Bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for choosing Chorus Call, and thank you for participating in the conference. Goodbye.