Grenergy Renovables SA

MAD:GRE

Earnings Call Analysis

Strong Revenue and Significant Asset Rotations Highlight Q1 2024

In the first quarter of 2024, Grenergy saw a 15% rise in total revenue, reaching EUR 110 million, and a remarkable 63% increase in EBITDA to EUR 23.3 million. This growth was driven by successful asset rotations and high realized prices, despite a 4% decrease in total output due to asset disposals in Peru. The company secured EUR 3.3 billion in revenue over 15 years through PPAs, and its net debt rose to EUR 335 million, maintaining a stable leverage ratio of 5.7. Significant investments focused on the Oasis Atacama and other projects, promising continued growth .

Strong Financial Performance Despite Challenges

Grenergy reported a notable financial performance in the first quarter of 2024, with total revenue rising to EUR 110 million, marking a 15% increase compared to the previous year. This was primarily driven by the development and construction division, which benefited from the sales of wind and solar assets in Peru. The EBITDA experienced a remarkable surge of 63%, reaching EUR 23.3 million. This demonstrates the company's ability to grow even while facing challenges such as the disposal of its Peruvian wind assets.

Successful Project Rotations and Future Prospects

The sale of 175 megawatts of solar and wind assets in Peru for USD 150 million signifies the successful execution of Grenergy's asset rotation strategy. The management highlighted that this rotational strategy aims to bolster investment for future projects and has already achieved 55% of its EUR 600 million target for the 2023-2026 period. These transactions contribute significantly to the company's ongoing initiatives, ensuring a robust pipeline of projects in both Spain and Latin America.

Increased Capital Expenditure and Strategic Investments

The total capital expenditure (CapEx) reached EUR 73.8 million, consistent with the previous year. The company anticipates an increase in CapEx in upcoming quarters, aimed particularly at the Oasis Atacama project. A substantial 66% of this investment is allocated to projects in Spain, signifying a strategic focus on recognized growth areas.

Debt Management and Cash Position

As of the end of the quarter, Grenergy's net debt stood at EUR 335 million, a rise attributed to ongoing CapEx investments. Despite this increase, the leverage ratio remained stable at 5.7. A strong cash position of EUR 164 million was noted, bolstered by proceeds from the asset rotations in Peru, which contributed nearly EUR 116 million to the treasury. This financial stability offers a cushion as Grenergy navigates through its capital-heavy projects.

Oasis Atacama as a Transformational Project

The Oasis Atacama project holds considerable promise, with significant milestones anticipated in the coming months. The company is currently in advanced negotiations for a Power Purchase Agreement (PPA) for Phase 5, aiming for closure before the end of September. Project financing for the initial phases is nearing completion, marking a pivotal moment for Grenergy's growth and market presence.

Market Conditions and Future Outlook

The forecast for Grenergy remains optimistic, underscored by contracted revenues of EUR 3.3 billion over 15 years. The management indicated that merchant revenues would comprise only 10-15% of total revenue in 2024, with the bulk secured through long-term PPAs, ensuring predictable earnings amid market volatility. They anticipate a significant increase in project scale and profitability as they utilize innovative energy storage solutions.

Sustainability Initiatives and Environmental Commitment

Grenergy showcased its commitment to sustainability by successfully implementing two major initiatives, including the publication of a climate change risks and opportunities report and achieving a significant reforestation project covering 255 hectares in Chile. These actions not only reflect corporate responsibility but also align with growing investor appetite for ethical and sustainable business practices.

Strategic Positioning and Competitive Landscape

The company is strategically positioned to benefit from the increasing demand for renewable energy, especially in regions like Chile and newer markets such as Mexico. Notably, the management expressed confidence in replicating their successful business model from Oasis Atacama across other geographies, which could offer lucrative opportunities for growth in the medium to long term. However, they raise concerns about the overregulation and varying market conditions across Europe, which may impact future growth strategies.

Executive Changes and Corporate Governance

With recent changes in leadership, including David Ruiz stepping down as CEO to focus on strategic roles, Grenergy aims to enhance operational governance as it continues to expand. The company is committed to maintaining a clear organizational structure to manage its growing international presence while ensuring that it can respond to market conditions and investor needs effectively.

Earnings Call Transcript 2024-Q1

[Marta Castro, executive]

Good morning, and welcome to Grenergy's First Quarter 2024 Results Presentation. I'm Marta Castro, Investor Relations of Grenergy. I'm joined today by David Ruiz, our Executive Chairman; Daniel Lozano, Chief of Strategy and Capital Markets Officer; and Rocio Fernandez, Head of Sustainability. They are going to take you through our business, financial and sustainability review. At the end of their presentation, there will be a Q&A session for sell-side analysts.I hand over to our executive chairman, David Ruiz.

[David Ruiz de Andrés, executive]

Thank you. Thank you, Marta. And as you [ say ], [ it's ] my first quarterly presentation as Chair instead of CEO. So I think I will -- we will jump to the highlights of the period of the first quarter. Close to 15 gigawatts of pipeline of solar pipe. That's, I think, slight growth compared to the previous quarter, right? We are a bit more stable in -- with 11 gigawatt hour. That's -- we want to insist that whenever we introduce new projects in our pipeline, we really mean it. And I think what we will see with the storage is that, we'll see that the very high percentage of the projects will be in -- under construction, on the operation very soon. I'm talking about the storage projects, so we really want to make sure that when we introduce a new project in BESS, hybrid, it's something that we can build in the short, medium-term.Jumping to, well, the key projects advancing, right, where we currently have 1.7 gigawatts and 1 gigawatt hour already in operation and under construction. There will be a slide on Oasis Atacama and it's really well on track. It's a very transformational project for us, so we want to give as much information as possible. So there will be 2 slides in the presentation with focus on Oasis Atacama.Successful delivery on asset rotation and financing. That's a very important part of our value proposition. It's already been announced in the full year presentation, but now it's reflected in the accounts of the first quarter. I'm talking about the sale of close to 175 megawatts of solar and PV and wind assets in Peru for USD 150 million. And well, the deal was completed -- completely completed in first quarter 2024.I think we'd like to remark that the equity proceeds already at around 55% of the [ EUR 0.6 billion ], the [ EUR 600 million ] target of proceeds that we were targeting for 2023-2026 has already been obtained. So we are really well on track considering we are reporting first quarter 2024. So we are not even halfway. I think it's very important to remark that EUR 175 million have been obtained, have been secured for the construction of 300 megawatts of solar PV assets in Spain.Moving to financial results. EBITDA up 63%. This is driven by the asset rotation. We mentioned net income up 27% to EUR 6 million. I think we have a healthy balance sheet despite the continued CapEx efforts and we'll also consider the share buyback carried out. The total leverage stood at 4.7x and the corporate [ level ] at 2.3. The share buyback terminated and so far we have invested EUR 36 million, and we have purchased back 4.3% of the share capital.Moving -- sorry, I forgot to mention about our sustainability highlights. I think in terms of our highlights, Rocio will give you plenty more details. I'm very glad to mention that 100% of the objectives committed for the first quarter were -- have been accomplished. I additionally would like to remark specifically the publication of the TCFD. Rocio will give you more details of the report detailing how Grenergy manages the climate risks and opportunities and there's been a great [ effort ] on this field.And finally, [ and ] as -- just we would like to remark an example of our commitment. We've created a positive environmental impact in the communities where we operate. We will give you some interesting details about the most ambitions -- ambitious reforestation plan we've ever done. 255 hectares of native forests in the PV plant of Gran Teno in Chile. We were lucky, we could explain this to the [ President ] of Chile in the inauguration of the plant 1 month ago, and it's been one of the most ambitious reforestation projects this year in Chile. So it's -- we're very proud of this effort.Moving to the platform overview. Just -- well, very quickly, [ 15.6 ]. In this case, we are including all the pipeline plus the plants in operation and 11 gigawatt hour, right? I think assets in operation and under construction 1.7 gigawatts of solar and 1 gigawatt in BESS. I think this KPI is getting more and more important, right? I think it's something great that we can already show that we have 1 gigawatt hour of BESS under construction, right, as part of Oasis Atacama. These figures already exclude the wind and solar assets in Peru that were sold in the first quarter in 2024.And I think we'd like to remark that the 3 platforms are well balanced, right? It [ stood ] -- we're executing a lot more now in Chile and in Spain, but we are working very hard in the new markets that will be extremely important for us as early as second semester of 2025 and of 2026, 2027. So everything remains on track.We'd like to give all the information country by country, region by region and, whether it's solar and it's BESS. I think our solar PV keeps growing. Again, we'd like to insist, we want to create quality product, quality pipeline to make sure that wherever we invest our money in development is -- we are talking about projects we can actually build one day, and we can remain having a very high success rate here as we have done in the last 15 years, right, [ well ], 16 years already.Pipeline growth in Mexico and Peru. Keep an eye in Mexico, I think we'll get good news from this market in the future. Everything is indicating that it will be an important market. Again, nothing has been done in the last 5 years. It has -- we have this [ near sharing ] effect with the U.S. There's a very high demand of energy. So I think it will be a very, very interesting market to look at. And you know there are elections in a matter of 2 weeks' time. And no matter who wins, both candidates have shown a great interest in developing renewals faster.Our first development in Romania. Stable evolution compared to last term in BESS, but I think we will show some increases in the next few quarters, right? Chile, of course, remains our largest platform for hybrid projects supported by Oasis Atacama. We are analyzing all markets, and we are working very hard to replicate this scheme, this success we are having with Oasis Atacama in other geographies, right?Moving to -- this slide, I think, it's quite interesting. It's -- there's been a lot of noise about the low merchant prices in Spain in the first quarter, right? I believe we have a lot less exposure than other players, while considering a very high percentage of -- our IPP production is out of Spain and also considering we have a very high percentage of our production contracted, right? Still, this was driven by a very initial wet, windy conditions, right? I think it's something we'd like to remark.That said, we have a very defensive business model. I think we have predictable earnings. We give visibility. And I think our strategy of contracting most of our energy production, that at one point seem 3 years ago, that some players were not contracting such a high percentage. We were contracting minimum 75%. And I think this is the right strategy, and it's paying off now.Merchant revenues were only 8% of our energy revenues in the first quarter, and we expect them to be maximum between 10%, 15% in -- during 2024. Let's keep in mind, we have -- we are delivering around 1 terawatt hour per year, right, now, but we have PPAs signed for at least 3.3 terawatt hours, so -- from 2026. So that gives you the size of our IPP division is going to be 3, 4 times bigger than it is now, with a higher price capture, thanks to the PPAs we are signing with BESS. So it will be a completely different scenario as early as beginning of 2026.We have contracted EUR 3.3 billion of revenues over 15 years. And well, that's including the PPA side for already most of the phases of Oasis Atacama.Moving to Oasis Atacama. We had a very busy start of the year in terms of [ moves ]. Well, we signed the PPA for Phase 4 with an investment-grade global utility. We also, in January, announced that the first supply agreement for Phases 1 and 2 have been signed with BYD. We believe it is the right partner for this project, for these phases. We are now working on the new phases, and we could be with BYD or some other leader in BESS systems.We expect the next months to be very busy as well. The PPA for Phase 5 is in advanced negotiations, right? Hopefully, before the end of September will be completed, right, maybe earlier, but it takes a very long time to secure a PPA and negotiate the contracts, right, but we are really well on track.The [ project ] finance for the first 2 phases is expected to be -- get closed very soon. It will be a very important milestone for the company. It's by far the largest PPA we've ever signed. We are bringing 5 international banks. It's as -- in a syndicate, and it will be a very important milestone for us. And I think for Chile as well that is very -- it's going to be a very unique project with a very unique finance, right?We -- considering this -- it's a very important project for us, in this slide we want to give even more information in details. This is what we have -- how we are advancing in Oasis Atacama. We provide more color on the next milestones that will be achieved in next months.As I was saying, we are expecting even at the end of June, July to finalize the closing of the first 2 phases, right, for [ Quillagua ]. We are -- when we say FAT, these are the [ factory ] asset and tax, I mean all the batteries for Phases 1 and 2 are already under production. The first inspections will take place at the end of July. So first shipments will take place during September, right? So hopefully, we'll get the batteries in place at the end of October, November, right? The PPA, where we are mentioning here that could get closed in September for Phase 5, again, hopefully earlier, that we have somewhere in the middle, but hopefully, we can announce this PPA as well. So all Oasis Atacama will be contracted.Our focus in Peru in the deals we've completed in the first quarter. It's very good deal for us. We announced them in late January. We sold a plant of -- solar plant of -- new construction plant, 97 megawatts Matarani project to Yinson, which is a utility from Malaysia, right, from -- for USD 90 million. And also we agreed to rotate the sale of 77 megawatts of wind assets we -- to Engie for USD 60 million, right? All proceeds will amount to USD 150 million, and we are talking about an increase in valuation of [ 1.3x ] enterprise value/ invested capital.In -- as I was mentioning in the highlights, we have already rotated 643 megawatts with equity proceeds of EUR 340 million. I'm talking 2023 and first quarter 2024, and that already represents 55% of our targets for the period 2023 and 2026, we are really on track.All right, that's it from my side. I think I hand over to Daniel. Thank you.

[Daniel Herrera, executive]

Thank you, David. So let's move on to the financial review, which begin on Slide #10. We experienced a 4% decrease in total output. This decline was primarily due to the disposal of our Peruvian wind assets, specifically Duna Huambos. Contracted volumes in the first quarter 2024 increased by 14%. This volume accounted to -- for 194,000 gigawatt hour and represented 77% of our total electricity production. However, our realized prices saw a 4% increase. This positive trend can be attributed to favorable PPA prices during the specified period and illustrated our defensive profile, particularly in the challenging market environment we had in Q1 2024.Additionally, on the right side, you will find a summary of the main financial KPIs that we will look into later. If you take a look at Slide 11, you'll notice that in the first quarter of 2024, total revenue reached EUR 110 million, a 15% increase and EBITDA rose to EUR 23.3 million, remarkable 63% increase, a breakdown by division, development and construction division. Duna Huambos wind project and the Matarani solar PV project, both as already mentioned, located in Peru, were the driving forces behind this division.Together, they generated nearly EUR 70 million in revenue. Energy division. Even though we have those disposal, the energy division revenue remained relatively stable. Higher realized prices helped offset the impact of lower output. Finally, in this quarter, the retail supply business we have in Chile achieved positive EBITDA once again with EUR 0.3 million. We anticipate that this trend will continue throughout the rest of the year.Turning our attention to Slide 12. We observed that in the first quarter of 2024, total CapEx reached EUR 73.8 million, aligned with the figure from the previous year. However, it is important to note that this amount will accelerate in the coming quarters due to the construction of the Oasis Atacama project. A significant portion of the CapEx was allocated to the construction of various projects, specifically 66% of the investment here in Spain, while the remaining 34% was in Latin America. Notably, this figure includes CapEx related to rotated projects such as Matarani in Peru and Tabernas and Jose Cabrera in Spain.An additional EUR 13.5 million was dedicated to development initiatives. And the cost per megawatt has reached an all-time low. Panels, as you may know, are now priced at just [ $0.10 ] per dollar, is -- including the interconnection line, the current CapEx stands at approximately [ EUR 2.4 million ] per megawatt. This reduction is attributed to the expansion of global industry, capacity and increased polysilicon production. Despite higher interest rates, the impact is more than offset by CapEx deflation and the good PPAs we are closing. As a result, IRR remains stable and attractive at double-digit levels.Moving on to Slide 13, which provides insight into the cash flow for the period. A key message are that, well, there was a working capital outflow of EUR 17.5 million. CapEx has primarily been self-funded through asset rotation and, of course, project financing. As David said, we have already terminated our share buyback program totaling EUR 36 million, equivalent to 4.3% of company shares. And, well, as we close this period, our cash position stands at EUR 164 million, not only the net proceeds from asset rotation in Peru positively impacted our treasury balance, contributing nearly EUR 116 million.Now if you can look at Slide 14, our net debt increased to EUR 335 million primarily due to CapEx investment. However, despite this increase, our total leverage ratio remained stable at a similar level compared to previous year at 5.7. The disposal of Peruvian assets had a favorable effect on our corporate leverage. Notably both projects were free from non-recourse that -- which contributed to improving our corporate leverage position. Also bear in mind that our recent news regarding the closing of the financing for Tabernas and Jose Cabrera implies shifting corporate debt into non-recourse debt for the total CapEx already incurred. This has contributed to further improve our corporate leverage ratio. Taking both factors into account, our total corporate [ leverage ] ratio stands at 2.3x.And as announced during our Capital Markets Day held in November, our investment plan for 2023-2026 will be self-funded. We are achieving this through our asset rotation strategy, which, as David said, is already 55% completed.Thank you, that is all from my side. I'm going to hand you over to Rocio, who is going to explain the main sustainability actions.

[Rocio Fernandez, executive]

Thank you, Daniel, and good morning, everyone. I invite you all to follow the details of the progress in ESG matters during the first quarter of 2024. I am pleased to announce that the 2 goals committed for this period were successfully accomplished. Firstly, a climate change risks and opportunities report according to the TCFD recommendations was approved and published. Secondly, the Sustainability Report 2023 verified by a third-party for the second consecutive year, was also approved and published.Now moving to the next slide. Let me give you further details about the TCFD report. This document was elaborated to properly disclose the climate change risks and opportunities in order to show our stakeholders how Grenergy addressed and mitigates them through a powerful governance structure and strategy together with effective metrics and targets.Grenergy evaluates and mitigate climate physical risks in accordance with the most conservative [ climate ] scenario, resulting amongst the most impactful ones, as you can see in the right side -- in the right hand, thermal stress, temperature variability and floodings. Apart from those physical risks, Grenergy also manages and mitigates transition risks with a significant impact and a high probability of occurrence such as technology, market, resilience and product risks.Finally, in the next slide, I would like to share with you an environmental initiative that took place in the Gran Teno plant in Chile, proving once again our strong commitment to the environmental and social positive impacts. In the picture you can see our local teams participating in the reforestation of more than 250 hectares of native forests with local species using an innovative technology with high efficiency rates and with no need of irrigation water, just rain water. We are really proud of this initiative, and we hopefully repeat this again in another plants.So that's all from my side. Thank you very much for your attention.

[Marta Castro, executive]

Thank you very much, Rocio. We are now moving to the Q&A session. [Operator Instruction]. We will now begin the Q&A session with Fernando from RBC.

[Fernando Garcia, analyst]

I have -- sorry -- two. The first one is about the Atacama project. So there you are maintaining your CapEx for batteries and solar. But since then -- since you announced this CapEx battery impact, [ they ] fell significantly [indiscernible] [ gross ] as well [ volume cost ]. So let me ask you, there -- if you see any upside there are in terms of returns? And as a follow-up of these questions, taking into account potentially you see lower CapEx, what will be the strategic decision of the company, just to have less CapEx or to move to additional projects and doing the same CapEx that you announced in your CMD in November? And then the second question is on a follow-up about the divestment of Ayora.

[David Ruiz de Andrés, executive]

[indiscernible]

[Daniel Herrera, executive]

David, can you hear us? You cannot hear us. Okay, sorry, Fernando. David has not been able to listen to your question.

[David Ruiz de Andrés, executive]

I had a problem with my...

[Daniel Herrera, executive]

Okay.

[Fernando Garcia, analyst]

[ Shall ] I repeat or...

[David Ruiz de Andrés, executive]

No, it's okay. If you were answering, Daniel, go ahead.

[Daniel Herrera, executive]

No, no, no. If you can repeat, Fernando, maybe it's better.

[Fernando Garcia, analyst]

Yes. So my first question, it was about CapEx of batteries and solar that you maintained the same figures that months ago and taking into account that battery packs, they fall significantly recently, and same thing in [ volume cost ]. So I mean, my question there, if you see any upside in terms of returns based on this declining potential CapEx? And then what will you -- what will be the -- your strategic decisions [ you get ] to do the projects -- the same projects with lower CapEx? You will move to additional projects or you just will reduce your net debt? And then a follow-up question about Ayora, if -- is the process of divestment of Ayora at the moment?

[David Ruiz de Andrés, executive]

Okay, thank you, thank you. I'm sorry about the problem. I wasn't listening to you at all. About the project of -- well, about the question about lower CapEx, it's -- we really -- we'd like to maintain the figures we gave in our Capital Markets Day which took place 5 months ago only, right? So -- but it's true that the trend is downwards. And that might -- it might be an opportunity, as you say, either to reduce debt and get a higher profitability of -- I'm talking about the projects that we still have not committed, right? Because the purchase of Phase 1 was already completely secure in the -- in January.But still, for the rest of the phases we have different choices. We could reduce the size of CapEx and debt and increase profitability of the projects, or we could increase the size of everything, we remain in the same CapEx, but installing more batteries. So will be a larger project with a higher profitability that's -- considering that we have the debt committed from 5 banks, I think up to USD 200 million for Oasis. It's also -- it could be an opportunity for the company, but we are analyzing both opportunities. And I think in our next update we will give some color, right, on this, [ yes ].About Ayora, well, is -- long-story has been, is under construction. We still believe mechanical completion could be accomplished at the end of this year. As you know, the government extended the interconnection and gave more flexibility. Initially our projects -- most of our projects in Spain were supposed to get connected in June, I think it was June, July 2025. Now these dates have been extended. That might be some good news for others. But for us, we're really on track, but we are kind of reorganizing the interconnection date with the rest of partners in the [ nodes ].But -- anyway, this part, as you know, it's -- we are considering a build-to-sell. And also, we are having very advanced negotiations for quite a while already. We still believe that this deal will be announced before the end of the year, maybe earlier, right? And I think the -- considering we have a fantastic PPA, right, with Amazon, we don't expect that the capture prices will be lower considering we have a very high percentage contracted. So I think the figures will be slightly similar to the last deal we announced. So that's for Ayora. But anyway, whenever we have some news, we will let you now.

[Marta Castro, executive]

And the next question is from Paul from Kempen.

[Paul Chabran, analyst]

Just one for David. In the past month, you have sold a large stake in the company and you have stepped down from your CEO role. Can you explain the reasons for these 2 moves and whether you are looking to further reduce your involvement with the company?

[David Ruiz de Andrés, executive]

Yes, well, thank you for the question. Now the first move, it's what we -- as you know, I have a very high percentage of my wealth in the company, right, maybe more than 80%. So I need to divest in other activities I do have so from time to time. I think it's the second time I do it, but anyway, I didn't sell -- actually, I sold less than 3%. I think its [ 1 ] -- 2.8%, 2.9% to an investor that was already in the company, right? And I think it's a natural move consider that we did share buyback program. I am also going up again to a very similar percentage, right? So I will be -- I went down to 51%. Now I'm very close to 40% -- 54% after the share buyback period. So I will be in the same position, right? It's just a financial move. And I don't expect to do any more deals, at least this year, for sure.And the other move, it's something we had planned for a very long time. I think it's something that makes all sense in terms of corporate governance. In terms of operational, right, I think dividing the roles of CEO and Chair -- and Chairman, right, Executive Chairman, and we are very glad to have Pablo with us now, that he was [ right ] in the company for a while. He will be more in charge of the operational divisions, right, development, construction, operation of the plant. I will more -- be more in charge of corporate strategic decisions and wealth. That's the way we are organized. And I think it's a good move for the company, considering the company is growing, and we are already more than 500, and we have to handle many markets. So it's -- I think this is great -- it's going to be a great help for me and great news for the company to divide the roles, yes.

[Marta Castro, executive]

Moving on, the next question is from Jorge from [indiscernible] Capital.

[Jorge Guimarães, analyst]

Is it possible to give us an update on the selling process of the last asset of the Valkyria process -- program in Spain? So this would be the first one. And the second one, do you -- given your experience that you're gaining in Chile, has your perspective about batteries in Spain changed or do you continue to believe that any type of capacity payment or CFD or whatever is required for batteries to be profitable, either stand-alone or hybridizing existing assets?

[Daniel Herrera, executive]

Thank you, Jorge. I think your first question was kind of answered in the previous, right? You're talking about Ayora. We have more assets in Spain, but they're not included -- they were not included in Valkyria. So, so far, our last part of Valkyria -- I mean, so far, just to summarize, we were -- it was close to 1 gigawatt. We ended up -- the -- one of the initial alternatives was farming down 49% of all the platform, of all the gigawatt, but finally, we ended up keeping 200 Escuderos plant, right? And that's a very strong candidate for our first hybrid project. That will be to your second question,, right?Then we farm-down 100% of Belinchon to a solar [ pipe ] to equity . We farm down 300 that is still under construction and finance to Allianz, right, Tabernas, Jose Cabrera. And then to finalize Valkyria, we still have Ayora and the initial decision has been to farm down that plant as well, right? And that's the whole picture of Valkyria, right?About replicating Oasis Atacama in -- or this scheme in other countries, it's something that is going to happen for sure, right? And we are working very hard analyzing -- the good thing about BESS storage, everything is happening so fast, right? I mean, look at our pipeline of 11 gigawatts, 1 gigawatt already in the construction, [ we ] -- the rest of Oasis Atacama will be under construction very soon. So 40% of the 11, it's already under construction. It will be under construction very soon. And things are moving very fast, right?Why is it happening first in places like Chile, Australia and some parts of the U.S. first? Well, because there is regulation, because there is the gap between day and night prices and, well, maybe other factors, right? But we are very sure that we can eventually replicate this in other -- especially other [ sunny ] regions like Spain and Texas, and we are analyzing the markets very well. They have very high potential for introduction of BESS. But it takes time. Yes, in Spain we are missing, obviously, some inputs and -- but everybody thinks that it's going to happen, right? So we are missing the regulation for capacity payments.And we are also kind of educating the large offtakers like -- the hyperscalers like Amazon and Microsoft. Look at the announcement that Amazon made in Aragon yesterday -- the day before yesterday, it's unbelievable. They're going to need energy, and they're not going to need energy -- they're going to need energy 24x7, right? So that's also a fantastic opportunity for BESS combined with other [indiscernible].We are really missing [ in Spain ] the regulation, right? And it's something that hopefully before the end of the year, right, will be placed. Once we have the regulation, we have the demand, we have the regulation, we have the gap, so all pieces will -- everything will work. So I think maybe if not in 2025, in 2026, for sure, there will be a boom of storage in Spain, both stand-alone and hybridization. We're very sure about that, and maybe in Texas earlier.

[Marta Castro, executive]

And the next question is from Edward from [indiscernible].

[Unknown Analyst]

I have 2 questions, but one has already been answered. I wanted to do a follow-up on Jorge's question about Ayora. Knowing that you have secured the financing to build Tabernas and Jose Cabrera, what is the strategy for the construction of Ayora? Are there any plans to secure a bridge financing until the asset is sold, or are you going to -- are you going full equity?

[David Ruiz de Andrés, executive]

Yes, thank you, Edward, for your question, which is very relevant. We normally have several [ tracks ], right, for -- one of the things that we are discussing with the potential buyer in Ayora that is whether it will be a ready-to-build deal, which is what we -- or whether it will be a COD deal. If it's a ready-to-build deal, something that we have done, it means that normally, we transfer the shares, we get a very high percentage of the price and then we remain as an [ EPC ] contractor. That's what we've done for this -- give you an example, in Matarani in Peru, right. The other strategy is what we've done with Allianz and -- okay, we raised the finance, we -- this is what we've done now with MUFG, Santander and Natixis for Tabernas and Jose Cabrera, and then we transfer the plan after COD, right? That's another -- the other option.We have both options open now. In fact, the same banks that have financed Tabernas and Jose Cabrera are more than ready. It's all included in the term mandate, in same mandate. They can go and finance Ayora for sure, right? And that is the same PPA, same project, same sponsor, everything the same. But that would only happen if it is a COD deal, right? If it's a ready-to-build deal, it doesn't make any sense. We might always ask for a bridge, as you say.Normally bridges are corporate facilities. They are faster -- they're faster to close, but it's corporate -- it's a corporate loan after all, right? So it's also a possibility we can -- we are contemplating, right? But again, I think we'll give color in the next presentation in September. We will know whether we go one way or the other. And -- but in natural way will be, okay, just going -- moving the deal to COD and then using the same project finance facilities we've used for Jose Cabrera and Tabernas.

[Marta Castro, executive]

And now one more question from Fernando from RBC.

[Fernando Garcia, analyst]

So taking into account the increase in electricity demand in the U.S., how are you ranking your projects there and the possibility of moving forward to construction phase in any of your projects in the U.S. versus other geographies?

[David Ruiz de Andrés, executive]

Thank you, Fernando. We expect that the U.S. -- I mean -- and that's why we decided to -- for the first time to purchase an existing developer, right, existing platform instead of starting from scratch as we've done in other geographies in the U.S. So we wanted to accelerate things that happened 2 years ago, slightly -- even more than 2 years, right? We -- there is always a learning curve. We want to make sure we make no mistakes, especially in a country -- sorry, in a market like the U.S., which is -- the figures are huge. It's -- it should be if -- our largest market in, of course, our largest country 2, 3 years from now, right? But we want to make sure of the timing, and we want to go step by step, right?I think in any case, we might start with the construction. We want to develop construction capabilities. I think we are building a great team in the U.S. I think we're close to 30 people already. We are developing a very good pipeline. There are great opportunities. Like everywhere else, the huge driver now is data -- is the convergence of data and power, right? That's creating an unbelievable new source of demand, right, We all were expecting tailwinds like electric vehicle, hydrogen vehicle.Okay, that's going to happen. But in the very, very short-term, right, in short and medium-term, the very high demand of new PPAs is coming from AI and data centers, and it's really coming from these companies, right, like as we have mentioned, that are the big drivers and the big -- so that's happening in the U.S. It's happening in Europe as well. And we are following that trend and many of the new PPAs that we will announce will be definitely to fit this need, the needs of this new demand.I think the U.S. will play a very important role. There are elections less than 6 months from now. I think it's in first week of November. We also like to wait and see, right? Because some -- if you know that the question now is what happens if Trump wins. Well, nobody really knows. We all believe that even the IRA, the -- IRA, the whole concept about the IRA is very Republican, is really helping building local industry, I think, quite successfully, right? It's really helping many [indiscernible] states like Texas, like the southeast. And I don't think -- there could be minor changes. But of course, we would love to have more visibility on whether there are any changes to the IRA before we commit ourselves to PPAs, that might -- there might be an impact of this change of the IRA.So very interesting market. Things are moving very fast. And I think we are getting ready to escalate in a very good speed whenever we consider it's the right time.

[Marta Castro, executive]

Okay. We have 2 more questions, one of them from Eduardo from Santander.

[Eduardo Martin, analyst]

Yes, it's for David. If I am not wrong, you said that with Ayora, you will [ run ] the Valkyria project. In that case, what happens with Clara Campoamor? Do you expect to sell this asset? And also if you could give us a bit of update on what is the status in terms of development and [ in terms of ] permits for Clara Campoamor?

[David Ruiz de Andrés, executive]

Okay, thank you. Okay, you're Eduardo, right, not Edward.. All right. Okay, I think Clara Campoamor, it's been contracted, right? It's -- we know that -- I think the big news -- part of -- I think, if I'm not wrong, I think we have obtained the environmental permit for 250 something, correct me if I'm wrong, Daniel, but I think it got reduced. Remember initially, it was more than 400, right? I think now the difference is that we're going to have a lot more time for this project, right? I think we have a great PPA. That PPA also has given us more time because this will be Lyondellbasell, it's not the Amazon PPA. I think we can start even at the end of 2026. So we can take a little bit more time. There are also potential of adding storage to that project, right, and create like a different animal. And we are working on it, right?But I'm not saying we are relaxed. We are never relaxed about that project, but not really -- initially, we were thinking, okay, this [ project ] needs to be connected mid-2026. Now, we're going to have -- I think, until 2028 -- it doesn't mean we connect that plan in 2028, but we have a lot more time. We are working in different strategies even with the offtaker, because it might be the first project we can announce like a hybrid PPA in Spain. So we're working in different alternatives, right?

[Marta Castro, executive]

And the last question is from Anis from ODDO.

[Anis Zgaya, analyst]

As my first question has been already answered, I have a question on cash flow. So could you please detail the calculation of the EUR 50 million of divestments in the cash flow statement, because I thought that the Peruvian projects had a lower level of debt? So I was expecting higher contribution to cash flow from those sales.

[David Ruiz de Andrés, executive]

Thank you. I think, Daniel, do I leave you this one?

[Daniel Herrera, executive]

Yes. Well, we will need to check number. The EBITDA contribution from Duna Huambos project has not been really important. The main one has been coming from Matarani Solar PV asset, both for selling the asset, of course, also the construction. And you are right, the Peruvian, the wind asset was with finance with the corporate debt. So -- but it didn't have a lot of EBITDA contribution, the net effect and net debt has not -- and cash flow has not been really important, but the equity. And then the Matarani asset had an EBITDA contribution of around USD 20 million, there was some earn-out. And that project, as we had also started the construction and there was some CapEx previously invested, there has been more cash flow contribution apart from the margin generation. However, there will be more so on -- pending revenue coming from this Matarani asset as the project is being built. If you have more [ doubt ], we will have to check it with the finance team and I'll let you know.

[Anis Zgaya, analyst]

So I have another question, if I may, but [indiscernible] -- Yes, it's on European elections. As we spoke about the U.S., there is elections also in Europe soon in June. So how do you see these elections, knowing that the former 5-year term was supportive to renewables? Do you fear changes at the European level on the energy transition trend?

[Daniel Herrera, executive]

It's -- well, it's the big year of elections, right? This is -- next, I think, 2 weeks from now is in Mexico. We were mentioning earlier on, right. November in the U.S., was announced in the U.K., I think for July. So it's elections all around. I believe that -- what we see, and we are a bit concerned about Europe, right? I think in terms of that -- things are moving way faster in the U.S. and in -- and [ one ] in Chile for sure, right? That's -- and it's also a matter of biggest constraints. We have [indiscernible] mentioning, it's permitting. You cannot be waiting like 5, 6 years for -- to develop a PV plant like in Spain or Italy, in many cases, right? And I think that's one thing.Over regulations and other thing in many areas like storage, we are missing regulation. Other areas we have an overregulated market. So I really believe that Europe has to do something. I -- we are happy with the way things are evolving in some markets. I would mention Germany. I think Germany, we are happy the way -- we are a bit surprised that we were expecting longer development terms, and it's getting simplified.But Spain, Italy remains very challenging. They have been very challenging markets. Whether at the European level, something like an IRA can be done in Europe, okay, we'll see, we'll see. But I don't know. I think it's quite challenging, right, whether it has a real effect in our industry, what happens in the European elections, I think has more to do with -- still with country by country.

[Marta Castro, executive]

Okay. Having no more questions, we conclude the first quarter 2024 Grenergy's results presentation. I hope we have covered all your inquiries. If anything, don't hesitate to reach out, we will be glad to get back to you.Thank you very much for your time and availability, and see you next time.

[David Ruiz de Andrés, executive]

Thank you. Thank you very much.

[Rocio Fernandez, executive]

Bye.

[Daniel Herrera, executive]

Thank you, bye.