ERG SpA

MIL:ERG

Earnings Call Transcript 2023-Q2

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the ERG Second Quarter 2023 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference to Mr. Paolo Merli, CEO of ERG. Please go ahead, sir.

[Paolo Merli, executive]

Hi, everyone, and welcome to our second quarter and results presentation. Here with me as usual is our CFO, Mr. Michele Pedemonte who will run you through our business performance over the period in more detail.

So let's get started with the overview of results over the period. I'm on page number 4. Numbers here are based on continuing operations, excluding CCGT from the scope as you know, we reached an agreement for its disposal on June 29. For the sake of clarity, figures are also presented net of clawback measures and windfall taxes, despite the fact that those measures are extraordinary and temporary. Throughout the presentation, we will provide detailed disclosure of the effects of those measures. In a nutshell, I would say, results were slightly below year-on-year at the EBITDA level and to be honest substantially lower than our budget, mainly due to tough wind conditions over the second quarter, significantly lower than the historical average against a backdrop of lower electricity prices. Those effects were only partly offset by the larger installed capacity, that suffered the same for wind energy. EBITDA in the first half of the year was EUR 263 million, slightly down year-on-year. The larger installed capacity brought up by M&A and organic growth contributed by around EUR 37 million. This contribution was more than offset by lower captured sales price and lower wind availability, more or less across all of Europe, but in particular in Italy and in the UK. Solar in the period showed slightly better volumes due to stronger irradiation. Clawbacks at the EBITDA level during the period were EUR 7 million, against EUR 5 million over the same period last year. Michele will elaborate more on those figures in a while. Notwithstanding those trends, results at bottom line proved very satisfactory, with adjusted net income at EUR 116 million, up more than 40% year-on-year. Thanks to the reduction of windfall taxes and to significantly lower financial charges deriving from our cash management in a context of rising interest rates.

Clawbacks at the bottom-line level were EUR 6 million, basically the same as the operating level net of the relevant fiscal -- against EUR 40 million in the first of 2022 when we add also the windfall tax in Italy. CapEx in the period amounted to EUR 311 million higher than the same period last year, boosted by M&A. The remaining CapEx were related say to the advancements of assets our under construction both repowering and greenfield projects. As far as repowering in the period, we completed the construction of the first repowering project. Net financial position at year-end was EUR 1.5 billion up versus slightly above EUR 1.4 billion at the end of '22, mainly reflecting the dividend payment of EUR 150 million, the investments in excess of EUR 300 million implemented mostly compensated by the operating cash flow generation. All in all, say in light of this weaker business environment they just described a very low wind and much lower electricity prices. Say, the economics of the group proved to be resilient with a stronger generation, not immune but resilient.

Let's move on, now we comment on our main achievements during the quarter, I'm on page number 5. First of all, it's worth starting with the agreement we reached with Achernar for the disposal of our CCGT, which was a top target for the year. We expect the closing to take place by the end of the year as already communicated, after the completion of the golden power procedures which I updated you, we have already filed for. This is a very important step for the transformation of ERG into a pure renewable player and a crucial step for the net zero target which has been officially approved in the meantime by SBTi.

We are also moving forward with the expansion of our RES Portfolio in Europe. We started up, as said, our first repowering project in Italy, Partinico-Monreale, 42 megawatts. We are nowadays finalizing also the installation of another repowering project Camporeale which should be in operation soon. We made an important step ahead in our diversification in solar in Spain with the acquisition of 149 megawatts under construction, the very, very last phase of construction and 25-megawatts just to enter into operation. We also made important steps with the development of our pipeline, as we got the building permit or like we call in Italy [Foreign Language] for a 115 megawatts wind repowering project. So one of the largest projects we have in our pipeline. We have another 30 megawatts of fully authorized and now ready to build in Germany 18-megawatts fully permitted and already awarded in a recent auction in France.

Our ESG part is continuing successfully I would say with important recognition on all the pillars of our strategy. We are particularly proud to have obtained the Net Zero Certification from SBTi. We have been promoted by MSCI with AAA and we have been included in the Top 10 in the '23 Integrated Governance Index. Last but not least, ERG joined the Nasdaq Sustainable Bond Network, an important recognition of ERG's financing strategy focused on green instruments.

Now over to Michele for his comments on second quarter results.

[Michele Pedemonte, executive]

Thank you, Paolo. First of all, please note that all figures presented here are net of clawback windfall profit taxes implemented by various European governments. Also, the 2023 data are represented un the same measures.

Now let's start with an overview of unitary revenues over the period. In the second quarter, electricity market prices have been strongly lower than previous year. This trend has partially influenced our all-in unitary revenues, which are mainly dependent on incentives, bidding schemes, long-term PPA, and hedging made in line with our risk policy, or by other revenues component.

In Italy, for example, unitary revenues are influenced by the value of the incentive on the majority of our assets, which is null in 2023 and lowered by EUR 43 megawatt power versus previous year, while on the market we caught a price higher than previous year, thanks to hedging policy. All-in-all, we had a slight decline in unitary revenues for EUR 122 megawatt hour and EUR 117 megawatt hour. Please note that the structure of the Italian green incentive will allow recovery of electricity prices below EUR 180 megawatt hour this year and next year. This will be a material positive upside expected in 2024. In France, the large majority of our assets operate under fixed scheme without the exposure to market prices. Price is lower than second quarter 2022 because the few assets, their merchant prices in 2022 were influenced by a higher market scenario. In Germany the one-way tariff structure, coupled with some short-term hedging, allows us to capture higher prices than previous year. East Europe, unitary revenues decreased in second quarter driven by Romania and Bulgaria, mainly due to lower merchant prices. In UK, the decrease in all-in unitary revenues minus EUR 80 megawatt hour are related to PPA price which is lower than the spot market price captured by our Northern Ireland assets in second quarter '22, during the first months of reduction of the plants. As the solar all-in unitary revenues, we see values to increase in second quarter in Italy, thanks to the new assets consolidated from July 2022 versus the previous year at fixed prices because 100% of the production was hedged. In Spain, where our assets have a tariff mechanism that operates as a floor, all-in prices are slightly lower and reflects lower market scenario.

And now focus on production. In first half, production reached 3 terawatt hour, 0.3 terawatt hour higher than previous year mainly due to perimeter effects. Production coming from abroad represent more than 50% of the group's total productions. As regards the second quarter, we have in Italy 565 gigawatt hour, plus 4% year-on-year. Only thanks to the perimeter effect plus 75 gigawatt power, from wind & solar assets acquired in 2022, and a small contribution from repowering plant and registration in June. Perimeter effect is almost completely offset by lower wind conditions, well below the historical average and worse irradiation in comparison to the second quarter 2022. In France, we have 254 gigawatt hour, plus 13% year-on-year, thanks to better wind conditions in comparison to the very poor second quarter 2022. In Germany, 103 gigawatt hour, minus 9% because of lower wind conditions. In Eastern Europe, volumes are higher than second quarter 2022, plus 17% mainly due to assets entering operation in 2022 in Poland. In UK and Nordics, we recorded 85 gigawatt hour, plus 74% year-on-year. Thanks to the asset energized by the end of 2022 and early 2023 in Scotland and Sweden. Production in Scotland, well below the expectations due to very poor wind in the region in the quarter. Low production also in Sweden due to also prolonged testing conditions activities at our Furuby wind farm in order to solve some technical issues encountered during start-up activities. In Spain, minus 7% mainly due to worse irradiation with respect to second quarter last year.

We are now at Page 9. In the second quarter of the year, we have an overall EBITDA net of clawback equal to EUR 103 million, slightly lower than the one of second quarter 2022, mainly due to lower capture price than previous year. Prices benefited from extremely high market scenario and lower production particularly in Italy, partially offset by perimeter effect. In Italy, the EBITDA is EUR 67 million, in line with last year, mainly due to perimeter effect offset by the lower value of incentive which is zero in 2023, and worse weather conditions both on wind and solar.

In France, the EBITDA is EUR 14 million benefiting from better wind conditions and to a perimeter effect of EUR 1 million. In Germany, the EBITDA is EUR 8 million slightly lower than previous year mainly due to lower production in the period. In Eastern Europe, the EBITDA is EUR 11 million lower than second quarter 2022, mainly due to lower sales price, partially offset by perimeter effect in Poland. In UK and Nordics, the EBITDA is lower than last year, mainly due to the PPA at a lower price than previous year market scenario, partially offset by perimeter effect. In Spain, EBITDA is EUR 5 million lower than last year, mainly due to lower capture price and lower production. First half EBITDA is EUR 263 million lower than the previous year, mainly due to weaker weather conditions, partially offset by perimeter effect. In 2023, almost 50% of EBITDA comes from assets outside of Italy.

And now a brief overview of investments in the period. In the first half, we invested EUR 311 million, an amount which is higher than the one invested in the first half of last year. About EUR 182 million are related to M&A projects in Spain in the second quarter of the year, for about 149 megawatts of assets under construction and 25 megawatts of the solar plant in operation. This acquisition happened just in the last day of the quarter. About EUR 125 million are related to organic CapEx in wind, in particular, we have EUR 92 million of CapEx in Italy for wind repowering projects entering field in Sicily.

Let's now move on to financials, commenting on profit and loss on a recurring basis. In the second quarter, we have net financial charges at EUR 3 million versus EUR 6 million in the second quarter of last year, mainly influenced by liquidity remuneration in a scenario of interest rate increase, with a debt structure almost completely at fixed rate. Tax rate in the quarter is 24%, versus a 69% of the second quarter of last year, which included the Italian windfall profit taxes. As a result of all of this, the adjusted results on continued operations of the quarter amount to EUR 37 million versus EUR 15 million of the second quarter of last year, that included the extra profit taxes for a total amount of EUR 23 million. The adjusted results from continuing operation of the first half amounted to EUR 216 million including EUR 7 million of clawback measures versus EUR 82 million in 2022. CCGT is consolidated in the discontinued items. In this chart, you can find a summary of effects of the clawback measures and windfall taxes affecting our figures. The impact on EBITDA and net profit in the second quarter is negligible because of the sharp electricity price decrease in the first half of the year and it refers mainly to Eastern Europe. In Romania, the government set a compulsory PPA mechanism at the cap price of EUR 90 megawatt hour which has the same substantial effect of a clawback measure, but it is not reported here. Comparing net profit net of clawback, we see a substantial increase versus last year because it is affected by Italian windfall tax. In the first half, the impact of clawback measures on EBITDA was EUR 7 million and EUR 6 million on net profit.

Finally, let's take a look at the cash flow statement and the net financial position for the first half. The net financial debt closed at EUR 1.5 billion, EUR 82 million higher than the end of 2022 driven by a solid cash generation from EBITDA and a positive net working capital movement of EUR 61 million mainly linked to a timing effect from hedging operations done in the period. These impacts are netted by the already commented investment in the period and the dividend payment for EUR 152 million. The net financial position includes EUR 23 million due to the mark-to-market of derivatives on commodities. I think I've touched all the relevant items, thank you for your attention.

I will now hand over to Paolo for his final remarks.

[Paolo Merli, executive]

Thanks, Michele. Before going through guidance for '23, let me refresh our target for the year in terms of installed capacity. As you can see from the chart, through a combination of M&A and organic growth, we expect to add further 369 megawatts by year-end, which is consistent with the trajectory of the business plan. It's worth mentioning that out of this 369-megawatts, a total of 160-megawatt are already fully operational and the remainder is under construction.

The growth will continue to be a driver of our results in particular, as of 2024 when we expect all those assets to reach their full potential on a full-year basis. And now a deep dive, a few months delay for basically all our assets under construction, given a supply chain scenario that remains challenging, but we are talking about few months. Of course, it must be said these few months had an impact on our operating figures in the first half of the year, but despite all this we are moving on with our developments, which will make our portfolio stronger ahead of next year, so with an higher degree of geographical and technological diversification. As a matter of fact, the new assets are spread out between Italy, France, UK, Germany, and Spain, both wind and solar. In a nutshell, we are moving forward in line with our objectives.

Now guidance, let's see the guidance for '23. In light of the fact, as I already explained, Q2 results were significantly poor than our budget, slightly down year-on-year, but significantly lower than what we expected. And our budget basically, which our previous guidance was based on and mainly as a result of extraordinary weaker wind conditions all across Europe in particular in June and especially in Italy and UK, we revised the guidance on EBITDA downwards while maintaining guidance on CapEx and net financial position. Given that, all in all, we expect cash flow to be aligned with our previous expectations as lower financial charges and some other working capital items will offset the poor operating margins. Let me be more precise. We still expect today to be at the lower end of the previous guidance EUR 500 million and EUR 550 million, but we felt it was more transparent to recalibrate the guidance range downward for the reasons I've just explained.

So to summarize, EBITDA is moving from EUR 500 million to EUR 550 million to EUR 480 million to EUR 520 million. Let me remind you that '23 guidance is net of clawbacks. CapEx range remains in the range of EUR 500 million, EUR 600 million unchanged, as net financial position is still expected within a range of EUR 1.4 billion, EUR 1.5 billion.

So thank you very much for listening and we are now ready to take your questions.

[Operator]

[Operator Instructions] The first question is from Enrico Bartoli with Mediobanca.

[Enrico Bartoli, analyst]

First one is on the guidance. If you can elaborate a bit more on the bridge that you add to this reduction, if it is only related to volumes or if there is also some impact from the declining scenario for the spot power prices or some impact on your hedges for 2023?

Second one is, can you update us on the hedging level in terms of volumes and prices for 2023 and possibly also for 2024? And also a general question on let's say the regulatory scenario, I think that the government is implementing some revision of the maximum prices in the auction system. What visibility you have on that, and what impact you expect on participation to the auctions on your commercial policy, if the update is consistent with the market conditions currently or is still not enough compared to what the PPA market can achieve in Italy?

[Paolo Merli, executive]

The guidance, let me elaborate a little bit more is reflecting mostly the lower production in the second quarter. I think you have seen the TSO monthly report and June was a very tough month in Italy, particularly in Italy but also in the UK. The whole wind production in Italy was down 19% year-on-year in June, which means -- I mean the country not ours, which means more than 20% lower year-on-year, if adjusted to take in consideration the higher installed capacity. So most of the EUR 20 million, more or less, we have lost coming from volumes was in Italy. The price effect was very limited to be honest because 2023 most of the production is covered with hedging PPAs, tariffs, and so on. It was a very limited impact say few millions of euros in the quarter. But please consider also the positive effect of having this year lower merchant price because as you know the value of the incentive in Italy is inversely correlated to the electricity price. So we expect next year to more than recover the impact from the energy price in 2023 because according to the very latest forward for the calendar year, the value of incentive next year should be in the region of EUR 40 per megawatt hour, while in '23 is zero. So these are based on the volume we still have say under this kind of incentive scheme means that in 2024 we should recover roughly EUR 40 million in terms of EBITDA, just for this effect, that's why it seems to me a little bit overly excessive the reaction of the market through this EUR 25 million, but it's not in my power to change it.

So coming to the second question, the hedging, say if you refer just to the financial hedging, we are talking about the number that is in the region of EUR 100 more or less for 2023 because it's a mixture of some hedging done, and performed in 2022 plus some hedging that we inherited say from the previous year. So EUR 100. For '24, the value of the financial hedging is in the region of EUR 150 so much higher. Because also, if you look at the core market, you can see that the market still expect higher electricity prices during the winter and especially in the first quarters of 2024.

Last point, the auction system, yes, you are right, it's an amendment that was already approved by the parliament, which basically revised upwards the base price for the next auctions, still related to the fair decree 2019 with inflation. And in other terms, it means that the base price will move from the current EUR 65 to EUR 76 per megawatt hour. Is it enough? I don't think so. In fact, we are working on the PPA side because we think the PPA market is now giving numbers that are much higher than those and more consistent say with the merchant prices going forward. It's anyway a step ahead and we think in the new decree the mechanism to regulate the say the auction will be further revised upward, that's my personal opinion, that's what we are working for with institutions here in Italy, in particular. Because in France and Germany, they have already revised significantly up these tariffs. In Germany, we are on average in the area of EUR 90 because in Germany don't forget there is a value, a nominal value, which is EUR 75, but then there is this correction factor that increases especially for wind, the final tariff sometimes in excess of EUR 100 per megawatt hour. So the Italian one EUR 75 is still well below those levels.

So I hope I touched on all your points, Enrico.

[Enrico Bartoli, analyst]

Just a quick follow-up on hedges. When you talk about the financials, is it possible to have an idea of what portion of total revenues you are referring to? Of course, they don't take into account the feed-in tariff and everything else.

[Paolo Merli, executive]

I must say, it's limited. It was 0.5 terawatt hour or something like that because most of our production is already covered by tariffs, PPA or CFD what else. So let me say, our terawatt hour is a good estimate for 2024. This amount could be further increased throughout the few months remaining in the forthcoming months let me say, and even when talking now the forward for 2024 are in the level of EUR 104 to EUR 145 per megawatt hour. So we should consolidate this number.

[Operator]

The next question is from Roberto Letizia with Equita.

[Roberto Letizia, analyst]

The first one is a follow-up on this 0.5 terawatt hour hedging, is the 0.5 just for '23 or is it also for '24 or maybe '24 is slightly less? And what's the total you may actually reach for '24? Is it a terawatt, is it something like that because some of the asset goes out from the incentives, so maybe on '24 you have a larger space for doing hedging at very good price?

Again, a follow-up on the previous question, but you talked about the loss of productions, I was wondering how much instead of the guidance reduction comes from the few months delay that you mentioned in terms of installation going forward? Then a clarification again on the guidance in a sense of the impact from clawbacks. So month ago when we talked about the net guidance for '23, you mentioned a very high level of the impact from clawbacks that have not materialized in the first and second quarter. And I guess, actually the overall level of hedging has not changed dramatically versus when you gave this amount. So I cannot reconcile actually now that, for example, Italy have no longer the clawback in place and in some other country, what do you expect now in terms of potential changes versus that impact of clawback, which if I not remember one that was EUR 90 million, but maybe I'm wrong, I don't recall it correctly.

Then please, if you can start to elaborate a little bit on '24 at least on bridge of the components that will occur next year to understand a general sense of the growth in EBITDA that we may look forward for next year? And a final one, it's more a view on the PPA market development versus the volatility that we're seeing now in power prices at peak hour of production, especially in Spain. So I was wondering if you see any slowdown for example in the ability to close down PPA because market participants are actually looking at that volatility at peak hour, so they are increasing competition on the market prices, and it is becoming more difficult to send PPA or not. If you can give us a view on this topic that would be very helpful.

[Paolo Merli, executive]

Okay. The 0.5 terawatt hour is just related to 2024. In 2023, we had almost 0.7, 0.8 terawatt hour fully covered by financial hedging. So this 0.5 could go up to almost 1 terawatt hour by the end of the year because we have a policy to cover progressively part of this volume throughout the year. So some each week let me say and current value of these hedging is in the region of EUR 140. The average at today's EUR 150 now the forward are more in the region of EUR 104 or something like that. So, anyway higher than the one we had and we still have for the current year. But the delay has a limited impact on our financials just a couple of million euro because all in all we are talking about just a few months of delay for each projects to be honest, it's a little bit challenging the environment in the BOP or the construction, but anyway we are managing it satisfactorily, so couple of million. I would say the delay effect over the next 6 months is mainly related to Partinico-Monreale that entered into operation 3 months later than what we expected in our budget and also Camporeale which is the second repowering project, that was expected to enter into operation in May, and now is expected to be completed by the end of August.

We have started just a few weeks ago, the erection of the wind turbines, so we are going on. We are organizing field trip in October to visit the 2 wind farms because they are one in front of the other in Sicily, wonderful wind farms. So I would say, limited impact and the full potential of all these assets will be seen in 2024. So going to your questions about the expectation for '24, I don't I'm not going to provide any precise number. But let me say that for several reasons, first of all, the reversal of the incentive in Italy I said this should account for EUR 40 million, more or less of EBITDA, and this is a price effect already very visible. Then we will have and we will enjoy the full potential of the roughly 400-megawatt that entered progressively into operation in the current year. And this is a very other important contribution to our EBITDA. If you add to this, the fact that, say the edge in price and the forward prices for next year are stronger than the one we are experiencing, right now, we can expect surely an important growth, that's our current expectation.

Clawback, sorry, you asked me for clawback. Yes, it's not a secret, the TTF gas price which is the one that is the price sector for the market because still the gas technology is the one that set the price on all the merchant prices across Europe has totally collapsed compared to few months ago. If you open the site I have in front of me, right now, the price in August is EUR 26 per megawatt hour, last year was EUR 200, EUR 250 per megawatt hour. So the reduction in clawback measures simply reflects the reduction in energy prices. But again, given the structure of our revenues, 80%, 85% cover by all this mixture of price, route to market mechanisms, our P&L it's very resilient say compared to merchant prices. What is more important are the volumes, but I would exclude that what we experienced in these months should be extrapolated as a trend for the future.

We have been analyzing from any point of view the windiness over the last 20 years and also in the past that we have seen a cycle of one, 2 year of low wind then followed by stronger couple of years of wind. So I tend to see as a one-off that is part of the business, in fact, that wind is not there for a few months. Yes. Anyway, yes you were right, in the budget, we expected clawback measure in the region of EUR 90 million, something like that. And now we do not expect any further on top of the EUR 7 million we have already accounted in the first half of the year because the prices right now are mostly below the price gap. And some measures are off in Italy, for instance, the government confirmed its intention not to renew this extraordinary measure, that in fact that were supposed to be temporary.

PPA, let's say, we are working on further the negotiation and from our point of view, we still have Corporate eager to secure energy in the longer term. You see we have closed a couple of PPA recently with Luxottica with a team and now we are working on some others. So for sure the volatility of the market is our complexity to manage, to be managed but I would say we do not see particularly say less interest in PPA. For sure, I think you were referring to the profile effect in particular for solar in particular, that's for sure a point of attention, but has already been included in our estimates when we are buying the assets. And as regards our assets, particularly the 149 megawatts which should enter into operation by the end of the year. This is already covered by payers-produced PPA, so we are not in a hurry to find other PPA in Spain.

[Roberto Letizia, analyst]

Really a quick follow-up on the 2024, just adding maybe you correct me. So next year you're going to have EUR 20 million, EUR 25 million let's mention this way from wind normalization say assuming wind resource or generally resource normalization, that should be EUR 20 million, EUR 25 million. Then you have some EUR 40 million from the green certificate, then you have 400 megawatts, let's take it half because you've got already half contribution this year, but less than half contribution on that. But you have, let's say at least 200 megawatt full contribution, plus you have the 1-terawatt say that has at least EUR 40 per megawatt hour higher prices. Am I counting correct? Is there any negative because this some ups maybe to I don't know EUR 70 million higher PPA, I don't know something like EUR 118 next year. I don't know if I'm losing something on the way.

[Paolo Merli, executive]

No, I think you are a good analyst and what you did yourself make a lot of sense.

[Operator]

The next question is from Naisheng Cui with Barclays.

[Naisheng Cui, analyst]

Three, if that's okay. The first one is on project delay. Just want to understand what exactly caused the delay. Paolo, I think you mentioned its construction, just want to understand what exactly caused the delay. And what have you done to prevent further delays?

The second question is on the CCGT asset disposal. I understand you've sold at a higher price this year versus last year on the back of a worse micro, just wonder what has changed this time and how did you achieve a such good price this year?

And the third question is on CapEx, just want to understand if your CapEx per megawatt basis is due within your budget plan given the project delays, et cetera.

[Paolo Merli, executive]

We are talking about a few months, 3 months delay nothing very rocket science, let me say. Delays are related maybe because during the construction, you find some obstacles in the field, which is not having a major overrun cost. So all in all, we can confirm our budget because in our plan we already reconsidered and revised upwards the CapEx for the current challenging environment. So, no, I would say nothing of worrying for these few months delay. So for instance in Sicily when you've got the [Foreign Language] I mean the full authorization from the authority from the region, there are 30, 40 entities that they have to express say the Neulasta they go ahead with the works. Then they come to the site and they say, okay, this little I don't know installation instead of putting here, you put in there. So minor things with not major cost associated that caused a delay. For instance, in Partinico-Monreale we waited a couple of months the permission to make the trucks that were bringing into the wind turbines to pass on a bridge. So we waited for a couple of months the permission from Anas, which is the authority controlling the viability and the motorways. So that's kind of reason brought to this delay, but nothing, very important. Then, so the CapEx plan. Yes, I can confirm it in some projects, maybe we have something more, in some projects, we are saving a little bit. But still for sure it's a point of attention, that's truly a point.

Then, CCGT the prices what you have seen in the press release consider that is made of several items when compared to Enel because, for instance, there is an unexpected tax asset that at that time wasn't spotted. So and this is related to a regulation that was issued after the Enel agreement and is related to the fact that the gas consumers, such as the CCGT can enjoy some reimbursement for the higher cost of gas and the penalties we went through for this particular gas scenario. So if you look at the price, all in all, yes, it may seem higher, but from the buyer perspective, the price is still in my opinion little because these are paid by other sources, let me say. But in the press release, there was I think, very well specified these effects. And partly also the price is made of the permit leakage, which is the cash flow generated in 2022, so when the asset was still under our management.

[Operator]

The next question is from Emanuele Oggioni with Kepler Cheuvreux.

[Emanuele Oggioni, analyst]

I have only 2 left. The first one is still on the guidance. Maybe focusing on the net profit as I noticed that the D&A in Q2 were a quite low and lower than my expectation. So if you could give us for guidance for D&A in 2023? And the same, you had a very good control of financial charges, also very, very low in Q2 and in H1 in general. So if you provide us a guidance also for net profit for 2023 based on my estimates, it's in the region of EUR 200 million.

And the second question is on Sweden. You mentioned technical issues for the 62-megawatt wind plant in Sweden still in commissioning phase. I suppose it's related to the well-known technical issues of one on the main worldwide supplier in the industry. So if you could provide us more details on this.

[Paolo Merli, executive]

I'd say as regards the net profit, yes, we have a positive view also for the full year because for the 2 reasons you have mentioned, first of all, because we had been working for a while on the lifetime extension programs that led us to re-modulate the amortization and the depreciation of the assets, because all the projects we put in place reached a certification for a longer life of our assets. And as a consequence, notwithstanding the large investments we have done in 2022, you can see the depreciation are more or less in line with last year or just slightly up. And this has helped the net profit.

The other area of interest is the financial charges. We had been good and probably a little bit lucky to renegotiate all our indebtedness in a time of very low-interest rates, and we find ourselves with a lot of cash available that has been not invested say are located risk-free, but with a return that is consistent with the current remuneration for liquidity in excess of 4%. So if you take EUR 500 million at 4%, you can easily realize that what we have missed from EBITDA was basically fully recovered from financial charges. As a matter of fact, yes, we expect also for the full year because this effect should continue in the second part of the year. We expect net profit to be reasonably in line with what you said or maybe a little bit in excess of what you said.

Sweden. Sorry, I forgot. My colleagues remind me. Yes, we said the wind farm is brand new, it's composed by 10 wind turbines from Siemens Gamesa, more than 6-megawatts each, so completely new and advanced technology. The capacity was fully installed by the end of last year. Then, we entered the commissioning phase but this is in line, also with public announcements from Siemens Gamesa itself. We encountered some technical issues in some components. But now they are working -- Siemens Gamesa which [indiscernible] as a full-service agreement is working, 8 out of 10 wind turbines are working and they should hold it to the last news we had from the OEM they should reach more or less the regime, say, by the end of September. It's not, of course, we have contractual closes that are covering part of the production loss.

[Operator]

The last question is from Davide Candela with Intesa SanPaolo.

[Davide Candela, analyst]

I just have one and maybe that is not even answered for this, just a suggestion on my side. I was wondering if do you feel that the average load factors for the plants are going a bit down. Did you say severe weather conditions because, if it is too windy, the wind farms are not working, or you can do some efficiencies in the plants? Just a feeling on this view or just say if I'm completely wrong.

[Paolo Merli, executive]

Whenever we have a performance say below our budget, we started up all the analysis to understand if it's something company-specific or it's something related to outward and external conditions. And this time, didn't make any exception on this point of view. We made several analyses all around the assets say 360 degree in particularly focused in Italy and in the UK where we had the lower load factor compared to our budget. And what came out from those analyses that there is nothing or almost nothing company-specific. Has been an external situation based on the weather conditions high pressure in UK, lower wind speed in particular, I repeat in June in Italy. But when I'm going to ask or I ask my engineers to say this is related to climate change or to this extra-ordinary climate condition, they said it's impossible to extrapolate this kind of trend or this kind of conclusion. And they showed me a 20-year, 30-years analysis on wind and they let me see that this kind of cycle are always been there and also in the past. So maybe you have a couple of years weaker wind because also 2022 wasn't that good. And then followed by 2, 3 years stronger wind. So it's very difficult to extrapolate a trend for wind, especially for wind looking at the long-term analysis and considering in Italy we have assets that started up production more than 20 years ago. So we have all the elements to run this kind of analysis. So the message I want to give you, don't take one quarter as a proxy for the future, it would be completely wrong. That's my opinion and our opinion.

[Operator]

The next question is from Roberto Letizia, Equita.

[Roberto Letizia, analyst]

I missed what you said on the net income. Because you said, okay, the reference is in line or even better to what Emanuela suggested. But actually, the line was better, I didn't give the number. So if you can please repeat it. And one very, very quick. I was wondering if you can confirm that the Poland cap is in place only '23 or if it's going to continue even next year?

[Paolo Merli, executive]

For the time being for 2023, then, let's see, because it's a little bit unpredictable, the regulator in some countries. So, let's see. For the net profit, I said that if you take the number mentioned in the region of EUR 200 million, I would say it's a reasonable estimate. And I will be a little bit more optimistic of that because also in the second part of the year if you take our EBITDA and say take the depreciation more or less in line compared to the first half of the year and the trend in financial charges to remain basically the same, you will reach a number that is in excess of this reference estimate.

[Operator]

Mr. Merli, there are no more questions registered at this time.

[Paolo Merli, executive]

Okay. So thank you very much. Have a good summer. And we are going on with our business plan.

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over. And you may disconnect your telephones.