Enel Americas SA
SGO:ENELAM
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
86.76
102.9
|
| Price Target |
|
We'll email you a reminder when the closing price reaches CLP.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
You don't have any saved screeners yet
Good day, ladies and gentlemen, and welcome to Enel Americas Second Quarter 2021 Results Conference Call. My name is Sade, and I will be your operator today. [Operator Instructions]
During this conference call, we may make statements that constitute the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements could include statements regarding the intent, belief or current expectations of Enel Americas and its management with respect to, among other things, Enel Americas' business plans, Enel Americas' cost reduction plans, trends affecting Enel Americas' financial condition or results of operations, including market trends in electricity sector in Chile or elsewhere, supervision and regulation for the electricity sector in Chile or elsewhere and the future effect of any changes in the laws and regulations applicable in Enel Americas or affiliates.
Such forward-looking statements reflect only our current expectation, are not guarantees of future performance and involve risks, uncertainties. Actual results may differ materially from those anticipated in forward-looking statements as a result of various factors. These factors include a decline in equity capital markets of United States or Chile, an increase in market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere, and other factors described in Enel Americas' Annual Report on Form 20-F, including under Risk Factors.
You may access our 20-F on SEC's website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their date. Enel Americas undertakes no obligation to update those forward-looking statements or to disclose any development as a result of which these forward-looking statements become inaccurate.
I would now like to turn the presentation over to Mr. Rafael de la Haza, Enel America's Head Investor Relations. Please proceed.
Thank you, Sade. Good afternoon, ladies and gentlemen, and welcome to our second quarter 2021 results presentation. I'm Rafael de la Haza, Head of Investor Relations of Enel Americas.
In the coming slides, Maurizio Bezzeccheri, CEO of Enel Americas; and Aurelio Bustilho, our CFO, will be presenting the main figures of this period. Let me remind you that this presentation will follow the slides that have been already uploaded into the company's website. Following the presentation, we will have the usual Q&A session. [Operator Instructions]
Now let me hand over the call to Maurizio, our CFO, who will start by outlining the main highlights of the period in Slide #3.
Thank you, Rafael. Good afternoon, everybody. Let me begin the presentation by highlighting the successful merger of EGPA into Enel America, concluded on April this year. I would like to thank all our shareholders for the strong confidence on our strategy once again. In this second quarter, we began to consolidate EGPA assets after the merger approved by our shareholders last year. This is a very important milestone and the beginning of a new sustainable growth phase for our company.
In terms of demand, we have seen an important recovery compared to last year, and we also had a positive tariff adjustment in Enel Sao Paulo in July. EGPA consolidation and demand recovery mainly explain the plus 53% increase in EBIT -- in EBITDA and plus 96% increase in net income, while gross debt for the company remains in line, excluding EGPA. It is also important to highlight that the agreement with GEB in Colombia has been approved by the shareholders' meeting, and we expect to have the new structure of it in Colombia during the first quarter of 2022.
In terms of credit rating and equity updates, we have an upgrade by Moody's. We have confirmed in the Standard & Poor IPSA ESG Tilted Index and we improved our FTSE4Good score. Finally, we are glad to announce the start of operation of Lagoa dos Ventos wind farm in Brazil. We also have another 3.1 gigawatts of capacity in execution and the long-term pipeline of 44 gigawatts that we will analyze later on.
Let's move to the following slide, see the evolution of currencies, demand and collection. Colombian peso and Brazilian real are preceded against the U.S. dollar by 4% and 1%, respectively, during this quarter, while Peru and Argentina continue showing a depreciation. Regarding electricity distributed, we are glad to see a solid recovery in all the countries during this quarter, reaching pre-pandemic levels.
Finally, in terms of collection, we had an important recovery in the region, especially in Peru, which increased 17.1 percentage points. In the 4 countries, we are now at around 100% of collection.
Now let's have a look to our investment for the period. During the second quarter of this year, our CapEx increased by 132% compared to the same period of last year, reaching USD 698 million. This is mainly explained by the consolidation of EGPA, which contributed with a CapEx of USD 193 million, which represents 28% of total CapEx of the period.
Without considering, this CapEx would have increased by 68%, mainly explained by higher investments in distribution business in Brazil. In relative terms, our investments increased by 65%, reaching USD 993 million. Without the contribution of EGPA, CapEx would have increased by 33%. Within comparison of EGP, we see that Brazil has become the most important country in terms of investments with around 70% of the total.
Finally, it's worth to highlight that 96% of our CapEx is SDG-related, confirming our focus on ESG. Let's continue with the renewable projects under execution and in our growth pipeline in the coming slide. Our long-term pipeline and now the last year when we proposed the merger operation was around 22 gigawatt. However, we have made an important effort in terms of new capacity, and now we have a pipeline of 44.4 gigawatt from which 24.6 are in the early stage and 19.8 are mature pipeline.
Regarding project in execution. Currently, we have 3.1 gigawatts of renewable capacity under construction from which 1.8 gigawatts are in Brazil, 0.9 gigawatt are in Colombia, 0.3 gigawatt are in Peru and 0.1 gigawatts are in Central America. 66% of this capacity are wind farms and the rest is solar. Regarding the commercial operation to date, 0.8 gigawatts will begin operation this year, 1.1 gigawatt will enter in 2022 and 1.3 gigawatt in 2023. Let's now analyze our operating highlights on the following slides.
In generation business, our installed capacity increased by 35% due to the incorporation of EGPA, reaching 15.2 gigawatts, from which 67% is renewable. Net production in the second quarter reached 13.2 terawatt hour, an increase of 55% compared to same period of last year, explained by EGPA and by a higher thermal and hydro production due to the demand recovery in the region.
In cumulative terms, production increased by 19% due to the same reasons. Energy sales increased by 46% and 19% during the second quarter and the first [ out ], reaching 19.2 terawatt hour and 33.3 terawatt hour, respectively, also explained by the consolidation of EGPA and a demand recovery in the region.
Let's analyze network business in Slide #8. Electricity distributed reached 29.2 terawatt hour in the second quarter and 59.3 terawatt hour in the first half, which represents increases of 13% and 6%, respectively. This is explained by an important recovery in demand in the 4 countries where we operate during the second quarter. Regarding number of customers, we had an increase of around 470,000 in the last 12 months. It is important to highlight that Enel Sao Paulo reached 8 million customers and the important achievement considering that when we took control of the company is at 7.2 million.
In terms of quality indicators, SAIDI and SAIFI improved in the 4 countries during the first half of the year, while energy losses increased in Argentina, Colombia and Peru and remain flat in Brazil. This is mainly explained by the fact that the temporary provision of casting of electricity supply during the pandemic and finished with the exception of Brazil for clients classified as by [ share in ] them.
On the following slide, we will see Enel X and Retail business. In Enel X business, we had a solid growth in charging stations for the [Foreign Language], that means distributed generation and public lighting. Credit card business was broadly in line with microinsurance decreased by 29%, mainly explain the reduction of in-person marketing due to the COVID-19 pandemic. Regarding the free market business, the number of delivery points increased by 31%, reaching 4,163, and the energy sold amount to 9.9 terawatt hours in the first half of the year, which means a 40% increase.
Let's now have a look at our ESG highlights in coming slide. Enel Americas and the second edition of each school of circular economy for Latin America, an initiative that aims to spread the culture of the circular economy within the [ co ]. In addition to the internal program, an open course will be helped for stakeholders for from Latin America. This school presented to its more than 220 internal and external students, a journey through the foundation of the circular economy, new business models, the role of design, impact metrics, sustainable finance, government and circular cities.
The school emphasize that the circular economy is the basis of a new sustainable economic model that aims to redesign the business model throughout the entire chain and through innovation and not just technology. The recently completed merger with EGP Americas puts our company in an excellent position to lead the energy transition. It contributes to reducing our CO2 emission, which is a focus of our strategy.
The integration was well received by the credit agencies, which is reflected in the upgrade given by Moody's some weeks ago to BAA2 from BAA3. Regarding the SG indexes and raters, the company was confirmed on the S&P IPSA ESG Tilted Index and the FTSE [ raters ] published the new score of the company, reaching a score of 4.1 out of 5. This reflects the excellent performance of the company during the last year.
Finally, we are glad to announce that our 2020 total tax contribution report is already available on our website, promoting the relevance of fiscal transparency in our reporting system. We encourage other companies in Lat Am to follow this path to promote best practices in transparency and hoping that our region can become a reference in ESG. Also today, our B of D approved -- Board of Directors approved an engagement policy. All our institutional investors and bondholders are aligned with best practices at the international level.
Now on the coming slide, let me talk to you about our new wind farm, Lagoa dos Ventos in Brazil. In the State of Piaui, Brazil, we have built Lagoa dos Ventos, a facility that consists of 230 wind turbines, making it Enel's largest wind farm worldwide and one of the biggest energy infrastructure in Brazil.
The 716-megawatt facility can generate over 3.3 terawatt hour period. Thereby, avoiding the addition of more than 1.6 million tons of CO2 into the atmosphere. This wind park implied an investment of BRL 3 billion, and will add another 396 megawatts of capacity, reaching a total of 1.1 gigawatts of capacity and 5 terawatt hour of production by 2022. 510 megawatts already at 20-year contract with a pool of distribution companies, giving stability to our cash flow. This shows the potential of Brazil and the region in renewable generation and the future role of our company and in the energy transition, which makes us very proud.
In the coming slide, I will comment about the reorganization process of our operation in Colombia. This operation consists in the merger of Emgesa, Codensa and EGP assets in Colombia and Central America into 1 new Grupo Latam Colombia, in which our company will hold 53 -- 57.3% of the total share, increasing this way the stay in state and maintaining the control. As you know, our company currently owns a 48.3% and 48.5% ownership in Codensa and Emgesa [ interfused ]. And we have control of the company due to a shareholder agreement.
This operation allows us to settle all disagreement with our partner and begin a new stage of growth, designing a new and clear dividend policy, improving our corporate government and adding new number of growth opportunities. Yesterday, the transaction has been approved by the shareholders meeting of Codensa, Emgesa and [ GPR ]. And coming, we have to wait for the approval of the bondholders meeting and the authorization of the financial regulatory in Colombia. We expect to have the completion of the operation during the first quarter of 2022.
Now I leave the floor to Aurelio, who will comment about the financial results for the period in the coming slides.
Thank you, Maurizio. EBITDA in the second quarter reached $951 million, 52.7% higher than the same period of last year. This is mainly explained by the consolidation of EGP Americas and by the demand recovery in distribution business. If we exclude the impact of EGP Americas and also the negative impact of $70 million coming from currency devaluation, we get to an EBITDA of $841 million, which is 35.1% higher than last year.
In cumulative terms, EBITDA increased by 15% in normal terms and 12.9%, excluding EGP Americas and the negative impact of $97 million from FX. Group net income in the second quarter increased by 95.8%, while on a cumulative basis, it increases by 20.6%. In both cases, this is explained by the contribution of EGP Americas, better result at EBITDA level and better financial results.
Funds from operations, FFO, in the period reached $302 million, a decrease of 9.8% compared to the same period of last year. while net debt increased by 27.9%, reaching USD 5.7 billion. We will analyze in detail the cash flow and debt later in this presentation. On the coming slide, we will see the EBITDA evolution and breakdown.
Starting from $623 million of EBITDA of second quarter 2020, we see that all our businesses have positive results, thermal operations improved by $101 million, while a large hydro increased by $44 million. Networks grew by USD 49 million, and Retail Enel X increased by $7 million and $10 million, respectively.
In addition to this, we had the positive impact of $127 million coming from EGP Americas. Currency devaluation had a negative impact of $17 million. Considering this plus after impact, we get to a final EBITDA of $951 million, 53% higher than the same period of last year. On a country basis, we see that the main contributor for consolidated EBITDA was Brazil with 42%, while Colombia represents 35%; Peru, 40%; Central America, 5%; and Argentina, 4%.
Let's have a focus on Generation and Networks businesses in the coming slides. EBITDA in generation business increased by 96%, mainly explained by the contribution of EGP Americas. Without this effect, EBITDA would have increased by 49%. This is mainly explained by better results in Colombia, Peru and Argentina, mainly due to a higher energy sales.
In the case of Argentina, it's important to highlight that we had a tariff adjustment of 29% retroactive to February 2021. However, these adjustments is still not enough to compensate the inflation increase. Currency devaluation had a negative impact of $20 million. As shown on the pie chart, Colombia and Brazil were the main contributors to generation EBITDA with 37% and 30%, respectively.
Let's analyze EGP Americas in the coming slide. In stock capacity in operation during this period was 3.9 gigawatts, from which, 1.8 gigawatts are wind, 1.4 gigawatt solar and 0.8 gigawatts is mini hydro. This capacity produced 3.5 terawatt hours of energy -- in energy during this period.
EBITDA during the second quarter was $127 million, from which 59% came from Brazil, 38% from Central America and 3% from Peru. Regarding financial debt, it amounted to USD 639 million. 82% comes from Brazil and 18% comes from Peru.
Let's see Networks business in the coming slide. EBITDA in Networks business increased by 19% compared to second quarter of last year. This is mainly explained by better results in Brazil and Colombia. In Brazil, EBITDA improved by 44%, mainly due to an increase of 13% in energy demand, along with higher tariffs due to Enel Rio and Enel [indiscernible] tariffs adjustments. While in Colombia, EBITDA grew by 12%, also driven by an increase of 13% in energy demand.
It is important to highlight that energy demand increased in the 4 countries, reflecting a solid recovery after the difficult times that we faced last year and that we are still facing today. EBITDA in networks business came mainly from Brazil and Colombia with 57% and 31%, respectively. Peru contributed with 12% and Argentina had no contribution this quarter due to higher energy costs despite the positive 9% tariff adjustment. Let's analyze our cash flow in the following slides.
Funds from operations, FFO, amounted to $489 million in the period, starting from an EBITDA of USD 1.7 billion. And these results include a negative net working capital in the period for an amount of $659 million, 28% higher than the same period of last year, mainly due to higher CBAs in Brazil that should be recovered next year in the coming tariff adjustments, of course.
Tax paid during the period amounted to $436 million, while net financial expenses amounted to minus $108 million, 24% lower than last year. After investments for $993 million, including $193 million coming from EGP Americas, we get to a free cash flow of minus $505 million. Let me now analyze the debt of our company in the following slides.
Gross debt amounted to almost $7.2 billion, an increase of 21% compared to December 2020. This amount includes $1.2 billion coming from EGP Americas. And without this impact, gross debt would have increased by 2.3%, reaching USD 6.1 billion. This is mainly explained by our increases in our distribution subsidiaries in Brazil, partially offset by a reduction in Enel Americas holding.
Looking at our net debt, starting from $4.4 billion of last year, we had minus $505 million of free cash flow, as mentioned in the previous slide. Net dividends paid amounted to $636 million and financial receivables minus $11 million. During this period, we had an extraordinary operations for an amount of $712 million, which corresponds to the equity injection received by EGP Americas to continue developing our projects in renewables. With this, plus the net debt coming from EGP Americas of $631 million and the FX effect of minus $188 million, total net debt reached $5,663 million. In terms of currency and country, we see that Brazil remains at the largest contributor, while the debt holding level represents 10% of total.
Finally, regarding the cost of debt, we can see an increase for this period going from 4.9% to 5.5%, mainly explained by the incorporation of debt coming from EGP Americas and growing trend in indexes associated with variable rates in debt in Brazil. This is partially offset by better rate conditions in refinancing of debt in Colombia and Peru. Now on the following slides, Maurizio will finish the presentation with some closing remarks.
During this quarter, we saw a solid operational recovery across the region. This allowed us to have an important improvement at EBITDA level boosted by the consolidation of EGPA. We continue with our ESG focus, and we are positioning our company as one of the best ESG players in Latam. And finally, we are already delivering in this new phase for our company after the full integration of EGPA. We are confident that this will continue bringing benefits to all our stakeholders.
Well, thank you, Maurizio, Aurelio. I now pass the call to the operator for the Q&A session. Operator, please proceed.
[Operator Instructions] For our first question, we have Enrico Bartoli from Stifel.
Congratulations for the results. The first 1 is related to the outlook for the second half after the strong quarter you report in Q2. If you can elaborate on what you expect in terms of evolution of demand? If you expect some additional tariff adjustments during the coming quarters? And if I'm right, you provided the guidance in February of $4.2 billion of EBITDA, including EGPA, and if this is confirmed?
A second question is related maybe to Slide 6, when you show your pipeline for renewable projects. I was wondering if you can share the details on how the projects are classified in the mature pipeline or the early stage pipeline in terms of contract visibility and connections? And if you can provide us some guidance on the IRR that you expect from the projects that are currently in execution?
Let me reply to the third question. We see in the second half of the year, that will continue a group of the demand. So from the distribution business, we don't see any particular difficulties. Of course, now the possibility to have doing in -- as well in Rio will allow us just to reduce and keep up the control the debt situation. So no major change in this action business.
Regarding generation, of course, we are the dry season impact on Brazil that are put under pressure. Of course, the entire electric system in Brazil. But we will -- we are maintaining good generation in renewable segment. And, of course, you remember that we have as well for [ tariffs there ], our combined cycle there to produce it. Regarding the other countries, in generation, we don't see particular criticalities.
And regarding the other business related to the world of Enel X, we are facing an interesting growth in terms of product and service in terms of especially in electric mobility, and we are negotiating several interesting contracts. Same contracts like the contract we did with Volvo in Brazil for the charging station.
So we see in the second half of the year that we continue the recovery from the pre-pandemic thing. Of course, in all countries the commercial segment is the segment that was the biggest impact of the pandemic that this has not been compensated by the growth of demand in domestic segment and in the Latam segment.
Regarding the pipeline, what we say is a mature compare with new, mature means that we have less contract already in place. We have a good number of permit in place. So we have a connection point already secured. And of course, the second page is just optimization of the layout procurement activity, et cetera.
The more mature pipeline that you do have some preliminary contract on land rights you are starting the permitting phase. Of course, you know this pipeline normally, unless there are some unexpected influence we don't consider that are major problem developing ahead this project.
Of course, as you know, pipeline is a living creature. So you have some projects that will die and some other projects that will enter. And the demonstration is the fact that since our announcement of the merge in December 2020, you recall that, as I already recall, as I said, 22,000 megawatts of pipeline, now we have in 44,000 megawatts of pipeline. This does mean that are going to 2,000-plus -- 22,000 in the reality, you have, as I said, in/out in the pipeline. Having a consistent pipeline is just the indicator that you have a huge and solid growth opportunity even more beyond the actual growth strategy. You recall that one of the reasons why we underline the importance of the merge was the possibility to have in-house one of the best development team in the region. Regarding IRR, I leave to Aurelio the floor.
Enrico, thank you for your question. We -- it's important to mention just to complement the second semester, second half of the year that we have a full semester with the tariff of Sao Paulo. We adjusted, right? We'll have a readjustment in [ Goya's ] in October. We have more around 600 to 700 megawatts of new capacity that will -- that the COD is estimated is to enter in the second half of the year. So which drives us to, of course, and the demand recovery that we expected drives us to a better or improvement semester for us, okay?
In terms of -- just to mention that in the first quarter, I mentioned the estimation of around USD 4 billion of EBITDA this year. We maintain this estimation, and we are comfortable with this figure.
In terms of IRR, we use this -- well, depending on the technology, but it varies on 10% to 11%, okay? So this is our -- of course, we are confident that we are improving our capacity, as Maurizio explained in all the lesson learned increased cost, increasing pipeline, and so on, we could improve these returns, which is, for us, is a reasonable return, okay?
Just to clarify this 10%, 11% is equity levered or unlevered, this kind of figure we are talking about?
The, let's say, the WACC plus some hurdle or the WACC for the capital.
[Operator Instructions] For our next question, we have Rodrigo Mora from Moneda.
Congratulations also for the good results. I have 2 questions. The first 1 is related to the Enel Green Power Americas. I would like to understand the net financial debt that Enel Green Power Americas has because I understood that the transaction, the merger transaction consider that Enel Green Power Americas came without financial debt or net financial debt equals 0? This is my first question.
My second question is related to the drought condition in Brazil. I would like to ask Enel Americas' team, what is the risk that you see that the next year, Brazil could face potential electric rationing at the system?
Okay, Rodrigo, I will just give first, just some indication regarding the first question, and then I will let Aurelio reply. Just to recall that, as we said during the emerging, this project was just coming with investment related that you see, of course, this in the free cash flow increase coming that means assets with financing with cash because it was already related to the prevalent. But I will leave Aurelio just to reply regarding the situation of debt.
Regarding the situation in Brazil, I think that the -- all the indication of the announcement of the declaration of the Ministry of Energy is that we'll have no rationing of the electric energy. In this respect, we are making some proposals. For example, demand response can be a solution to the type of rationing that we'll be cutting on the distribution. So in general, I think it's as well politically a challenge from [indiscernible] declaring the cutting of the energy. But consider that the situation today is quite different from the situation of '21, that was the year in which the cutting of energy produced. Why?
Because there are much more wind farm and solar farm already in production. So one and all, I don't think you will easily find the situation of cutting of energy, even though you consider that we need to see what will happen in October. October is the month of the raining, the raining season, the beginning of raining season in Brazil. And of course, everybody is expecting that we will get an improvement in this direction. If not, we will see what will be the action. We are -- we think that there are other possibility avoiding the cutting of electricity supply. Regarding debt, I leave the floor to Aurelio.
The cash that came with EGP Americas is in Enel Americas level, right? That's why we -- because we consolidated all the cash flow we have at holding level and we use it as the project needs the cash flow to conclude or to pay the construction, right, the part that it's in the company. So the company came with, let's say, the projects came with the debt, but that's the cash flow neutralizing this effect at Enel Americas level, okay, which is considered Enel Americas. It's in the one boss, one [ safe co ], let's say.
So the company came without net financial debt, but Enel Americas had to use the cut to finance the capital expenditure of Enel Green Power Americas. I am correct?
You are correct. You can see like really...
Rodrigo, we said during the merger operation that the project in construction was supposed to come into Enel America with already financing for the construction, okay? And this is exactly the funds we are talking about. The funds that need just for the construction of you remember, there was some megawatts in construction in '22 and -- '21 and '22. This is the cash we are talking about in light of what we explained during the merged operation.
Yes. Just to add, Rodrigo, the net level, it's 0, right? Because we didn't -- of course, we didn't need to optimize the flow. We didn't leave the cash in the companies, in the operating companies because they are using. Then we can -- in Enel Americas, we can optimize this discussion in a better situation, a better flow of resources, okay?
Okay. Please, let me ask our last question, is related to the agreement with Grupo Energia de Bogota. The merger of the operations, Emgesa, Codensa and also Enel Green Power Colombia and Enel Green Power Central America. I would like to know if related to the the dividends approved to make the transaction, what is the idea of the group in terms of use of proceeds? Because when I see at the level of holding, Enel Americas Holding, it maintained some financial debt. And I would like to know if the use of proceeds of this dividend will come to reduce this financial debt.
Yes. Thank you, Rodrigo. Yes, that's the idea. I anticipated this strategy in the first quarter. If you remember, Enel Americas anticipated dividends in the previous years, that's why Enel Americas has a debt today. Because, of course, we are in a growth phase in the countries. So now that we are seeing that the countries, especially in this case, Brazil, in Colombia, as you mentioned, so we can invert this trend. So what we'll do is to have let's say, a dividend pay in higher than the dividend payout, right, in a progressive way. So that's the idea. The idea is to reduce a little by little, these debts in Enel Americas because it's -- the debt is more efficient if it stays in the country because you...
At the operating companies, right?
Exactly That's the idea. That's idea.
For our next question, we have Henrique Peretti from JPMorgan.
I have a few follow-up questions. The first one would be on Enel Green Power. The EBITDA in the quarter was $127 million. The question would be, can we analyze this EBITDA for the full year? Or is EBITDA poised to increase in the upcoming quarters? Because generally, at least in Brazil, wind power generation is stronger in the third and fourth quarters?
The second question would be regarding the GSF. So we know that GSF is going to be very low in the third and fourth quarter. So is there going to be an exposure for Cachoeira Dourada and Volta Grande, if there is an exposure to the spot market if the company has already hedged the eventual position? So those will be the 2 questions for now.
I can take this one. Well, in terms of EGP, the new -- the new parameters, EGP Americas, we can expect it to maintain this level, taking into consideration that we'll put in a COD 600 megawatts in the second semester. Of course, it's not in the beginning, it will be spread by the month, but we'll have this new capacity. So we are expecting something around USD 400 million for the -- not for the whole year, but for the 9 months, let's say, right? Because we are only [ 137 too a month ]. So this is Enel Green Power.
In terms of hydrology and all the impacts in our hydro generation in Brazil that we have today. We are perfectly matched in terms of contracts that we complement with our generation with energy that we bought previously. So we are long in terms of contract purchase for to sell energy in the -- especially in the free market and some parts in auction, 45% auction and 55% free market.
So we do not have concerns in terms of coverage in our generation assets since we have this position of contracted with plants, not with a commercial plant, but with real generators. In fact, this energy to sell in the free market complementing our own generation. And also, there is also -- I mean, these risks spend lots of opportunity also because we can do a short-term business with some commercialization that or some agents that has -- may have problems or something like this. But in our case, we are in a comfortable position.
So finally, if you could just explain very briefly if you have any changes to the guidance? I know there is no official guidance at the moment, but if you can guide us for 2021 and 2022 in terms of consolidated EBITDA, that would be really helpful already?
For 2021, we are maintaining the the USD 4 billion, USD 4.1 billion that I explained in the first quarter. We are confident with this number, with this figure. We are still calculating and analyzing the scenarios for next year. We are seeing different behaviors in terms of demand and the segmentation, especially in distribution. So to anticipate now this situation, I think it's not -- we are not, let's say, have a number to tell you.
But we can talk about our expectations in terms of recovery and so on of demand and so on. So again, in terms of EGP, we are doing very well, increasing our portfolio and take advantage of anticipating projects and take advantage of prices if we can. We'll do this. That's why we are improving our pipeline in a huge way. Also take advantage of our commercialization and trading strategy. You can see the quantity of energy that we generate and the quantity that we sold by for free customers, it's 2/3, we generate 2/3 the energy and 1/3 is just commercialization, trading commercialization. So this is something that we'll capture with -- also with renewables.
And distribution, it depends on this -- the recovery of the the demand that we are seeing that right now, we are better than last year. But to have a solid position in terms of demand for next year, we need to to see the development, especially with the pandemic in the region. I don't know, Maurizio, if you want to add some comments regarding this.
Nothing. Regarding the question, we have strategy that covers the contract of Cachoeira Dourada, Volta Grande, we are continuing growing in Brazil in the free market. And this, of course, will be even more boosted by our execution in renewable project as we are doing right now. We are going [ to have interest and have inventory come when time comes, time on that ].
Regarding the -- as you said, regarding our target, we are facing the fulfillment of the target declared for 2021. We are -- we think that we can maintain the target of 2022. Of course, we are right now, we are in the phase of definition of the budget for 2022 depending for demand, et cetera. I don't see any major change in regulation. I think we will -- for Brazil, for example, I think that we will get even better results compared to 2021 in the reality.
[Operator Instructions] Presenters, we don't have any further questions at this time. You may continue.
Well, there are no more questions. I conclude the results conference call. Let me remind you that the Investor Relations team, as usual, is available for any others you may have. Thank you for your attention, and have a good day.
And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.