A2A Piano Strategico 2024-2035 e Risultati FY’23

Ladies and gentlemen, good morning. Thank you for coming to the presentation of the 2024-2025 strategic plan. Compared to the one presented in January 2021, we have a very rich agenda, so I won't take any more time. The agenda first includes the presentation of the 2023 results by Luca Moroni, followed by Renato Mazzoncini with the presentation of the strategic plan. At the end, I would ask you to concentrate all questions at the end after the plan presentation. Thank you again, and I immediately give the floor to Luca.

Life is a Circle. We are a Life Company because we put life at the center of everything we do for us and for future generations. Our technology and our infrastructures are at the service of people and the protection of nature. For this reason, we work every day to regenerate the potential of every resource. Life is a Circle. We promote energy from renewable sources and accelerate decarbonization, favoring the electrification of consumption. We build a virtuous water cycle to reuse it without waste. We transform waste into resources, so every waste can become new material, energy, and heat. Life is a Circle. Our vision looks far ahead; we build the future today by acting consciously. Because a bluer life is possible. A2A Life Company.

So, good morning to everyone. Thank you for being here. Make yourselves comfortable because, having the plan until 2035, I will have a few things to tell you. On the other hand, I think it is also interesting to see through our eyes how we see the future of the energy transition, the circular economy, our country, a piece of Europe, and our world. Let's start by giving the correct retirement to our first plan. You remember it was January 2021 when I presented the first ten-year plan 2021-2030. I will always remember that period, partly because we were in the middle of a pandemic, so no in-person presentation, and partly because the perplexity about the acceleration the plan gave to A2A left some perplexity. For the credibility of our 2024-2035 plan, we went from an average of 1.6 billion in capex in the period 21-23. Here we compare actual vs. plan: we said 5 billion in capex, we did 5 billion. We said we would reach 1.6 billion in EBITDA in 2023, we reached 1.9 billion. But net of the scenario effect, we reran the plan with the scenario numbers from October 2020 and got 1.7 billion. So we beat the plan on EBITDA. We said we would close 2023 with 400 million net profit, we are at 500 million, actually over 600 million. Net of scenario, we beat the old plan and grew 40% vs. 2020 (90% with scenario). 24% total shareholder return is very respectable. We did it with strict financial discipline: today a ratio of 2.4, vs. 3.3 in 2020. Without the scenario effect, we would have maintained 2.7. We refinanced debt at excellent conditions, and now 70% of debt is sustainability-linked, with good duration and cost. Industrially, we said we would reach 3.3 million customers, we are at 3.5 million. We sold 6.7 TWh of green energy as planned. We installed 0.6 GW of wind and solar (target 0.4), accelerated by the Ardian acquisition. Electricity RAB reached 1 billion, three times the investments in 2020. Waste treated: 0.9 million tons, slightly below plan due to industrial downturn. Water losses improved through investments. ESG: women managers at 26.4% (target 23%), 30% ESG criteria in vendor rating. Our 2021-2030 plan is archived proudly; it transformed the group into the Life Company announced in January 2021. Now, in presenting the 2024-2035 plan, we start from here.

The agenda will be this: I will talk about vision, then strategy, then numbers. I recall from 2021 that this is a real plan, not a division plan. We have put everything: economics, investments, capex, EBITDA, IRRs of all investments to 2035. Why 2035? It has important anchoring points at European level: the phase-out of electric cars (symbol of electrification), greenhouse gas regulations, waste cycle targets (65% separate collection, max 10% landfill by 2035). Just as we did for 2030, we want an anchor year. Let's start from the vision and the concept of Life Company. We care about the end, not the means. We don't just deliver electricity, water, gas; we provide infrastructure for the ecological transition. We cannot solve the overshoot day of decarbonization without planning and making investments. Compared to 2050, which is really tomorrow morning, we need to act. The climate situation: in 2022 we lost 36 billion cubic meters of water in Italy's aquifers, equivalent to Lake Garda or 60 Lake Trasimeno. We cannot afford to waste water. Pollution levels were high before the recent rains. In the oceans, there is one ton of plastic for every three tons of fish. In Italy, we send 11 billion cubic meters of waste to landfill each year, equivalent to 21 Duomos of Milan. The Earth Overshoot Day for Italy this year was May 15. So it is good that we address the problem. To be a Life Company, we must solve these problems. The Terna-Snam scenario expects a 30% increase in peak distributed electricity by 2040 (in Milan +50%). The PNIEC approved by the new government targets 131 GW of renewables by 2030 and 177 GW by 2040, tripling renewable capacity. I worry about overcapacity when we are going at one-third the needed rate. For circular economy, the 2035 targets are 65% recycling, which requires 75% separate collection. So A2A contributes with this 2024-2035 plan.

Now I start to spoil the ending. Let's pull out some macro data. What we expect to be in 2035 implementing this plan. These are some macro numbers; we will see details later. We imagine reaching 3.4 billion in electricity RAB (we started from 0.7 in 2020, and the recent Enel acquisition gives a big boost). We expect to reach 5.7 GW of installed renewables including hydro. We will go from 5.1 to 7.3 million tons of waste managed. Overall, we have planned 22 billion in capex to 2035, the maximum speed we can move safely while maintaining financial discipline and our rating commitments. This leads to constant EBITDA growth, exceeding 3.2 billion, and net profit exceeding 1 billion. Three elements I want to underline: first, as in the 2021 plan, we stress that A2A is an infrastructure company; most of our EBITDA comes from capex remuneration. But we must not forget the customers. Second, decarbonization remains the North Star. Third, we have reflected on future-fit development: we must ensure that our investments are truly future-fit, that A2A will be stronger in 2035 and 2050. So we need to be careful about what we invest in. Our two pillars are Energy Transition (left) and Circular Economy (right), with people and business in the middle. On decarbonization, we certified with SBTi in 2017 at 417 g CO2 per kWh, target to 226 in 2030. We have already reduced 30% and plan a 65% reduction. We have closed coal production (except for a brief period in 2022 at Monfalcone). We are working on district heating with decarbonized heat: in 2023, 85% of heat distributed in Brescia was from decarbonized sources (waste-to-energy, waste heat, etc.). We are developing district heating in Milan using waste heat from data centers. We have reached almost 2 TWh of wind and solar production from zero. We aim for near-zero scope 2 by 2026, 60% reduction in scope 3 upstream, including electrifying our fleet of 5,000 vehicles. We have planned a carbon capture plant, as methane cannot be fully phased out. Capacity market and reduced CCGT production are also important.

What do I mean by future-fit strategy? On the left are macro trends, on the right are our investments. Decarbonization: we develop renewables and invest in CCS. Energy security: we invest in capacity market, storage (batteries, Cassano, Monfalcone conversion), and grid development (Enel acquisition, mobility). Circular economy: energy recovery from waste (WtE, biomethane), material recovery, and water. We are the only strong player in both hydro and water cycle, and water is a huge value. We estimated that 90% of the 22 billion capex is future-fit, meaning we are confident we will see them in the next 30 years. Today, 77% of EBITDA is from future-fit assets; by 2035 it will be 90%. Now let's look at the strategy implementation. We have the usual division: circular economy (6 billion capex) including energy recovery (WtE, biomethane), material recovery, water, and district heating (which we put here because it uses decarbonized heat). Energy transition (16 billion) includes grid development, renewables, customer base, and energy flexibility. We split these investments by low vs. high volatility. Low volatility includes regulated (Arera) and contracted (e.g., 10-year Amsa contract) – 44% of capex. Market volatility includes renewables, A2A Energia, customer base – 56%.

Now let's look at growth over the plan for circular economy. We have a base of 2023, then targets for 2026, 2030, 2035. Circular economy EBITDA grows linearly to 1 billion. Energy transition starts from 1.4 billion, total base 2 billion (0.6 circular, 1.4 energy), rising to over 3.2 billion. The 'greater than' refers to this. Business model snapshots: waste – target 2035: over 4 million inhabitants served, 2 million tons collected. We have won four tenders in Liguria and Valle d'Aosta, outside our territory. We want to balance collection and treatment. We have 3.9 TWh of energy produced from waste (electricity and heat). Water – interesting: in the old plan we assumed some concessions would be transferred to a public company, but that possibility has disappeared due to high RAB (1 billion by 2035). We now expect to keep our 600,000 inhabitants served and reduce losses from 16% to 13% with smart meters. Industrial waste treatment is where we grow, as we see concentration in the industry. Urban waste may decline due to EU packaging directives. We acquired the Tec plant in Crotone, a large industrial waste-to-energy plant. Goal: 3.9 billion cumulative capex by 2035, 0.7 billion EBITDA, zero waste to landfill (only ashes, which we are working to reduce with projects like Mapei and Mind). People and business: we reorganized the industrial waste value chain, creating a sub-holding to improve commercial visibility and offer hands-on consulting. We have 1.1 billion in urban waste investments, with 300 million EBITDA by 2035; industrial waste becomes very visible. End-waste is key to solve the overshoot day: we work on compost, glass, wood, plastic, paper to move down the value chain. Goal: increase waste-to-material produced directly by the group. Water: 1 billion RAB by 2035, investing €130 per inhabitant vs. Italian average €60 and European €100, to recover losses.

For energy transition, we aim to reach 10 TWh of renewable production (including 4 TWh hydro, plus wind/solar growth). Customer base: over 5 million. Grids: 3.4 billion electricity RAB, 34,000 charging points. We have developed a low-capex City Plug model for urban mobility; this year we will install 2,000 points in Milan out of 4,000 planned in the first two years, with occupancy rates double the average of the first installations.

Normal charging points, even without a dedicated stall, which perhaps opens up some reflection. And 2.1 million PODs, which is the sum of what we had before and what we bought, the 800,000 we bought from Enel. So this is the operation we announced to you a few days ago to keep you from getting bored. It is obviously an extremely important operation for us. You probably know that both A2A and ASM began developing electricity networks a hundred years ago. Then, with the Bersani decree in the early 2000s, the networks of the Municipality of Milan were assigned to A2A, absorbing part of Enel from the Municipality of Milan, ASM from the Municipality of Brescia, and then buying 3,000 km of network lines from Enel in the Valsabbia area. So the lighter blue part you see is the historical part of A2A, which is about €1 billion in RAB and about 1 million PODs. Realizing that the development of electricity networks in terms of regulated assets was the finest we could aspire to, I decided to go to Enel to see if they were interested in expanding our perimeter, logically around us to generate operational efficiencies. When you expand the barycentric network, it generates huge benefits. Fortunately, we are in Lombardy, in Milan and Brescia, so this logic coincides with a network that is particularly important and with very significant developments, because in these two territories, a 50% growth in electrical peaks is estimated by 2040, compared to 30% nationally. So we are buying a huge network: 17,000 km of cables, 9,250 secondary substations, 60 primary substations, 800,000 meters. With list prices, the replacement cost is over €5 billion, so a truly enormous network. This allows us to become the second largest Italian network operator in terms of distributed energy, and we have even entered the top 20 European operators, I think we are 16th or 17th. We plan to close the deal in Q4, December 31, 2024. I'll explain why quickly: It takes time to close because we need to move the physical tollbooths. The networks are all interconnected, but energy passes from one network to another. The tollbooth that measured energy flows between A2A and Enel was on the border of the Municipality of Milan. Now we have to move it outside, which involves installing meters and shifting networks from the counter. So far we have done the easy part; now the electrotechnicians come in and reconstruct the new border with Enel. We estimate it will take a few months, so we have set the closing date as December 31. The 10% remaining with Enel is for a sort of stewardship, a collaboration because the migration of systems takes time. We have done this twice before, in 2003 in both Milan and Brescia, so we have some experience. The collaboration with Enel is very good. Later Luca will talk about the financing of this acquisition. Logically, we start with a very good shoulder, you saw it at 2.4. Part of this acquisition is financed with our cash flows, and part we have analyzed assets on which we are willing to open minority capital, thus acquiring the equity that allows us to close this acquisition in total tranquility. Well, I don't need to tell you that I am more than happy. I think it is a historic operation and for many reasons, perhaps unrepeatable.

Speaking of future-fit EBITDA, if there is a future-fit, it is certainly the one that comes from this. So the strategic rationale is future-fit. We assume 5-10% operational synergies between our networks. All capex is eligible for the European taxonomy, which is another very important element for us in terms of cost of financing and service quality. We have acquired a network that is very interesting because it performed very well, last year it only received awards for service quality from ARERA, but it has the age that allows for replacements. So we have estimated significant investments in the coming years. It is a network that was well built at the time; the Italian network was built from the 1950s to the 1980s, then for 30-40 years we didn't invest much. Now the DSO becomes a completely different object because of bidirectional flows, 1.2 million solar panels on homes create a situation where the role of the DSO changes completely. Investments restart due to electrification of consumption, growing peaks, bidirectionality. So a new wave of investments begins, and you can only make them where there is a 30-year-old transformer, because ARERA authorizes them. We have estimated a very important absorption of capex. So for us, as you read in the interview I gave, it's like buying a field on which we can sow and reap a lot for the coming years. From now to 2035, we have estimated in that €22 billion plan, €1.4 billion just on the Enel network, not ours. Consider that there will be another roughly two billion, so very important investments. The interesting thing is that on this network we have a CAGR of RAB of 10% overall, even 11% including ours, with an EBITDA by 2035 of €200 million, and by 2050 we are well over €350 million. So when I launched the plan in 2021, this was one of the slides. You know I am also an electrical engineer, so I am passionate about this. We had a CAGR of RAB from 1 billion from 700 million to 1.9 billion. Now with this operation we are in very significant growth. You saw earlier, 21 TWh of distributed energy is a really important number. Milan has a density of distributed energy five times that of Rome. That speaks volumes because A2A, even before this acquisition, in terms of distributed energy was superior to Acea, just to give you an idea, even though Acea has 1.6 million PODs, because the density of energy consumed and distributed in Milan is truly enormous. Of course, there is also some innovation. For example, that thing you see earlier is a submersible substation. You know when the Lambro river floods, but actually you don't even need the Lambro to flood. Unfortunately, when Vicenza was under water two weeks ago, a heavy rain is enough. The manholes built and planned 50 years ago don't have the capacity to absorb heavy water, the streets flood, secondary substations are under water, they are under the street, they flood too, they are under the gratings we walk on, and so the city goes into blackout. So we invented and patented with Schneider the submersible secondary substation. This one can remain under water for an hour, it has portholes like a submarine, and when it fails it is extracted and replaced. For network resilience and therefore the reward mechanisms, many around the world are starting to ask us about this innovation. On renewables, obviously our hydro is stable, solar and wind grow. €4.6 billion capex by 2035, all on solar and wind. I underline that we have assumed a pipeline of 1.8 GW, fairly balanced between solar and wind. Substantially we move on greenfield, most of it is greenfield precisely to leave no value on the table. We have a very important piece of mid-stage, you know these are the classic ways to classify the pipeline, and our goal is to have about 350 MW per year to send for authorization. So we are traveling according to this plan, and the important thing is that we are doing it in a very balanced way across Italian regions. So the burden share is very important because it allows for the development of photovoltaics also in the North, where the premium on the PUN is still very important because the immediate consumption of energy is high. For example, we are finishing building a plant in Friuli Venezia Giulia, Santo Stefano. These are plants that do not require storage; all the energy produced is consumed instantly, so you have an ease and zonal prices that are extremely interesting.

And it remains what we have always told you: a highly integrated and balanced generation portfolio. By 2035, you see that we have production of CGT in TWh decreasing, consistent with the PNC policies, hydro increasing slightly due to the investments we have planned (about €1 billion invested in hydrogen and concessions), and then wind grows with repowering of plants we acquired in the Ardian portfolio, solar, and waste-to-energy which still produces its 2 TWh and is always fixed-price production. Let me show you something very interesting about our energy scenario. Let's see if I can explain it well. Our waste-to-energy plants produce energy at 8,000 hours per year, so they produce baseload, predominantly in northern Italy areas that are at a premium on the PUN. The concept is very simple: there are days when you see the PUN in Puglia at zero and in northern Italy at 180. That is what is happening. So it is very important to keep in mind that in a country like Italy, you can no longer think in a logic where you take the average PUN and multiply it by production; you need a more granular analysis. Let's try to help with this analysis: 2 TWh of energy produced by waste-to-energy plants, predominantly in northern Italy because the barycenter is on baseload production, so they capture the premium. Solar energy, balanced between north, south, and islands because we have it spread everywhere, is not programmable, so it probably goes at a discount on the PUN precisely because it is not programmable. Wind is predominantly in southern Italy and islands, because there is no wind in the north, and it is not programmable but has a very different production profile from solar, and it always captures at least the average PUN, never at a discount. Hydro and CGT are both programmable, we have about 80% in northern Italy, and they all go at a premium on the PUN. Our dispatchers dispatch them when prices are right. The result of the operation: our levers are technological diversification, having all generation sources, we move the levers on this. We have hedging and PPAs with our customer base. You know we have launched PPA SMART Market, which is going very well. We have strategic dispatch capacity and capacity market, which means we don't need to have production from plants under capacity market; those that are well remunerated can wait for the right moment to produce. The result over the last 5 years is that we travel at a 10% premium over the national PUN. So our achieved PUN, what we actually bring home on our balance sheets compared to the national average PUN, is plus 10% simply because of this effect. So within this plan, we have imagined a scenario oscillation between €85 and €100 per MWh for the PUN, and we know that we are systematically traveling, thanks to our dispatch and our production fleet, with a 10% premium on the PUN. Evolution of the customer base: There was some surprise, I must say, also on our part, about the closure of the auctions. We were very happy because we came from two auctions, the last one for other uses, where we had won more than everyone and at good prices. We had a growth that was important and sustainable. In the last auctions, we kept our house style: we bid in areas that interested us, especially where we had less awareness, and we bid positive values. Frankly speaking, considering that these are customers who remained in the protected market for their entire lives, the hypothesis that they suddenly become particularly dynamic in terms of commercial propensity seems a bit unlikely. So investing a lot of money on subjects whose only logic for investing money is that when they exit the protected market after 3 years you can start selling them something, subjects who have no propensity to buy VAS and so on, didn't seem particularly sensible. So we bid positive values. In the end, I think we were the only ones in Italy. We still won three interesting areas: Palermo, Naples, and Cagliari. So we continue to develop our customer base with the tools we have shown we know how to use in these years, which are a bit of imagination. Imagination on the product, which is perhaps what is missing a bit in this sector. The PPA SMART Market, we put them back on sale on February 6; by the end of February we had already made 7,000 new contracts. Last year we put 10,000 on the market. The scheme is PPAs from A2A generation to A2A Energia, which then has green energy to put on the market. That finished, since there was excess demand, we managed to open for another 5,000, then we suspended sales until February because we didn't have new green energy to put on the field. This year we restarted with the objective of 50,000 contracts. We had imagined 5,000 per month, it's a very particular model, 10-year contracts, and they are going very, very fast, even though the price is very different. Last year we had a PUN at €200, now we have a PUN at €90, the price of PPA SMART Market hasn't changed, it remained at €119 per MWh, and yet they are going away with a truly surprising speed. And then we are working on all our channels. Let me show you quickly the channels. In 2023 we acquired 700,000 customers on the market, and then there is a part of churn, so the net is what Luca mentioned earlier, 400,000. The digital channel is growing a lot, also thanks to the combination of Nen and A2A Energia, Nen is another innovation introduced by A2A a few years ago, and it is going very well. So we assume in the 2024-2025 period to have acquisitions with digital channels, you see the proportions, with our call center which remains a proprietary asset with our own employees, very effective, and with stores. We need stores to gain awareness around the country. Anyway, a very strong acquisition track record, we have doubled digital acquisitions in recent years and they continue to grow. Our brand awareness has tripled since 2020; today brand awareness T2A is 58%, only in 2020 it was at 36%. If we go back years, we see very low awareness. So today we have a very important lever linked to brand awareness, linked to a very low market share, as is quite obvious. We have a market share between 6 and 9%, awareness of 58%. It is quite evident that these two data help each other. 14 times the growth of stores by 2030, because we are still in a world where digital works, so there are people who don't move from home and do everything digital, and people who need the store. So especially in parts of the country where we are less known, we are moving with this. I must say we are very calm about achieving the client target you saw earlier. On charging points, I already announced them, I won't waste time, but it is certainly another innovation that the company has brought. I think it will be difficult to think of developing charging points today with a high capex per single plug. So we chose the opposite model. When I gave the brief for this column, the one you see here, I said: guys, I need a plug that costs one hundredth of a superfast capex, one hundredth of the depreciation. They didn't make it, we arrived at one fiftieth, but it's still a good result. And this was necessary to be able to do a capillary development without dedicated stalls. Obviously, if you have a capex of €100,000 per plug, you must have a dedicated stall or you are dead. While if you have a capex of €1,000 per plug, you can obviously afford to wait for the electrification of the fleet to grow. The first results are very interesting. Well, at this point I pass the word to Luca, who will tell you about the financials. Please.

Closing remarks. Just a couple of really important messages. On the environmental side, we already talked about it, but it's a very important commitment, a bit the logic of making a plan so long. On the social side, I want to spend just a second. Inside this plan there are €120 million on what we called the birth rate project. We think that for our country, the number one problem is demographic, number two is climate change. So if the demographic estimates are not wrong, and unfortunately it's a statistical science, so quite exact, the biggest problem we will have in the coming years is 47 million people in Italy against the current 60, by 2060. So we decided to try to see if large companies can give a contribution. We made a benchmark among all large Italian companies to see what policies supporting families exist. We made the envelope of the maximums and we inserted into our plan everything that the sum of the other companies together does. It came out as an increase in cost of €10 million per year, and we inserted it here. We hope it produces a result, and if it produces a result, we hope it is followed by other large companies. Certainly our state will have to do the bulk of the part, but I think companies can also do their part. Also the growth and the objective to reach 40% of women managers obviously remains one of the objectives. The one I want to stop on is this. Today, and this also explains why we are doing a 2035 plan, we are in a situation where on this environmental world, from here to 2030, we were working on the plan to 2030. 76% of our capex is either under construction or authorized. So either we start looking a bit further ahead. And excuse me, on the energy transition side, the capex 2024-2030, €8.3 billion, are for 68% either authorized or under construction. So this explains why we either take care of the period 30-35 or we get a bit bored. In the sense that effectively, when most of the activity is already planned, and if you think about it, it's obvious. For example, the Monfalcone plant we are building is something that was planned 3 years ago, is being channeled now, goes into service in 2 years. So it is logical to have horizons of 5-6 years and even more when you have plants of this nature. So I give you these two data to tell you that the plan is extremely robust because it is based on... I didn't go into all the projects, obviously we have projects that go beyond 2030, but it seemed useful to give you this view because it also explains the work we did in the plan 2021-2030. Besides doing the deployment of these 3 years, we had already planned and advanced authorizations for the rest. Here for example, 13 primary substations, the Monfalcone CGT, authorized projects on batteries, a 30 MW plant authorized, wind, solar plants authorized for over 100 MW, and so on. So the very strong message I want to give you is that we are always very feet on the ground. So we have the head that looks a bit ahead but feet on the ground, and we know that the path is made by walking day by day and bringing home authorizations. Typically, both in the environment and energy world, you need pipelines seven times larger to be able to do what you need to do. This is a bit of inefficiency of our country, but once you know it, you carry it forward. So starting from the path of the old plan that brought these great objectives, the new plan consolidates the growth. It remains a capex-driven plan. I think we have now acquired credibility on this. That little fork 22/22? Have you ever seen such a small interval on guidance? Tell the truth. It was the negotiation with my people on the fact that I didn't want to go below 2 anymore, and we won't go below 2 anymore. And logically, I mean, already in 2024 reaching €2 billion means being a couple of years ahead of the plan. Remember we had assumed in 2026 to reach €2.1 billion. Now you have seen we are €2.2 billion in the plan, but we are surpassing the target with 2 years of anticipation. Besides, I must say, with levels of coverage for 2024 certainly there are some of your questions on this, a little bit also for 2025, certainly interesting, which give us a big hand to maintain this very robust trajectory. 90% of capex future-fit. This is the other thing that makes us very proud. It is not easy today to find... you imagine being a company like ours that manages €1.5 billion, has €1.5 billion of cash flows and must invest €1.5 billion per year in interesting future-fit things. Because then the theme is also this: when you generate large cash flows, you need objects to invest in, projects to invest in, and they must be projects of great value for the future. So great attention, as Luca said, to the difference between WACC and IRR. 7% EPS CAGR, 6% dividend yield. I would say our shareholders can be happy. Well, thank you for everything. Now we are ready to answer all the questions you want, especially if they bring me a chair. [Laughter] Take this one.

Good morning everyone. Francesco Sala from Banca Akros. Thank you for the presentation, congratulations on the results. I have three questions. First, could you share with us the assumptions made on the infrastructure part of WACC and deflator for the next, at least until 2026? Second, on the retail part, do you see a squeeze on margins? It seems to me that in recent months margins have come down a bit, there is a bit more competition, a bit more aggressiveness in offers. Third, always on the generation part, could you share with us your assumptions in terms of MSD and capacity market to help us model this part as well? Thank you.

You start on the first one. Let's take a few questions. Maybe take a few questions.

Good morning everyone. I was interested in the comment you made. It seems to me you said that your assumption is a PUN between 85 and 100 and you think you consistently get 10% more. Could you confirm that this is your statement? And what is your assumption for 2025 and 2026? Also, I was very interested in slide 35, because if I understood correctly, in the capex you are assuming in the period 2024-2025... on 2026, EBITDA and Net Income are quite similar. In 2026, 100 million euros more in EBITDA, but Net Income and EBITDA are the same in 2030 compared to the previous plan. I was interested to understand the moving pieces. Are you considering a different composition of these numbers, perhaps with less contribution from generation? Very interested to understand under distribution, which for 2030 is quite similar. Thank you.

Good morning everyone. Paolo from Intermonte. I have two questions on the generation side. First, regarding renewables, I see compared to the old plan, the growth is more shifted to the second part of the plan. I see you have 26 GW of capacity and estimate to reach 28 GW by 2026, so a rather limited growth. I was wondering if you could comment on the draft decree FER X that circulated, with auction bases around €80/MWh, whether you think it's an interesting level or a bit low, considering also the auctions we see in the rest of Europe. Second question, still on generation, a more generic question on the system: how do you see the potential development of new generation nuclear in Italy? Thank you.

Good morning. I am Stefano Gambrini from Equita SIM. I want to follow up on Paolo's question. I wanted to understand better on the FER X, when it will be approved, do you think there will be a strong acceleration of renewable investments that until now we haven't seen, many say due to the authorization issue, but probably also because the visibility for a plant is much higher with 20 years of return at €85 inflated rather than merchant. So I was wondering, in your opinion, is there a risk of actually seeing those plants installed that the PNIEC expects in 2030 or 2035 thanks to FER X, or do you still think there could be a delay and therefore those targets are not reached? Second topic, the scenario assumptions: for 2026 and 2030, could you tell us the energy price PUN, the gas price, and the CO2 price you expect in these years? Third, I didn't quite understand the investment. If I understood correctly, the Enel network investment is €1.5 billion that you will have to pay probably between 2024 and 2025, then you say the difference in capex is only €600 million net of the impact of the disposals. If we also include the higher investments in the new network, I understand that most of the new network is financed through these step-ups or these disposals. Where am I wrong in the calculation to maintain that leverage level always below 2.8? And the last thing, on the market, until now you have given a split between generation and market. Could you help us understand in 2026 where you see the market in terms of EBITDA compared to the €360 million included in the previous plan? Thank you very much.

Let's stop for a second so I can... Please.

Good morning. Emanuel Jioni from CAP. I also have some questions. First, regarding the retail market, I saw that at least making a quick calculation on the number of customers expected in 2026 and then also in 2030, related to the EBITDA target in the plan, there is an increase in profitability per customer compared to 2023. So I wanted to understand what the underlying assumptions are and what visibility there is for the increased profitability...

These retail market issues. Regarding the free market, the concept of vertical integration in the growth you expect as resale and as sales to final customers of electricity, it grows more sustained compared to internal electricity production. So it seems that it is not simple to add new renewable capacity, but it cannot keep pace, not due to internal issues at A2A but to the Italian permit process. So this coverage of electricity sold to final customers that is internally produced is progressively reducing. I wanted some considerations on this, please. And then on 2025, if it is the first year of full EBITDA contribution from the acquisition of Enel's electrical grids, if you can give us more indications on the evolution of EBITDA in the first years of the plan.

Let's go in order with the questions. Yes, so now there is the PUN and asset rotation. Wait, let's say a word on retail. Regarding retail, you must consider that 2023 is a strange year because it has an excellent recovery of margins but also extremely significant investments we are making for retention, essentially for the realignment of customers who were displaced. We made a campaign, investing 60 million euros to allow our displaced customers, due to the famous contract renewal at fixed price where we could not contact customers due to antitrust intervention, to reposition them at variable price. So they renewed at a high fixed price and once they realized they were displaced, we made a campaign to reposition them. This campaign had an extremely significant cost that is no longer present in 2024, so the reason we have margins that grow is simply that we no longer have a very important cost. This cost impacted heavily in 2023, will impact to some extent in 2024, and then no longer impacts because essentially our customers have passed or are passing almost all to variable, so this cost for supporting the repositioning is no longer there. Today we continue to have a low churn and a very robust customer base. A continuous growth is expected, and it's going like that. The value-added services are the only reason to go to the free market because when you go to the free market, the real difference is that you have a customer with whom you can discuss and negotiate other things beyond the commodity, and that is the true win-win value of the free market. So we are evidently aiming for this, and I must say that if we see how 2024 has started, we are extremely serene on this front. As for the PUN, today we see a scenario that oscillates around 90 euros, so between 85 and 100. It's not easy to know exactly where it will settle because it depends on many factors, perhaps the most important is industrial production, on which we see some positive signals from ISTAT. What is certain is that we are in a situation where our hedges for 2024 are at 70% with a value of 160-165 euros, so 2024 is already covered. For 2025, hedges are at 20% at 105-135 euros, which generates 10 euros per terawatt hour of production at fixed price above the PUN alone. And then we have the 10% overall over the entire plan, which is the empirical data the company systematically brings home. We took the last 5 years, which seems more than sufficient for a robust statistical data based simply on our capacity to dispatch and the locations where we have localized our generation and technological diversification. So we believe this scenario is robust. We have run a scenario between 100 and 110 euros, but even if the Italian PUN base were lower, around 85, we would not see problems in capturing this value.

On the topic of asset rotation regarding the VAT operation, actually it's not. What we foresee: we have assets of great value, and in a diversified company like A2A with such valuable assets, it's quite easy to put together minorities that can allow significant equity. But the analysis that we need this in terms of stewardship to make the capex on the new network with this sale of minorities is wrong. This serves for the acquisition, but then the billion and a half of capex we have planned on this network is inside our normal cash flows. So we are assuming that the amount we need to maintain our solid ratings in terms of overall equity is between 600 and 700 million euros, and the rest of the value, the difference with the 1.35 billion and obviously the investments of these 10 years, are all included in our capex plan, which is fully financed by our cash flows. This also gives perhaps a piece of the answer to Xavier, who asked how the EBITDA would shift. If you remember the previous plan, the mix of capex between energy transition and circular economy was a bit more balanced, 60-40. Now you have seen it is 70-6 from one side and 16 from the other. Why? Because we have shifted more investments to the electricity network, so exactly the investments on the electricity network are those that create the imbalance. So it is certainly true that there is a change in the nature of the EBITDA in the next years of the plan because certainly the CCGT productions reduce, certainly the MSD reduces, certainly renewables grow, certainly the electricity RAB and water RAB grow importantly, so we find ourselves with a somewhat different mix. So what could I tell you? I could tell you that the company made the leap from 1.2 billion EBITDA in 2020 to 2 billion now, and now we travel on a plateau around 2 billion, reaching 2.2 billion in 2026, accompanied by a decline in scenario that is partly compensated by hedges and partly by the fact that our capex generate about 100 million per year of EBITDA growth. We have about 100 million of EBITDA that arrive dry on the plan every year, so in 2026 Monfalcone comes into operation with its 100 million of EBITDA generated mainly from capacity market, and so on. This mix continues to produce growth, renewables enter. Who was asking about the shift to renewables? It is certainly true that in our plan we have moved them a bit further out because we want to do them greenfield, and so we did the Octopus and Ardian acquisitions that we needed to become a recognized player in the sector. Now the bulk of the value comes from not paying 500-1000 euros per megawatt installed, so I must absolutely finance and build projects with my pipeline, and this requires a bit of time delay. The Fer X decree? It is needed. It is certainly better to have it than not. Is it sufficient? For wind, probably not. I think they underestimated the inflation indexing on wind. Photovoltaic panel costs are falling, so there we are okay. On wind, it's hard, so I expect that this Fer X decree creates a big push on renewable development. What I expect is that we will realize very soon that there will not be enough development, and then they will revise the Fer X decree. When there is a Fer X decree that truly guarantees the correct profitability for these plants, we will reach the PNEC. I am sure of it. So I hope that the observations that Elettricità Futura is making on this topic will produce results. The only really good news is that there are 110 euros per megawatt on hydrogen towards hydroelectric. But the development we have put in renewables, which is not a monster development because it is balanced with the rest of our capex, I consider absolutely safe. We have 22 billion of capex, 4 on renewables, and those 4 we will definitely do. I don't have worries on this, but I don't expect the Fer X decree to generate an acceleration on renewables now.

There was Oggioni asking about the contribution of Enel's networks from 2025. There, yes, the growth of EBITDA was made in a measured way with respect to investments, taking into account the new Tiros regulation, so as not to create a somewhat fictitious EBITDA, the so-called fast money, but to create all slow money deriving from the increase in RAB due to investments and consequent increase in remuneration. The EBITDA from 2025 onwards already starts with a good level of about 100 million and then grows by about 10% per year, as we also saw in the presentation. So, as was said before, as investments are developed, it will bring us values that are on average around 120 million over the plan and after the plan above 220 million on average. So also to make the calculations that have been circulating in the last few hours of an EV/EBITDA, I think it is more correct to look at the average development period of this network and the EBITDA it can express on average, because it is an object that has a very important investment opportunity and therefore of subsequent value, precisely because it is a regulated asset. Consider that the comparison between 2030 and 2026 in the old plan versus the new plan essentially sees a decrease in generation of about 100 million euros, a growth of about 100 million euros on the market (the market today objectively captures higher profitability), and a growth of 200 million euros on networks, especially due to the acquisition of the Enel network. So yes, the composition is a bit different and certainly needs to be studied.

On nuclear, who was asking about nuclear? Here it is. My position on nuclear is the following. As I have already said on several public occasions, I can say it here too. Nuclear of this nature, so we are talking about SMR reactors of 200-300 MW, remains an oligopoly asset. The operators that can deal with such assets are very few in Italy, and we are certainly among those few, needing a company that can make mega investments with extremely sophisticated technologies. So I could even say that if one decides to invest in nuclear, instead of having 1,200,000 competitors of solar panels around, we are back to being three companies that generate electricity. That could be fine. But I don't think this will happen in Italy for two reasons. First, the investments are really very significant: an SMR of 200 MW costs a couple of billion, so no one would build it without very significant public assistance. I find it hard to see a situation where not only is nuclear rehabilitated in Italy but it is also significantly financed, because no company today would invest 2 billion in a plant that immediately goes into direct competition with renewables. To recover its investment of 2 billion, it would evidently have to produce baseload, and it is evident that in baseload production, there would be hours of the day when the price would plummet. Second, for exactly this reason, it would compete with renewables and would probably block their development. So I am generally in favor of nuclear in Europe: we will struggle in Europe to become energy independent; with nuclear it's difficult, without nuclear it's impossible. But I would concentrate it where there is not the potential for renewables to use, and there are many countries that don't have potential because they don't have mountains, water, sun. We are a country that has everything: we are the third hydroelectric country in Europe after Norway and France, together with Spain and Greece we are the country with the most sun, and we also have a lot of wind in the south and islands. And not only that, we also have a lot of waste that, if we transform into energy instead of exporting or landfilling, allows us to recover about ten terawatt hours. So I think we should develop the renewable potential in a European planning where nuclear certainly serves. So if you ask me if I see nuclear development in Italy in the next few years, the answer is no.

Let's see what we missed. Marco, maybe Oggioni also asked. The question was about production, that it seems we have more green energy sold than we produce. That is the question: the growth of the terawatt hours sold on the final market, in the energy supply business, is much higher than the growth of the additional capacity you can put in solar and wind. So the degree of vertical integration between generation and the retail market tends to decrease. I wanted a reflection on this. Yes, then. Consider that we have an objective to reach 10-11 TWh of our own green energy production, and then we have our combined cycle production that in our logic will work more for modulation than for baseload production. So when we think about our hedging between production and customer base, we always think about hedging renewable production at fixed prices, which is why we invented the PPA Mass Market or why we are working in northern Italy where there is the bulk of industrial consumption with many industrials to close PPAs. And in these months on the renewable production side, this hedging between green energy and customer base, if we look at how green energy sales move, today we are at 6.7 TWh, so we see a growth in green energy sales and in our generation quite balanced. Also, the mass market part is very important because it is very stable and has much better margins than the B2B part. For example, our PPA Mass Market logically give a much better margin than the classic B2B PPAs. We also historically have a very significant part of B2B large clients. I must say that the energy crisis also gave us a big leverage because many important operators abandoned or did not satisfy their clients, so we ended up with a significantly strengthened customer base. But that customer base manages energy also by doing trading; on the other hand, they are variable price contracts. So today we are in a situation where we no longer have the big coverage problem we had a few years ago. Today, all large clients de facto move at variable prices. So yes, we have some imbalance in the future in the sense that A2A Energia certainly sells more energy than we produce, but the real hedging that interests us is green generation and customer base, especially mass market capable of doing PPAs. So to give a number, we have assumed to reach 1 million customers with PPA Mass Market that absorb 2 TWh alone, which is a lot. So we are assuming to work between PPA Mass Market and normal PPAs to achieve at least 50% of green generation covered by PPAs with the best possible profitability. We also have the platforms from which we take, like Infinity, and the other work we are doing is bidirectional PPAs. You saw a few months ago the announcement of the agreement with Infinity, and we are doing others. We acquire PPAs from generators and in a platform logic we put them on the market. On the other hand, a few years ago anyone with a wind turbine or a solar panel would put it on the market the next day. Now that we are starting to have significant price volatility, one realizes that without energy management you can't do this. So more and more frequently, asset owners come and are available to give you full control of the asset in terms of production in a platform logic that only companies with structured energy management can do. This is certainly one of the parts of development.

Sorry, I come back again. I was trying to redo the numbers of what you said. Is it correct to say that your assumption for 2026 and selling prices of your production, I recall that in the previous plan it was 130 for 2026, 110 for 2030, and you have shifted it down by about 20 euros per terawatt hour? Is that correct? And after the second question I was asking: strategically, a company that is developing renewables, and renewables are not particularly flexible, especially the solar part, this 10% historical premium you talk about, wouldn't it be a fair assumption to assume that this premium should decrease over time? In the sense that you will have a lot of production that is not flexible, it will be more inflexible, especially solar. So why should this 10% sustain itself over time? Shouldn't it decrease?

Sorry, on the topic of the curve assumption, we don't work on forward curves simply, but we work on our PUN achieved, that is what we have to do. I think to give a correct representation of the numbers we see, it is the scenario we believe we can capture, which can be a bit different from the flat national PUN base scenario. Now, I imagine we are not the only company doing this. But for your understanding, every time we present to the board the PUN data, we systematically have the base PUN and the achieved PUN, precisely because depending on the type of plants and where they are installed, this number can change. So we build our own curve and we have offices that do this for a living. We do it logically starting from the general scenario and simply mount what is the achieved PUN with respect to our plants. So, for example, we take the plants one by one, the G.C. plant, imagine what PUN it could take. So while probably you don't have the tools to go in such a granular way, we do this granular work, and so the curve we take is a curve based on our plants. Regarding the ARAR of the Enel project, we made a model where we paid a small premium to Enel compared to the remuneration rate. We also identified opportunities to recover an important part of this premium through the synergies we will be able to put in place. So, in the end, the ARAR will not be very different from the regulatory one. And I would not talk about asset rotation because we did not talk about asset rotation, we talked only about partnerships. That means we are not putting pieces of business up for sale, which was your question about the reduction of investment intensity. We evaluated that selling a minority stake in specific identified assets allows us to regain or maintain financial flexibility, also in defense of our ratings, and at the same time to develop the growth we expressed through the use of cash flows from operations. So everything is rather broad and consistent with a very high flexibility in development capex, which gives us flexibility to calibrate over time if things need to be calibrated correctly. Excuse me, but our reference point remains maintaining financial sustainability and credit metrics that defend the rating we have. But let me add just this: you cannot value a network like Enel's with a multiple. Valuing it with a multiple when the entire plan is based on capex and therefore on its cash absorption and on EBITDA that grows as a function of RAB, it is evident that the only valuation method you can use for such assets is DCF. So the negotiation with Enel simply was on the discount rate. We have a regulatory post-tax rate of 5.9%. If Enel had sold at 5.9%, it would have ceded the asset at zero value. So the negotiation was on those few tenths of a percentage point, which in substance, being the owner of the asset, kept the negotiation exclusively on that. So we never used a multiple logic because it doesn't make sense. I could tell you that over the industrial plan we made, the average multiple is 6.2, but does that make sense? If you want to use a datum, take the average EBITDA of the 25-year plan, we made the plan to 2054, we put the capex, we get that in 2054 the EBITDA is 380 million euros, starting from 100, and the average multiple is 6.2. But we are talking about methods that in this case are not really applicable. So the real point was where we recover that 0.4-0.5% of WACC, that is, of ARAR, that we lost. There we recover it in the synergies I was telling you about, 51% of synergies that we are able to recover, and on the ability we will have in the future with the new Tiros to be more efficient. So obviously now our goal is to make sure that this investment also returns to give a remuneration aligned with the regulatory one. I must say that the question to which it would be interesting to have an answer is: considering that we are talking about completely unique assets, it's not like you have a market for these assets, it's a unique. So what is the interesting rate to take, considering that we are talking about an asset that certainly can give you profitability for the next 1000 years, which my grandchildren, great-grandchildren, and great-great-grandchildren will see? And on that basis we also reasoned in terms of fairness opinion, and I must tell you that the rate is significantly lower than what we paid. The rate that gives this answer, so we are still happy with the negotiation because a negotiation in which Enel rightly kept a part of the discount, but we brought home, considering it was not ours, a rate that is fully respectable. And this seems very important to me. The answer to why we don't reduce capex is in the first 10 slides of the Vision I gave you earlier: there is no time. There is no time to slow down. We already won't reach the 2050 decarbonization target. So I prefer to open the capital of minorities and find the Australian pension fund that gives me the bath of money to maintain speed rather than slow down anything. Because it seems to me that we are already going too slow in this country, in Europe, compared to the targets we must set. So I don't think the right path is to slow down; rather, the right path is to find a capital bath that allows me to maintain speed and grow. That's it.

Just some follow-ups from me. First, you rightly point out that from the outside it's difficult to understand margins in generation or sales. But I saw that EBITDA in 2023 was 1.1 billion from the overall energy business, so from the integrated margin, and in 2026 it remains at 1.1 billion. Can you help us understand the movements? Because if I'm not mistaken, you sold at 70 euros per megawatt in 2023 and we have a decline in 2026. Are there other elements we need to consider to get the same number? If you can help us understand beyond the data you gave on the market part and the generation part. Second, if the scenario were different, 10 euros less per megawatt, what is the sensitivity of EBITDA? Then I have a couple of things if I may. First, on waste: in the previous plan, we also had some VTAs that you had to acquire, or in the previous one also some international operations. Is it visible what we do from 2027 to 2030? You said you want 75% of investments already authorized or even in execution. Can you help us understand that? And spend a few more words on the new projects that will come, maybe those in Sicily, or if the one in Rome is a WTE that interests you, so we can focus on this aspect. Last, on hydroelectric concessions: we left off in a situation where an extension of hydroelectric concessions was supposed to arrive. Today it seems that instead, tenders have started and it's not clear what the future evolution will be. If you can help us understand what you see from here to the end of the year. Thank you.

Yes, then on the topic of waste, I'll mention a couple of projects we have on track. We won the tender for the construction and revamping of the waste-to-energy plant in Trezzo d'Adda. It was a plant managed by Falck, and the tender for reassignment was won by us with the construction of a new waste-to-energy plant and also a district heating network for three. So now we are in the design phase, and it is one of the projects you see in that horizon from here to 2030. We have the revamping of the TecnoA plant. We bought a waste-to-energy plant with already authorized capacity of 150,000 tons of special industrial waste, very high profitability, and it's another construction site that will start next year, with 36 months of construction. We have Corteolona, Pavia, which is the other waste-to-energy plant where after a very long process regarding remediation, we have reached the end. So without bothering Rome or Sicily, which are both delicate situations I prefer not to talk about now, we have a pipeline of authorized projects that is extremely significant. Sorry, the other question from Stefano was the bridge. Ah, the bridge. Sorry, on the bridge, obviously you have the decline in the PUN and that generates a downward curve. From 2026, Monfalcone comes in with its 100 million of EBITDA generated mainly from capacity market. You know it's a plant of 870 MW, we won capacity market for its entire capacity at 50,800 euros per megawatt installed, so you can do the math. We assume it starts with about 5000 operating hours and then obviously decreases in subsequent years. So Monfalcone is what offsets the generation. So you have the downward effect of the PUN, which is compensated by the hedges in 2024, part of 2025, and in 2026 the rebound due to the entry into operation of Monfalcone. That's simplifying. And then what else did you ask, Stefano? Ah, hydroelectric, sorry. Hydroelectric. You know that here in Lombardy we have about over 1000 MW installed. The tender for the Cancano plant, which is a microscopic hydroelectric plant, was put out. There is a rationale, evidently. The rationale depends on the fact that the Lombardy region, as a guide compared to other regions, has determinately pursued this hypothesis of the so-called fourth way: the reassignment of concessions in exchange for investments. This is the path we want to continue on. It didn't enter the DL Energia because it is still inside the DL Concorrenza, and the DL Concorrenza is one of the targets of the PNRR. So evidently it is necessary that within the negotiations on the flexibility of the PNRR between the government and Europe, the hydroelectric issue can be removed. I can tell you that based on the dialogues we are having, the political will seems completely unchanged regarding this choice. And the fact that instead of putting the Cancano concessions up for tender, a 4 MW plant in Resio is being put up for tender, in some way I think gives the answer. It's like a ping, a signal that was given that a response must be found. This has inevitably triggered discussions here and in Abruzzo, where the tenders were even withdrawn, on a series of unresolved issues that de facto prevent the idea of being able to formulate tenders in the short term. So today I see a situation where in our plan we have forecast a billion euros of investments in hydroelectric under the assumption of continuation of the concessions. After that, I could give you the same answer I gave the other day to Sole 24 Ore on the topic of tenders on electricity: when you find yourself as the second player but in a situation where you are still very robust, strong, organized, I don't necessarily see tenders as negative. On the hydrogen from hydroelectric, we are now in a situation where the inflow of water to our lakes has changed topographically. We have water intakes built 80 years ago that are no longer adequate compared to the modification of the conformation of glaciers and what has happened evidently in recent years. So since hydroelectric is the most important element to reach the PNEC targets, investments must start immediately. If we wait for the 2029 expiry, tenders, appeals, and then reassignment in 2035, investments start from 2035 and we cannot afford that as a country. So for this reason, we have assumed, coherently with all institutional dialogues made so far, forecast investments and a bit of production growth, because as you saw in the slides, we go from 3.7 TWh in 2023 to 4.1, and this is due to the investments made by Camo. We are well over time.

We are well over time. Nothing. Thank you for participating today in the presentation. For any other questions, please contact the IR office. Thank you all and have a good day. Thank you, thank you.

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