Drax Group plc full year results presentation for the year ended 31 December 2019

All right, good morning everybody and welcome to the Drax 2019 full-year results presentation. So I'm gonna start with an operational review. I'll turn it over to Andy Skelton, our CFO, for a financial review and then I'll come back at the end with an update on our biomass strategy. Our purpose, as you know, is to enable a zero carbon, lower cost energy future and our strategy supports that. It has three legs: to build a long-term future for sustainable biomass, to be the leading provider of power system stability, and to give our customers control of their energy. Late last year, we added a further ambition to become a carbon negative company by 2030 with the right regulatory framework and government support. I am absolutely confident that we can do that. During a year of significant change for Drax, we delivered strong performance. The group grew adjusted EBITDA by 64% to £410 million, and within that our hydro and gas generation assets delivered £114 million above the top end of our guidance range, which was £90 to £110 million. We continue to be significantly cash generative, delivering £413 million in net cash from operating activities, and over the last three years we've delivered more than a billion pounds in net cash. We exceeded our target of two times net debt to adjusted EBITDA, delivering 1.9 times, and we grew our dividends per share by 13 percent.

Operationally, we grew our biomass self-supply business while reducing cost. We reduced our CO2 emissions by 47% relative to 2018, and we performed very well in the system support markets. Finally, I will spend the last section of the presentation discussing our strategic progress on biomass. We're making good progress with our biomass investments, as well as the development of BECCS. Alongside our results today, we made another very significant announcement: the end of coal generation at Drax Power Station. This is a major milestone on our journey to becoming a carbon-negative company. In the course of 10 years, we will have moved from reporting emissions of more than 22 million tons of CO2 per year to zero. We have not received a capacity market contract in the T-minus 3 auction in January on our coal units. We've consulted with the government over the last month before making this decision. While very much in line with the UK government's objective of achieving net-zero by 2050, it's not an easy day for many at the Drax Power Station and we will be working closely with our employees and their representatives over the next weeks and months. The closure will affect 200 to 230 roles and is the next step in the process of reshaping Drax Power Station to run safely and economically past 2027. While we are still firming up the financial impact over the course of the first half of this year, we wanted to give you a first estimate. The closure costs are estimated to be between £25 and £35 million. Ongoing operating expense savings will be between £25 and £35 million per year, and that's once those are completed at some point next year. The carrying value of the assets impacted is about £240 million. We also have around £100 million of coal inventories which we expect to use before we close, and that will probably lead to a small short-term increase in coal generation this year before falling again to zero next year.

By converting Drax Power Station from coal to sustainable biomass, we are now close to completing the largest decarbonisation project in Western Europe. Through a combination of effective government policy, the technological innovation of our team, and the support of our shareholders, Drax has reduced its CO2 intensity more than any other major utility in Europe. And I believe that the same combination can enable Drax to become the world's first carbon-negative company, using BECCS to take CO2 out of the atmosphere and accelerating the UK's path to Net Zero. And just as we are delivering attractive returns to shareholders from our investments in renewable biomass, I believe that negative emissions will ultimately also be an extremely attractive financial opportunity. None of that story would be true if we didn't source our biomass sustainably. We continued to be 100% committed to that and are also moving forward as science, understanding, and regulation evolve. Since our Capital Markets Day in November last year, our Independent Advisory Board has met and issued its first report. Its purpose is to challenge our sustainability practices and policies to ensure that we are keeping up with best practice. The IAB, led by former chief science adviser to the UK government Sir John Beddington, noted that the criteria we defined for reducing the carbon emissions of our biomass have been designed to reflect the findings of a landmark forest research report called 'Carbon Impacts of Biomass Consumed in the EU' and that they are an accurate interpretation of that report. For those of you who do not know, Forest Research are widely viewed by a range of stakeholders across the spectrum as a strong guide to ensuring sustainability. And there's a significant amount of content in this area on our website and I would encourage you all to have a look. Safety, sustainability, and good governance are at the core of what we do. We continued to have good safety performance, although we are constantly working to reinforce behaviors and bring down the number of recordable incidents. With regards to ESG more broadly, we were very pleased when recently Norwich recognized the commitments that Drax has made to reduce its carbon emissions by transitioning away from coal to renewables. Having previously excluded Drax from its investment universe, Norwich confirmed that they will now include Drax. This is a reflection of our biomass transformation and I believe that this morning's announcement on our plans for coal further evidence our commitment to reducing emissions on our path to becoming a carbon-negative business. Equally, we are proud of the innovative ESG funding facility that we put in place last year. The cost of that funding is directly linked to our CO2 emissions, meaning that we will be financially rewarded for doing the right thing and moving off coal. Finally, we are very much committed to the communities where we operate. Zero Carbon Humber, our cluster that is working with government to deliver CCS infrastructure to the Humberside, has the potential to save 55,000 heavy industrial jobs that otherwise would be challenged in a net-zero world. Along the same lines, we announced today the Zero Carbon Skills Task Force. We will work with government, trade unions, other sectors, and businesses in the north to establish a task force to enable people to capitalize on the skills and opportunities created as the UK moves towards a net-zero carbon economy.

Now talk about the performance of each of our three divisions. I'll start with generation. Earnings were strong at £408 million of adjusted EBITDA, up 76% over 2018. After a difficult first quarter when biomass generation was limited because of bad weather in the southeast of the US, we finished the year strong with record generation in November and December. Our new hydro and gas generation assets performed extremely well, delivering £114 million of EBITDA ahead of our guidance of between £90 and £110 million. I'm very pleased with the acquisition as it is delivering financially and very much in line with our strategy to be the leader in system support in the UK. We're now the fourth largest generator in the UK with a multi-technology portfolio spread across the country. And I'd finally like to note that while biomass is very much at the core of what we do, it is notable that more than 25% of our generation earnings come from hydro and thermal. With the addition of our hydro and thermal assets, Drax's role in supporting the UK system has grown substantially. The value that we earn from flexibility increased in 2019 to £129 million from £79 million in 2018. And as you can see on the chart, the overall market for flexibility, for which the cost of system support is a good proxy, has grown 30% over the last two years. We are well positioned to benefit from that. Our assets are well located from Scotland through Yorkshire to the southeast and Brighton to help move power around the grid. And this market is changing in ways that we believe will offer us new opportunity. In January, National Grid tendered for inertia and reactive power, important ancillary services, and we won one of those contracts using one of the units that we have at Cruachan. It's a six-year contract that we expect to deliver about £5 million of incremental EBITDA to Drax. Now historically, those non-generation services have been provided by large-scale rotating plant such as coal and gas. When they would generate base load power, the services would naturally be provided at the same time. And as a result of the change in the generation mix, we expect the system operator to take more actions to provide these important non-generation services. And it is telling that for the first time the system operator is now actively tendering for those with longer term contracts, and we expect further tenders of this type later this year and into the future. Our pellet production business continues to grow nicely. EBITDA increased more than 50% through a combination of increased output and reduced cost. After a difficult first half due to bad weather in the southeast of the US, we increased production year-on-year by 4%. Through a combination of more sawmill residues and improved logistics, we reduced the net cost by $5 per tonne. Those initiatives which came in over the course of the year, if actually looked at on a full-year basis, should deliver $17 per ton this year. As you know, we're also in the process of expanding our production at our three existing sites by 350,000 tons, and we are evaluating options for up to another 500,000 tonnes through satellite plants. Our customer business had a challenging year as it moves to focus on future earnings growth. EBITDA for the year was down to £17 million versus £28 million the year before. I would say that within that £17 million, there are about £8 million pounds of restructuring costs, and those costs have allowed us to combine Haven and Opus Energy, positioning us to share best practice across the customer business. Our focus on more profitable customers is bearing fruit as we increased our margin per megawatt hour while continuing to add customer meters. We've also added some quite interesting and attractive customers, so we feel quite good about the quality of the portfolio that we have. We have significantly improved our management of bad debt, allowing us to reduce our bad debt expense from £31 million in 2018 to £18 million last year. 2020 will be a year for our customer business to focus on profitability by reducing its cost to serve, delivering operational excellence, and continuing to improve customer quality, which we expect to drive increased margins and lower bad debt. So with that, I will turn it over to Andy for the financial review.

Thank you, Andy. I'd like now to just give you an update on our biomass strategy. So at our Capital Markets Day, we rolled out our new biomass strategy. I've summarized that here, including our ambition to create the world's largest low-cost sustainable biomass supply chain. To remind you, the goal is to increase self-supply to 5 million tons and to reduce the cost of biomass generation to £50 per megawatt hour. And all of that is underpinned by our world-leading sustainability policy, the development of biomass trading capability, and the development of carbon negative technologies. And the strategy, we believe, has multiple benefits. First, it will make biomass generation viable at Drax Power Station without subsidy. Secondly, it will deliver a world-leading biomass supply business with significant value in its own right. And thirdly, it will position us to deliver negative emissions at scale. And let me remind you of some of the details of the plan. So over the next seven years, between now and 2027, we will increase our self-supply from roughly one and a half million tons today to five million tons, and at the same time reduce the cost of biomass power generation to £50 per megawatt hour from around £75 today. And we'll do that in several ways. First, a series of improvements and expansions at our existing plants, as outlined by Andy, that will deliver $35 a ton or £13 per megawatt hour of cost savings on 1.85 million tons by 2022. Secondly, expansion of our self-supply through satellite plants, where we're looking at 500,000 tons of new capacity. Thirdly, we're looking at other attractive investment opportunities which could deliver further additional capacity. And fourth, we're looking at the expansion of our fuel envelope to include other types of fuel, such as biomass. Finally, we are investigating a series of innovations that we can potentially apply across the supply chain to reduce cost, whether that be changes to fuel or changes to logistics. Let me just give you an update on BECCS first. As a reminder, Drax is going to be playing one role specifically in the...

The whole carbon capture and storage value chain. So what we will do is we will be capturing the CO2. In order to do that, we're looking at several different options for how we do the carbon capture. The first one involves using proven amine-based technologies that can deliver and have been proven to deliver carbon capture at scale today. They've been operating in industry for over thirty years and there are two reference plants in North America that are capturing over a million tonnes a year each. The second alternative that we've talked about already is we are continuing our trials with C-Capture, which potentially over time we expect to be a lower-cost alternative to those amine-based technologies. That process is going well and we're currently testing the technology at a world-recognized carbon capture testing facility in Norway. And as we previously said, with the right support from government, we could have BECCS operational at scale and delivering negative emissions in the second half of this decade.

The other thing I wanted to mention is that we've established a carbon capture innovation hub at the Drax Power Station and are working with startups to investigate the usage of CO2 in both plastics and also in animal feeds. And we're also beginning to have discussions with large-scale users who are investigating the production of synthetic fuels using a combination of CO2 that we capture and hydrogen that ultimately might be produced at or near the Drax power station.

During 2019 we launched Zero Carbon Humber, which is a partnership with Equinor and National Grid committed to decarbonizing the UK's most carbon-intensive industrial cluster around the Humber using BECCS and ultimately hydrogen technology. In doing so, we have the opportunity to capture and store, I should say, more CO2 than anywhere else in the UK, more than 40 million tonnes per year by 2040. We also have the opportunity to safeguard 55,000 industrial jobs as well as create new green jobs in a strategically important industrial hub in the north. Since the launch, we've been working closely with a number of industrial players in the region to develop a detailed plan for the CCS network, passing many of the CO2-emitting companies in the region and allowing us to achieve economies of scale in the transport and storage. Decarbonizing industrial clusters is a critical policy area for the current government and we expect significant funding to be announced over the course of 2020, including the 800 million pounds that was pledged in the Conservative election manifesto, as well as about 132 million pounds for the Industrial Strategy Challenge Fund which could support the development of the Zero Carbon Humber.

We talked a little bit about what we think is going to happen, some of the major milestones supporting CCS and BECCS over the course of this year. So as we start the year, we have a much more settled political picture than we've had in some time. The government is committed to the north of England and is also committed to Net Zero, and we are working closely with Kwasi Kwarteng, who's the Energy Minister, and are excited about what we see coming over the course of this year. Let me highlight a couple of key events that we're waiting for. The first one is an energy white paper that is expected in the first quarter and is expected to update the government's vision for CCUS as well as negative emissions in response to the Climate Change Committee's Net Zero report. In the budget, the spring budget expected in a couple of weeks, we're expecting an announcement from the government on at least 800 million in new funding for CCS infrastructure and importantly how that will be allocated. At this point it's not exactly clear how they expect to spend that and I'm happy to take questions on that in a minute. Later in the year, the Treasury will issue its Net Zero review, outlining innovative new ways to drive investment required to deliver Net Zero. And finally, building on continued engagement with industry throughout 2020, and remember this process began early last year, we expect the government in the fourth quarter to publish further details on the investment framework for CCUS, including possibly drafts of the types of support contracts that would be available to support carbon capture and storage. All of this work will culminate in COP26, where we believe there's a very significant opportunity for the UK to take a world-leading position on carbon capture as well as on negative emissions.

Let me add one important thing. We've been doing more work on BECCS than anybody else to understand its potential, how much of it could be done on a global scale, as well as its cost. And we believe very strongly that it has the potential to make a significant global impact on climate change. The amount of negative emissions could be quite material, and secondly, that we can deliver those negative emissions at a cost which is significantly lower than the one that one sees now publicly. So if you look at the Climate Change Committee's report, which calls for about 50 million tons of negative emissions from BECCS, those are based on their estimate of the costs. If we can do it for significantly cheaper than that, we think the opportunity could at least be that much or significant anymore. So as you would expect, we're going to be sharing that work with the government as they work on their own views of future negative emissions.

So in summary, we have a clear purpose and three legs to our strategy that are designed to deliver that purpose. And I believe that we've got exciting opportunities in each one of those areas. First on biomass, we have the opportunity for significant cost reduction and capacity expansion as we deliver those, and that's a critical objective for us this year. In line with that biomass strategy, we are working hard to make some significant progress on BECCS to ensure that becomes a reality at the Drax Power Station in the mid-2020s. Thirdly, we have attractive opportunities to invest in providing power system stability. Again, we expect more tenders for those types of investments later this year, and new opportunities to potentially build synchronous compensators or to convert existing assets to synchronous compensators. Again, we expect that later this year. And finally, in our customer business, we're very focused on driving future earnings through operational excellence and cost control. So thank you very much and I'm happy to take questions.

Okay, maybe I'll ask Andy to take the first one and then I can take the other.

On CCS, if you look at that Climate Change Committee report, they talk about costs of BECCS costs about a hundred and fifty pounds per ton of negative emissions. Right. And as I said, I think we can do that for significantly less. Right. Third point on the T-4, I would be crazy to give you any sort of forecast. Maybe the demand in the auction is lower, there is more new-build entered, there are some potentially some of the nuclear assets might behave different than expected, so it's anybody's guess. Obviously six pounds forty-four from the point of view of a new project was not an attractive level, and we will continue... I mean maybe they expand a bit on the intent behind the question. And we still have, we think, six very attractive projects: the two combined cycles and the four open cycles. The Drax Power Station project is currently on hold while the judicial review takes place, and that project is not entered in the T-4, but we would be looking for, you know, we will again wait until we get the right level of returns to make those projects interesting.

Okay, so firstly on the hedge position, and just noting that that was a market consensus that we have published as opposed to a forecast, but on the hedge position, you're right, we're very well hedged for 2020. I think it's around fifty-four pounds, so substantially better than current commodity prices, but our ability to benefit from that is reflected in our expectations for next year. On the cash conversion, you're right that 120 percent cash conversion. You can't continue to do that without delivering additional working capital benefits. When we look to next year, I think broadly the working capital we should expect to be neutral. Primarily we have to offset the rebasing activities that we did this year. We also have an inflow from the capacity market which will help in that regard, and we have the inventory balances on the coal that will consume before closure. But next year I'd expect working capital to be broadly neutral.

First one, yeah. So on timing of the savings, those cost savings relate to redundancy, to pension costs, and then to some site rectification normalization costs. The coal units are an integral part of the station at the moment, so when you stop operating the coal units, making them safe and making the station work with four units, there's some cost to deliver them, but primarily as the coal generation stops in '21, then that's when the headcount will start to reduce and you'll get the savings delivered from there. Some before, but primarily from '21 through '22. On the depreciation, if you think of 140 million being depreciated over six years, do the math, it's around 25 million. The balance is over 20 years as an extra five, so you're around 30 million a year of depreciation savings if we were to impair the whole 240 million that we need to review. Well, we expect to complete the review in 2020 as we finalize the plans for closure following today's announcement. So once that's made, there'll be savings from then on. There may be some cost of depreciation during the year until we make that decision. So on the second question, which is about our raft of options, I think maybe I'll just describe a little bit the way we as a board debate the topic, because I think really there are multiple factors that go into the assessment. So there's clearly a sort of purpose-driven one: how do the different investments apply to that? So there's a strategic lens, are they consistent with our strategy? And the other one is obviously returns, size, and risk. So if I look at the pellet expansion strategy, I think it ticks all those boxes very nicely. The risk is very attractive given the fact that we have a known customer set, so very attractive on the risk basis. They're also moderately sized, which makes them interesting, and the returns are very attractive, and they fundamentally support our purpose. If I look at things like the Cruachan expansion, that is again consistent with all those things other than the fact that that would be a large investment and one that actually would probably require some sort of government framework to make that work. And then if I look at the open cycles, they're very consistent with our strategy to be the lead supplier of system stability and support. Again, each one of them is reasonably moderately sized, so the risk is quite manageable. The challenge is getting the right type of support in the capacity market to make the returns attractive. Combined cycles, I would say, are probably in some ways of a different nature given their size. Again, we think they are attractive opportunities with attractive potential returns depending on where the capacity market comes in. I guess in summary, I think you probably have access to them. I think if you take all those factors, the way you're thinking about it is probably not inconsistent with how we are.

I think again it's our assessment of the likely outcomes, the sort of risk involved, the level of contract that they would require. I think the decision in terms of economically was quite clear, and if you combine that with some of the other stakeholder considerations, we felt like it was very much the right time to do this. Important to say it was not taken lightly by any means. Good discussions with government, as I said. We will be having good extensive discussions with our unions and other employee representatives to make sure that we support our people through this in the right way. But we felt like it was the right time for ourselves and also for the system to come off, to be honest. Another important factor behind that is we've got four units running on biomass, right, so there is a future for the power station through 2027 and I'm quite confident beyond that. In terms of what we do with them now, the first step is well, both three steps. The first thing is we will run them to 2021 as we run them now, and we have that coal stock to get through. Between March '21 and September '22, we will be available if needed by the system. As we know, there has not been a capacity market event to date, so we'll be ready and if it happens, but I'm not sure it's a likely event, but we will be there just to comply with our obligations. The next step is then we will make them safe, so we will make sure that we manage them in such a way, shut down things that need to be shut down, manage the assets so that they will be safe but they won't be dismantled immediately. And then from that point on, there are a couple of options. Repowering is still an option absolutely. We are looking at it. The judicial review comes out as we would expect and we have our planning permission, so that's obviously still an opportunity. The other thing is interesting: when these stability tenders came out, one of the things that is possible is to take a coal-fired power station, effectively disconnect the generator, turn it into a synchronous compensator and run it to provide no megawatts but only inertia and reactive power. And that's absolutely something we'll also look at because we expect more tenders of that type.

Okay, so think about the first two, supply business. Let me start with the back end of it first. Fundamentally, our supply business is about providing customers control of their energy and being able to provide, for example, demand-side response or other types of system support services over time as that market develops. So from a strategic perspective, that piece of it is fundamentally still something we are very confident of. We want to have a piece on both the demand side and also on the supply side as the system evolves over time. So for example, we're doing a lot of work around electric vehicle management and we've got our first customers there. We're effectively the first step is installing EV infrastructure for customers, and then over time the potential to manage V2G type services we think is quite an interesting angle for us. The second thing which I think is a growing light to that business is more about strategically how do we help customers achieve their ESG objectives themselves. So I think it's quite attractive to some players who are themselves have a very strong ESG agenda to work with us in a simple way to provide renewable or carbon-free power and/or gas, but also as we become more of a negative emissions company, we have interesting discussions with them about how we can share our ambition with them on those terms. If I look at the operation, how we're performing, we haven't done as well as I would have liked. Quite disappointed with that. What's happened there? A couple of things. Integrating the two businesses Haven and Opus was probably not as easy as we might have liked. Some external factors have been quite difficult, things like last year the mutualization of ROCK payments for example, or the price gap has not impacted us but again the environment for electricity supply and gas supply hasn't been that good. What I'm most excited about is Paul, who's here somewhere, who's now leading that business with a very clear focus on how we can deliver through operational excellence. So what we've done for example at Haven, we put in place what we call 4E, sort of Excellence Every Day, and that plan really brings the people on the ground to get more involved in how we solve problems for customers. That's really delivering very interesting results at Haven and now we're going to bring that across to Opus. So there's a series of things we need to get right, and that includes debt management where we are making improvement, it involves cost to serve where we also need to make more improvements. But the final point I would say is if you think about the top line growth and the customer growth in that business, it's still I think we've got a very attractive portfolio. Andy mentioned Ford Motor Company, Severn Trent, we've done a very interesting deal with Budweiser, we're effectively doing a sort of channel type deal with them for pubs. So I think there are definitely attractive opportunities there. So that would be supply. On the carbon tax from the government, it could be at the spring budget, could be later. Clearly that's an important issue for us. In the short term, we believe there's been talk about replacing the EU ETS with something like an 18-pound tax. I don't have a good crystal ball on this, so I'm not going to give you any real forecasts. I think long term, the idea that UK and European carbon prices would converge is a sort of economically logical thing to have happen. How that happens, for example is there a UK ETS that is somehow linked to the European one? That would be our preference, either linked or combined. How all these negotiations go over the next year is anybody's guess, but I do think that economically that's where the logic should get you. If we're going to be part of the European system, and even if we're not linked, power prices given interconnectors should be impacted by where European taxes go anyway. My very clear expectation is that European ETS prices will rise significantly if they can hit their net zero target by 2050 as well. So that's what I would say there. On the viability of BECCS, in the broader picture, if the UK and the rest of the world is going to get to net zero by 2050, there has to be some mechanism by which carbon emissions are either taxed or regulated such that they are less attractive. Equally, it would make very good economic logic for the inverse to be true, for negative emissions to be incentivized. My own view is that a tax or government levy is the most logical way to do that. It's not yet to happen, but I'm very convinced that if the world's going to get there, this has to be in place. So there has to be an economic logic that supports BECCS and supports going to net zero, and we would expect to participate in exactly how it happens to be determined.

Okay, I'll take those. I think the first best way for the government to help extend the life of the Drax power station is through BECCS. And so the discussions that we're having with them now talk about how can they incentivize negative emissions. We maybe don't make enough of the comment that most negative emissions technologies, direct air capture being the other obvious one, do not produce power, they're massive users of power. So there's a lot of economic logic for why having Drax power station with negative emissions at the center of the UK system for a long time makes a ton of sense. So that's the first thing. The second thing is it's becoming, and that will be the next year or two. At the same time, I'm already having discussions with some suppliers. We don't highlight this, but obviously if I go to a supplier and say I can give you a contract through 2027, the time is getting short for that payback, so that's starting to become a topic. The other one is with capital providers. Clearly we have a sense of where the equity market is on these things, but the debt markets, we are extending our debt profile beyond 2027, but as we do refinancings we need to have answers to those questions too. So it's not far away. But again, my discussion with the government, the best alternative or the best solution to that for everyone now is BECCS. It'll be in the next one or two years before we solve that. And your second question was... I'm sorry. So I think that as we talk about sort of half of the puzzle is existing capacity. Well, there are three pieces to existing capacity. I think we've got good plans there. Second piece is on potentially more pellets. Let's say of that five million, I think about it between two and three on pellets and between two and three potentially on other types of viable fuels. We are going to be taking to the board for final investment decision the satellite plants. We're also going to be going back to them this year and talking about bagasse and if it's potentially a bagasse pelleting plant. So I would hope to be coming to you at the mid-year with discussion of both of those topics and more, the beginnings of more clarity on how we get to that five million.

So I think on the first one, you take out the 30, you get to around 100 versus sort of around the 90 the year before. Over the longer term, we expected that market to grow, no question. That will be both through increased balancing market activity, could be increased contracted activity as we described. Some of the things that we put into that stability Pathfinder tender were actual investment projects where we would actually invest capital. The returns are attractive and we think there's good opportunities for earnings there. I would say that by definition this is a volatility play, so it's not going to be a straight line, and some years might be better than others. In terms of the second question, apologies, on the coal capacity market contracts, yes, it is technically allowed to transfer those, and I think it has happened at least one other time. There are not a lot of buyers, so we will try to do that if it makes economic sense, we'll do it, but I'm not holding my breath.

I'll be maybe delicate about it. I think we found that it's not exactly clear to us exactly how that tender was set up or exactly how the winners were determined. So we've done a lot of back-solving to try to get there. There's clearly a price. If we look at price per megavar per half hour of availability, I think you can get to a lot of the answers, but it's not exact. There is some locational element which is having an impact, which to be honest I'm not sure we fully understand yet. We would ask grid to give more transparency because that would help. So the entry question is, is there enough information to get certainty or real clarity on pricing? I'm not sure we're there yet, but it has been helpful because having that tender has definitely made a big difference in moving us towards a more transparent picture. So if I think about investments that we might do, the other problem is the tenor of the contract is a six-year deal. So I could make adjustments to existing assets like a coal plant where we're talking about small tens of millions types of investments where I potentially can get a return in six years and I can make it work. But again, we put one of those in and it didn't win, so it's not far away, shall we say. If we had more time, I would expect that we will try to do that type of thing again. Doing an expansion of Cruachan or what we call Cruachan, adding more turbines etc., that is a very big project which will not earn a return in six years, and this revenue would not be sufficient for that. So that's the kind of thing why I say we need a framework. To do that, we would need to have a really bilateral discussion with the government, UK or Scottish government, how that might work.

Thank you all for coming, and we'll be around if you want to ask any questions in private. Thank you.