Operator
Good afternoon, ladies and gentlemen. Welcome to A2A's first half 2026 consolidated results. At this time, all participants are in a listen-only mode. However, if you wish to ask a question, please dial pound key then five on your telephone keypad to enter the queue. Please be advised that today's conference is being recorded. Now, I would like to hand the conference over to our host, Marco Potro, Head of Investor Relations. Please go ahead.
Good afternoon everyone, and thank you for joining us. Today, our CEO Renato Mazzoncini and our CEO, CFO Luca Moroni, will present our first half 2026 results, which confirm the group's operational and financial strength and the progress of our strategic investment. We will be happy to take your question at the end of the presentation. Let me leave the floor to Renato.
Okay thank you Marco and good afternoon everyone and thank you also from my side to for you for joining us. So reacting effectively to change delivers a result today, challenging change over time is what builds sustainable results tomorrow. It is what distinguishes the short-term responses from long-term value creation. And I think this perfectly encapsulates the first half of 26482A, continuing to deliver today while building the foundations for tomorrow's growth. And to illustrate this, let me start with some of the key achievements delivered during the first half of 26 across both our two pillars of energy transition and the circular economy. On renewables we further scaled our REST platform adding 35 megawatts of of wind capacity and bringing its toll capacity in wind from the sources to over 300 megawatts. We also continued to develop our PPA platform, this is really key for me, with agreements signed with Sosteneo and Politecnico of Milano, so large customers, as well as the launch of our first H2A open PPA designed to support the small business enterprises through long-term contracts. Through these initiatives, H2A promotes the development of renewable by making green energy more widespread, more accessible, and less exposed to market dynamics. This is also a concrete example of how PTAs enable the integration of renewable sources into industrial consumption, promoting long-term procurement models that provide the greater stability and sustainability. And today, Realia 2A is the only energy company that tries to change this paradigm of renewable with products for every kind of customers long term. So, the PPA mass market, 120,000 contracts signed more or less 260 gigawatt hours sold with this kind of PPAs. Of course PPA classical B2B and now also this small business enterprise that is a kind of customer super interesting that without standard PPAs can't really arrive to a change of paradigm of renewables. Also in this case, the duration of the contract is 10 years or 20 years, depending on the negotiation. And so we are really very happy to have in our market, let's say, a product PPA for every kind of customers. At the same time we increased our role as a strategic infrastructure operator. Some example of the 250 construction sites that we have in this moment active. For example, Mount Falconer construction site is running, you know, is a CGT super large, 870 megawatt of thermal capacity, is running at full capacity, supported by extended shift partner, with commercial operation confirmed for next year. Power network capacity increased by 5%, reaching 9,300 megavolt ampere, and two new wastewater treatment plants had the treatment capacity for the equivalent of 30,000 inhabitants. In this context, grid capacity is not just a technical matrix, you know. It is what makes the transition executable. By reinforcing our networks, we create the condition to connect more renewable energy, support the new electric uses, so the demand, and ensure continuity and quality services for the community that we serve. As water resources come under increasing pressure, also in this month in Italy, wastewater treatment plays a key role in protecting water quality and increase the resilience of integrated water cycles. But delivering today's results is only a part of the story. At the same time, we are advancing a number of strategic initiatives that underpin long-term value creation. So let's start at slide number three, talking about our data center platform. So let me now turn in this, in one of the areas where our industrial approach can unlock significant future potential, exactly the data center. Today the sector is benefiting, you know, very well from a number of favorable structural trends, growing attention to data uh sovereignty and digital infrastructure resilience is driving demand for domestic and european data center capacity making digital infrastructure and increasing strategic assets at the same time lombardy uh our core area an area which you know A2A is incumbent for both generation and network, offers a particular supportive environment for deployment development, promoting brownfield redevelopment and its recovery solution, so district heating, let's say, two areas that are fully aligned with A2A's industrial footprint and long-term strategy. Against this backdrop, we believe 8-Way is a unique position to capture this opportunity. And our approach is based on energy-efficient power shell solution developed on 8-Way-owned sites. Owned sites near our electrical production generation. we will connect them behind the meter leveraging our generation assets this enables us to offer faster time to market lower energy cost and reduce environmental footprint and so let's say also looking the NIMBY syndrome this is a key point and on our data center platform we are well on track with our strategic roadmap. You remember the 12th of November with the update of industrial plan we launched our platform. Where we are now question mark. Two sites La Marmor in Brescia is designed for around 20 megawatts of IT capacity so 30 megawatts electrical megawatt serving IE workloads and co-location services with a behind the meter connection to our waste-to-energy plants. Our waste-to-energy plants in Brescia is around 70-80 MW, so it's ready to feed this new data center. And proximity to our DCTT network, that means to have a data center with a PUE super low and a WE approximately zero. Cassano, Cassano d'Adda, province of Milano, is also moving forward with a preliminary design already completed. The site, our site, once again a site in our property, for at least 80 megawatt IT, at least, is designed to support AU workloads with potential for modular densification. It will benefit from a beyond-the-meter connection to the allicent CGT plant, once again, more or less 8,800 megawatt of CGT plant. And from the availability of existing gas picker as backup power, 110 megawatt of picker that can work as backup power. providing potential advantages in term of permitting timelines that means no environment impact assessment required so in this case the title market for this plant is really incredible because we have a connection in high voltage we have a degeneration to feed the base load the plant and we have a backup and we don't need the environment impact assessment Okay, in slide four, we underline our strategic partnership with Equinix. Because as our data center platform continues to progress, we are, of course, also advancing our role as an energy partner. And our partnership with Equinix is a clear example of this. We are in near Milano, once again, Settimo Milanese, and we will transform the heat produced by servers hosted at Equinix campus in Settimo Milanese into the energy resources for local communities. The model is a straightforward and effective. It generates as a byproduct of data center workloads is captured by Equinix and transported to 8-way energy center where 8-way upgrades it with 72 megawatts of larger scale heat pumps because the temperature coming out from data center is not enough. backed by a storage, water storage, 6,000 cubic meters of thermal storage. The heat is then delivered into the Milan district heating network. To understand the dimension of only one data center like this, the expected contribution is incredible, up to 225 gigawatts hours of recovered thermal energy per year, enabling further network expansion and increasing decarbonized heat distributing in Milano around 20 percent, so more 20 percent of distributing in Milano. That is also, let's say, the only way really to decarbonize Milano because it's not easy with the typology of building that you have in Milano to substitute the thermal plant with heat pumps in every country. of building. It is a pioneering partnership with Equinix that illustrates how strategic collaboration can pave the way for future opportunity. Looking at slide number five, let me now turn off our first half results. These results, despite the different trends across our businesses highlight the value of A2A's diversified industrial platform enabling us to mitigate the external pressure while capturing opportunities across our portfolio. The BDA remained broadly stable at 1.2 billion despite higher contraction fees for hydro and less favorable energy price environment and excluding this effect group BDA would have a growth by around two percent year on year this was supported by the natural edge in hydro generation in particular in this case between northern and southern Italy and by continued a BDA growing electricity distribution driven by ongoing investment because in this half the production the relative production in the southern Italy hydro was much much higher than the average level of the last year in the north we had a reduction due to less snow in the winter in the mountain So strong financial discipline with net financial position to a BDA ratio at 2.6 in line with our target supported resilience results and continuous strategic evolution. So look at slide number six, so to our investment program, in the first half we continue to execute on our strategic roadmap with capex reaching in this half 718 million up to 5% year-on-year. This was mainly driven by the ramp-up of investment at the Mon Falcone CET expected to be completed next year with an EBDA contribution of 120 million once fully operational. So imagine the second half of 27. The development of new Cortellona waste to energy plant province of Pavia, Lombardy, expected to be commissioned in 28 with a full run rate of 40 million and a continued investment in electricity distribution and regulated assets and I want to underline that we reach 4 billion of rub, considering the rub coming from power grid, the most important gas grid and water cycles. Development capex increased by 17%, confirming the progress of the projects that will drive our future growth. Importantly 59 percent of our future fit investment are aligned with the EU taxonomy confirming the strong sustainability profile of our growth plan. With that let me turn to Luca for a more detailed analysis of our results. Please Luca.
Thanks Renato. Good afternoon everyone. As Renato just highlighted, our first half results once again demonstrate the value of A2A diversified and integrated business model. The slide shows how the strength of our portfolio allows us to balance different market dynamics to see ease opportunities and mitigate headwinds. As a result, we deliver an EBITDA of $1,181,000,000, broadly in line with the last year. This reflects three main factors, higher solar and wind energy production, the ability to capture trading opportunities and strong energy management performances, solid contributions from our regulated business, mainly electricity distribution and resilience in the market business, despite the challenge competitive scenarios. Albeit, mitigated by the impact from higher hydroelectric concession fees and lower hour production, the lower waste contribution and the non-organic reduction in gas distribution. Now, I will unpack our results in more detail, starting with generation and trading, where I walk you through the main driver of our performance. In slide 8, generation and trading, increased wind and solar production and a strong performance in energy management helped offset the impact of our concession fees. EBTDA was $394 million, a decrease of $26 million compared to the first half of 25.
Starting with renewables, we delivered high wind and solar production.
However, it was partly offset by two factors. higher hydroelectric concession fees which had a 37 million impact including around 25 million related to prior years and lower hydroelectric production on hydro production that is also a positive point worth highlighting lower water water availability in the northern italy particularly in may and june was partially offset by better hydrological conditions in Calabria. This once again shows the value of our diversified generation portfolio and its ability to reduce local volatility. Moving to flexibility, a good performance in trading and energy management confirmed our ability to capture market opportunities. To sum up, our operational performance remains solid with our production volumes and effective trading execution while higher concession fees and weaker rider condition representing the headwind during the semester. Let me now move to market. Looking at the market segment, the first semester confirmed the persistence of our commercial performance EBITDA was 232 million with an increase of 3 million compared the first half of 2025. Performance was primarily driven by our electricity volumes particularly in the free market segment. At the same time unit margin were lower than last year reflecting a more competitive market environment why competition remain high we have seen progressive reduction in churn rates over the last few months in particular in July in June July overall the business deliver an hour solid set of results with volume growth of setting margin pressures. Let me now turn to performance of the circular economy. Adjusted EBDA was 293 million, a decrease of 29 million compared with the first half of 2025. The decline was mainly driven by temporary factoring waste, lower availability of Parona waste to energy, and other treatment plans due to maintenance activities new acera service contract signed in february 2025 higher full cost fuel cost in collection on the positive side treatment prices shows a slight increase while the integrated water cycle benefited from higher allowed revenues In district heating, performances were lower year-on-year, mainly due to the lower volumes and reduced contribution from white certificates. Overall, the soft results reflect temporary operational factors, primarily related to plant maintenance in waste. Excluding these effects, the underlying performance of the business remained broadly robust. with a support from integrated water cycle partially offsetting the pressure on waste.
Then let me turn to smart infrastructure.
In smart infrastructure the overall performance reflects growth in a low revenues that more than offset the negative perimeter affecting gas distribution. EBITDA of this business unit was $285 million, an increase of 3% compared to the first half of 2025. In electricity network EBITDA benefited from higher load revenues driven by the new Roth tariff methodology, the regulatory lag alignment, and the continued growth of Rob driven by capex deployments. In GAS Network, we saw a negative year-on-year contribution, mainly due to the disposal of GAS distribution assets completing in July 2025, and the absence of non-recurring OPEX recognition that have benefited the first half of 2025. Okay, we have unpacked the results for each business unit. I'd like to conclude by illustrating the combined contribution to our EBITDA mix, group net profit, and cash flow. So slide 12, starting from EBITDA of 1,181 million DNA amounted to almost 500 million, up 21 million versus last year, mainly reflecting the continued deployment of carpets. Provisions were $41 million, slightly higher than last year, mainly due to our result in the market business. Net financial expenses stood at $87 million, broadly in line with last year. Despite ongoing market volatility, the cost of debt remains stable at 2.7%. Adjusted taxes amount to $165 million, $18 million lower in the year. The tax rate stood at 29.5 percent, excluding the impact of the ERAP increase introduced by Energy Decree, which has been accounted for as a special item. As a result, adjusted group net profit came in at $374 million compared with $419 million in the first half of 25. In the first half, we continue to deliver solid returns with a return on investment and return on equity around 9% and 11% respectively. well aligned with our targets. Let me move to cash flows. In the first half, 2025, the group recorded negative change in net financial position of 312 million euros. As of June 30, our net financial position stood at 5 billion.8, with a leverage duration of 2.6 times, which confirm the overall stability of our financial profile and remain fully aligned with our capital structure of target. Looking at the cash generation, we deliver an operating cash flows of 749 million Euro, fully supporting the financing of organic growth during the period. So let me briefly walk through the main drivers. Starting with the networking capital, the variation of minus 287 million euros was mainly driven by two one-off events. The first was the reduction in payment terms to CSEA following the 2026 Energy Decree, the Decretable Lette. and the second was the payment of the past due state concession fees for hydroelectric concessions moving below operating cash flows we paid 145 million euro of taxes 76 and net financial expenses 69. after accounting for 718 million of capex the operating cash flow before dividends amounted to 31 million euros following the dividend payments metric cash flows stood at 295 minus 295 the change in the consolidation perimeter had a negative impact of 2 million mainly driven by 27 million related to M&A, partially offset by the $25 million price adjustment related to the partial disposal of our gas asset to ASCOPIAVE completed in 2025. Finally, after also having taken into account $15 million spent on our share-buy-back program, the overall change in net financial position for the period amounted to minus 312. Looking ahead, we remain confident that the strength and the diversification of our integrated business will continue to be a key competitive advantage. It provides the flexibility needed to navigate the changing market condition, it reduce our exposure to market volatility, it bolster the stability of our cash flows and net financial position. So now I hand back to Renato for the final part of the presentation.
Okay thank you, thank you Luca and our guidance is confirmed. I am are really confident to confirm our guidance for 26 with an adjusted BDA between 2,210 and 250 billion and adjusted net profit between 0.63 and 66 billion reflecting the robustness and visibility of our business mix. The resilience of our diversified business portfolio and our ability to capture opportunities leave us really fully confident in achieving these targets our target and and so let me conclude by bringing together all these elements we have discussed our strategy aims to deliver today while continually building tomorrow's grow It is a strategy built on discipline execution, industrial excellence, and future fit growth. So, discipline execution underpins our ability to deliver our commitments with clear priorities and rigorous capital allocation. And we are on target. Industrial excellence is rooted in the strength of our integrated portfolio across energy environment and the infrastructure and we are on track and future feed growth comes from investing in platform that respond to long-term structural trends from the carbonization and electrification to digitalization and we are on trend in short visits and architecture built to last resilient integrated and designed to convert opportunities into sustainable growth so thank you very much for your attention and now let's open the q a session
Operator
if you wish to ask a question please dial pound key then five on your telephone keypad to enter the queue if you wish to withdraw your question please dial pound key then six on your telephone keypad. The first question comes from the line of Javier Suarez-Hernandez of Mediobanca. Please go ahead.
Javier Suarez- Hi, everyone, and thank you for the presentation. I have several. The first one is on the generation business. There are probably two different dynamics. One is higher electricity prices and probably higher contribution from ancillary service activity positively impacting your your activity so I just wanted to have latest data and forward selling for electricity in 2026 and 27 and was these upward pressure on electricity prices may be impacting your business on the contrary probably hydro conditions during the second quarter has been lower than than versus versus previous year so which is your expectation on the company production with hydroelectric facilities by the year-end and how that assumptions compare with your assumption in the recently presented business plan that would be the first question and the second the second question is more strategically is on the the interest on renewable energy so can you help us to understand your latest views on developing new renewable energies in Italy the value for the group and the relative reference for brown fill asset versus green fill assets so and also latest views on new battery system and the third question is if you have any comment on the consultation document open by Arera on Ross implementation for gas distribution in Italy from 2028.
Operator
Thank you. Okay Xavier, good afternoon.
But talking about generation, consider and you know very well that we edge our production. So for 26 more or less is all edged. Not all because you know with a flexibility exactly in the hydro production, we maintain a margin to be able to not to arrive in a situation of over edging. But the prices was fixed a month ago. And also for 27, considering that the scenario in this moment seems high, but you know, the The volatility is super high, so it's enough that as probably all we hope tomorrow between Trump and Iran, they try to find a solution and the scenario prices come back normal, and so we have 70 percent of the production 27 all covered with a price higher than 100 euros for megawatts so it's fine but is on budget let's say. And talking about the hydro condition in this moment, 4808 in this first half works super well the south, consider that in Mars as probably I said in the last call, we did all the production of 25. And for this reason, in this moment our forecast is around 3.9 terawatt hours compared with an average of 4.1. So yes, there is a little reduction but absolutely not really material. Talking about renewable, I think that absolutely we need in Italy and in Europe to increase the renewable production because it's the only way to come out from this incredible situation of external dependencies in particular from gas, petrol and so on. And for a company like K2A, let's say, works well both brownfield and greenfield. Overall in Italy, of course, we need new renewables because that means also repowering. For example, for wind, repowering is surely the key element to increase the total production. production. And so we are absolutely committed in our plan. You know, there are 3.7 billion of investment for another free gigawatt of renewable production in the next year. And our pipeline is solid, is interesting, and is well balanced between sun and wind. Talking about battery is a good question. I think that the business of battery can work inside the max tender because a merchant is really too difficult to imagine to develop this business. The next tender is in November, as you know, we are working to participate in. You'll see in which way, in which configuration, but 8WA, like other large energy company, has some plants, some sites already connected with high voltage power grid that is key to develop large-scale storage plant battery plant and so we think to be able to participate it to the next standard with an interesting proposition.
Yeah maybe the last question that was on the Arrera document of consultation the gas distribution. I think you are referring to the introduction of the rough mechanism also on gas which frankly speaking we think not affecting so much our network i remember that we manage today only milan network and we already did the tender. So it is something that will affect a bigger player than us with a point of delivery higher than 300,000. So it would not have any impact really on us.
Operator
The next question comes from the line of Emanuele Occhioni of Kepler.
Please go ahead and ask you a question yeah good thank you for taking my questions uh the first one is on the on the guidance apart the numbers the figures what are the moving parts expected in h2 we know that for example a part of the the usual flexibility in the aging volumes depending on the weather, depending on the water availability and the next weather, you are not included the potential positive effect for power prices. So what are the moving parts in general by business unit in ways that is in a recovery in ways expected or a higher pressure in other in energy supply you don't know in other pieces unit and this is the first more quality qualitative question on h2 outlook the second is on the ets reform the eu ets reform which came out better than expected or not so bad than field by investors. So, what is your comment and opinion on this? And the third one is on the market supply. In Q1, you were able to increase by 1%, but in any case, it was still an increase, a small increase, but an increase in the free market customer base while according to the H1 data, there is a minus. So you lost free customer base in Q2. So what are the current dynamics for you? And this turned down compared with VQ1 in Q2.
Luca, start with the moving parts of the data. well I will give you an answer on guidance and maybe some about market supply so on guidance we are pretty comfortable about the guidance so we confirm it with some positive expectation on generation and trading business unit having also considered the negative impact related to hydro concession fees with an impact for the total year of more than 50 50 million euro so we are able to offset it and to stay in line with the result of the last year market have you have you seen that it has been performing very well with a strong resiliency on the marginality even though they are slightly below last year but with an increase on the volume sold. The churn rate is going to improve in the next month with an expectation to stay below the end of the last year at the end of 2026 and with as a consequence with the opportunity to revert somehow the number of acquisition and the total customer in particular in electricity market in the free market. So we have a positive expectation also in terms of marginality to stay slightly below or near the level of 2025. Smart infrastructure, very good, very positive. The fact that the Ross mechanism of the tariff have given us quite good results and opportunities for the first semester and also for the second one. Offsetting the negative effect on the gas distribution, so all in all with an opportunity to end the year higher than the last one. Circular economy, it is the business which is more suffering for the maintenance activities of the first part of the year with a shape of recovery in the second half and ending in line with 2025. So all in all, this is what let us comfortable on the ending of 2026 results.
Okay, talking about it, yes, the reform in this moment presented by the commission is better than our expectation for a couple of things the first is that talking about you know the proposal of change the merit order of the plans working on ets but the answer from the commission was absolutely clear so not touch ets and what we need to really give to renewable the strong to win against the other sources the second on the opposite side is because one of the discussion was about the application of the TSO on the waste to energy plant that was under discussion and in this moment the decision was to shift this hypothesis from 28 to 31 or later because frankly speaking in this moment there are no technology worldwide to better than the waste-to-energy plant to face the part of waste not the new material and And so, what we see is an ATS that try to be more useful for Europe, but don't change the strategic or rational that brought ATS to be invented some years ago. So, talking about supply, you know, our strong commitment is on free market electricity. And also in the second quarter, so in this first half, 8-way energy, pay attention, 8-way energy growth, 0.2, 0.3%. The little differences in this number is linked to our second brand, in particular, the multi-utility, you know, IB in Brianza, the 5-5 in the northern of Lombardy. But as some brands that are not really able to stay with the stronger competition in terms of marketing, advertising, and so on. And we don't want to push a second brand because it is absolutely inefficient. So, frankly speaking, we are happy that with the situation of a churn rate so high, like in the first half, the capacity of acquisition of 2A energy remains high. In June and July and August, the churn rate fell down, and so we expected to be able this year to grow also with our electrical customer base. thank you the next question comes from the line of roberto letizia of equita please go ahead and ask your question yes thank you for taking my questions i would like to go back briefly to a couple of questions already answered but if you can tell us exactly how much is the coverage
on your production in 27 and eventually in 28 if you did any for even the following year An additional clarification, because I had the same question, but actually, Javier, but partially you skip it, so I want to recover it. So I got the sense of you being interested in the rest, the amount of giga what you want to do, and the pipeline which supports both solar and wind. Just wondering how much of that can be looked into brownfield deals rather than greenfield, considering that the market is very open. This morning NL announced another acquisition of 85 megawatts in the country. We saw additional M&A did for power generators trying to increase as rapid as possible their rest present. So wondering if any change in the strategy may occur. from you by leading you in having a higher exposure of the growth through brownfield acquisition as there is a market and an opportunity uh if you can give us the most recent trend in retail long-term ppa just wondering if you keep going to growth on those kind of uh contracts and then i'm just wondering if there is any any potential impact from the heat waves that we saw one month ago and also in this day uh there was a fire in us in in um distribution
connection center in in in milan uh just this morning and a lot of accidents during the heat way just wondering if we have to consider any potential negative impact from extraordinary maintenance to the distribution plants that follow the heat waves thanks a lot okay starting from the vegging the coverage is 27 and 70 percent the price is higher than 100 is So as good is in line with our budget, with our scenario. And for 28, no, is a peanuts in this moment, but it's difficult to look forward 18 months, let's say. Talking about renewable, consider that our strategy since the first moment was a mix between brownfield, if for you brownfield is M&A, let's say, and greenfield. You remember very well that we bought the pipeline from Octopus Solar, from Mardian Wind. We are working in re-powering of some of the portfolio wind from Mardian and from the other side pipeline and new greenfield project for example in Friuli Venezia Giulia in the north 160 megawatt of solar plant And a super interesting thing for the position and the strong demand that we have in north of Italy. So if you look at our 700 megawatt today is a mix of the strategy. And I think that this is a good solution also for the future probably will maintain a solution like this. Because if our opportunity is correct to look and if there is the opportunity also to buy something but from the other side it's fundamental to have a pipeline and in this moment we have a strong pipeline because to be able to deliver our industrial plan of course we don't include into account the M&A. So our pipeline must be enough to deliver our industrial plan. Then M&A can be an opportunity to increase the return of investment if there are opportunities against our pipeline, our greenfield development. So I think that this is the situation. Looking at Italy, once again, we need to increase the number of solar panels and wind capacity. So it's clear that there's not enough M&A in which you pass assets from one end to the other. Talking about retail, yes, we are absolutely on track with PPA mass market. Consider that is interesting because the price, I remember that in this moment the price of a PPA, let's say with a normal profile, B2B can be around 80, 85 years for megawatt hours. the mass market is around 105 and is typical to have more marginality from B2C than from B2B. The number of contracts in this moment is more than 120,000 and the number of gigawatt hours that we are located with PPAs mass market is slightly higher than the number of gigawatt hours allocated with B2B. In particular, if I were a member, is 263 gigawatt hours of total allocation for energy for PPAs mass market. The reason why we decided to put on the market also PPA for small businesses is that I think absolutely that the change of paradigm for renewable is exactly the capacity to fix the price for long term and we absolutely we must build products for every kind of customers and we absolutely know that for a large company imagine steel plant and so on is normal to deal with our energy management to find the correct PPA, the correct profile, the correct price. But for a retailer and householders, also for a company, a small business without expertise, know-how in energy management, or you are able to put on the market a standard PPAs, or is impossible to sign a contract for 10 years, 20 years, 15 years, and so on. And so I think that really we'll arrive to have one million of customers with PPAs, mass market, or small business. And talking about the heat, yes, in this moment the heat That is crucial, but if you look at the performance of our power grid in Milano, compared with the last year, it is much better. The number of blackouts is absolutely minimum, and all the indicators for TPI that underline the performance are good. And absolutely, there are no extraordinary maintenance that we have to do. Simply, we have to continue to invest in new secondary cabins, new primary substation, so to new cable and so on, but online with our planned plan. And we are absolutely happy to say that also in a situation in which there are 40,000 degrees, that is incredible, we are able to face the situation with a good level of satisfaction for customers. The only problem that we had, frankly speaking, was in Duereti, so in the company that we built last year you know from compa which company and uh in duality we have not the track records of capex that we did in uh in the last years thanks the next question comes from the line of francesco sala of banca across please go ahead and ask your question good afternoon thank you for taking my questions the first one is on the
treatment business when should we expect the written business to go back to normal whether it's going to be something already in a full quarter or let's say towards the end of the 2026 the second one is on the single national price. Francesco sorry can you come back because I didn't understand the question you know the quality of yeah the first the first question is on the treatment business there have been some yeah some issues in the first alpha I was just wondering when should we expect the business to be back to normal whether it's a third quarter thing or more, let's say, towards the end of the year. The second question is on the single national price. There have been discussions for a while about the end of the single national price source on the demand side. I wonder if you can share with us your initial thoughts on the consequences you think they are going to be for you and the market. And the third one if there are updates if any on the extension of hydro concession and also electricity distribution concessions.
Okay coming from starting from electricity and hydro for electricity, the last activity is in charge of the minister to produce the final decrete and I talked with the manager in the ministry some weeks ago is on on production let's say the decreed you know the tender the historical date for the tender was 2030 and simply the laws says that the five years in advance the government uh to to start working for the tender this is the reason why in december 25 24 25 in the balance law they included the below to change the needs of tender. Only to say, Francesco, that probably is not the priority number one in this moment, talking about 2030. But we are confident to see in September the text of the decrees coming in discussion to be closed this year. Talking about the hydroconcession is interesting because the reason why we didn't solve the problem of hydroconcession till now is mainly due to the PNRR because you remember that But inside the PNRR agreement, there was in the competition law, the commitment for the government to put tender on hydro. So my personal position is that we see something different after August, simply because in August will end finally and totally the PNRR with the 10th part of the money coming arriving from from Europe. If the question is there is a discussion about tender frankly speaking in this moment not the only super little super peanuts homeopathic tender in lombardy in one of our plants in baleka monica was stopped by the court the civil court of pressure because region lombardy didn't do correctly the procedure to put on the market with concessions. So I think that also this dossier after August can come back on the correct table. Your question about the single national price, the question is that if we think that it's possible for customer to have a different price? Which is your question. Yes, exactly. Because you know, in this moment, the price is zone by zone for the producer. But if you ask if I think that is possible to have a different national price for final customers I think that is impossible because really if in a country like Italy, in which of a discussion about the price of electricity, you divide it in seven different parts of the country, the price. And the different price is mainly linked to the power grid, the national power grid by Ternal. So let's say that is not enough strong to produce a unique market. You can imagine what can happen because it is not a structural problem because it's normal to produce more sun in the south or wind in Sicily only in southern events and more hydro production in Lombardy, Piemonte or Dolomites. But we are a country in which this different energy capacity of a single region can absolutely remain inside a unique market if the power grid is enough stronger to connect completely the country exactly like in the plan, a capex plan offer of them so um i think really that is impossible to politically impossible to have some something of different from the single single pool uh treatment business uh uh the question is the performance and you know in the first half so in particular we had the problem with a plant in a waste to energy plant in Pavia Parona it is not a economical problem because it's well covered with an insurance but surely in the first half we had some problem of production of some plants that we forecast to recover in the second half so in particular consider that one of the reason why we confirmed with confidence the guidance is because we are looking also in the treatment business, a situation normalized in the second half.
Operator
The next question comes from the line of Davide Candela of Intesa San Paolo. Please go ahead and ask your question.
Ladies and gentlemen, thank you for taking my question and for the presentation. I have a few regarding the current energy scenario and so the curves and the dynamics of energy prices. You spoke briefly about generation, but I was wondering if you can provide a bit broader view also on other businesses like, for example, energy supply. If this current scenario is changing your approach commercially and there are some emerging risks with regards to your potential sourcing costs from next year and so on if you can provide a picture on that and secondly on waste I was wondering if you can or maybe incur in some higher cost mostly related to oil prices increasing and that could be bared by your numbers and recovery in a second time so just a bit on that and the last one still on renewables was wondering if you can provide more visibility about your pipeline and which is the the breakdown in terms of how many projects are ready to build or closer to final investment decision and on that on the return environment if apart from the higher prices we are seeing in power if the the high interest rates or the equipment costs are challenging in a way the return environment also for you or this is not an issue at all thank you okay well for them energy scenario the situation in the last month is a little
bit incredible because from one side all of us see price for gas and and of course electricity super high from the other side if you look the forward 27 28 the price the price fall down Why? Because the storytelling is that the war in the Persian Gulf must finish. The effect of the degree for volat will reduce a little bit the pool price in with not with ATS but with the gas distribution cost so some some euros for megawatt house and so on and so we we continue to to be in a film with a real price, super high, and with forecast more, quite more. Consider that for a company like H-Way that works with a strong edging, what I can say, Davide, is that we are able every time to remain on budget. So you know our industrial plan, and the target that we introduced in the industrial plan is absolutely confirmed. One year ago, the discussion was if the scenario embedded in our industrial plan, so more or less 100 euros for megawatt hours, was correct or too high. And do you remember that I said, for me it's correct simply because we are linked to GNL. GNL in this moment has OPEX, so Liquefation, Transport, Regasification, that brings the base cost of GNL to 30 years for megawatt hours, that means 60, considering 50 percent of efficiency of a thermal plant and more at yes, more or less, you arrive to 100. In this moment, the price will remain higher for probably for circulation, for the situation that you know in the Percy Gulf. And so I can say simply that if I look at the next two, three years, surely our budget is correct and we are able to edge the pump price at the level that we have in our industrial plan. For the waste, I imagine you talk about collection considering the cost of oil, so gasoline I think, consider that compared for example with the public transport, our fleet drew a number of kilometer super peanuts. If you look at a truck or a collection is every time stopped and the number of kilometer is really not material. So also the total consumption of oil compared with the other cost is not enough to change the result of our economics. Much more, for example, the cost of labor. And what is interesting is that the last negotiation on the cost of labor brings a total cost that is slightly lower than our expectation. We are not alone because there is a national negotiation. Probably, we are the biggest company, and so the average cost for the other players remain lower, and this is a benefit also for us. So more or less also on waste collection, we are absolutely on budget. And about the pipeline, consider that our goal is to be able to build every year 300 megawatts of new solar and wind renewables. The pipeline is 10 times more and of course like every pipeline as a part of ready-to-build, a part of advanced, and the part on, let's say, ongoing. And in this moment, what is important is to select well what really can be merchant and and what is too high like LCOE to be merchant, because it's clear that the pressure of the electricity price brings all of us to build a plant with low LCOE, to be able to stay well on the market, to be able to contribute really to reduce the pump price without reduction of our marginality. And then the best way is to be able to build well, to build a plant with low SOE. That means to reduce the cost of land, of authorization, permitting, APS, and so on. So all the supply chains that reduce the final cost of energy because the solar plant or also a competition in the oilic pool between some China's players and the historical EU is working to reduce the inflection also in this case. So to close, surely we are absolutely able to deliver our 300 megawatts every year starting from a regime I think from 28-29. In this moment for example we have under construction from 100 megawatt of solar plant in the north of Trinidad and Giulia. As we have seen, we delivered 35 new megawatt of wind capacity. So also in this half 26, the new quantity of renewable is more than 100 megawatt.
Yeah, I will answer to your last question regarding the cost of debt. We closed the first half with the same cost of debt as we closed the fiscal year 25, that is 2.7 percent, and we are expecting to maintain it for all the year 26, considering the fact that we are funding ourselves with an average cost in line with our quantities, as you've seen as the result of the cash flows analysis, but with a slightly lower or the same cost we already experienced in the first half of the year. We are also proactively managing the cost of that, taking some position on the market with some swap activities, and this also helps us to lower the impact of the cost. So we are comfortable about the future resiliency of the cost. I have to say also that, generally speaking, the weighted average cost of capital has been lowered in such a way. And this gives us the opportunity to stay coherently to the spread of 200 basis points between the work with the return, the average return of our capital allocation, our projects.
Operator
At this time, we will not be taking any further questions. I will therefore hand the conference back to the speakers for any closing comments.
So thank you everyone for participating to the first half results. If you need any additional follow-up, please contact the IR department and happy summer break to everyone. Bye-bye, thank you. Bye, thank you very much.
Operator
Ladies and gentlemen, this concludes today's
