ENDESA SA (ELE) Q2 2026 Earnings Call Transcript

Good morning, everyone, and thank you for joining us today for our first half 2026 results presentation. With me today are our CEO, Gianni Armani, and our new CFO, Daniele Caprini. Before we start, let me remind you that after the presentation, we will move to the Q&A session. And starting from today, we will only take questions submitted in advance by e-mail or through our website. In addition, given the busy earnings calendar with a large number of companies releasing results today, we aim to limit the duration of the call to one hour. Thank you once again, and now I would like to hand over to Mr. Armani.

Thank you very much, Mara. The first half of the year delivered solid financial results with the BDA increasing by 20% and net income growing by 41%. This performance reflects the growth across all businesses supported by higher contribution from regulated activities including both distribution and non-mainland generation. These results highlight the resilience of all our businesses and the disciplined execution of our strategy. Growth has been supported by continued efficiency effort, allowing us to improve profitability and maintaining solid financial ratios. At the same time, we continued to accelerate the execution of our investment plan, with network remaining the main focus. Overall, the robust operational and financial performance delivered with more than 60 percent of full-year EPS target already achieved, together with the strong visibility that we have for the remainder of the year, leaves us well positioned to rise our full-year EPS guidance. On slide four, in the first half of 2026, EBDA increased to 3.2 billion. More importantly, the contribution of our regulated businesses increased from around 40 percent to approximately approximately 50% of total EBDA. This reflects the weight of networks and other regulated activity within our portfolio, further strengthening the quality and resilience of our earnings. This stronger earnings profile translated efficiently into solid bottom line results. Net income reached 1.5 billion euros, implying 45 percent EBDA to net income conversion, while EPS increased 46 percent to 1.44 euro per share. Lastly, cash generation remained strong, with ABDA to FFO standing at 70%, and FFO to net financial debt reaching 38%, supporting a strong financial position. Turning to market conditions, on slide 5, power prices fell almost 20%, despite the energy market being clouded by uncertainty and volatility stemming from the ongoing geopolitical tensions. This decline has partially offset by the significant increase in ancillary services cost since one year after the blackout event, the TSO reinforced operation continues to drive up overall system operating costs. In fact, according to external sources, this cost could exceed 5.6 billion euros in 2026, probably equivalent to the distribution network costs. Against this backdrop, electricity demand showed a modest growth with largest increase on the residential segment, mainly due to temperature effects, followed by services and industrial demand, still affected by the uncertainty of geopolitical scenario. This reinforced our view that further investments in the grids will play a critical role in enabling economic growth, supporting electrification and unlocking future demand. In this sense, the Royal Decree approved yesterday, of which we don't have yet the final text, a significantly rise distribution investment cap, providing additional headroom to accelerate capex deployment in the coming years. As we can see in slide 6, we continue to accelerate our investment plan, with gross capex increasing by 14% year-on-year to $1.1 billion. Networks remained our main investment area, representing more than half of total capex. This increased investment effort has already delivered operational improvements with lower network losses and TAP remaining at even or even improving when exceptional weather-related events are excluded. In renewables, the output reached 11 terawatt hours, with 86% of mainlet output coming from emission-free technologies. In supply businesses, the total customer base stood at 11.3 million, while free power customers increased to 6.3. The Spanish retail market remains highly competitive, although we expect a more rational environment going forward as regulation tightens and market conditions evolve. Against this backdrop, our retail strategy remains focused on value creation, customer quality and profitability, supported by a more pool-oriented channel mix and the enhanced customer experience. The customer proximity remains the key differentiator. With a network of more than 370 stores across Spain, we continue to reinforce our physical presence through the expansion of our directly managed commercial footprint, enhancing customer relations and strengthening control over customer experience. At the same time, we continue to drive customer growth and loyalty through our digital initiatives, while leveraging on Mass Orange partnership, exploring new opportunities for customer acquisitions and enforcing loyalty and enhancing commercial offering. Let me now hand over to Daniele for the financial results. Thank you, Daniele.

Thank you, Gianni. Before we begin, let me say that I am very pleased to be joining this call in my new role of CFO of Endesa. Turning to slide 8, let me briefly highlight once more the outstanding economic and financial performance delivered in the first half of 2026. EBITDA increased by 20% year on year to 3.2 billion euro while net income rose by an even stronger 41% to 1.5 euro billion. Net financial debt increased by 0.2 euro billion to 10.3 euro billion with the net financial debt to EBITDA ratio remaining at 1.6 times. Moving to slide 10 Looking at the main drivers behind the strong financial performance, first, network EBDA increased by 24%, mainly supported by the new regulatory framework in force since the 1st January of this year, and the effect of positive previous year resettlement, resulting from the update of certain remuneration parameters booked in 1st. Generation supply EBDA increased by 16%, driven by, first, higher customer EBDA, with the resilience both in gas and power margins, despite ancillary services cost increase, together with an improvement in fixed cost. second stable renewable EBDA as the negative price effect from lower references was offset by better volumes and lower fixed cost then in conventional generation EBDA also rose by 18% supported by both margin expansion and the cost containment margin increased was driven by 0.2 euro billion improvement in non mainland generation margin supported by the favorable regulatory framework which enable future greenfield investments in this business as well as by prior years resettlements this was partially offset by the normalization of the gas management margin operating costs decreased by 45 million euro further contributing to EBDA growth. Turning now to our network business and I'm now on slide 11. As mentioned before the new regulatory framework drove an improvement in earnings with the NEET Networks EBDA rising 24% to 1.2 euro billion representing 36% of total EBDA networks continues to increase its contribution to earnings further enhancing the visibility resilience and the quality of our results at the same time we significantly accelerated investment with network capex rising to 38 percent year on year to 0.6 euro billion this reflects the increasing needs for grid reinforcement and expansion to support the energy transition and growing electrification trends this investment effort is translating into continued growth of our regulated asset base which reached 11.4 euro billion providing additional visibility on future future regulated remuneration and reinforcing the long-term growth profile of the business focusing on the retail business on slide 12 our retail action plan continues to deliver visible benefits improving both the efficiency of our commercial model and the quality of our customer portfolio. We are seeing the benefits of a higher share of pool-driven acquisition and the lower cost to serve, reflecting a more efficient and disciplined customer acquisition approach. These improvements are also supporting stronger customer quality indicators, in particular early churn decreased by 5% while bad debt levels also continue to improve together these trends are enhancing the quality profitability and the sustainability of our retail earnings now i'm on slide 13 and turning to our integrated power and the gas unitary price margin the free power margin remain broadly flat in absolute terms absorbing the impact of higher ancillary services costs. Combined with the lower liberalized sales volume, this drove the unitary margin up by 6% year-on-year to 56 euro per megawatt hour. We also reshaped our edging approach to achieve a more flexible alignment between generation and supply profiles. This enhanced matching capabilities to optimize the management of our energy position strengthening the value of our integrated business model looking ahead we expect the free power margin to remain in line with our full year 2026 guidance meanwhile the gas margin remained broadly flat lower sales volumes drove the unitary margin to 11 euro per megawatt hour up 7 percent year-on-year. Our high hedging levels in both power and gas continue to provide strong visibility with limited exposure to market volatility. Moving to slide 14, efficiencies continue to translate into tangible savings with fixed cost decreasing by 8% year-on-year efficiency gains more than offset inflationary pressures and the cost associated with business growth supporting continued the reduction in the cost base this performance reflects the ongoing execution of our transformation program with more than 500 initiative focused on simplifying the way we work streamlining processes optimizing assets and accelerating digitalization across areas such as workforce optimization operational simplification it and software license optimization asset management procurement and commercial activities these initiatives are already delivering tangible productivity gains we expect them to progressively materialize throughout the year moving now to slide 15 net ordinary income reached 1.5 euro billion up 42 percent compared to the first half of 2025 reflecting the strength of underlying operating performance and positive non-recurrent effects. This resulted in an improvement in the net ordinary income to EBITDA conversion ratio to 46% from 38% a year ago. DNA and provision remained broadly stable at 1.1 euro billion as lower bad debt partially offset the increased amortization linked to higher investment financial results improved by 0.1 euro billion year-on-year mainly driven by late payment interest income recognized following several favorable administrative and judicial ruling finally the effective tax rate stood at around 24% turning to next slide cash generation continued to be robust with the FFO reaching 2.3 euro billion implying a remarkable 70% cash conversion in spite of a transitory negative effect in a working capital net financial debt remains quite stable as the strong cash flow generation was almost enough to fund investment needs as well as 1.2 euro billion of shareholder remuneration including both in the interim dividend paid in January and the share buyback program which represented the cash flow out to outflow of approximately 550 million euro it's worth highlighting the remarkable FFO net debt ratio at 38 percent over the

last two months as well as the solid leverage ratio which will allow us to accelerate and capitalize on investment opportunities and now i end over to johnny for the closing remarks thank you very much daniele thank you but daniele let me now turn on to shareholder remuneration and provide an update on our share by back program a key pillar of our capital allocation strategy aimed at maximizing long-term value. By the end of June, we had already completed more than 50% of our 2 billion share by back program, keeping the execution firmly on track. Indeed, on July 15th, we started the execution of the sixth trend, amounting to 500 million, further reinforcing our commitment to enhance shareholder returns. Beyond the attractive effect of the buyback, our commitment to shareholder value is also Also reflecting the confidence in the earnings outlook for 2026, as shown in slide 19. As highlighted earlier, following the strong performance delivered on the first half of the year, including the positive contribution of certain non-recording items, and given Given our confidence in the outlook for the remainder of the year, we are upgrading our 2026 earning guidance. We now expect new net ordinary income to exceed 2.4 billion comfortably above the upper end of the original guidance range, translating into a higher earning per share and supporting and enhance shareholder returns. Before we conclude, let me leave you with some key messages. First, electrification remains the greatest opportunity for Spain. Unlocking a significant demand awaiting for connection will require accelerating grid investments, not only to support economic growth and energy transition, but also to improve system efficiency and reduce overall costs, system costs, particularly ancillary services costs that are needed to provide security for the network. At the same time, in a volatile commodity environment, And this integrated business model remains a key competitive advantage, providing resilience, mitigating market exposure, and supporting sustainable long-term value creation. Thank you for the attention, and we will now open to Q&A session.

Okay, thank you, Yanni. Let's now move to the Q&A session. We received a lot of questions from the call that we have tried to summarize by topics. In particular, we received questions from Alberto Gandolfi, Goldman Sachs, Fernando García, RBC, Jorge Alonso Berstein, Arturo Mouroua, Jefferies, Rob Poulain, Morgan Stanley, Peter Vistiga, Bank of America, Jenny Pink, Citi, Meike Becker, HSBC, Pablo Cuadrado, JB Capital, Pedro Alves, La Caixa, Davide Candela, Intesa, and Javier Suárez, Media Banca. thank you to all of you for participating the first one is could you quantify the impact of non-recurring items book on the first half results i think daniel that is for you thank you mar approximately 0.2 billion of the 3.2 billion ebda reported in the first half 26 was driven by

positive non-recurring items this included around 0.1 billion in distribution related to the pre-year remuneration resettlements, and a further 0.1 billion in non-mainland generation, primarily reflecting the favourable Supreme Court ruling on historical fuel remuneration. Beyond the BDA impact, these items also contributed approximately to 0.1 billion of late payment interest income, positively affecting financial results.

The next question is also on the first half results. Can you explain the evolution of the non-Mailan generation EBDA?

This business delivered a margin increase of approximately 200 million, primarily supported by the enhanced regulatory framework for 26-2031, which provides for a higher return and improved recognized operating and economic standards. In addition, as I have just commented, these results benefit from the positive sentence recognizing a higher fuel remuneration for 2020-2022, as well as from the lower O&M costs registered in the period. It's important to emphasize that the new remuneration framework for this business is considerably more investment-friendly, enhancing the attractiveness of future investments. We have received some questions asking for more detail on how the supply EBDA in the second quarter has increased despite high customer losses and energy costs. the improvement in retail ebda in first half 26 reflects to a large extent the benefits of the commercial and pricing action implemented over the past two months in our electricity retail business to address an exceptionally challenging market environment characterized by unusually high ancillary services cost these measures progressively gained traction during the period and were further supported by lower energy sourcing costs, particularly in the second quarter. In addition, the gas retail business delivered a strong performance, especially in the B2C segments, providing a further contribution to earning growth. Finally, continued efficiency initiative led to a meaningful reduction in fixed operating costs across the retail business, further enhancing profitability okay next we have received a couple of questions about the efficiency plan evolution the first one is how is the efficiency plan progressing and on the same topic how artificial intelligence is contributing to the efficiency plan fixes costs in the first half 26 evolved in line with efficiency plan presented in february As shown on slide 14, efficiency gains more than offset inflationary pressures and the costs associated with business growth resulting in a continued reduction of our cost base. In addition, we continue to implement further efficiency initiatives that are expected to progressively materialize throughout the year, supporting the achievement of our cost discipline targets. About the EA initiatives, the efficiency plan is increasing driven by AI initiatives that at the moment cover approximately the 50% of business processes so far. The adoption is focused on high value use cases across customer operations, network management, asset maintenance, software engineering and cyber security, workforce productivity and service quality, operational resonance and so on. But some of our most advanced applications are already delivering tangible benefits in generation and in distribution, particularly in predictive maintenance network monitoring and the fraud defection the next question is about the hydro and how sustainable is the stronger hydro performance in the first half well hydro performance in the first half 26 was slightly ahead of our initial expectation with output reaching 5.4 terawatt hour particularly not worthy well the contribution from pumped storage facilities up 29 percent versus first half 25. The stronger hydro contribution provided additional support to generation earnings and overall integrated margin during the period. Looking ahead, our outlook remains constructive but fully consistent with the business plan assumption favorable hydro here in 2026. Reservoir levels remain healthy and comfortably above the 10-year average providing good visibility for the remaining of the year okay we move now to the to the hot topic of the of the call that is the update on guidance the first question is what gives you confidence in upgrading net ordinary income target we are upgrading our net ordinary income guidance on the back of a strong first half performance combined with the good visibility on the expected evolution of the business for the remainder of the year the first half of the year delivered solid results supported by positive operational performance in all business lines in addition we benefit from no recurring positive effect both at the margin financial results left which were not embedded in the guidance range presented at the capital markets day taking all this factor into account and based on our current expectation for the second half we now expect net ordinary income to comfortably exceed the upper end of our guidance range we are we are very comfortable and we see during the second half what will happen but we are very very comfortable indeed the the following question was precisely about the main operational drivers for the second Well, the drivers are more or less the same. We don't expect any change on these drivers. But operationally, we expect the second half to follow a trajectory broadly similar. In distribution and non-mainland generation, we will continue to benefit from the positive impact of the updated regulated framework applied to a growing asset base. In the liberalized business we expect to maintain free power margin broadly in line with the first half 26th level, landing at approximately 54-55 euro per megawatt hour by year end, almost neutralizing higher than expected ancillary service costs, which we estimate will have a net impact lower than 100 million euros in full year 26. Regarding the gas margin, after the good results recorded in the first half, we expect certain moderation in the coming quarters according to the seasonality of the business.

Thank you. An additional question is if Fendessa could capture any upside from higher wholesale power prices expected for the second half of this year.

Very limited, if any. At this stage, our inframarital marginal generation is effectively fully edged through fixed price sales to our customer base. As a result, I heard full price would have a little impact on full year 26 earnings.

Okay.

On a different topic, and I think this is a question for our CEO, some analysts are asking if following the recent management changes in Endesa, do you expect the current strategic plan to remain unchanged, or could there be some adjustment in the next capital market day? currently our strategy drivers remain unchanged clearly investors expect continuity and our focus is in delivering the most out of the strategy plan that we have presented at the beginning of the year as a group and as NDESA. We clearly will communicate a new investment plan in a capital market day at the beginning of 2027 with review market developments and the new regulatory trends but of course our focus is continues to be in the same directions with the slight adjustments even in the future okay regarding the survey back program we have received three different questions the first one is if we are committed to complete the current

survey back program second is if we continue purchasing sales considering the current price if it makes sense or not. And finally, if we plan to land a new sell-back program after the completion of the current one.

Very briefly, as we shown in slide 18, we are fully committed on the plan. The plan is clearly on track. We believe that the investments still remain value-creative given the performance that we are delivering on the results for the year and for the future and represent an attractive use of capital. The outstanding shares that we cancel enhance earnings per share and support higher dividend share per share, providing an attractive return for shareholders. And lastly, we actually are not thinking to launch an additional plan and the no extension of the current plan is currently under consideration.

Most of the analysts are asking for our view on the royal decree recently approved. Indeed, it was approved yesterday, which increased the cap on the network investments.

Yes, the ministry with this decree is fully aware that electrification is enabled by extension of grids and this allows both electrification and the change of production mix that is in progress in Spain. A large part of the network are close to saturation, and this clearly is a problem to be solved in order to unlock economic growth. The new version of the Royal Decree, even though we don't have the final text that should be published today or tomorrow, we believe, includes a significant improvement of initial additional cap that allowing up to 10.2 billion euros of investments in distribution in the years between 2027 and 2030 versus the 7.7 that we had in the initial drafts. This is going clearly in the right direction, providing greater regulatory visibility and level, and also locating network investments with a view until 2030. Of course, this is the main focus of our strategy, and we believe that this is the right direction that the regulatory framework is going.

We have two additional questions also related to the grid. The first one is what's your opinion on the new grid capacity reservation regime set in the Royal Decree Law 7 and if we expect a further regulatory intervention to free up grid capacity?

Yes, of course, demand and supply of grid capacity is creating a great tension in the correct availability of capacity. This regime is clearly under review from the ministry and the Royal Decree 7 of the beginning of the year has intended to modify the balance of the market, it, imposing new additional burden for speculative connection requests. Unfortunately, the released capacity for the application of the decree has been limited to 1.2 gigawatt in distribution and 1 gigawatt more or less in transmission. And this is not very much compared to the 45 gigawatts that are the outstanding requests for capacity only in distribution. We see that, of course, this situation will evolve, but the real solution for this tight market is clearly to expand distribution capacity and accelerate investments in this aspect. Do we expect a future and further regulatory interventions? This might be. It's clearly the allocation of capacity that is not effectively used is clearly an efficiency. and inefficiency that the regulator has to validate and to adjust. There are several ways that can be done, and we are studying together with the ministry ways to solve this issue.

Next, an update on data center. What is the main bottleneck for the development, and which is this approach to this business?

Clearly, data centers is going to be an infrastructure that will enhance productivity and has potential to expand electrification together with being an intensive user of energy. Beyond the investment impact that may have on our grids and clearly being a potential customer, it's really important to facilitate the expansion of this kind of infrastructure in the system. And we expect the deployment gradually, even in Spain, with a good visibility over the five and ten years of the commitment of investments with a growing pipeline that we see in the sector.

The next question, what are the latest news on Spanish blackout?

The administrative proceedings remain at the early stage and at present there is no visibility on the final outcomes. On this basis, we don't assume any financial impact in our numbers. Indeed, these proceedings mainly related to historical technical compliance matters matters and do not establish a responsibility and a link between the behavior of specific infrastructures and plants for the blackout day. The opening of the investigation does not imply guilt and prejudice and therefore a outcome, a specific outcome. We have already submitted all our allegations and continue to defend our position vigorously. The process is expected to continue for several months or years and potentially for a very long period of time at this stage. And we believe it is important to separate the headlines from the actual risks. Our view is that the blackout was a system-wide multifunctional and multifactorial event linked to the voltage control system operations and the increased complexity of managing a power system with a renewable global penetration. In this sense, the Spanish system is at the edge of the innovation in the transition, and this is experiencing new situations that require different investments. Since the incident, the system operator introduced a number of changes, particularly in introducing enhanced voltage control requirements and additional stability mechanism and more conservative operating procedures aiming at strengthening system security. The fact that these measures were considered necessary suggests that the previous framework and scope had the possibility of improvement in addressing the risk that ultimately has materialized. At Endesa, our position is unchanged. We maintain that our asset operated full compliance and with applicable regulations during the event. Therefore, at this stage, we do not see grounds to assume any material financial impact. On cost-based valuation, we see that now it's very important to prioritise an investment plan that solves the transitory operational system that is operated by the TSO. the cost of ancillary services is becoming an important cost for the system and this requires a long-term solution.

Okay, thank you, Yanni. I think that we can move to a different cluster. We have received some questions about the retail competition in Spain.

In particular, the first question is in terms of a customer evolution, the evolution also of the chain rates or the margins in our business as expected and represented in the presentation the spanish market the retail market remains highly competitive with increased customer mobility and the pressure from new entrants despite this and as i continue to deliver a solid profitability supported by commercial discipline and customer retention initiatives and improved customer mix. We have streamlined our sales agent network, removing channels associated with higher churn levels, although this in the short term has a impact on customer volumes. This is explained with the enhanced portfolio quality that we are obtaining and support a more stable customer base over the medium term. And the shortfall of clients' acquisitions in reality has limited impact on the numbers of the retail business. In the market, there are already seeing signs of more rational and competitive environment helped by the recent regulatory measures and higher ancillary costs that limit unsustainable pricing practices going forward we expect competition to becoming progressively more balanced and the less less stable positions to fall into distressed one okay indeed we receive a follow-up question that is what's your view on the tighter regulatory framework for energy

retailers.

We believe that the robust regulatory framework is essential to ensure healthy, competitive and financially sound retail market. This is going in the right direction, improving also the relation with the clients in the sectors.

Okay, we have one question on the island business. Will you participate in the new capacity auction?

We are currently reviewing the details of the tender and submitting our allegations in order to improve the conditions of the tender and, of course, allowing the tender to be successful. This will be, by the beginning of August, the submission of our allegation. The auction confirms the need of additional capacity, firm capacity in non mainland systems. This could unlock investment opportunities for us and, of course, for competitors. We are positioned very well to contribute to the future of non-mainlander generation business and we are aiming to do so.

Okay, another hot topic of the call is related to the status of the nuclear extension request.

Regarding the extension of the operating license of Almaraz until 2030, the Nuclear Security Council has just finished its technical assessment, issuing a favourable opinion, confirming that Almaraz can continue operating safely under the highest technical standards until 2030. The file of this process, a procedure, is now in the hands of the ministry that will be responsible for taking the final decision that we expect before the end of the year.

Okay, we have now some questions on different topics, renewables. The first one is, do you see still attractive investment opportunities in renewables under the current market conditions?

The economics of standalone solar projects are becoming more challenging due to the lower capture price and increased price cannibalization and a growing number of zero price hours rising of curtailment. All this is clearly showing a not favorable perspective for this kind of investments. As a result, the project selection and the asset configuration have become increasingly important. The market is shifting beyond the standalone renewables towards an integrated energy management model, where the combination of renewable storage, flexibility, hybridization and customer solution create clearly greater value. In this environment, these are, like other integrated utilities, well-positioned.

Next, and looking ahead, do you see a scope for additional investment on storage?

Clearly, storage is becoming an increasingly strategic component of power system and important enabler of renewable integration. On top of the pumping storage already in our mix, we are also strengthening our commitment to batteries and hybridization of plants. In our business plan, we have increased significantly the planned investments with a sizable pipeline of 300 million, more or less 400 megawatts of battery capacity.

And the last one of this cluster, are you seeing acquisition opportunities in renewables?

We see increasing opportunities emerging from market consolidation, particularly in renewables. Some of the smaller developers and players face pressure from lower merchant margins and returns, financial constraints and limitation of scale. We will assess this opportunity, as always, with a selective approach.

On the macro context, how is Endesa's exposure to the current geopolitical scenario?

In reality, our exposure is currently very, very limited. The resilience of our first half results of 2026 are proof of it. We are fully in line with pre-conflicting expectations, actually more than these expectations. This demonstrates the strength of our business model. and we do not currently anticipate any material impact on the performance for the remainder of the year. Let me add one thing. We actually can view in this situation the value that has been created by the sector in the energy market in Spain. Broadly, across Europe, the impact has been significantly strong, even in the electricity sector. In Spain, in reality, the sector has created a shield over this geopolitical tension. And despite the recent price volatility, we estimate that clients have been protected from an increase in the energy cost up to 3.5 billion in the first half of the year, which is a significant protection given by the sector and a smart investment strategy that has been adopted in the last year.

Okay. In this context, are you concerned about the possibility of new extraordinary taxes on utilities?

We don't see a risk of further market intervention in Spain. Spain prices have been stable and there is no extra profit to extract from market speculation that has been adopted in Spain.

Thank you. We have one question regarding the capacity payment mechanism. When do you expect the first auction to take place?

The approval of the mechanism is clearly in line with the trend of regulation in Europe. The need for stable, firm capacity, even in a scenario where renewables are prevalent, is still very important, and guaranteeing a stable revenue stream more similar to a regulatory scheme is important to guarantee this firm capacity. We expect the first auction by the end of the year, as probably the ministry is planning to work on it.

Next, what's your view on the new European Commission regulatory proposals?

We see the initiatives that have been taken both on electrification plan and ETS reform in line with the strategy that has been adopted by EU, reinforced by the need of electrification drives that is allowing energy independence for the continent. And, of course, the electrification plan reinforces the strategy towards electricity and enhancing the consumption target in 2040 to 46 percent versus current 23 percent. This is perfectly in line with our strategy and not only ideologically but also economically it makes sense.

The last question concerns the wildfires thing in recent days and their potential impact.

Wildfires and exceptional events are more and more frequent across Europe, in particular in areas in geographies like Spain. This is clearly an emergency that requires a different organization to manage these emergencies and also requires planning of infrastructure in order to be more resilient. All these These events put a huge strength on infrastructures, in particular energy infrastructures like electricity, and the technical requirements in terms of redundancy and resilience needs to be upgraded. some regulation some markets have already moved to reinforce the regulation in this sense with that we conclude

today's presentation so thank you very much for taking part of this conference call as always investor relation team will be available for any follow up question and just to wish you all a wonderful summer break thank you very much