OEZVF - VERBUND AG (OEZVF) Q2 2023 Earnings Call Transcript
2023-07-28 16:53:09 ET
VERBUND AG (OEZVF)
2 2023 Results Conference Call
July 27, 2023 05:00 AM ET
Company Participants
Peter Kollmann - CFO
Andreas Wollein - Head, Group Finance & IR
Conference Call Participants
Wanda Serwinokska - Credit Suisse
Louis Boujard - ODDO BHF
Piotr Dzieciolowski - Citi
Ingo Becker - Kepler
Olly Jeffery - Deutsche Bank
Thibault Dujardin - Société Générale
Presentation
Operator
Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the Verbund AG Half Year 2023 Results Conference Call. Throughout today's recorded call, all participants will be in a listen-only mode. The presentation will be followed by question-and-answer session. [Operator Instructions]
I would now like to turn the conference over to Peter Kollmann. Please go ahead, sir.
Peter Kollmann
Thank you. I'm here with Andreas Wollein. Ladies and gentlemen, let me welcome you to the presentation of our first half year 2023 results. And let me thank you for joining today's conference call. Before we move into the analysis of our business development, then we make it to your general comments. The slide meeting on the energy market already again at the end of '22, which continued in the first half of '23.
Wholesale prices for gas fell significantly in the first half year compared to the previous year. In addition to the heightening levels of the gas charge facilities resulted due to the weaker demand for gas. This was accompanied by a drop in wholesale prices of electricity. However, the market environment is still very volatile. Let me highlight one regulatory issue at the beginning in Austria, the capital market revenues of intermarginal generators was reduced in the second quarter.
The reduction of the revenue cap was from €140 to €120 per megawatt hours, and that applies as of the 1st of June. However, our crediting of investments in renewal generation technologies in Austria is still committed. Now let's move on to our financial details. At the beginning, I would like to highlight the most important influencing factors for the results development at plant. Following the development of prices at the electricity exchange and based on our hedging strategy for our own electricity generation of habitat, the average achieved contract price increased by €69.6 to €182.1 million.
The hydro position determining the generation from our renewable hydropower plant was better than last year of the lower long-term average. However, production for our hydro reservoirs was higher by 6.2% compared to last year. Generation from wind and PV was up compared to last year, mainly driven by the new renewable assets in Spain. Renewable generation contracts, strong decreased due to lower yields of our CGM. The contributions from flexibility products slightly decreased, mainly due to a decrease in pumping and intraday trading. Gas Connect Austria, is clearly positive for the good segment results.
The sales segment contributed negatively among others due to our existing cost for energy. And finally, a negative impact on our results is coming from the money on excess profits in Austria, Germany and Romania, totaling 172 million in the first half year. The impact of these insurance transactions on the key period in the first half year of '23 is as follows. EBITDA increased by 62.6% to €2.25 billion, and the reported group result increased by 57.5% to €1.287 billion. The adjusted group result increased by 28% to €1.4 billion, and the operating cash flow strongly increased to a level of almost €2.9 million. The free cash flow after dividends was strongly positive at a level of €927 million, and net debt decreased by 24.5% to a level of slightly above 2.9 billion.
Now let me give you an updated guidance for an average hydro wind and PV generation in the last two quarters of '23 as well as considering the opportunities and the reiteration of the group. We expect to report an adjusted EBITDA between approximately €3.8 billion to €4.2 billion, and we require a group result between approximately €2.5 billion and €2.3 billion. The payout ratio will be between 35% and 55%, and of the adjusted group results between 2.7 and €2.32 billion. The earnings forecast and the information on the expected payout ratio are, as you know, conventional or won't not being impacted further profitable energy policy measures to stem off some of the process at energy companies in Austria.
On the next page, let me go into more details on the hedging volumes and the hedging prices, which are quite highly relevant for our results. I think you all know, a €1 megawatt hour of plus or minus higher or lower average achieved price has a sensitivity of approximately €25 million in our EBITDA line. As of the 30th of June, we reached an average achieved contract price for our hydro generation of €176.8 and we have totaled approximately 88%. For '24, we have sold 44% of our generation volumes at a price of 155.6 and for '25. We have sold 37% of our generation volume at 140.7%. On a mark-to-market basis, with prices as of the 14th of July, the average achieved contract price for '23 are at €168.8, for '24 at €148.8 and for '25 at €135.
Now let me comment on some developments in the various business segments, and let me start with the title segment. At 0.95, the higher position, which, as you know, is an index quantifying the hydropower generation of the run-of-river power plants, was 5 percentage points below the long-term average and 5 points above the level of the first half '22. Production from annual storage power plants increased by 6.2%, all production from hydropower for overall increased by 947 gigawatt hours or 6.7% to slightly above 15 terawatt hours compared to the first half '22. Higher average achieved prices. The main reason for our increased EBITDA, however, a slightly lower contribution from flexibility products and the levels of excess profits had a negative effect in EBITDA. In total, EBITDA in the hydro segment increased by 62.1% to €1.984 billion.
Regarding CapEx our main hybrid projects, the 480-megawatt Limberg III storage power plant and the 45 megawatts Reißeck II pump pure power plants -- both projects are on time of the 11-megawatt Gratkorn run-of-river power plant project all on time and completion is expected in '24. In addition to the above, we started the 14.3 megawatts Stegenwald run-of-river power plant project where we have an expected conclusion in '25.
Now let me continue with the analysis of our own generation from new renewals. The new renewal positions, the index quantifying the generation for wind power and PV amounted to 1.01 in the first half of '23 compared to €1.04 billion in '22. Generation from wind power increased by 6.3% or 32 gigawatt hours and amounted to 546 gigawatt hours in the first six months of '23. More favorable wind commissions in Germany and especially new installations in Spain more than offset less favorable wind conditions in Austria and Romania.
Generation from PV amounted to 161 gigawatt hours in the reporting period stemming from PV installations in Austria, 2 gigawatt hours in Spain, 159 gigawatts hours. Now taking a look at the EBITDA development in the new segment, we see that the EBITDA increased to €109.2 million. In addition to the increase in volumes, mainly from our quarters in Spain, higher average ship prices contributed positively to this development. The chart also provides an overview on current developments in the renewal sector. Now on the next page, you see our sales segments.
Taking a look at the EBITDA development here, we see that EBITDA increased to a negative value of minus 143.2, the change in EBITDA view among other things, to a much better result from the valuation of energy derivatives in connection with future energy deliveries while a sharp increase in electricity and gas procurement prices had a counteracting effect. Focus delivered electricity and gas to approximately 510,000 end customers. That represents a decrease of approximately 18,000 customers year-on-year.
Now on the all other segment. The generation from thermal power plants was down by 462 gigawatt hours to 342 due to the decreased views of our Mellach electricity for old electricity and the strategic production was led to a declining electricity industry heating revenue. Positive effect from the valuation of energy derivatives in connection with future energy deliveries could not compensate for this and let a drop in EBITDA despite lower fuel consumption as a result of the reduced generation, the contribution from flexibility products decreased by €5.9 million.
The contribution from Kelag, the provincial utility of Carinthia increased from €5.7 million to €38.2 million as a result of better realized sales prices for the long generation, in addition, the heating and trading businesses also contributing positively. Finally, let me remind you that our CCGT Mellach was contracted from Austrian Power Grid for future congestion management. In detail, Line 10 is contracted from the 1st of October '21 to the 30th of September '22; and Line 20 from 1st of April '23 to the 30th September '23. In Q1 and Q4, we used Line 20 on a market-driven basis. The strategic power plant in Mellach is contracted by APG for the period from the 1st of April '23, again to the 30th September '23.
Now on the next page, on our grid segment, as you know, the grid segment consists of our regulated business, Austrian power grid as well as Gas Connect Austria, the EBITDA for the first half from the electricity group business according to IFRS was approximately €184 million, roughly the same as last year. As a reminder, let me also highlight that as of January 1, '23, a new regulatory period started, the regulatory system has been changed. E-Control, the Austrian regulator has had a new map for '23 and a lot the work into the work for existing assets and the rest in U.S. sales. The rec for in '23 for existing assets has been sated 3.72%.
The work for U.S. has been cited 4.88%. Therefore, the overall WACC for '23 will be 3.9. On top of the work at PG can receive an incentive rate bonus of maximum €12 million a year. The work for existing and some new assets for '24 will be set again at the end of '23 and will definitely reflect the higher interest rate environment, which we're currently in. A has appealed against the level of WACC, mainly because it reflects the historic development of interest rates and does not reflect the strong increase in rates since last year.
The new EBITDA guidance for the electricity growth to '23 based on the new regulatory parameters and the increasing regulatory asset base is approximately €360 million. The main reasons for the increased guidance are higher revenues from options. The planned amount of the regulatory can at the end of '23 will be approximately €419 million. Now with regard to the result contribution of as Connect Austria, we reported EBITDA of approximately €112 million for the half year. The main reason for the strong increase were higher revenues from the quality tariffs and lower energy costs.
The guidance for 2013 with regard to Gas Connect Austria, is approximately €140 million. On the next page, I will give you the nonrecurring effects we accounted impairments amounting to €15.4 million, stemming from an impairment of the CCGT Mellach devaluation of the trend of Austria pipeline target profit participation rights amounted to minus €0.8 million and had a negative effect on the other financial results. But we also had impairments related to the HalloSonne participation of minus €15.8 million and talk with minus €2.8 million in total amounting to a minus €18.7 million.
There's a reversal impairment related to our hydropower plant Ashta in Albania amounting to €6.3 million. In total, the effects on the financial results were €13.2 million, minus €13.2 million. After considering the effects on taxes and minorities, the nonrecurring effects on the group results level amounted to minus €20 million. Note shows the nonrecurring effects in the first half year of '22 in comparison. Now going through the key financial figures. First of all, the aforementioned developments on the EBITDA where we had an increase by 63.6% to €2.25 billion increased by 15% to €250 million, mainly due to the acquisition of Spanish assets and increased investments into the high voltage group.
The financial results improved from minus €15.7 million to minus €7.1 million. This was attributable to the higher earnings contributions from interest accounted for using the equity method mainly teller higher interest income, while higher interest expense is mainly caused by the assurance of [indiscernible] in November and the interest expense from the loans taken over from the Spanish companies acquired in the previous year had a counterbalancing effect. The group results increased by 57.5% to €1.287 billion. The group results after adjustment for nonrecurring effects was up 78%.
Finally, I would like to mention the decrease in addition to tangible assets in total from €588.1 million in the first half '22 to €311 million in the first half '23. The decrease is a result of the fact that in 2012 for Bon with an acquisition of a 70% share in on TV and for wind power projects, companies in Spain with a total capacity of 171 megawatts. On the bottom left, you'll find division in tangible assets of Gas Connect Austria and Austrian Power Grid.
On the next page, we're looking at cash flow from net debt. So, this operating cash flow strongly increased to 2.89 billion, mainly due to a significantly higher average price achieved for electricity as well as inflows from margining payments for hedging transactions in our electricity business, those were deposited with securing how do the exchange is a collateral for open positions and then basically come back with the prices coming down. These positive effects were partly offset by higher income tax and higher interest payments.
The free cash flow after dividends showed a positive development from minus €111 million to a level of plus €927 million, significantly higher operating cash flow and lower investments in property, plant and equipment were the less further positive development. Dividend payments, on the other hand, increased significantly compared to the previous year. Our decrease in net debt is due to lower financial liabilities because of the retain of shops and money market liabilities to hearing corresponding decreased to a level of 21.3% compared with 46.8% at year-end '22.
Now I'm coming to the end of our results presentation, and I would like to give you our earnings outlook. As always, at this point, I would like to highlight the sensitivities. As of the 30th of June, a deviation of plus/minus 1% in the generation from hydropower has an impact of top minus €10 million in the group results. a deviation of plus/minus 1% in the generation for wind power and PV has an impact of plus/minus €0.8 million; and a variation of plus/minus €in the wholesale price has an impact of plus/minus €2 million in our group result for '23.
Now our updated guidance for '23 is as follows: for bonds, expect reported and adjusted EBITDA of approximately between €3.8 billion and €4.2 billion and a group result of approximately between $2.05 million and €2.2 billion under the assumption of average hydro again and TV generation in the third and fourth quarter. For the financial year '23, VERBUND plans to pay out between 45% and 55% of our group results after the adjustment for nonrecurring effects that would be approximately between €2.07 billion and €2.2 billion. The earnings forecast and the information on the expected payout ratio, as I mentioned before, our contingent on, has not been impacted further by possible energy policy measures to scale up some of the profits of energy company.
Now with that, I would like to move on to our Q&A.
Question-and-Answer Session
Operator
Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Wanda Serwinokska with Credit Suisse. Please go ahead.
Wanda Serwinowska
Two questions for me, plus one request. So the first question is on the 2023 guidance. I mean the midpoint is unchanged despite a lower revenue coverage you would expect would have a negative impact. I know there was the upgrade to your grid EBITDA CMICs clearly stronger than we expected. But -- was there anything else that basically surprised you on the positive on the 2023 numbers?
Second question on the recent acquisition in Spain, I remember back in March, you guys impacted some assets in saying that the acquisition -- I mean, can you give us some financial operational data, which basically help us to believe that this client will be a different story, you can put some value creation there. And then you can request as always, it, if you could share the latest hedging in the hydro that will be reasonably appreciated. And if you could repeat the H1 at least follow that, I didn't catch that.
Peter Kollmann
Yes. Sure, Dane. I will start with the hydro. Our current hydro coefficient is 0.93. So when we basically take the half year hydro coefficient and resume on for the rest of the year, it would be 0.98. On the power prices, I can give you sort of the latest hedging levels as of the 21st of July, where we are hedged for 28% at a level of 176 million. So when we basically assume the mark-to-market for the open position we end up with €169 million.
When we look into '24, we are hedged approximately 53% and there we are hedged at 154, and as it happens, the open position crates 154 as well for 24 before. Therefore, the macro margin would be 154 for 25, we're hedged 37%. And there, again, we are hedged at 141 and the open positions and approximately at the same level. So the result of that we see a mark-to-market level there of around €140 million.
So as you see, we see a lowering of the power curve. And that is a result of the more gas prices -- and that is certainly a certainty that the gas prices need to be carefully watched over the next few months, particularly in the retail to see what impact the gas prices are going to have on the power prices.
Now on our recent Spanish acquisition in terms of the value creation, there were a number of comments on the price per megawatt hours, which we paid. The value creation for that asset for the wind asset in Spain needs to be seen, particularly in the form of hybridization and in the form of repowering. So we have due diligence. We have looked at the assets very carefully, and we have come to the conclusion that we have significant potential for repowering and also for hybridization. The repowering has more value effect, more value creation potential than hybridization. But at this point, we're not going to give more details than what I've just mentioned.
On the '23 guidance, the reason for the guidance has been mainly the power prices. As you know, the power prices always have the biggest impact on our results and our EBITDA. And with power prices coming down with 12% still unhedged. And with volatility, which we expect for the remainder of the year, that has flown into our discussions when we determine the guidance.
Obviously, we took into consideration of the fact that we have, as you have mentioned longer a new level of €120 for the second half of the year, which has come down from the €114 in terms of profits came in and we able to take into consideration the slightly better results from our grid.
Wanda Serwinowska
Just quickly follow-up on the H1 [indiscernible] power price, if you could just repeat I didn't catch it. And then on this Spanish M&A can you give us some financials of the existing assets? I mean EBITDA generation is something that we can basically work with. And then on the 2023 guidance, is there anything which is hard to see from the outside like a revaluation of hedges is something that we cannot really see from the outside that also impacted your guidance?
Peter Kollmann
No. On the '23 guidance, it's very transparent. What we have said there is nothing hitting, there are no surprises, which we, at this point, expect. And Randy asked me about which power price, the 24 million.
Wanda Serwinowska
No, no, H1 2023 achieved, I think it was 180 something. The power cases you guys, you captured in H1 this year. I think you mentioned it at the very beginning of your speech.
Peter Kollmann
Okay. Let me just go back to the....
Wanda Serwinowska
I will follow-up with the IR team later. That's fine.
Peter Kollmann
Yes, but I can even go back to the slide and give it to you right now. Yes, 176 million.
Wanda Serwinowska
Okay. Brilliant.
Peter Kollmann
Yes, welcome. Good. Thank you, Wanda.
Operator
The next question comes from the line of Louis Boujard with ODDO. Please go ahead.
Louis Boujard
Yes, good morning. Thank you for taking my question. Because then I will lead to -- maybe the first one to come back on the retail segment, which is still significantly negative. You have only 10,000 end customers and minus 40 in here in terms of performance. My question would be, if you disparate with your finance customers, would it have any impact into your sales segment performance?
Or do you have other commitments with external suppliers that would make it being only, in fact, to the number of customers that you have to sell in the end. And more precisely, if you have earnings commitment, what shall we expect for 2024 in terms of performance for this division. Do you have room to go back to a more normal level by 2024 with the current contractual situation that you can have in these divisions?
And the second question was with regards to Gas Connect Austria. I think that you touched it in the presentation that in I got everything in particular, it seems that clearly front-end loaded in terms of performance for the year 2023 compared to your updated guidance. Can you elaborate a little bit more on the reason, why is it that much whether that much costs for the remaining of the year in this division in terms of potential performance?
Peter Kollmann
Okay. Now let me start with the [indiscernible] segment. We have more linkage to external suppliers. So it is basically our own generation and the procurement is on a -- is on a basis that's similar to our hedging the procurement of the sales of the sales side is done through our generation. So therefore, if we if we decided to have lower customers because customers at the moment, produce losses, then that would not have that would not have an impact vis-a-vis any external supply relationships, if I understood your question correctly.
On Gas Connect Austria, the key influencing factor on the results there where the high energy cost for our for our stations, which compress the gas. The compression needs, require a lot of energy. And with the energy prices coming down, the cost for the compression obviously comes down as well, and that has given a boost to our results. And that is the reason why the results of Gas Connect Austria have come up. And your third question was as it again? Sorry.
Louis Boujard
I actually did not have a third question.
Peter Kollmann
Okay. Thank you.
Operator
The next question comes from the line of Piotr Dzieciolowski with Citi. Please go ahead.
Piotr Dzieciolowski
Just wanted to check on Spain. Can you tell us how much money spend in all of these acquisitions in organic CapEx so far? And what is the contribution we could expect from the Spanish able assets in let's say, '24 and '25. Just trying to acquisitions together and coming out with multiple on it, and then beyond the repowering and humiliation of the Sanitary synergies that you could quantify between the carpet and your existing operations, and it's what will be the peso.
Peter Kollmann
Could you repeat the second question again? I had to.....
Piotr Dzieciolowski
Sure. Is there any other synergies between the assets you bought you announced yesterday versus their assets and then the assets that you own already, whether this is a team combinations or MX synergies on the CPA providing to external customers. Are there any other synergies we could think about how this in portfolio.
Peter Kollmann
Yes, that's an important question. We -- the two aspects, which I would like put some light on. The first one is synergies in our operations. As you rightly said, we have accumulated assets in Spain, both on the solar side and on the wind side. And we believe that the combination of the production of solar energy and the production of wind can be combined into packages for our purchase agreement.
We think that is a very important feature in the future. You have seen the discussion around the back curve. And as a result of that, we also believe that a lot of future PPAs will take that into account and without that market cars will be forced to combine different production technologies in order to structure those PPAs. So that is the one side in terms of selling the generation in the most effective way.
And the other aspect is to try and develop operational synergies as much as possible between the various parts in terms of maintenance, et cetera, et cetera.
Piotr Dzieciolowski
And on the first question, like, can you provide your expectations still as the top or contribution from Spain and how much money you spend on our then combine it altogether.
Peter Kollmann
We are coming back, you were at the beginning, if I understood you correctly, you were asking about the EBITDA contribution for the asset, which we just bought, which was announced yesterday.
Piotr Dzieciolowski
No for all of the chain assets. So I just wanted to understand, you've been doing it for more than -- like last year, you've been buying a number of Spanish assets. And I just wanted to understand the end outcome of it in '25, which is how much money you spend in total? And what is the expected contribution to P&L
Peter Kollmann
Yes. I can give you an approximate number in terms of the EBITDA contribution in Spain, which is around €130 million, €140 million. But what I would like to mention, which is really important, is the following. When we made our acquisitions, yes, part of it was operating ourselves, but the focus has been on the pipeline. So what we have acquired, for example, in our project Labrador, was a relatively small amount of operating assets, that was very large pipeline of around 2,000 megawatts, which are -- which have a high probability, very high probability and around 2,400 megawatts of medium probability pipeline.
As a result of that, the acquisitions which we have made, we are focused on development and future generation and future build-out of PV and wind and less on operating assets when you look at the volume differences. The EBITDA overall coming from Spain, and that's an estimate because it depends on power prices and other factors, would be between around €250 million and €300 million in '26.
Piotr Dzieciolowski
Okay. And how much CapEx is going to spend to achieve these numbers?
Peter Kollmann
Well, the CapEx that's why I mentioned before, the CapEx might be is leading because the CapEx is.
Piotr Dzieciolowski
I was just trying to understand like you're going to move your spend EBITDA from 150 to 250, 300, so roughly more than doubling it you send the money profile acquisition. And you wanted to get to the 26% numbers you see in sent has been repeated in Spain year I can think it also flying in the high.
Peter Kollmann
I think it would be better than take it offline because obviously, I could give you a number now. But that number quickly confusing because our acquisition numbers always include the -- obviously, the operating assets and then separate amounts for the pipeline, which we value in a different way, i.e., high probability pipeline, we obviously value higher than more probability pipeline as a result of that when I give you the overall launch it might be confusing as a result of that, we'd be more than happy outside this conference call to go with you through the numbers in more detail.
Operator
The next question comes from the line of Ingo Becker with Kepler. Please go ahead.
Ingo Becker
I got two questions. First, on the generation price. I think the prices that you produced of 176 and also the 168 mark-to-market currently are above the cap. You've mentioned the capital lower apparently from 140 to 120, but sent the lower end of the range pre applicable or renewable investment stands. Could you just confirm what your final realized prices are for 2023 and '24 the hedge price of 165.6, 156. I understand up pretty sharp exactly the cap for [indiscernible] under the new cap rule, right, just in case the cap would get extended.
And that will be my second question, actually still the first one. We see a risk that the caps, which are meant to expire at the end of the year, will have extended what is multiple thinking here. And second question would be on your retail business, which has made €140 million EBITDA loss in the first half. How should we think about that? I mean first, would you expect that to be profitable again next year?
And is it a retail loss actually indicating that assuming you're not recovering the full generation cost at least in half year now. Does that mean that the generation profit by that amount that you should have actually recovered look too good this year in '23, and that was on next year?
Peter Kollmann
Okay. Now let me start with the with the extension question because there obviously is one we don't know, but where at this point, I would like to give you a judgment. We don't think that the €120 cap would be extended into next year. The reason for our assumption is that the rest of the European Union has already stopped the cash from -- by the 30th of June.
As a result of that, I think Austin the only country in Europe that has expanded the cap, has lowered the cap and extended the cap. Therefore, I don't think there will even lower or extended into '24. You never know. It's a political decision at this point of time to think so. In terms of the retail business, I mean, we are working very hard on bringing the retail business back zero or even sort of like getting a positive EBITDA contribution from the retail business.
The challenge is that there are that there is a lot of political pressure on the entire utility market in Austria, so not just on forums, but in all the others as well to lower retail prices, that has something to do with the inflation discussion with the media very much focusing on -- on the retail prices. There has been addressing a huge political discussion around energy prices.
As a result of that we need to absorb the lay of the land. And at this point in time, we need to show like all the others, prices that are loss-making for us. Now with the procurement costs coming down with power prices coming down, and keeping the level where we are, we should basically earn ourselves back into the positive territory. Will that be in '24? At this point in time, I don't think so.
It will be better than '24, but it will not be -- it will not be a plus. In '25, I actually think that we're going to see a positive contribution again for the retail business. I got design didn't miss anything in the train.
Ingo Becker
Just to your guidance of €3 billion to 2 billion, what met achievable generation price after all caps for the first and second half? Are you assuming there -- and for retail just briefly, when you say maybe 25% in here that might be fully back in shape only in -- when you look at the power forward curve, what do you say that the prices we are seeing for those years are being acceptable in the political arena. So when -- and meanwhile, while prices still are higher feeding through to customer build. I'm not talking about the energy component of the total tariff. You're accepting those losses. When you look at power forward getting 25, 26, they say about €100 by getting closer to €100 us base load at least. Would you say that is an acceptable level for the political arena?
Peter Kollmann
Yes, that's a good point and an interesting discussion. There is a lot of uncertainty around that. political discussion sometimes gets very emotional. It's very often driven by position. which have found a topic which a lot of people are interested in, which obviously concerns every single citizen. Therefore, it is a key topic.
It is also highly interesting for the media. And I'm not sure where the exact level is I mean the only point, the only data point which we have, and I'm not just talking retail now, I'm talking industry as well is the discussion which we had in Germany, which I also mentioned in our last conference call, where the discussion was around €60, €70. So basically, the German industry said in order for Germany to be competitive, power prices there need to be somewhere around 60 to 70 million. Now if there is a reference point of sort of like general acceptance, the €100 would still be too high.
However, people also get used to a new environment where energy prices are higher. So we're coming from a very low energy environment. The [indiscernible] then because of the war unbelievable numbers in terms of electricity prices, gas prices. And then, of course, also retail -- retail prices. And now it's coming down and will continue to come down.
But really it still leads to political discussions because the levels are still higher than what people are used to, to before the war remains to be seen and very much depends on. In my view, on opposition and very much depends on how much the media focus on it as well. And in Austria, don't forget we have actions in for '24
Ingo Becker
Okay. Great. And the net price?
Peter Kollmann
Yes, the price is around 164 million.
Operator
Your next question comes from the line of Olly Jeffery with Deutsche Bank. Please go ahead.
Olly Jeffery
Thank you very much. A few questions, please. The first one -- looking at your balance sheet, I mean if haven't very strong, we know path on our opportunities in the space. But it was really deploy. I begin that you're still looking for that a multibillion opportunity to buy in the platform?
Or do you think we'll continue to see peak mail acquisitions as care acquisition, but I wonder if you actually might need to consider post-recent dividend policies for a higher payout in order local balance sheet more effectively.
So it's not to get and the second question is just the initial guidance was based on the negative million derivative valuation of that. Initial there's an impact from that in business to the start of the year.
Can you just confirm that the current guidance for base in $300 million for the valuation effect. And if we also comment that actually if you had to recut that today, what that number would be that translation to 100 million in? And lastly, could you just explain -- in the first half rebidding very well in the start of the year. Our full year results you commented on quite material year-on-year while flash products are holding up much better than the business on those questions would be great.
Peter Kollmann
Yes, sure. Within the split for your questions, I'm going to talk about sort of the strategy in terms of our acquisitions in Spain and the flexibility products, and Andreas will give you sort of like the detail on the derivative numbers, which have an impact. Now I will start with the flexibility products. The flexibility products are now slightly better than we had anticipated when we had our last conference call. The reason for that is namely the pumping and the targeting, the parking and the tubing has been better than we had expected.
We also have slightly better results on the intranet trading, given the volatility. We have not seen any changes for the controller energy and concession management. Usually, you might remember sort of like previous years, where we had big wins on the concession management. congestion management has been relatively stable within the last sort of like a few months both in terms of our view of the full year. And the pumping and the travel has, as I mentioned before, slightly better.
So the flexibility products, we think that it is going to be obviously much lower than in '23, where we had where we had around €480 million contribution in flexibility products, it's going to be much less. It's going to be around 250 for much less than 22%.
But that is still a very high number when we remember sort of like the normalized contribution for our flexibility products which were anything between sort of like €100 million and €150 million before we had a very sharp increase in power prices. In terms of our strategy for acquisitions, it is really sort of like a combined strategy of looking at large platforms -- to give you an example, we have recently looked at a very large platform, which would have covered Spain, Italy Germany and a few other countries, but mainly Spain, Portugal, Italy and Germany. We have come to the conclusion that we would not buy a platform because we thought that to put it in was too expensive. The pipeline was gene as two channels in terms of the probability of implementation.
So when we look at Spain, we look at both. We look at small bolt-on acquisitions, which we think fit into our portfolio both on the solar side and on the wind side. And sometimes those can be relatively small acquisitions when we view that they fit very well. but we continue to look at large platforms There, on the large platforms, we look particularly not too much on the operating assets, but there, we look very much on to the pipeline and the -- and how attractive the pipeline is -- and I would not exclude that we say within the next 24 months, if an opportunity arises.
Currently, we're not working on any deals -- on any large deals. But if an opportunity arising is certainly something we're going to look at. As we feel that the diversification into wind and solar is an important one for the [indiscernible] and at the same time, as I mentioned before, we feel where the combination of hydro, solar and wind in order to be able to package interested PPAs, also is very attractive to us.
With that, I will hand over to Andreas, who is going to give you other details on the derivative valuation.
Andreas Wollein
So you know we hardly impact coming from the derivative valuations basically zero. And what we have currently reflected in the guidance for the full year based on our current, let's say, trading positions and the loan positions we have is a minus of around €85 million for the full year guidance.
Olly Jeffery
I think you have adjusted [indiscernible] in the current full year
Andreas Wollein
Sorry, once again?
Olly Jeffery
I just confirm that you adjusted therefore...
Andreas Wollein
Yes, as to go much comparing that.
Operator
The next question comes from the line of [indiscernible]. Please go ahead.
Unidentified Analyst
I have one more for bookkeeping and the very general question. Can you remind us also to figure what the tax and revenue cap impact is included in the guidance. Maybe I've missed that amount in call. The second question is, what's your experience with in New Year's hydro conditions. So given that your access to long-term lines, I'm sure you did the math already. Can you give us some info on that?
Peter Kollmann
Sure. I will start with [indiscernible]. We have over the years, worked very closely with science institutes and with universities to look at the long-term hydrological conditions in Central Europe. Most studies have come to the conclusion that Central Europe is lucky in a way to have very stable hydrological conditions.
However, they have come to the conclusion that there will be shifts when there was more snowfall during the winter time. And then snow melting that will change to more rainfall during other periods. As a result of that, there will be almost like an economization of water conditions in Austria throughout the year. But the overall level according to those studies will not come down.
What we have recently seen, not through our studies. But basically, by observing what's happening in the world is that, obviously, we take one record after another particularly now. What I have heard from scientists on that phenomenon is still working on. Is it is a part of amino? Is it a part of CO2 emissions. What is the greater influencing factor?
Most have come to the conclusion that amino is a higher influencing factor where again, and this is important, the Central European region, i.e., particularly the mountains region Austria to Switzerland, and the southern part of the area seems to be less influenced. As a result of that, we are -- we think that over the next 50 to 100 years, hydro conditions in Austria are going to be similar to what we are currently seeing.
In terms of the first question which you have had, we -- for the full year, we have approximately 410 million in Austria. As a result, also often lowering from the 140 million to 120 million, we have we have zero from Germany and we have approximately 12 million from Romania. So overall, we have slightly above 420 million for the full year. But there is one important point.
There is a possibility and business transit government has already said -- they have not finally decided, but they have already said that future investments, future investments are investments done in '25, '26 in Austria, can be can be used to balance out that figure. And if that were the case, those investments would amount to around -- the investments that can be used to the amount to around €180 million. And that would obviously reduce the amount which I've just given you. But that is an opportunity. That's an upside. We think there is a good chance for the sales side, but it's still being negotiated with the ministry.
Operator
Today's last question comes from Thibault Dujardin with Société Générale. Please go ahead.
Thibault Dujardin
I had a question coming back to on the [indiscernible] on the offsetting amounts. Just to be sure if you could anticipate consumer remaining for 2022 of the sitting amount for our investments in renewables and potentially from '23? And second point concerning grid returns, if you could give us some impact on the calendar for the control updates on the return and then the legal challenge calendar as to?
Peter Kollmann
Okay, I will ask Andreas to give you the details of the quarter which we have had.
Andreas Wollein
So, we look at to the CapEx, which we can also do in 2023. So basically, that's historic CapEx for this regulation. I think it's €350 million we can deduct, so we can balance from the [indiscernible]. So that's the number for 2023. And with regard to -- I think the second question as far as I understood with regard to the great returns. So as you know, the regulator has changed the system.
So., we had -- since the beginning of the year, we have a regulatory return in the electricity grid of about 3.7 for older assets and 4.8 for new assets. So, the mix for this year, it's around close to 4% and the regulator will set up or will define the new work for all the old assets and for new assets at the end of this year.
There is no update yet, but if we would follow a way of calculating the rate cost of capital the CapEx from the new investments will be more than 6%, around 6.3% and for the older assets directly increased to a level of around 4.2%. But as I said, it's not fixed. So, utility on the regulator will set the tariff, I think in Q4 and Q3 beginning in Q4.
Peter Kollmann
Yes, as you add is there are -- with respect to some of your questions, which you have said before, there are a number of uncertainties in the political discussion. There are obviously uncertainties around the skilling of profit, something in as in terms of the expansion. Then of course, there is uncertainty in an open discussion in terms of how much of future investments we can use. That is something where, obviously, as I mentioned before, we are negotiating.
But where we have -- where we don't know what the outcome is going to be. And then, of course, on the Austrian power grid, there is the open question around what the regulated return for the investments will be. And that is something where we are working extremely hard on making sure that we control the regulator takes into consideration, number one, the huge CapEx, which we have in the regulated system; and number two, the fact that interest costs have come up quite dramatically.
So, there's a point which where we have a very clear stance and where we have a very clear position, and we need to convince the regulator to react accordingly.
Operator
That was the last question. I hand back to Peter Kollman for comments. Mr. Kollman.
Peter Kollmann
Yes. Thank you very much for a very interesting discussion, as always. And I look forward -- well, first of all, I wish you a great summer and nice holidays, and I look forward to our next conference call in about three months.
Thank you very much, and goodbye.
Operator
Ladies and gentlemen, the conference is now concluded. And you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.
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VERBUND AG (OEZVF) Q2 2023 Earnings Call Transcript