00:00How is this conflict in the Middle East impacting your business?
00:04Well, first, thanks for having me.
00:05I think the first thing to say is obviously it's introducing a lot of volatility.
00:09And so we're seeing something that is at the early stages similar to what happened back in 2022.
00:14But I think really the important thing is that this just highlights how important it is to be diversified from
00:20an energy perspective.
00:21And so one of the things we've been advocating for many years now is the investment, for example, in renewables,
00:25which is much more insulated from these type of exogenous shocks.
00:29And so for many years, we've been a leader in the clean tech space.
00:32We've been investing in renewables both in Europe and in the U.S.
00:35And you have actually a fantastic example in Portugal, which is more than 75 percent renewable generation
00:41and which managed to navigate through the crisis back in 2022.
00:44And so I think we'll also navigate through this crisis basically as a result of having a lot more sources
00:49that are not exposed to this type of volatility in the market.
00:52To your point, Europe is vulnerable.
00:53We don't have the stockpiles of energy.
00:54We know that inventories around gas are low.
00:57Oil, of course, is an impact.
00:58We import significant amounts of oil into Europe, into the U.K. as well.
01:02Are you hearing from investors?
01:04Are you hearing from governments a greater urgency to invest in renewables as a result of this conflict?
01:09Do you expect greater inflows?
01:11Do you expect more investment?
01:12Do you expect more interest?
01:13Yes, we do.
01:14And that's something that we've been seeing actually over the last couple of years.
01:16As I say, going back to 2022, it became very clear that the issue around energy independence,
01:22diversification, affordability and competitiveness, all those issues are very conducive to actually investing more in renewables,
01:29where you actually can take advantage of your natural resources without having to import fossil fuels from outside.
01:34So we've been seeing that push, and we think that will be just strengthened really by what we're seeing today.
01:39So if the war means the relative economics of wind and solar have improved dramatically, how fast can you fulfill
01:44that demand?
01:45Listen, we've been pushing to invest two, three times faster than actually what's been happening in the past.
01:50I think one of the big bottlenecks that has existed over the last couple of years has been a lot
01:55of the administrative and bureaucratic,
01:57let's say red tape, that a lot of times makes it difficult to actually build out these projects.
02:02And so we've been saying and advocating you need to be much faster in cutting the red tape,
02:06making sure that you can fast track these projects so that you can actually reduce that energy dependence on fossil
02:11fuels.
02:12And how exposed are your supply chains to the conflict and the closure of the Strait of Hormuz effectively?
02:17So more than 90% of our generation is actually renewables, either hydro, wind or solar, and batteries.
02:23So our exposure is actually relatively limited.
02:25We are also very low risk because we have a lot of long-term contracted revenues,
02:29either from our networks business, which is totally regulated, or our sort of PPAs with our renewable sources.
02:36So actually from a risk perspective, we are relatively de-risked from this type of conflict.
02:39So you paint a picture there of quite a bit of visibility then, which sounds like a positive.
02:45Many businesses probably don't have a lot of visibility right now.
02:48I noticed, I think just recently, you've been tweaking your CapEx guidance.
02:52And I wonder what your appetite for CapEx looks like right now.
02:58On the one hand, a lot of volatility, but on the other hand, you're in an industry that maybe is
03:04structurally set to benefit from that volatility.
03:06So what do you do around CapEx with that in mind?
03:09So we have over 12 billion euros projected to invest over the next three years.
03:13And most of that is going either into networks to make them more resilient, or going into renewals, as I
03:18say, into the U.S. or into Europe.
03:20I think it's not just the issue around volatility.
03:23One of the big macro trends that we're seeing is just an increase in demand for power coming out of
03:27AI data centers.
03:29All of that is driving that demand.
03:31And so we are seeing tremendous opportunities to actually invest, to supply that power for those AIs.
03:37So I think it's actually a great time to be in the sector because you're not just having all of
03:42this demand, which is obviously positive,
03:44but I think it's also very plugged into increasing this energy independence.
03:48So a number of structural shifts then playing to your advantage.
03:52I wonder, the conversation in the United States around renewable energy is so influenced by politics right now.
03:58There's a lot of that, and there's a lot of commentary from the White House specifically on renewables.
04:03Does that just absolutely have no impact here in Europe because of the things that you've talked about,
04:08because there's European commitment to energy security and because of AI build-out?
04:13Does that mean it just doesn't cross the Atlantic?
04:15I don't think it crosses the Atlantic.
04:17But to be fair, even in the U.S., I think there's a difference between actually what's happening on the
04:21ground and some of the rhetoric.
04:23On the ground, what you're seeing is a tremendous amount of demand for power.
04:26And actually, the type of supply that can be deployed the fastest and sort of the most competitively is actually
04:31solar and batteries in the very short term.
04:34So we're actually seeing a tremendous amount of demand.
04:36It's one of the best times actually we've seen over the last 20 years to invest in the U.S.
04:40in this space precisely because of this demand.
04:42So I think I would separate some of that sentiment and rhetoric from actually what's on the ground.
04:46And to be clear, that's really interesting in terms of the demand picture in the U.S., given the politics
04:50that Anna talks about.
04:52Is the federal government not getting in the way then?
04:54Because they've been getting in the way of renewable turbines.
04:56We know that.
04:57Are they getting in your way at all in terms of meeting that demand?
05:01So one of the things that was actually established last year with the big, beautiful bill was this framework,
05:07which essentially they kept out till 2030, of support for renewals.
05:12Primarily, I'd say solar and batteries, which continues to be sort of a big part of our business there.
05:17So the truth is that we are continuing to see that regulatory stability there, and they are not actually getting
05:22in the way.
05:22So if you actually look at the numbers, there's a tremendous amount being installed as of today and expected to
05:28be installed over the next couple of years.
05:29And you've touched on AI, and clearly the U.S. is leading in terms of the build-out of the
05:33infrastructure and data centers around AI.
05:35Give us a projection.
05:36In five years' time, or two years' time, what percentage of your revenues come from serving data center demand?
05:43Well, from our renewables business, it's either directly sort of our biggest customers globally, our Amazon, Microsoft, Google.
05:50Those are our typical customers, but also utilities that themselves are having then sort of this additional load coming through
05:56from the big tech.
05:57So it's actually a very significant percentage.
05:59But what I'd say is that that demand is driving 2%, 3% CAGRs, compound annual growth rates, over the
06:05next five, six years plus.
06:07So that's a very attractive environment to be investing in.
06:09And that's true on the renewable side, but it's true also on the network side.
06:12And so just to give you one very interesting statistic, in Portugal, for example, we're actually seeing a huge amount
06:17of investment as well in data centers.
06:18Just one data center in Portugal is going to represent 20% of Portugal's consumption.
06:23So over the next couple of years, you're going to see that really drive that demand in the country.
06:29Given all of these changes to the backdrop, do you still hold to saying that there won't be any M
06:34&A?
06:35Listen, I think we are very comfortable with the plan that we have.
06:39We think it's a plan that is solid, built on organic growth.
06:43As I say, very attractive investment opportunities.
06:45And so, you know, we are steering our path.
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