Snam S.p.A.

Thank you. Good afternoon, ladies and gentlemen, and welcome to Snam’s first half results presentation.

We’ve seen a strong start to the year. CapEx has significantly grown, reflecting the ramp-up of our investment program as well as a dampened operational activity in the first half of last year.

One of the drivers of our investment plan is digitalization. Here, we have the objective of becoming the most technologically advanced gas TSO in the world.

We reached an important milestone in our digital transformation program with the inauguration of the Bologna’s TecHub in July. You’ll find some detail on this in the backup slides.

We’re also seeing a recovery in gas demand, which rose by 10% in the first six months of the year. Thanks to rebound in industrial production, power generation and cooler than usual weather.

On the regulatory front, the first consultation document on the WACC formula has been published by ARERA. Changes to key parameters have been proposed, including the risk-free rate, country risk premium and the way to calculate the cost of debt.

Depending on how it will be applied, the formula gives rise for a wide range of potential outcomes, including the possibility of a significant cuts. It will now be a consultation period we expect an intermediate document by October and the final release by year-end.

Hydrogen’s momentum continues to increase. And we have dedicated a slide on how policies and scenarios are evolving.

We’re continuing to build skills and knowledge in this field, leading projects that test hydrogen’s use in decarbonizing rail transport, ceramics, glass making and steel sectors. In May, we successfully carried out the world’s first test of a 30% hydrogen natural gas plant in the forging process used in industrial steel-making in Milan.

We have also been awarded grant by the Innovation Fund to bid an electrolyzer plant connected to a waste energy facility in Russia. Our subsidiary, De Nora, a global leader in sustainable technologies continues to show strong growth while increasing its H2 backlog.

It is ideally positioned to become a key player in the hydrogen ecosystem, thanks to the credibility and track record both of De Nora itself and of its joint venture with the German group Thyssen, which is involved in the Neom project in Saudi Arabia with the target of 2 gigawatts of electrolyzer capacity. We’re starting to discuss possible options to crystallize value from our minority investments and support De Nora in the next phase of its growth.

Another key source of value creation comes from the optimization of our financial structure. Average cost of debt is now below 1%.

All the funding of the first six months of 2021 has been based on sustainable finance instruments, bringing it to around 60% of total available funding. Our financial results in the first half of 2021 were very strong.

EBITDA benefited from the contribution of higher tariff RAB, thanks to our investments in our infrastructure and ILO D&A. Our new businesses grew by €5 million versus the same period of 2020, a significant acceleration compared to first quarter 2021.

Financial charges are down, thanks to our team’s excellent liability management capabilities and our continuing treasury optimization measures. Income from associates is up €29 million compared to last year, benefiting from a perimeter effect, including ADNOC and De Nora and from the full year contribution of TAP.

These effects are partially offset by the decrease of Austrian associates, which was affected and that’s for the lower unitary tariffs and the reversal of the extraordinarily strong results in the previous years. Net profit was up €57 million, thanks to the strong operational results, lower financial charges and the contribution from associates.

The strong results achieved in the first half of this year mean that we can confidently confirm our full year net profit guidance of €1.170 million confirming the guidance. The role of green gas in the energy transition is gaining traction globally and in Europe, with the recovery plan and the Fit for 55 EU package.

There is finally growing consensus around the role of hydrogen and biomethane to decarbonize the hard-to-abate sectors in particular and to meet overall climate targets. A significant share of the Italian recovery plan will be dedicated to areas in which Snam has built strong expertise and capability.

In Europe, the Fit for 55 package introduces specific targets for green hydrogen and the industrial and transport sectors already by 2030. Half of the hydrogen currently used in the industry will need to be green and 2.6% of the energy used in transport will come from hydrogen.

At the same time, forecast for the growth of the hydrogen market are now increasing. The IEA has published a Net Zero scenario with 850 gigawatts of electrolyzer capacity by 2030.

While the most recent Bloomberg Green scenario envisages 1,900 gigawatts. The direction of travel is clear, and thanks for leadership in key energy transition technologies in hydrogen and our execution capabilities, we’re very well positioned to take part in this investment cycle.

We’ve identified around 1 billion of projects aligned with the recovery funds, in particular, in the use of hydrogen in the hydrogen valleys, rail and transport hard-to-abate sectors, the development of hydrogen supply chains and R&D. These projects will be selected to receive funding through state tendering processes and some will require operating support to be viable.

We will be working on some of these projects in partnership with other groups and the details of the incentives and the tendering processes are not yet available. We have also been selected as a direct partner in the first two hydrogen related waves of the IPCEI, which are the important projects of common European interest regarding hydrogen technologies and hard-to-abate sectors.

This is a program that aims to support strategic value chains in Europe and allows member states to finance up to 100% of the funding gap of projects in R&D or in their first industrial development. I will now hand over to Alessandra for a closer look at our first half results.

Thank you, Marco. Net profit for the period was €635 million, up €57 million versus the same period of last year.

This was mainly driven by the growth in EBITDA core by more than €50 million due to higher regulated revenues, thanks to the continuous growth in the transportation business related to the ongoing investments and the commodity effect due to the recovery of the gas demand in 2021 and also to the cold weather in April and May. This was only partially offset by the ongoing reduction of input-based incentives.

Regarding the storage business, it benefits from the release of fast balance sheet items and a smaller contribution from input-based incentives. Moving to the core – the cost – lower cost, in the core business were due to decrease on the fixed side related to higher capitalized costs.

And the program – continuous program of our efficiency program, partially offset by higher labor costs. The decrease in other items was linked (Technical Difficulty) counterbalance in the second part of the year as well as higher costs for business development and (Technical Difficulty) The contribution of new businesses was positive for €5 million this was due to the strong contribution of our energy efficiency business due (Technical Difficulty) into the non-consolidated Renovit perimeter.

This was partially counterbalanced by the continued investment in our H2 capabilities, our sustainable mobility business and the overall platform cost was lower-than-expected ramp-up of our biomethane business, which as explained already in the first quarter, is mainly due to the delays in authorization processes, some – delay in some plants realization and rollover effect of COVID impact from last year. And also, finally, for a small part of the effect of very strong global solution performance in the first half of 2020.

Lower net interest expenses of €17 million were due to the lower cost of debt attributable to the positive impact of our fixed liability management exercise, treasury management optimization and natural bond rollover effects replaced with cheaper and new issuances. The increased contribution from associates is due to a perimeter effect with the contribution of ADNOC gas pipeline and De Nora and the positive contribution of TAP that in the first half of last year was loss making.

These increases are partially offset by the expected decline at DESFA and TAG that Marco referred to. The lower performance of DESFA was mainly linked to a lower applicable tariff, whilst the decrease of outturn associate was due to the new regulation in place from January 2021, non-recurring items and the compensation in the first half of last year due to the end of the regulatory period.

The increase in taxes is essentially due to higher earnings before taxes. As you might have seen in the first half of this year, net profit benefits from a positive one-off component adjusted of €255 million related to the realignment of the differences between the fiscal and book value of fixed assets.

This is possible paying a substitutive tax of 3% in a maximum of three installment, while the amount of the alignment is €1.2 billion for transportation business to be recovered over the coming years, and you will find more details in the back half. Turning now to our cash flow.

Cash flow from operations for the period amounted to €556 million, including €379 million of working capital absorption, of which €364 million related to balancing and settlement activities, €105 million of settlement, mainly related to reabsorption of 2020 items and €249 million of balancing activities affected by cold weather and that will be reabsorbed in the next month, most likely in the third quarter. Deposit contribution of tariff-related items were €69 million and other working capital items of which we note the growing absorption of working capital related to the Ecobonus effect that goes hand-in-hand with a strong performance that our energy efficiency platform is having, the contribution of net tax payable, and the absorption, mainly due to VAT on receivable that is expected to be reabsorbed in the next couple of years.

On the net investment and M&A side, these includes CapEx and CapEx payable and the effect already commented in the first quarter, mainly related to the inclusion in the perimeter of De Nora, the transactions on the energy efficiency, all showed cash in and CAG true up. Other outflows for the period have clearly been the dividend paid equal to €795 million.

This led to a net debt at the end of the first half of slightly more than €14.148 billion. We confirm our full year 2021 net debt guidance at circa €14 billion with neutral tariff-related and balancing working capital effect.

Moving on to the non-debt structure and reduction in the cost of debt in the second quarter of 2021, will further strengthen our financial structure by leveraging on another transition bond issued in June, with a coupon of 0.625%. And we’ve also finalized a new EIB loan aimed at financing our energy efficiency projects carried out by Renovit.

Moreover, we have started the second half with new ESG funding signing this week, new term loans linked to ESG KPIs for overall €360 million. There are no refinancing needs for remaining part of the year, while bond maturity profile is well spread over time.

With respect to treasury management optimization, we continue to exploit the good market condition, which allow us to fully utilize our Commercial Paper Program and a large use of uncommitted credit lines, both at deeply negative yields. On sustainable finance, ESG factors represent a crucial element for our financing choices and our financial structure.

As such, funding for the first six months of 2021 has been entirely based on sustainable finance instrument with an overall sustainable finance component reaching 55% of total committed funding at the end of the first half. Thanks to the recently signed ESG loans, this percentage has further increased to close to 60% at the end of July.

Finally, in May 2021 and for the third consecutive year, we reached the ESG target for our sustainable loan KPIs to achieving confirmation of the margin shutdown. Thanks for the attention.

Marco, I am now ready to answer your questions.

Hi, good afternoon, everyone. Thanks for taking my questions.

I’ll keep it to two given we’ve got busy after need a conference call. So just firstly, I guess there’ll be lots of questions on this.

But on the allowed return, just a very specific one. I guess now we’ve seen the initial documents.

We probably have a rough idea in our heads of what the worst case scenario might look like? And you alluded to that in your opening comments.

I wondered to think about specifically the dividends, now that you’ve seen the initial proposals, do you feel that the current dividend policy is secured under a worst case scenario here? Or would you be willing to say that at this stage?

Or do you think the ranges are still too wise at the moment? That’s the first one.

And then the second one is on what – again, what you touched on earlier about crystallizing value from your portfolio of minority investments. And I think you mentioned that in the autumn of last year initially.

And I guess, what can we expect in terms of timing here? Or what are you – is there sort of a timing block here?

Are you waiting for something to happen? Is there a contingency somewhere that’s driving the timing of this?

So just interested to know when we could expect that to be announced? And whether you’ve got any update on exactly what kind of structure we should be thinking about for that?

Many thanks.

Thank you, Harry. So as we look at the dividend policy, and you’ve been following us for some time, we – over the last two years, we’ve been managing to both increase the dividend in absolute terms and decrease the payout.

So as we look about the worst case, which, at this point, we have the same information that you have. We read the consultation.

That’s where we are at. We will see how things evolve in September and October.

But as we look at our payout, it’s in a very comfortable place. So I think we can absolutely confirm our dividend policy with its, let’s say, embedded growth.

And we – when we originally planned the Italgas spin-off, we were around 90% payout, we’re now at 75%. And so I think we have very strong headroom there, and our policy is confirmed and more, let’s say, very serene when it comes to our dividend because of our EPS growth has significantly outperformed our DPS growth.

When it comes to crystallizing, just to be very clear, my comments were referring only to De Nora and we plan to give you more information around the plan period. De Nora has significant upside and growth potential from what – some of the numbers I shared around the electrolyzer growth projections.

And this gigafactory project that we’ve, let’s say, been preliminarily awarded on the – it’s that would be De Nora’s job to do that. And the De Nora’s JV itself with Thyssen is also enjoying very, very attractive growth.

So that’s the asset I was commenting on. And hopefully, we’ll be in a position to give you more granularity around timing and when we present the time in November.

Got it. Many thanks.

Thank you.

Hi, good afternoon and thank you for the presentation. A follow-up question on the ARERA – ARERA’s proposal.

So maybe putting the question in slightly different terms. In the case that the regulatory cap is at the lower end of the range, what would be its non-managerial decision to maintain financial stability.

So including in that definition, both dividends and CapEx. So what we may expect from the management of the company in that, that regulatory goes at the lower end of the range?

And the second question is related also to the consultation document. As you said, there is a wide range of possible outcomes.

Can you share with us your technical comments to ARERA to improve the document? And the third question is on the – you can update us on your latest views on the possible benefit for Snam from the EU funds, still, the tendering process are not yet available, but if you can give us some initial thoughts on the potential benefit for Snam that would be great.

Many thanks.

Sorry. I was on mute.

Thanks, Javier. So as we think about the dividend policy as I mentioned as a fixed with its embedded growth.

And then we have that flexibility, you mentioned on the CapEx, we don’t have an issue around, let’s say, cash flow flexibility. What we – and so we wouldn’t be cash constrained for the CapEx.

However, as we think about our CapEx profile, too many levers and here also answering your second question. We have three things to take into account.

First of all, the absolute WACC outcome, that would be a factor of how attractive certain regulated investments are. The second is around the discussion about replacements, how accretive or non-accretive replacement CapEx could be.

As you know, we have an ongoing dialogue that started in 2019 with the regulator, hopefully, will have news after the summer and by the plan, even if it won’t be yet definitive news, but some news. And the third is really around your second question, which is how these tenders will be structured, what type of incentives will be offered.

We are surprised to see that some hydrogen applications are already in the money even big incentives, even without incentives. CO2 prices are on the rise, which makes the kind of the funding gap smaller.

But really, this is a process that has stopped. And so the – this is true for all the kind of Fit for 55, the whole of Europe.

And Italy still have to build specifics around the tenders, the incentives, the schemes. I think on biomethane, we will see quicker action, perhaps in hydrogen, just because it’s building on what has essentially been already successful first biomethane, the crew.

All these tenders have to go through European approval process or indeed most of them. So we will update you as we see these tenders on how much of that can translate into our own CapEx, and we’ll be presenting the new CapEx plan linked to all of this in November.

When it comes to the EU funds for the IPSA because when we look at the current electrolyzer markets, the factories that are in the Markets Day are subscale and not very efficient. And we know most of them were in dialogue with many of them.

As you think about a gigafactory, it’s almost again already in the money. So the funding will depend on the funding gap, and that’s what we’re working on.

I hope I’ve answered all three of your questions, Javier.

Many thanks.

Hi, good afternoon. Thanks for presentation.

I have two questions. The first is on the WACC review again.

You’ve commented a bit in terms of the range that you could have in the near-term on the WACC, and a lot of people seem to be focusing on what the near-term cuts to the allowed returns, which obviously depends very much on the measurement periods for the cost of equity parameters and how quickly the changes to cost of debt is a phased in. But over time, the new framework will result in quite different allowed returns to the last one.

Do you have any comments that you could share to us in terms of how you feel about the more structural changes and approach that the regulator is suggesting, particularly on the cost of debt. Are you happy with those changes?

Or do you feel like that’s a step in the wrong direction in terms of how the regulators going around things? And then the second question is totally apologies, unrelated to the presentation.

But I was wondering, there seems to be a lot of debate at the moment around hydrogen and storage and what storage facilities are suitable for hydrogen and whether or not operators gas storage might have to develop new sort cabin storage in order to meet the demand that’s out there. Could you share some thoughts for those in terms of what you’re thinking at the moment on storage?

And whether you think your existing storage facilities would be suitable hydrogen or whether you might have to new ones? Thanks.

So when it comes to structure, I think there’s too many moving parts in this consultation. So I would – I don’t have a view on the structural intention behind these proposed changes.

Some aspects are even not bad about some of the proposed elements for change. And so the only certainty I have is that now we’re in an incredibly low spread and kind of risk-free environment, which may not last that long.

So I agree with you that there’s a different approach to kind of near, medium-term and longer term. Directionally, we don’t see the returns going up in any way.

And it’s just a question of how much they go down even structurally in the longer term. Regarding the storage.

Stogit is a world leader in gas storage and Stogit deserves to become a global leader in terms of capabilities. I’m talking about, not about reach in the hydrogen storage as well.

And I would say, in energy storage, more generally, the interplay between electrons and molecules will disappear with a lot of power to gas storage related opportunities. We want Stogit to maintain this kind of technological leadership that we have, and that’s allowing us to even consult and offer our services to other bigger companies in other geographies.

So we are building capabilities. We are looking at technologies.

CCS is going to be a big part of the decarbonization efforts and Stogit has, let’s say, the skills that are needed to store our CO2 underground is not that different from storing CH4, which is methane underground. There’s also some cutting-edge ideas like storing CH4 and then stripping it from CO2 to produce low hydrogen.

And then when the hydrogen comes back to the store added back the CO2 to recreate synthetic methane. There’s also ideas to build rock carbons that are still cheaper than building above ground steel facilities.

So there is a lot of new technologies coming up. I think storage will be the new frontier of the energy transition.

I think Snam has built a lot of new capabilities that can be added to the existing legacy kind of below the ground engineering and reservoir management capabilities to really become a leader in this field. So thanks for the question.

Thank you for the answers.

Hi, good afternoon, and thanks for taking my question. My first question is related to Slide 4 when you highlight the push to the decarbonization from the Fit for 55 package.

This is mainly based on pushing decarbonization of transport. So you highlight the opportunities for biogas and infrastructures related to green gases.

Is it would be reasonable to assume that in your next business plan, there would be an acceleration in the CapEx related to these businesses. And if you can elaborate on the opportunities that could have related to the green gases?

Second question is regarding on the guidance that you reiterated, considering the growth and net profit level in the first half, it seems that the guidance looks a bit conservative. Could you elaborate a bit on the drivers in the second half if you see some reason for a deceleration of the growth that we saw in the first half?

And last one, just on detail on results. So you mentioned this release of balance sheet items, which had an impact on P&L, if you can highlight the impact on revenues and EBITDA that you had in the first half?

Thank you.

Okay. I’ll take the first two, and then Ale can integrate on the guidance if I’ve missed something and then answer the third question.

So on the Fit for 55, in general, I would say, on the new businesses. In the current plan, we have – we don’t have a lot of CapEx related to these businesses.

We have some, as you know, there is significant upside potential. And as I mentioned, depending on the final WACC outcome.

And depending on the substitution, how we settle on the substitution incentivization, let’s say, we had options to move more CapEx from the legacy activities to the new activities. That would be preserving the current risk profile trying to get either government incentives or offtakes to support that.

The EPS being extended to new sectors is already a big facilitator of the energy transition projects. On the CapEx for biomethane, that’s the most likely to increase.

So I would rather talk about the CapEx altogether when we look at the new plan. Certainly, the role for green gases that was absent from the general discussions now very firmly in the documents and all the discussions that are taking place.

When it comes to the guidance. So when you compare the H1, let’s say, outperformance with the confirmation of the guidance.

First, we are now more confident in the guidance, even more confident given the results. In the first half, we had positive effects that are not replicable, as we said, like the €17 million release of the past balance sheet items.

There’s some phasing on costs that have been postponed to the second half. There is a usual increase in the D&A, for example, in the second part of the year, that’s worth around €15 million when assets enter into operation.

And the excellent, really excellent performance on liability management and financial charges that was achieved in the first half is going to be difficult and possible to replicate in the second half because of the higher average debt that we have, positive, let’s say, treasury management operations that are not necessarily replicable. And potential long-term funding that could be raised in the second part of the year.

And when we look at the associates, you also have to take into account that some associates are not linear over the year. They have lower OpEx in the first half, again, a question of phasing or higher revenues in the first half, like, for instance IUK.

So I’ve given you maybe too much information. But this is the kind of level of granularity that we’re looking at, and this is not a good time to be increasing the guidance.

Ale on…

Yes. When it comes to the past balance sheet items, I was referring to what Marco referred to.

So there were old provisions that are related to the storage business that can – are now not necessary any longer and therefore they’ve been released. So it’s a very boring action that we took because there is no reason to keep those provisions that were more than 10 years old.

Thank you.

Good afternoon everybody. Two questions on my side.

The first regarding the introduction of TOTEX, the regulator kick off this process from the next regulatory period. So in 2024, there could be some risks in my view for gas networks relating to the topics of the capitalization rates that will be set by the regulator with differentiated approaches among the different sectors.

So could you just elaborate a little bit what are the risks? And also the opportunities that you expect from these changes in the approach from the regulator on TOTEX from 2024?

The second is regarding the crystallization of value for De Nora. If I remember well, in November, you said that you could create a fund which could invest in energy transitions.

What is the situation right now? And what could happen in order to crystallize the value these assets?

And the last one, if I may, regarding your long-term targets. What I mean is you are signing a lot of agreements in order to develop hydrogen economy hydrogen word in Italy with many companies.

So in the long run, if we can share with us what is your view in terms of, for example, EBITDA for Snam coming from regulated business and gas transport. And on the other side, new businesses, mainly related to hydrogen, I guess?

Many thanks.

Thank you. So on TOTEX, I think TOTEX can end up being an opportunity.

I’ve been saying this for years now. But more importantly than saying that we’ve been preparing for TOTEX for years.

We’ve hired, let’s say, TOTEX experts and put them beginning four years ago in our regulated accounting and planning and control functions. We are introducing digital technologies to better be able to forecast our spending needs.

And the success of topics really relies on the ability to make clients that are then executed on and to have a constructive dialogue with the regulator around those plans. And so I feel Snam is ready, and I feel there’s an opportunity there.

And if you look at the UK situation, we have worked a lot to really understand what went well and what didn’t go as well to make sure we’re prepared. So we feel good about that.

When it comes to De Nora and the energy transition vehicle, these are separate things. At the time, we had tied them as an idea that if we had gone to market in let’s say, before year-end, with an investment vehicle, we could have flipped De Nora at the same value into that vehicle and use it almost as a fixed assets and that was our thinking at the time.

We haven’t gone to market, obviously. We have seen a number of other investors, some of whom have been approaching us go-to-market with a very significant energy transition dedicated vehicles, much bigger than the one that we had in mind.

And at the same time, as I mentioned earlier, we’ve seen De Nora’s value increase importantly as De Nora with our support has been building their hydrogen plan on their hydrogen strategy, which wasn’t really there when we took that state in the company. So I think De Nora will follow its own, let’s call it, crystallization path.

We haven’t completely rolled out the investment vehicle opportunity, but we’re not in the market at this moment. There are a number of dedicated hydrogen investment opportunities for multiple players to get together and maybe joint forces on some investments.

I think that’s a positive. I think overall, the industry will need to collaborate a lot more.

The oil and gas industry is a lot more collaborative than the utility industry and projects like TAP, where we have a 20% stake or like IUK where we have a very small minority. I think they’re going to become the norm and the energy, as you say, utilities typically have 100% of their own assets, whereas oil and gas companies have many, many projects where they have minority stakes and other people are operating.

When it comes to the hydrogen agreement, I see there is two phases. First, we have the, let’s say, market development phase, where our main purpose with hydrogen is to make sure that our transport and as I mentioned earlier, even storage RAB becomes relevant and gets even more relevant in the energy transition.

So our hydrogen activity is done to promote hydrogen as well as then the long-term growth of our RAB in our assets and our substitutions, et cetera. Then we have, I would call them almost tactical opportunities like De Nora, Snam will not become a big manufacturer of electrolyzers itself.

But if we can help a company where we have a big stake and become bigger producers of electrolyzers. I think that’s a win-win solution.

Then we have businesses like energy efficiency, where we see a market opportunity today. But again, we may decide to crystallize on this tomorrow.

When I look at Snam long-term, we will remain put essentially an infrastructure company with a similar risk profile, being able to branch out into new types of infrastructure where skills and more importantly, execution capability has become relevant. That’s what Snam is about.

Snam is about – and this goes also back to the TOTEX point. Snam has delivered – I can’t count them, maybe it’s 13 or 14 years in a row, its investment plan on time and on budgets.

And the key feature of the energy transition is would be a big companies who can commit and undertake big projects and deliver them on time and on budget. And that’s what we’re good at.

That’s where we bring superior value added, and that’s what we will continue to do also when it comes to hydrogen. A lot of the deals that you read and the experimentations.

These are small, either MOUs or helping our current customers get familiar with this, where our objective is that they create clusters, big pools of demand where we can then realize or refurbish existing infrastructure to serve those customers.

Thank you.

Thanks.

Thank you for the presentation and also for taking my question as well. I have three.

The first one is on the ongoing process. Could you update on the ongoing progress of the testing to increase to up to 30%, the blend – the natural gas hydrogen blend.

And if some projects could be financed by the next-generation youth. So it will not be remunerated under the RAB scheme?

The second one is on the fully depreciated assets. We know there is not a specific deadline for the consultation for – with the Italian regulator.

But we can expect some news about this possible remuneration of these fully depreciated assets by the end of the year? And the third question is pending on the ongoing regulatory review, are you planning to postpone the business plan release from November to Q1 2022.

So after the Italian regulator, final decision will came out in December? Thank you.

So on the hydrogen blend, as I said earlier, we’ve now moved from testing the pipe, even though we will continue to increase the percentage at which as the pipe. We’re now moving to test directly, having shown that the pipe has no issue, test directly the blending and customer premises that we’ve done for the steel forage relate we’ve done committed to do for the glass industry.

There are finances available by Europe. There’s going to be finances available by – from the regulator.

That 30% was for the steel. Just to be very clear, it’s about testing a customer’s capacity to use the blend.

As demand grows, following all the studies that we’re seeing faster than expected, I suspect blending remains an incredibly precious through the national governments and that you can have to create flexible and immediate demand at very low cost, blending in the pipes, but the transition will be faster. And I think I’ve said this before, also the outlook is one in which we will have parts of the network running on biomethane and parts of the network running on 100% hydrogen.

So blending is not a means to transport hydrogen blending as a means to create like we’ve done for the biofuels selective on biodiesel in all of our cars in Europe and in the UK, the blending of hydrogen gas is really a way to boost demand – chicken-and-egg dilemma but another way to move hydrogen well. What we are doing, though, and related to the previous question around storage, we will be completing by year-end the testing of 100% hydrogen storage and that potentially to open up a very attractive new market for our existing gas reserves in the depleted fields.

Depleted gas fields could potentially, we’re testing this to turn into full pure hydrogen storage sites. On the fully amortized assets, that’s what I mean when I say that we have a lever of increasing or decreasing CapEx related to some of the replacements that we need to do around the fully amortized assets.

I expect some news after the summer. As you mentioned, there’s no strict timetable, which is why we’ve been now going for two years on these discussions.

And hopefully, we’ll buyer and have some more news. I would be tented on your third point to November, unless there’s some bigger uncertainty than the one I see today just because that’s our normal planning, and then we can provide always an update in the first quarter if there’s some material changes.

But I agree with you that compared to the previous plan, it will be a plan that’s based on some factors where we want to have full certainty. More than the WACC, what I think we will not have certainty on is the types of incentives that will be available for the new energy businesses.

But still well mid-November, give you an update, present the plan, and then we can always have a special event if something that happened in the first quarter. Thank you.

Thank you.

Good afternoon, and thank you very much. I just have a follow-up from a previous question on electrolytes as you spoke about the processes moving forward.

I’m just wondering whether you could elaborate on timing. How long do you think it will take for tangible project announcement?

How soon do you think we could expect to see construction of that sort of more significant electrolyzer capacity at scale in the next sort of in the years to come, I guess, I would say.

Yes. Great question.

So the IEA has this 850 gigawatt numbers. If you add all the current manufacturing capability, you would maybe get by 2032 to kind of maybe 10, 15, 20, also including some of the announced projects.

So there clearly has to be a big ramp-up. When it comes to Italy, we’ve seen instances in which the government can move very fast.

There’s not many opportunities to create quick employment. So the government is quite receptive.

And Europe is very receptive on the electrolyzer gigafactories like they are in other sectors like the battery gigafactory. But the electrolyzer gigafactory is an area where Italy has a unique advantage because we have a lot of electrolyzer, historical legacy capability here.

And it’s not just in others. A lot of research, experts, a lot of materials, experts are kind of a very attractive supply chain as well.

So we – the recovery funds for Italy need to be spent by 2023. And we see the government really racing to pass some simplification procedures to speed up investments.

So we could realistically be looking at something where we start spending money in 2022, which would be kind of unprecedented in terms of going from kind of concept to execution. But technically, it’s possible.

It’s not a lot of CapEx. I mean a factor I can cost between €100 million and €150 million.

So you’re not talking about big CapEx and of course, we said De Nora would be the one leading this charge. We may tactically be a shareholder if the returns are attractive for a period of time, but that’s kind of what you’re looking at.

Thank you very much. So do you think we could hear something about this in November?

Or is that too soon?

No, we’re hoping to have news for you in November. We’re working with consultants on some preliminary plans.

We’ve begun looking for some sites. There’s a lot of work going on behind the scenes.

So hopefully, in November, we have news on this.

Terrific. Thank you very much.

Thank you.

Thank you all very much, and have a great remaining of the afternoon. Bye-bye.