Enel Americas SA (ENIA) Q2 2021 Earnings Call Transcript

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Enel Americas SA (ENIA)
Q2 2021 Earnings Call
Jul 28, 2021, 12:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day ladies and gentlemen and welcome to Enel Americas' Second Quarter 2021 Results Conference Call. My name is Sadie and I will be your operator today. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star-1 on your telephone.

During this conference call, we may make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements could include statements regarding the intent, belief or current expectations of Enel Americas and its management with respect to among things Enel Americas business plans, Enel Americas' cost reduction plans, trends affecting Enel Americas' financial condition or results of operations, including market trends in electricity sector in Chile or elsewhere. Supervision and regulation for the electricity sector in Chile or elsewhere and the future effect of any changes in the laws and regulations applicable on Enel Americas or affiliates. Such forward-looking statements reflect only our current expectations, are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those anticipated in forward-looking statements as a result of various factors. These factors include a decline in equity capital markets of the United States or Chile and increase in market rates of interest in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere, and other factors described in Enel Americas' Annual Report on Form 20-F, including under risk factor. You may access our 20-F on the SEC's website at www.Sec.Gov. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date. Enel Americas undertakes no obligation to update those forward-looking statements or to disclose any development as a result of which at least forward-looking statements become inaccurate.

I would now like to turn the presentation over to Mr. Rafael de la Haza, Enel Americas Head Investor Relations. Please proceed.

Rafael de la Haza -- Head of Investor Relations

Thank you, Sadie. Good afternoon, ladies and gentlemen, and welcome to our second quarter 2021 results presentation. I am Rafael de la Haza, Head of Investor Relations of Enel Americas. In the coming two slides, Maurizio Bezzeccheri, CEO of Enel Americas; Aurelio Bustilho, our CFO; will be presenting the main figures of this period. Let me remind you that this presentation will follow the slides that have been already loaded into the company's website. Following the presentation, we will have the usual Q&A session. Please remember that questions can be made only through the telephone lines.

Now, let me hand over the call to Maurizio, our CFO -- CEO, who will start by outlining the main highlights of the period in slide number 3.

Maurizio Bezzeccheri -- Chief Executive Officer

Thank you, Rafael. Good afternoon, everybody. Let me begin the presentation by highlighting the successful merger of EGP into Enel America concluded in April this year. I would like to thank all our shareholders for the strong confidence on our strategy once again. In this second quarter, we began to consolidate EGP assets after the merger approved by our shareholders last year. This is very important milestone and the beginning of a new sustainable growth phase for our company.

In terms of demand, we have seen an important recovery compared to last year and we also had a positive tariff adjustment in Enel Sao Paulo in July. EGP consolidation and demand recovery may explain plus 53% increase in EBITDA and plus 96% increase in net income while gross debt for the company remain in line excluding EGP. It is also important to highlight that the agreement in Colombia has been approved the by the shareholders meeting and we expect the new structure in Colombia during the first quarter of 2022. In terms of credit rating and equity update, we have been upgraded by Moody's. We were compete in the Standard & Poor's ESG Title Index and improved our Q3 promoter score.

Finally, we are glad to announce the start of operation of [indecipherable] in Brazil. We also have another 3.1 gigawatt of capacity in execution and the long-term pipeline of the 44 gigawatt that we have later. Let's move to the following slide, see the evolution of our demand and collection. Colombian Peso and Brazilian Real appreciated gains in US dollars by 4% and 1% respectively during this quarter. While Peru and Argentina continue showing depreciation. Regarding electricity distributors, we are glad to see a solid recovery in all the countries during this quarter, reaching pre-pandemic levels. Finally, in terms of collection, we had an important recovery in the region, especially in Peru, which increased 17.1% points. In the 4 countries, we are now are around 100% of collection.

Now, let's look at our investment for the period. During the second quarter of this year, our capex increased by 132% compared to the same period of last year, reaching standard $698. This is mainly explained by the consolidation of the EGP, which contributed with the capex of $193 million, which represent 28% of total capex of the period. Without considering these capex, increased by 16% percent, mainly explained by higher investment in distribution business in Brazil. In monetary terms, our investments increased by 65%, reaching $993 million. Without the contribution of EGP, our capex would have increased by 33%. With incorporation of EGP, we see that Brazil has become the most important country in terms of investments with around 70% of the total.

Finally, it's worth to highlight that 96% of our capex is ESG related confirming our focus on the ESG. That continues with relevant renewable projects under execution in our growth pipeline in the coming FY. Our long-term pipeline and now the last year when we proposed the merger operation was around the 22 gigawatt. However, we have made an important effort in terms of new capacity and now we have a pipeline of 44.4 gigawatt, from which 24.6 are in latency stage and 19.8 are mature pipeline. They are being projected in execution. Currently, we have 3.1 gigawatt of renewable capacity under construction, from which 1.8 gigawatt in Brazil, 0.9 gigawatt in Colombia, 0.3 are in Peru, and 0.1 gigawatt are in Central America. About 66% of this capacity wind farms and the rest is solar.

Regarding the commercial operation update, 0.8 gigawatt will begin operation this year, 1.1 gigawatt [indecipherable] in 2022 and 1.3 gigawatt in 2023. Now analyze our operating highlights on the following slide.

In generation business, our installed capacity increased by 35% due to the incorporation of EGP, reaching 16.2 gigawatt, from which 67% is renewable. Net production in the second quarter reached 13.2 terawatt hour, an increase of 55% compared to same period over the last year, explained by EGPR and by higher turnover in the hydro production due to the demand recovery in the region. In relative terms, production increased by 19% due to the same reasons. Energy sales increased by 46% and 19% during the second quarter, reaching 19.2 terawatt hour and 33.3 terawatt hour respectively, also explained by the consolidation of EGP and demand recovery in the region.

Let's analyze network business in slide number 8. Electricity distributed reached 29.2 terawatt hour in the second quarter and 69.3 terawatt hour in the third month, which represents increase of 15% and 6% respectively. This is explained by an important recovery in demand in the 4 countries where we operate during at the second quarter. Regarding number of customers, we had an increase of around the 470,000 in the last 12 months. It is important to highlight that in Sao Paulo region, 8 million customers, an important achievement considering that when we control the company at 7.2 million. In terms of quality indicators SAIDI and SAIF improved in the four countries during the first of the year, while energy losses increased in Argentina, Colombia, and Peru and remained flat in Brazil. This is mainly explained by the fact that the temporary provision of cutting off electricity supply during the pandemic estimate with the exception of Brazil for client classified as by sharing.

On the following slide, we will see Enel X and retail business. Business. In Enel X business, we have a solid growth in charging stations for the bike fannings, that means distributor generation and public lighting. Credit card business also broadly in line with insurance decreased by 29%, mainly explained by the reduction of in-person marketing due to the COVID-19 pandemic. Regarding free-market business, the number of delivery points increased by 31% reaching 4,163 and data restore amounts to 9.9 terawatt hour in the first half of the year, which means a 40% increase. Let's now have a look at our ESG highlights in coming slides.

In the Americas, as the second edition of each school similar economy for Latin America and initiative that aims to spread the culture of circular economy, we need [indecipherable] in addition to the internal program and open course we details for stakeholder for -- from Latin America. The school presented to each model 220 internal and external unit, a journey through the foundation of the circular economy. New business models, the role of design impact metrics, sustainable finance, modern and circular cities. The school emphasize that circular economy is the basis of a new sustainable economic model and aims to redesign the business model throughout entire chain and through innovation and not just technology.

The recently completed merger with EGP Americas puts our company in an excellent position to lead the energy transition. We contribute to reducing our CO2 emission, which is the focus of our strategy. The integration was well received by the credit agencies, which is reflected in the upgrade even by Moody's some weeks ago to VAA2 from VAA3. Regarding the SG indexes and the rates, the company was fulfilled on the S&P instant ESG vital index. And the FTSE published the new score for the company, reaching a score of 4.1/5; this reflects the excellent performance of the company during the last year.

Finally, we are delighted to announce that our 2020 total tax contribution report is available on our website, promoting the relevance of fiscal transparency in our reporting system. We encourage other companies in LatAm to follow this path to promote best practices in transparency and hoping that our region can we become a reference in the ESG. Also today, our ESG Group Director approved an engagement policy for the institutional investor and role model aligned with best practices at the international level. Now, on the coming slide let me talk to you about our new wind farm [indecipherable] in Brazil.

In the state of Piaui, Brazil, we have built Lagoa dos Ventos, a facility that consists of 230 wind turbines, making it the largest wind farm worldwide, and one of the energy infrastructure in Brazil. The 716-megawatt facility can generate over 3.3 terawatt hour every year thereby avoiding the addition of more than 1.6 million tons of CO2 into the atmosphere. This wind farm implies an investment of BRL3 billion and will add another 396 megawatt of capacity, reaching a total of 1.1 gigawatt of capacity and buying terawatt hour of production by 2022; 510 megawatt already a 20-year contract with the pool of the distribution contracts giving stability to our cash flow. This shows the potential of Brazil and the region in renewable generation and the future growth of our company in the energy transition which makes us very proud. In the coming slide I will comment about the reorganization process of our operation in Colombia.

This operation consisted in the merger of [indecipherable] assets in Colombia and Central America into one new vehicle named by Colombia, in which our company will own 53% -- 57% -- sorry, 57.3% of the total share. Increasing this way the stake in stake and maintaining the control. As you know, our company currently owns 48.3% and 48.5% ownership in [indecipherable], and we have control of the company due to a share of that agreement. This operation allows us to set hold this agreement with our partner and to yield a new stage of growth, defining a new and clear dividend policy improving our corporate governance and adding new long-term growth opportunities. Yesterday, the transaction has been approved by the shareholders meeting of [indecipherable]. And coming ahead, we wait for the approval of the board order meetings and authorization of the financial regulator in Colombia. We expect to have the completion of the operation during the first quarter of 2022.

Now, I give the floor to Aurelio who will comment about the financial results for the period that in the coming slide.

Aurelio Bustilho -- Chief Financial Officer

Thank you, Maurizio. Regarding the second quarter we reached $951 million, 52.7% higher than the same period of last year. It is mainly explained by the consolidation of EGP Americas and by the demand recovery distribution business. If we exclude the impact of EGP Americas and also the negative impact of $70 million coming from currency devaluation, we get to an EBITDA of $841 million, which is 35.1% higher than last year. In cumulative terms, EBITDA increased by 15% in nominal terms and 12.9% excluding EGP Americas and the negative impact of $97 million from FX.

Group net income in the second quarter increased by 95.8%. While on a cumulative basis, it increased by 20.6%. In both cases, this is explained by the contribution of EGP Americas that result at EBITDA level and better financial results. Funds from operations, FFO, in the period reached $302 million, a decrease of 9.8% compared to the same period of last year while net debt increased by 27.9% reaching $5.7 billion. We will analyze in detail the cash flow and tax later in this presentation.

On the coming slide, we'll see EBITDA evolution and breakdown. Starting from $623 million of EBITDA on the second quarter 2020, we see that all our businesses had positive results from operations improved by $101 million while large hydro increased by $44 million. Networks grew by $49 million and retail analytics increased by $7 and $10 million respectively. In addition to this, we have the positive impact of $127 million coming from EGP Americas. This devaluation had a negative impact of $70 million considering this plus after the impacts, we get to a final EBITDA of $951 million, 53% higher than the same period of last year. On a country basis, we see that the main contributor for consolidated EBITDA was Brazil with 40% while Colombia represents with 35%, Peru 40%, Central America 5%, and Argentina 5%.

Let's have a focus on generation and networks businesses in the coming slides. EBITDA generation business increased by 9.6%, mainly explained by the contribution of EGP Americas. Without this effect, EBITDA would have increased by 49%. This is mainly explained by better results in Colombia, Peru, and Argentina mainly due to a higher energy sales. In the case of Argentina, it's important to highlight that we had a tariff adjustment of 29% retracted to February 2021. However, this adjustment is still not enough to compensate the inflation increase. Currency devaluation had negative impact of $20 million. In the pie chart, Colombia and Brazil were the main contributors to generation EBITDA with 37% and 30% respectively. Let's analyze EGP Americas in the coming slide.

In soft capacity in operation during this period was 3.9 gigawatts, from which 1.8 gigawatt are winds, 1.4 gigawatt solar, and 0.28 gigawatt some mini hydro. This capacity to produced 3.5 terawatt hours of energy in this period. EBITDA during the second quarter was $127 million, from which 59% came from Brazil, 38% from Central America, and 3% from Peru. Regarding financial debts, it's amounted to $639 million, 82% comes from Brazil and 18% comes from Peru.

Let's see networks business in the coming slide. Network business increased by 19% compared to second quarter of last year. It is mainly explained by better results in Brazil and Colombia. In Brazil, EBITDA improved by 44% mainly due to an increase of 13% in energy demand along with higher tariff due [indecipherable] adjustments. While in Colombia, EBITDA grew by 12%, also driven by an increase of 13% in energy demand. It is important to highlight that energy demand increases in the 4 countries reflecting a solid recovery after the difficult times that we faced at last year and that we are still facing today. EBITDA in networks business came mainly from Brazil and Colombia with 57% and 31% respectively. We overall contributed with 12% in Argentina had no contribution this quarter due to higher energy cost despite the positive 9% tariff adjustments.

Let's analyze our cash flow in the following slides. Funds from operation, FFO, amounted to $489 million in the period starting from an EBITDA of $1.7 billion and this result includes a negative net working capital in the period of foreign amount of $659 million, 28% higher than the same period of last year, mainly due to higher CDAs in Brazil that should be recovered next year in the coming tariff adjustments of course. Tax paid during the period the multitude of $436 million, while net financial expenses amounted to minus $108 million, 24% lower than last year.

After investment for $993 million including $193 million coming from EGP Americas, we get to a free cash flow of minus $505 million.

Let me now analyze the debt of our company in the following slides. Gross debt amounted to almost $7.2 billion, an increase of 21% compared to December 2020. This amount includes $1.2 billion coming from EGP Americas and without this impact, gross debt would have increased by 2.3% reaching $6.1 billion. This is mainly explained by our increase in our distribution subsidiaries in Brazil, partially offset by a reduction in Americas holding. Looking at our net debt starting from $44.4 billion of last year, we had minus $505 million of figure as mentioned in the previous slide.

Net dividends paid and amounted to $636 million and financial receivables minus $11 million. During this period, we have an extraordinary operations for an amount of $712 million, which corresponds the equity injection received by EGP Americas to continue developing our projects in renewables. With this plus the net debt from EGP Americas of $631 million and the effect of minus $180 million, total net debt reached $5,663 million.

In terms of currency and country, we see that Brazil remains at the largest contributor while the debt at holding level represents 10% of total. Finally, regarding the cost of debt, we can see an increase for this period going from 4.9% to 5.5%, mainly explained by the incorporation of debt coming from EGP Americas and growing trend in the associated with variable rates in Brazil. This is partially offset by better rate conditions in refinancing of debt in Colombia and Peru.

Now, in the following slides, Maurizio will finish the presentation with some closing remarks.

Maurizio Bezzeccheri -- Chief Executive Officer

During this quarter, we saw a solid operational recovery across many regions. This allowed us to have an important improvement at EBITDA level, boosted by the consolidation of EGPA. We continue with our ESG focus and we are positioning our company as one of the best ESG players. Finally, we are already delivering in this new phase for our company after the full integration of EGPA. We are confident that this will continue bringing the benefits to all our stakeholders.

Aurelio Bustilho -- Chief Financial Officer

Thank you. I now call the operator for the Q&A session. Operator, please proceed.

Questions and Answers:

Operator

Yes, sir. [Operator Instructions] For our first question we have Enrico Bartoli from Stifel. Enrico, your line is open.

Enrico Bartoli -- Stifel -- Analyst

Yes, good morning. Thanks for taking my questions and congratulations for the results. The first one is related to the outlook for the second half after the strong quarter you reported in Q2. If you can elaborate on what you expect in terms of evolution on the demand? If you expect some additional tariff adjustments during the coming quarters? If I'm right, you provided the guidance in February of the $4.2 billion of EBITDA including the EGPA this is confirmed? Second question is related mainly to slide-6, when you show your pipeline for renewable projects, I was wondering if you can share the details on how the deposit are classified in the mature pipeline or the pipeline in terms of contract visibility, land, connections and if you can provide us some guidance on the IRR that you expect from the projects that are currently in execution? Thank you.

Maurizio Bezzeccheri -- Chief Executive Officer

You're welcome. Let me reply to the first question. We see in the second half of the year that we will continue growth of the demand. From the distribution business, we don't see any particular difficulties. Of course, now the possibility to binding in -- as well in Rio will allow us to reduce and keep under control that situation. So, no major change in distribution business. Regarding generation, of course, the dry season impact on Brazil that are put under pressure. Of course, the entire electric system in Brazil, we are maintaining a good generation in renewable segment and of course, you remember that we have as well for [indecipherable] producing. Regarding the other countries in generation, we don't see particular criticalities. Regarding the other business, related to the [indecipherable], we are facing an interesting growth in terms of product service, in terms of -- specially, in electric mobility, and we are negotiating that several interesting contracts, like the contract we did with the Volvo in Brazil for the charging station. We see the second half of the year that we continue the recovery from the pre-pandemic phase. Of course, countries, there is the conventional segment if the segment got the biggest impact of the pandemic but this is more than compensated by the growth of demand in domestic segment and in the industrial segment.

Regarding the pipeline, you said mature compare with no mature, means that we have contract already in place. We have a good move in number of need in place. We have connection points already secured. The second piece is just optimization of the layout procurement terms. The more mature pipeline that you have some primary contract of well dried [Phonetic], we are starting the permitting phase. Of course, you know this pipeline normally unless there are some unexpected the influence we don't consider that our major problem developing guide this project. Of course as you know, pipeline is living creature, so you have some projects that will die in some other project that will enter in the demonstration is the fact that since our announcement of the merger in December 2020, we report that as already recorded; I said 22,000 megawatt of pipeline, now we are in 44,000 megawatt of pipeline. That means that there are going 22,000 plus 22,000 in the reality. You have, as I said, in our pipeline heading a consistent pipeline is just the indicator that you have a huge and solid growth opportunity. Even more beyond the actual growth strategy. We recall that one of the reason why we underline the importance of the merger was that possibility to have in-house one of the best development team in the region.

Regarding IRR, I give Aurelio the floor.

Aurelio Bustilho -- Chief Financial Officer

Thank you, Maurizio. Hi, Enrico. Thank you for your question. It's important to mention just to complement the second semester, second half of the year, that we have a full semester with the tariff of Sao Paulo readjusted. We had the readjustment in the last October. We have more, around 6 to 700 megawatts of new capacity that will get the COD to make it is to enter in the second half of the year. So, which drives us too of course and the demand recover that we expected drives us to a better improvement semester for us. Just to mention that in the first quarter, I mentioned the designation of around the $4 billion of EBITDA this year. We maintain these estimations and we are comfortable with this figure. In terms of IRR, we use this depending on the technology, but 10% to 11%. We are confident that we are improving our capacity, as Mauricio explained in all the lessons learned increasing pipeline and so on, with that we could improve these returns, which is a reasonable return.

Enrico Bartoli -- Stifel -- Analyst

Thank you very much. Just to clarify this, 10% to 11% is equity levered or unlevered? What kind of figure we are talking about?

Aurelio Bustilho -- Chief Financial Officer

Let's say, the walk plus some hurdle or the walk for the cattle [Phonetic].

Enrico Bartoli -- Stifel -- Analyst

Okay, OK. Thank you very much, very clear.

Aurelio Bustilho -- Chief Financial Officer

You're welcome.

Operator

[Operator Instructions] Our next question, we have Rodrigo Mora from Moneda. Rodrigo, your line is open.

Rodrigo Mora -- Moneda -- Analyst

Hello, good afternoon. Thank you for taking my question. Congratulation also for the whose results. I have two question. The first one is related to the Enel Green Power Americas. I would like to understand the net financial debt that Enel Green Power Americas has, because I understood that the transaction, the merger transaction, consider that Enel Green Power Americas gain without financial debt or net financial debt equals zero. This is my first question. My second question is related to the drought condition in Brazil. I would like to ask Americas team, what is the risk that do you see that the next year we still good face potential electric rationing the system? Thank you.

Maurizio Bezzeccheri -- Chief Executive Officer

Rodrigo, I will just give some indication regarding the first question and then I will reply, just to recall as we said during an emerging this project was just coming with investment related that you see, of course these in the free cash flow increase coming that means assets with financing with cash because already related to the procurement but I will leave Aurelio just to reply regarding the situation of it. Regarding the situation in Brazil, I think that is the only indication will be announcement of the declaration of the Ministry of energy is that will have no rationing of the electric energy. In this respect, we are making some proposal for example demand response can be a solution to the type of rationing that will be casting the distribution. So in general, I think it's as well politically unpopular declaring the casting of the energy, by considering that situation today is quite different from the situation of 2021 that was the year in which decapping of energy reviewed why because there are much more wind farms and solar farms already in operation.

So one, you know, I don't think you will ease to find the situation of capping of energy, even though you can see there that we need that to see what will happen in October. October is the month of the beginning of raining season in Brazil and of course everybody is expecting that we get an improvement in this direction. If not, we'll see or will be the actions; we think that there are other possibility avoiding the capping of the electricity supply. Regarding EGP, I leave the floor to Aurelio.

Aurelio Bustilho -- Chief Financial Officer

Thank you Maurizio. Thank you Rodrigo for your question. The cash that came with EGP Americas is in at Enel Americas level right. That's why because we consolidated all the cash flow at holding level and we will use it as the projects needs the cash flow to conclude or to pay the construction right, the park that it's in company. So the company came with let's say the projects came with debt, the debt cash flow neutralizing this effect at Enel Americas level, OK, which has consolidated Enel Americas, it's in one safe [Phonetic].

Rodrigo Mora -- Moneda -- Analyst

So, the company came without net financial debt. But Enel Americas had to use the cash to finance the capital expenditure of Enel Green Power America. I am correct.

Aurelio Bustilho -- Chief Financial Officer

Yeah, you are correct. Rodrigo, we said during the merger operation that the project in construction was supposed to come into Enel Americas with already financing for the construction, OK, and this is exactly the funds we are talking about. The funds that needs jobs for the construction of -- you remember there was some megawatt in construction in 2021 and 2022. This is the cash we are taking about.

Rodrigo Mora -- Moneda -- Analyst

Okay, thanks. Perfect.

Aurelio Bustilho -- Chief Financial Officer

In line, we explained during the merge operation.

Maurizio Bezzeccheri -- Chief Executive Officer

Just to add Rodrigo, net level which is zero, right, of course we didn't leave to optimize the flow, we didn't leave the cash in the company, in the operating companies because they are using, then in Enel Americas we can optimize this cash in a better situation, a better flow of resources OK.

Rodrigo Mora -- Moneda -- Analyst

Okay. Please let me ask last question is related to the agreement with Grupo Energia de Bogota. The merger of the operations [indecipherable] and also Enel Green Power Colombia and Enel Green Power Central America, I would like to know if related to the dividends approved to make the transaction and what is the idea of the Group in terms of dues as proceed; because when I see at the level of Enel Americas holding maintain some financial debt and I would like to know if the use of the proceeds of this dividend will come to reduce these financial debt. Thank you.

Aurelio Bustilho -- Chief Financial Officer

Thank you, Rodrigo. Yes that's the idea. I anticipate that this strategy in the first quarter. If you remember Enel Americas anticipated dividends in the frequency as and know that's why Enel Americas has a batch today. Because, of course, we are in a growth phase in the Kansas. So now that we are seeing that the countries, especially in this case Brazil in Colombia as mentioned, so we can invert this trend. So what we'll do is to have let's say a deal even pay in higher than the dividend payout right in a progressive way. So that's the idea. The idea is to reduce as a little by little these debts in Enel Americas because with the debt is more efficient, if it stays in the country.

Rodrigo Mora -- Moneda -- Analyst

At the operating companies, right.

Aurelio Bustilho -- Chief Financial Officer

Exactly, that's the idea.

Rodrigo Mora -- Moneda -- Analyst

Okay. Thank you very much for taking my question.

Aurelio Bustilho -- Chief Financial Officer

You're welcome.

Operator

For our next question we have Henrique Peretti from JPMorgan. Henrique your line is open.

Henrique Peretti -- JPMorgan -- Analyst

Thank you. I have two follow-up questions, the first one would be on Enel Green Power EBITDA in the quarter was $127 million. The question would be can we analyze this EBITDA for the full year, or EBITDA for increase in different quarters because generally at least in Brazil, wind power generation is stronger in the third and fourth quarters. The second question would be regarding the GSF, so we know that GSF going to be very low in the third and fourth quarter. So, is there going to be an exposure for [indecipherable] if there is an exposure to the spot market, if the company has already hedged the eventual position. So, those would it be the questions for now. Thank you.

Aurelio Bustilho -- Chief Financial Officer

Yeah, I can take this one. Thank you Henrique. Well in terms of EGP, the new perimeter of EGP Americas; we can expect to maintain the this level, taking into consideration that will putting in COD 600 megawatts in the second semester, of course is not in the beginning, it will be spread by the months, but we will have these new capacity. So we are expecting something around $400 million dollars, not for the whole year, but for the nine months and let's say, right, because we are the only 127 zone [Phonetic]. So this is Enel Green Power. In terms of hydrology and all the impacts in our hydro generation in Brazil that we have today, we are perfectly matching in terms of contracts that we complement with our generation with energy that we bought previously. So we are long in terms of contracts purchase for to sell energy especially in the free market and some part in auction, 45% auction and 55% free market. So, we do not have concerns in terms of coverage in our generation assets.

Since we have this position of contracted with planes, not with commercial planes, but we believe real generators, this energy to sell in the free market and complementing our own generation and also there is also I mean this risks and lots of opportunity also because we can do short-term business with some commercialization that or some agents that has may have problems or sounds like a bit, but in our case, we are in a comfortable position.

Henrique Peretti -- JPMorgan -- Analyst

Thank you. So finally, if you could just explain very briefly, if you have any changes to the guidance, I know there is no official guidance at the moment, but if you can guide us for 2021 and 2022 in terms of consolidated EBITDA that it would be really helpful. Thank you.

Aurelio Bustilho -- Chief Financial Officer

Okay, thank you. For 2021, we are maintaining the 5.1 billion that I explained in the first quarter, we are confident with this number, with this figure. We are still calculating and analyzing these scenarios for next year. We are seeing different behaviors in terms of demand in the segmentation especially in distribution. So to anticipate now the situation, I think we are not let's say have a number to tell you, but we can talk about our expectations in terms of recall very and so on, of demand and so on. So, again, in terms of EGP, we are doing very well increasing our portfolio and take advantage of anticipating projects and take advantage of price if we can, will be, that's why we are improving our product line in a huge way, also take advantage of our commercialization and trading strategies, if you see the quantity of our energy that we generate in the quantity that we sold by for free customers, it's 2/3. We generated 2/3 the energy and 1/3 is just commercialization. So this is something that will capture with also with renewables and distribution. It depends on this debt recovery of the demand and that we are seeing that right now we are better than last year, but to have a solid position in terms of demand for next year, we need to see the development especially with the pandemic in the region. I don't know if Maurizio want to add some comments regarding this.

Maurizio Bezzeccheri -- Chief Executive Officer

Nothing else. Regarding the effectiveness, we have strategy that covered the contract of IRR. For the IRR, we are continuing growing in the sales in the free market and these of course will be even more boosted by our execution in renewable project that we are doing right now. We're going to be interested in inventory considering it. Regarding -- as you said, regarding our target, we are facing the foreseeing on the target we're pretty clear; considering the 2021, we are -- we think that we can in nine months meet as well the target of 2022. Of course, we are right now we are in the face of definition of the budget for 2022 depending pro demand. Let's say that I don't see any major change in regulation. I think we will for Brazil for example, I think that we will get even better results compared to 2021 in the reality.

Henrique Peretti -- JPMorgan -- Analyst

Perfect. Thank you so much.

Operator

[Operator Instructions] Presenters, we don't have any further questions at this time you may continue.

Rafael de la Haza -- Head of Investor Relations

There are no more questions. So, I conclude the results conference call. And let me remind you that investor relations team as usual is available for any doubt that you may have. Thank you for your attention, and have a good day.

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

Rafael de la Haza -- Head of Investor Relations

Maurizio Bezzeccheri -- Chief Executive Officer

Aurelio Bustilho -- Chief Financial Officer

Enrico Bartoli -- Stifel -- Analyst

Rodrigo Mora -- Moneda -- Analyst

Henrique Peretti -- JPMorgan -- Analyst

More ENIA analysis

All earnings call transcripts